Jason Hartman shares why he chose real estate for his career of choice and the biggest mistake he made and how it affect his life. He also talks about keeping property managers on a short leash and the top 3 qualities a real estate investor should possess to succeed with the buy and hold strategy. Live events offer investors an opportunity to meet other investors who are successful using the long-term buy and hold strategy, hear about real-life examples of the acquisition process, and learn the tips and tricks that can make an investor’s life easier.
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.
Announcer 0:12
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 independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution from Real estate investors.
Jason Hartman 1:03
Welcome listeners from around the world. And thank you so much for joining me. This is your host Jason Hartman with episode number 705 705. So glad so many of you have stuck with us for a decade. I talked to two listeners, just in the last few days. I don’t know time goes so fast. Was it last week or just in the last couple days? I’m not honestly sure. But it was recently. How’s that? Who said they have been listening to the show for 10 years? A decade of listening to a complete idiot like Jason Hartman. Gosh, how can you do that? Well, no, just kidding. He’s not that dumb. Anyway, we will keep the content coming and help you build great real estate portfolios, and make sure that you avoid as many mistakes on your road to financial freedom as possible. And we’re going to continue that topic. Today, as we’ve got one of our investment counselors you’ve heard from before Oliver Oliver, you there. Hey everyone.
Oliver 2:05
Yes, I am here, Jason and we’re here to help you,
Jason Hartman 2:08
obviously and Oliver is coming to us from San Diego, California, sunny San Diego. And it’s a lot cooler than Phoenix right now. You know, it’s just kind of miserable here right now. I don’t remember it being this bad.
Oliver 2:23
I’ve got to say, Jason, it’s pretty nice here. We’ve got the nice ocean breeze. La Jolla is still calling your name though. No way I’m not going back to those ridiculous oppressive taxes.
Jason Hartman 2:33
And you know, the other thing I really didn’t like about living in San Diego or California in general, is that the crowds everything’s just so high on the hassle factor and I mean, I can imagine you know, like for our listeners who live in LA or New York City or Oh my god, it’s just too hard. You know, I like going to places and getting parking spots and not waiting in line and getting into restaurants without a big weight and in in high end densely packed populated areas resources are scarce. And I like them when resources are a little bit more abundant. So, but yes, the heat is pretty miserable. I’ve gotta admit, the air quality’s miserable you know kind of thing you get in living in Scottsdale or any place like this in the summers you get a little bit of Cabin Fever it’s sort of like how people implement climates back east must feel during the winter. We kind of get it out here to in a different way. I mean, it’s you can go out but it’s it’s not very pleasant outside. It night at night. It’s okay but in the daytime oh my god just you got to stay in.
Oliver 3:37
I’ve got to say I lifted you know, I’m from Canada and I live there you know, just about my entire life. And during the winter, it got really cold as you know, you’re not really up there all that much. But minus 30 minus 40. was pretty typical where I was at, and Kevin fever you definitely get it because you’re indoor the vast majority of the time so you tend to try and head down south whether it be San Diego Caribbean, Mexico just about anywhere to get away from the cold for at least a week or two.
Jason Hartman 4:04
Yeah, that’s true. But I gotta tell you something, there is one benefit to places like that. And if you’ve noticed this, folks, you know, this is a theory that I developed a long time ago, when my mother sent me to upstate New York in ninth grade, which I really hated her for that at the time, but ultimately, it was a good experience. I think it was good for me. She sent me to live with my grandparents in upstate New York and ninth grade. And I went to the same school, she went to Letchworth Central School, which is the school out in the boonies. I lived with my grandparents on a dirt road. And I went to school there and I couldn’t believe how much smarter the kids were in Podunk, rural upstate New York than they were in Los Angeles, California. Okay. And I’ll tell you my theory. The reason they’re smarter is because In in places with inclement weather, people stay inside and they read more stuff, you know, in places like Southern California or Arizona eight months of a two thirds of the year our weather is frickin awesome here I think it’s the best in the world. Not right now but two thirds of the year, really three fourths of the year it’s it’s pretty phenomenal here in places like this where it’s beautiful all the time you’re outside and you’re not reading and learning you’re out socializing, bike riding, doing you know nice cool things but you don’t get a smart you know, if you’re, if you’re stuck back east in the snow sitting at home, you’re gonna read some stuff and develop your brain a little more.
Oliver 5:41
Am I wrong?
Oliver 5:42
I don’t know. I think that Yeah, there’s different ways to be looking at that because as a Canadian, you know, I was out there. I’m skiing. I’m out doing I’m on ski doos. I’m out. doing you know, snowshoeing around. If not, you’re going to like sugar cabins. There’s so much you can do you Even though it’s minus 30
Jason Hartman 6:02
It’s a sugar cabin.
Oliver 6:03
So in French, it’s called like a gingerbread
Jason Hartman 6:06
house.
