This Flashback Friday episode is a casual and impromptu conversation between Jason Hartman and Investment Counselors Ari and Sara. They talk about the last Creating Wealth Boot Camp, some investing insights, and a “case study” article from The Financial Freedom Report. In addition, a client also shares his experience in creating a high ROI in this market.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts visit Hartman media.com. Hey, this is Jason Hartman, thank you so much for joining me. Do you know what day it is? Yes, it is flashback Friday, or you hear the best of the creating wealth show and you hear some good prior episodes, some good review. Remember, we’ve got almost 500 episodes out. And you know what? iTunes doesn’t even hold them all if you’re an iTunes listener, if you are listening on Stitcher thank you for joining us. So we want to bring you some good review stuff now. What’s interesting about flashback Friday it’s a little scary for me I gotta I gotta be very very candid with you on that. Because you the listener, you get the chance to hold my feet to the fire. Did I make any predictions? Was I right? Was I wrong? I’ve been I’ve been right about a lot of things, but I’ve been wrong about a few. But it’s flashback Friday and we will give you the uncensored Best of the creating wealth show with a prior episode. So let’s dive in. Here we go. Remember, this is not current, it’s flashback Friday.
Announcer 1:20
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial industry. Day, you really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 2:09
Hey, I don’t know if you saw the article in CNN Money and it says Real Estate’s new problem. Not enough homes. Just as I have been predicting for about three years now, I knew that when construction came to a standstill, the inventory hangover would be gobbled up, the population is increasing rather dramatically. We’re having some of the biggest birth years since the big birth years during the baby boom, post World War Two and the inventory hangover is being gobbled up pretty quickly. So my prediction again, by the end of 2011, early 2012, we are going to see a rather dramatic shift in the inventory problem. We do have anywhere depending on who you listen to from two to 7 million homes in the potential foreclosure pipeline. However, many of those homes you must remember are currently occupied. It’s not like These are new homes being built that suddenly hit the market just because they’re foreclosure all this is is a moving around of occupants. So maybe the people that live in those homes now move to a another home, again, filling existing inventory, but the construction machine has basically stopped and you’ve got to remember that it takes a long time to ramp up that construction machine. So again, our philosophy ba package commodities investor tie up three or four decade long as I’ll talk about in just a moment fixed rate financing, let your tenants lead inflation that is coming. It is definitely coming pay off the loans. And by the way, I just wanted to address the inflation deflation issue. And we’ll go into this more detail in future shows. But I’ve been debating with a friend of mine who’s a very knowledgeable guy who has been talking he’s kind of becoming a bit of a deflationists actually, and I think the overall big trend is definitely inflation. And what is faulty about the deflationists argument in my opinion, is really hinges on two major things. Number one One they say things like the government, the fed the Treasury, whatever, it’s sort of all three of these cannot possibly print enough money to offset the deleveraging that is occurring. Well, I beg to differ with you, because there is no limit to the amount of money they can print, look at Argentina, look at Zimbabwe, look at all of the other examples throughout history where the fiat currencies have become totally worthless. So inflation is an unlimited prospect, there is no limit to the amount of money they can print. The number two thing is they say they’ll say things like, you know, there’s $40 trillion of potential deleveraging but that assumes that everything will be deleveraging and everything will be defaulted upon. And that is just simply not true. Now, some of it will, some of it already has and that does create deflationary pressure, but nobody knows how much of that will ultimately be de leveraged or defaulted upon. So this deflation argument just really doesn’t fly with me. So anyway, enough of that. I’ve got Sarah and are here. We wanted to You have a little debrief on our boot camp that we had last Saturday. Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday. So Sarah, what do you think of the day?
Investment Counselor 5:15
Hello, everyone. The day was great. We had a lot of guests from out of town which was nice. I want to thank our two guests from Hawaii nyota and Emily, thanks for coming out. Yeah, we
Jason Hartman 5:25
had people come from all around we had East Coast we had why I don’t think we’ve ever had any people come from Hawaii to our bed before heavily. I don’t think so. Well, I want to say mahalo, mahalo and Aloha.
Investment Counselor 5:36
We do have some Hawaiian clients though. Fantastic.
Jason Hartman 5:40
So I want to come visit Can I come and hang out with you for a while Hawaii, what a beautiful place, but I wouldn’t invest there. It’s a little too expensive. The RV ratio is not good.
Investment Counselor 5:49
And gas is definitely not cheap. So I also want to thank Ozzy from New Jersey. He’s been a longtime podcast listener and changed many, many emails. So it was great to put a face with the name
Jason Hartman 5:59
tag. Are you What do you think of the day? Good afternoon, Jason. The well being so funny with these Greetings, by the way, you know, whenever we get together, folks, don’t we get a little goofy. It’s just funny how we are. Okay. We’ll be a little goofy today. Go ahead. Yeah, no, the weekend was great. Actually, there was a lot of new clients there. I don’t think anyone there in the room actually currently owned an investment property. So it was a really good education for them. A lot of people enjoy the inflation talk. Well, I think I think my mom was kind of an interesting guest. We’ve never had her speak at an event before have we? No, I think everyone liked her because everyone heard the podcast with her on it, and they really wanted to see her in person. In fact, that was a good idea to have her come out. I think that was fantastic. Yeah, she flew out from Alabama and talked a little bit about her investment property experience. And I think the big message there is, keep the faith keep moving along the same path. That’s really what it’s all about. In regards to the number of people there The room was packed. We had expanded from one section of the ballroom to two sections, and there was one left that we didn’t take and looking back just like masters weekend, we probably should have taken it because we could have certainly used all three sections of the ballrooms, folks, we really got to ask you, please register for our events in advance, give us notice we can plan better and do a better job at that. If you do.
Investment Counselor 7:11
Yeah, another one of our guests, actually, a real estate broker in San Diego came out. And you know, I always wonder, you know, when, when real estate professionals come out, you know, what their intentions are in coming to our seminars? And you know, are they spies? You just never know. But no, it was great meeting you, Richard, I know you’re a podcast listener as well. And you know, Richard said that no one does what Jason does, his teachings are money in your pocket. And I think that was just great of you to say that.
Jason Hartman 7:38
Yeah. And I appreciate it. All the kind words also at the break from you as well. And I’m glad that we’re gonna get your wife listening to the podcast now too, because, because I know that she was complaining that you were paying more attention to my show than to her so you don’t want to do that. That’s not good for marriage. Right. This is a team sport. I wanted to give a shout out to Phil Are Texas. Yeah, Phil, that was awesome. He came out. And a lot of people really enjoyed that market listening about it and all the deals that are going on there. And I think a lot of people got a lot out of that. Yeah. And we also had Jennifer Furman for us talking about investing with your IRA and the Roth conversion to the topic is very, very hot topic, no question.