Oliver 6:08
It is in the woods, but it’s not some mystical place. It’s a little bit different essentially where they go and they, they they tap maple trees and they, yeah, they do the whole sugar process essentially go to this place. And you have you know, a whole maple syrup fest essentially you have a whole breakfast and then you go outside you do these things on on the snow where you get essentially like pure taffy from the from the trees, and they show you the whole process and it’s fun. And you know, you get the whole family out and it’s a it’s a good time.
Jason Hartman 6:37
Okay, cool. Well, we do have to actually talk about real estate investing, which is the show so I won’t debate this forever. But I will I will bet that you were not outdoors as much as people in say Southern California or Scottsdale where I live, you know, or So Cal where I grew up, that’s where the weather’s just really awesome all the time. I bet that wasn’t as often Can I just bet you people in that kind of weather stay inside more but hey, Oliver, I don’t know. Maybe that’s the reason you’re not as smart as the rest of your peers up there.
Oliver 7:09
Oh, you’re gonna punch me well put it this way they haven’t moved down here. Yeah.
Jason Hartman 7:19
They’re either developing their brains or they’re really dumb for staying in that cold weather I you know, I don’t know which But anyway, you kind of you kind of left that opening wide open. I had to take it. So.
Oliver 7:31
Okay, let’s move on.
Jason Hartman 7:32
Okay, grill me, and you can get back at me Go for it.
Oliver 7:36
Maybe we’ll have maybe we’ll have a Jason Hartman Rose one of these days. Well,
Jason Hartman 7:39
you can roast me on a lot of things. So you did a interesting little project. I had no idea you were doing this behind my back nonetheless. But you reached out to a bunch of your clients and started surveying them on all these questions they had and that’s what we want to talk about today. What your investor clients are thinking out there. Hopefully we’ll get time I want to share a story from one of your clients, you know who I’m talking about. I’m not gonna mention his name that we met with. And he’s, I’m sure listening at Starbucks a couple weeks ago, a few weeks ago, actually, he’s working on buying 23 properties from us now. And I just want to talk about that Chicago gun control thing, because I thought it was so interesting. Go, tell us what you did. And what questions did the investors come up with?
Oliver 8:27
Alright, so I reached out to a number of my, my clients, and I’ve got some really, you know, some really smart people. And they’ve got some really specific client questions, but some of them also, are those
Jason Hartman 8:39
smart people from cold climates,
Oliver 8:41
you know, they’re from all over the place. I do not.
Oliver 8:46
I don’t I don’t look at it that way. I essentially see that we’re all incredibly intelligent just to start with, by the by the fact that he listened.
Jason Hartman 8:54
Oh, to add to my earlier comments, right, and you Of course, nothing is always true. They’re just sort of trends. But listen, the people that live in the warmer climates, maybe they don’t study and read as much, but they have better bodies because they’re working out and they’re, they’re showing off their skin a little bit more, and they’re probably happier. Okay, so, advantages and disadvantages to each there. There are certainly lots of studies that show living in bright sunny climates affect moods and they make you happier. So there’s give and take for everything.
Oliver 9:32
Does that mean that if you move down here from the cooler climates your IQ is going down? Is that the correlation here? Well,
Jason Hartman 9:39
I don’t know if your I agree. I guess maybe you’re getting a little lazy intellectually, but you’re happier and you got a better body. How’s that?
Oliver 9:48
I think that’s another Jason Hartman theory. book, but
Jason Hartman 9:53
I have a feeling I’m gonna get some flack on that. Someone’s gonna say, Well, isn’t that like racist or something?
Oliver 10:00
No, it’s not.
Oliver 10:02
God, I swear you can’t
Jason Hartman 10:03
say anything in America anymore. It’s ridiculous. Well, okay.
Oliver 10:08
Jason, if you were running for president, what would be your slogan?
Jason Hartman 10:12
My slogan would be I’ve offended everybody by now. So I’ll never get elected.
Oliver 10:20
Well, I still think you would get some votes.
Jason Hartman 10:22
My I listen, I can’t run for president because to run for president. You have to be well, not to run but to be president. You have to be born in the United States. And I wasn’t born here overweight. Neither was Obama. Oh, here we go with another tangent. Oliver, get to these questions.