Investment Counselor 8:20
And we are going to give Jennifer more time to speak next time, because we just had a ton of questions. So if any of you are listening and attended, and you have more questions for Jennifer, let us know. We’re happy to put you in touch with her. And
Jason Hartman 8:30
we’ve had her on the show before too. So I heard some more detail there. So I want to also thank one of my clients named Matthew for bringing Jason eyes some fantastic t shirts. Those were awesome. By the way. The first one, the one Well, he gave me two of them, but one of them I just I love it. It was hilarious. And it’s a it’s a great looking t shirt. And by the way, his t shirt company is called Chai America. Yeah, so we want to say that on the air if anyone wants to get one of those, but it was a picture of Tim Timothy Geithner and Ben Bernanke. He said You’ve got those two guys that are totally messing up our economic world here. And, and the caption says the Dukes of moral hazard. I love it. That’s awesome. Those are great. So thank you very much. Yeah. Thanks, man. Thanks again for that. Those were awesome, folks. One of the things I really want to talk to you about today is the concept of these income property bonds. That’s kind of our little trademark term income property bonds. So call them IP B’s. All right, like ICBMs intercontinental ballistic missiles. Okay. And what does that mean, Jason? Well, what an income property bond is, is is a property that is usually a lower priced property in a very stable linear market with a fantastic RV or rent to value ratio. And I’ll give you a great example of one and we have these in several markets, but one of them that has been very dependable for many years and we have a lot of happy clients in is good old Indianapolis. I know we’ve talked about it before, but let me give you an example of a specific property we have right now. Alpha I cannot stress to you enough. If you’re interested in one of these properties, you have got to act lickety split. Because these properties go they’re just gone right away multiple offers constantly on this property. I’ll give you the rundown. Okay, and I know you guys will have comments on it. So get to that in a moment, but built in 1999. It’s a foreclosure property. It’s a single family home. Again, we’re not crazy about condos here. This is 1200 square feet, it’s $59,000. It does need some minor rehab that will cost about 70 $800 your total cash into this property is just over 25,000 bucks. It’s $49 per square foot, it would cost you almost double to rebuild that same house today. Okay, so you’re buying it far below the cost of actual construction, the projected rent is 950 per month positive cash flow is listen to this 40 $184 annually. On a $25,000 investment, so I just want you to notice what a bond this is. This is better than the crummiest junk bond out there on the market. This cash on cash return. I’m not talking ROI, I’m talking, no appreciation, no additional financing. None of the multi dimensional characteristics of a real estate investment like tax benefits 17% cash on cash return, the cap rate here is projected at 12.5%. Folks, you can’t beat a deal like this in a quality market. Now granted, I know you may have heard these other groups peddling junk properties from the loser city of Detroit properties that are being bulldoze to the rate of 10,000 homes. This is not a junk property in a junk area. These are yuppie ish communities. These are quality properties. These are properties that have a potential for appreciation in the future. Your overall return on investment here is projected at 20 8% annually, and without the multi dimensional characteristics 17% annually, that’s just a phenomenal opportunity. Just look at it like a bond, compare it to a bond, where a normal bond, you might earn three to 5%, a junk bond, you might earn nine to 12%. If the company stays in business, if you’re lucky in your savings account, you’re going to earn 1%. If this only works out half as good as projected your eight to 9% that’s just a no brainer deal. Well, I gotta tell you, Jason, I do a lot of researching and I’m sure you too, can attest for that. I do know that already. Because you are constantly emailing me articles and constantly emailing all kinds of, you know, interesting stuff. Some of it’s a little off the beaten path. I will definitely say, Yeah, well, I love the source information. And I see a lot of websites, a lot of companies out there selling beat up properties like you’re talking about and they’re selling them for 4050 $60,000 a year. 40 years old. I see the properties these companies are recommending And one of my former tenants actually bought a couple properties from them. And you know, I’m thinking, what is this guy thinking? You know, I obviously did not get through to him here. He’s looking at a property in Detroit that is, so it’s an older house. I mean, I saw the property on the website, and it says that the after repair value of that house was like 110 $120,000 for a house built. I can’t remember offhand. I think that was built in the 50s. These are a little 1100 square foot house, folks, I don’t know. You know, I’m no expert on Detroit. But I do know that I hear stories all the time of people buying houses for $1 $1 people buying houses for $500 that the city is just dying for you to take over the house so someone will pay the property tax bill and someone will mow the lawn and keep the house secure so that it’s not invaded by gangsters. I mean, there are areas in Ohio and Michigan that are absolute disasters. Well in your What I want to point out Jason is that you’re putting $25,000 down on this property and you’re leveraging your money to get alone. Yeah, the bank’s putting up the other 75%. So here’s what a lot of people don’t understand. Some people might see a house in Detroit, Michigan for 25,000 and say, well, I’ll just pay $25,000 in cash. Just a reminder, you’re listening to flashback Friday, our new episodes are published every Monday and every Wednesday. Can you explain the difference between not having a loan versus having? Well, you know, it’s definitely better. You know, and we all know this and all the regular listeners know this. It’s definitely better to have financing on the property because you have a partner, but there are some times where paying cash makes sense, and that is in an area like Indy or any area where you have really low price properties that become those income property bonds. Now, these don’t really exist. The income property bonds don’t exist in much in some of the sexier markets where the properties are a little more expensive. Cuz the cash on cash return isn’t so good and you need the leverage to amp up the return your cash flow will still be decent, it won’t be as high. But when there are these little inexpensive properties, you can pay cash those lend themselves very well to investing with your IRA or 401k. And they just work really well inside a plan. Because inside a plan, the financing is not quite as good as it is outside the plan. So if you already have your four loans or your 10 loans, and you’re maxed out on financing, here, it does make sense to buy with cash. But overall, given the choice, sorry, to your question to interior point, I would rather have a loan on the property, I’m just saying, if you’re maxed out on financing, then the income property bond really becomes something of interest and you want it to be in a quality area. Look, everybody listening has heard the three main things about real estate location, location, location, right and there are some areas that look Heck, I could be wrong, but some areas that I just don’t think have any future and I think one of those areas is really Detroit.
Investment Counselor 16:00
Well, and I’ll, I’ll bring this up because you mentioned Detroit. I had a client, Colin, he’s been on my email list. I don’t know for two years. He’s attended many of our seminars. And he calls in and he says, Do you have anything in Detroit? And I said, No, please don’t buy in Detroit.
Jason Hartman 16:15
We get the call from these groups that want us to sell their inventory in Detroit. I mean, it must have been twice a week.
Investment Counselor 16:21
Well, that’s exactly what I told him. I said, Look, if we thought Detroit was a good market, we would recommend it. We can recommend anything we want.
Jason Hartman 16:27
Area agnostic, we can go anywhere we can recommend. Look at I’ve looked at properties in numerous countries, we could recommend Romania, we could recommend Panama, we could recommend Detroit. We can recommend Lansing, Michigan, anything you want. But we’re not there because we don’t like it. We don’t think it’s good. We don’t have faith in it. And remember, we have to live with you clients through the life of the investment and the story has got to work because we’re going to be here to service you were going to be here to take care of you. We are attached to the deal. We’re not just selling books about tapes and sending you on your way.
Investment Counselor 17:01
Well, I’m just to finish my story here. So he calls anyone interrupting you interrupted me many times.
Investment Counselor 17:10
Okay, this is not morning talk. Okay.
Jason Hartman 17:12
So anyways, they might be listening in the morning. You know what I said before we started recording everybody. Oh, just interrupt me. So I’m guilty as charged. I asked why. Why is it that morning talk shows like TV and radio are so different than nighttime shows. Why is it that in the morning, they always have these chatty people talking and telling jokes and laughing? What is it people can’t wake up? I mean, in the morning, I’d rather just listen to regular news or music. I don’t get it. Anyway. Dangerous is a morning show.
Investment Counselor 17:45
So the guy calls he wants to Detroit. He’s a longtime listener attended many seminars. And he says, Look, your strategy doesn’t work for me. He says I’m retired. I’m 78 years old. I’ve been investing all my life and I just have a bunch of cash. It’s not doing anything. And so I suggested indeed to him and you know, long story short, that was about a month ago, he contracted and closed on his first properties and the rehab phase. And he called me the other day just to kind of check in. He says, I can’t wait to buy more properties in Indiana. I’m so glad that, you know, I chose Indy. So
Jason Hartman 18:14
I mean, you know, that’s a quality city. It’s not a disaster like Detroit. This just doesn’t work. And the other question we’ve talked about on prior shows we always get is, you know, what about California? Look, folks, we’ll be recommending California in the future, I am sure. It’s just gonna get a little bit less expensive because it still doesn’t work. The state has way too many problems. They had a bit all these states that are sort of the more socialistic liberal states. They’re collapsing upon themselves. I mean, look at what a couple decades of that has done to Michigan. It’s a disaster. California, look at what a couple decades of that has done to California total disaster. So let it equalize. Let it hit bottom, then we’ll recommend it. Nobody really knows where the bottom is for sure. But we don’t think we’re there yet. For sure. They said That was a recent article, I should have had it with me to talk about here. But that article that our local market specialist in Indianapolis sent us the other day was showing that Indianapolis was the number one most affordable market in the country based on income to home price ratio. And the worst market in the country was Riverside, California, an area that many investment groups are recommending, just like Detroit, you notice we’re not recommending those. One thing I want to say real quick about the seminar question that came up a couple of times was people were saying, Well, what kind of weather do these cities have? What kind of dangerous Do they have as far as storms and floods and earthquakes? And if people are looking at the markets, good question. They’re all different, right? every area has got something California has wildfires and earthquakes. And I’d say if you’re gonna choose a natural disaster, the worst of all is earthquake, because earthquakes total destruction and insurance for it. is rarely held and very expensive. And there’s a huge likelihood that if there was a giant devastating earthquake, none of the insurance companies could pay the claim no matter what. But no matter where you go, whether it’s Indianapolis, East Coast, West Coast, South north, you’re gonna have something to deal with snow West also hot. Yeah, yeah. So So I would say that’s not a big deal. People just need to get over that. Yeah, they do. Because every area has something
Investment Counselor 20:23
well, and you don’t have to live there. There’s plenty of people that already do. Well.
Jason Hartman 20:28
One thing I get from Californians is, is Houston that’s been a very good market for us and I own properties there. And we’ve done a lot of business in Houston in the past, not doing quite so much now, because we haven’t been sourcing really good inventory when we do recommend it to you. But everybody says about, here’s the whacker, and here’s dinner, just awful, the traffic is bad, etc, etc. It’s sprawling metropolis megalopolis. And you’re right. But look, 6,000,005 6 million people live there. So somebody lives there. Well, it’s a disease that Brian Tracy calls Excuse me. Excuse itis people make excuses to not buy in these places because they hear things and they’re not living there. So good point. Yeah, sounds like paralysis of analysis and other disease
Investment Counselor 21:10
well, and just to wrap this conversation up, and I have to run but exactly what I said laughter yoga again, actually, I am
Jason Hartman 21:18
hot yoga, you have such a hard life,
Investment Counselor 21:20
hey, I have a one hour conference call on the way to hot yoga with the client. So we need more flexible. So what I wanted to just say kind of in closing and you know already sort of alluded to, but I noticed in the seminar that there were several clients that have attended the seminar before or maybe they’d been on my email list. I’ve exchanged emails with them over the last two, three years. And you know, I’m looking at recent, you know, nobody in that seminar had purchased through us anyways. And I just want to say Don’t look back in a year from now and say, I wish I would have purchased when the interest rates were low, and there were so many foreclosure opportunities. I mean, so many of those people I’ve been talking to for so long and they can do it they just for whatever fear factor is involved. They just haven’t pulled the trigger and I hope you don’t look back a year from now and wish you would have taken advantage of these opportunities. Yeah,
Jason Hartman 22:06
don’t be the I coulda shoulda woulda that’s just a very sad place to be in life. If you live in the past you become senile. If you live in the future, as Denis waitley says, You’re on someday I’ll like I apostrophe lol like I will do it today. Make it your Now look, we are not saying that real estate is going to start wildly appreciating anytime soon. We don’t think that we’ve never we’ve never said that. What we do think though is that there is a high risk of interest rate increases and there was just these Treasury auctions are not going very well. And that’s directly tied to mortgage rates, folks, you gotta tie up as many packaged commodities as possible little houses in good areas and diverse markets that are sustainable, self sustainable, and what else are you doing with your money in the meantime? I mean, you know, the stock market, the stock market is becoming very volatile again, I heard a prediction yesterday. The s&p is going to be around seven to 800 from a very reputable guy who I’ve interviewed on the show, and that the Dow was going to 8000 I predicted 6000 we got to 6400. So we got close. Hey, you want to just share that testimonial? Before you go, Sarah, that was kind of interesting. I thought,
Investment Counselor 23:16
well, let’s see. 30% the price. This is on the seminar 30% the price and 3,000% the helpful information of a Robert Kiyosaki seminar. Yeah, and then in parentheses, it says, point 3% the sales pitch maybe less.
Jason Hartman 23:31
Yeah. And what was the who was the star of the show, though?
Investment Counselor 23:34
Oh, the star of the show, of course, puppy.
Jason Hartman 23:37
That’s my dog, puppy, the ROI dog. You’ve heard them in my newsletter. He writes a column in there from time to time and Puppy was there at the Masters weekend and at the creative world boot camp we just had.
Investment Counselor 23:47
Yep. And so Thanks, Matt, for that little comment there. I know you’re a listener of the podcast.
Jason Hartman 23:51
Thanks, man. We’ll see
Investment Counselor 23:52
You, you’re one of you’re already registered for masters weekend in October. So I’ll see you then.
Jason Hartman 23:57
Awesome. Hey, by the way, we have several people registered for masters In October, be sure to take advantage of that early bird pricing. Remember, it does escalate as you go on and time to plan in advance. Next, creating wealth. bootcamp is July 31. That’s a Saturday. I also want to tell our listeners, they can purchase the creating wealth in today’s economy home study course website. And you guys, if you can’t make it to our seminar, you got to buy that because it’s just like being here, but you can listen to on your own time, you can read the materials on your own time, and it’s fantastic. It’s a great way to learn. Yeah, the creating wealth home study course is fantastic. It comes with a complete transcript, the audio files as well as the PDF of the workbook as well the PDF file so you get all three of those. And that’s on our website. Jason Hartman, calm great point already. Already. It looks like we lost Sarah, she’s off to yoga to learn how to become more flexible. Okay. The other thing is, so we’ve got the next bootcamp on the 31st wanted to talk a little bit about one of our clients who just got a fantastic loan modification. And I tell you folks, if you are not asking for your baby allowed, I mean, why should all the banks and the Wall Street firms get the bailouts on your tax dollars and you not take advantage of that get a loan modification on all of your properties? If you can these sometimes take a while. You have to be a little persistent, but it’s well worth it. And I’ll tell you how worth it. It was for one of our clients, check this one out. Her rate was 7.3%. I think it was 7.3 to five, I’m not mistaken. And this was a B of a countrywide Bank of America countrywide loan modification and they lowered the interest rate to 2%. Well, that’s Yeah. 2% for five years, she sent me the documents. I read them 2% for five years, and then listen to this. They extended her loan for 10 years. Wow. They took the maturity date from 2038, which was a 30 year loan originated in 2008. And it’s now not due until 2048. Wow, okay. Her payment is dramatically lower. This property is now super positive cash flow. It has turned a sow sow property into a fantastic deal by nothing else happening, but the loan modification. Thank you for listening to the creating wealth show. This is Jason Hartman your host and we appreciate you following the show. We have many, many episodes, hundreds of episodes and some of the older episodes have been archived and placed in our members section. And that applies to this one. So we include a sample that’s about 25 minutes long. And then for the rest of the show, you can go to our members section at Jason Hartman calm many of the other shows are still in their full length complete version. However, some of the shows like this one are in our member section where you can hear the show in its entirety. And again, you just need to go to Jason Hartman calm and you can get the full show there in the member section plus a whole bunch of other great members benefits and resources when Whether it be documents, forms, contracts, articles, other video and audio content, just a great resource, so be sure to join as a member at Jason hartman.com. And thanks again for listening to the creating wealth show.
Jason Hartman 27:26
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum.