Oliver 10:42
All right, back to real estate here. Alright, so to start off, Jason, why did you start in real estate I mean, you had so many different avenues you could have gone through when you’re studying in California and Southern California where he grew up in Newport, so many different things going on at that period of time. Why real estate State
Jason Hartman 11:00
I just when I saw that infomercial at age 16, and after growing up poor and I grew up in Los Angeles, by the way, I lived as an adult in Orange County but grew up in LA, when I saw that infomercial for Robert Allen, the real estate guru who has questionable stuff going on, you know, he’s typical real estate guru guy. But you know, that really inspired me and got me very interested in this real estate stuff in it. It seemed like it was very accessible even to me, the poor kid from LA, and I got his book, I read three chapters, I put it down, my mom picked it up, read the rest, got really interested. And she said to me, You know, when I was 18, I was about to graduate from high school. There’s this real estate seminar in Anaheim. Why don’t you go and I went, I rounded up nine of my buddies from high school. They were all there Friday night, and then only one of them was left by Saturday morning, everybody else went to the beach. And by Sunday afternoon, when the thing was wrapping up, I was the only one that stayed the whole weekend, because I just wanted it more than they did. They were more comfortable than I was. They had better lives. They had parents with more money. You know, I, I wanted to have that. So that’s why I was I think I was just more motivated. And, and that’s one of the things that I think when you’re less comfortable, you’re more motivated. And so that’s why luxury can kind of be the wall to apathy. So we always have to guard against that in our lives. Because luxury and comfort make us complacent. Generally, as humans, you know, we won’t try as hard. And so sometimes intentionally making ourselves uncomfortable, I think that can can motivate us. So something to think about but but that’s that’s really what got me interested in it. And my first year of college when I was 19 years old, I got my real estate license just because I wanted to learn the basics. And then when I was 20 years old, I bought my first rental property and I made money on it and then I bought another one and another one and then kept buying properties. And I just love it. I think it’s the most historically proven asset class in the entire world, as you’ve heard me say before.
Oliver 13:07
Yes, quite a few times, but Okay, so you know what that said, other than the, you know, one of the answers, which would likely be I would start I would have started earlier, if you could go back in time and give yourself one piece of wisdom or advice,
Jason Hartman 13:24
what would what would it be, it would be to buy properties that had cash flow rather than properties that were speculative. See, I called myself an investor for all those years that I was buying properties in Orange County, California. And those properties really looking back never made much sense. Even though I made money on a lot of them. You know, they just really didn’t make sense because the cash flow never worked. They never made sense as an investment the way I view them today, as a much more conservative investor now and a much more prudent investor today, but remember commandment now Five, Thou shalt not gamble. The property must make sense the day you buy it or you don’t buy it. And that’s the
Oliver 14:07
key. I couldn’t agree more with you, Jason. Just give an example. I met someone the other day, and he bought in San Diego in the northern county and Carlsbad area, he bought a house for about $475,000. And he told me, let me
Jason Hartman 14:21
guess it rents for rents for 2000 a month.
Oliver 14:25
He’s got about 20 $500 a month for it. That’s That’s pretty good. The big thing he told me is that, you know, it’s actually worth 500 on paper, like, well, that’s fantastic. How much would you put down? He said, I put down about $250,000. I said, Are you crazy? So we got to talking about this. I said, Why are you doing this? So we’ll listen all over in 10 years from now, it’s gonna go up to 900. I said, Are you kidding me? I really just couldn’t really believe what I was hearing.
Jason Hartman 14:54
He might be right. It might go up to 900,000, but it might not. And that’s the problem. If you just buy for yield, if you just buy for cash flow, which, by the way, in those of you who’ve been to my live events, you hear me dive into this much more deeply. Cash Flow doesn’t necessarily mean you’re buying for positive cash flow or a certain amount of cash flow per month, because that’s all dependent on how much money you put down on the property and it gets all murky. You’re buying for rent to value ratio, that’s the proper way to analyze an investment and the rent to value ratio on that $500,000 house even though he got a bargain on it potentially. Maybe he’s right, maybe got it under market, which Hey, congratulations. It’s renting for a point five RV ratio, when you’re your target is right around a 1%. It’s double that. So literally, here’s how silly we get as investors and Listen, I’ve been guilty of this too. So I’m not just saying other people doing this are dumb. Well, I guess be out there they are dumber I’ve been done to put it that way. Okay. But the concept when you hear these people saying, Well, I don’t want to buy anything that’s far away from me, I want to buy something close to me. So this guy you’re talking to probably lived in San Diego, I assume. And he bought a property in San Diego as an investment. Right?
Oliver 16:16
Is that true? By the way? It’s actually an odd he’s actually he’s from lived in New York, and then came down here and then saw this and hoping that it’s going to be doubling. But who knows. Maybe that goes to your words, your theory, Jason, and about warmer and cooler climates. I don’t know. Who knows?
Jason Hartman 16:34
I don’t know. But let’s not go back into that one. It’ll take too long to discuss that and I, but here’s the thing. Think about it. Think about if you live in San Diego or LA or Orange County, the cost of buying a property that is near you physically, okay, is basically in that equation and that example, you just share it all over. It’s costing you 20 $500 a month. month. Because if you spend $500,000, on any property you see on Jason hartman.com, you’re going to get around $5,000 a month for it, versus a $500,000 property where you have no diversification, you just have one rather than five, okay? And you only get 2500 a month for it. That’s basically a cost of 20 $500 per month for you to buy a property that’s near you. Okay. If you, you know, in the example of you live in Southern California and that properties in Southern California, that’s what a lot of people do. So, the question is, how bad could it go for you to not lose 20 $500 a month. So say for example, you buy these five properties for $500,000, the same amount of money invested. And you have properties now in two or three diverse, prudent cash flow or entered good rental value ratio markets, right? And in that case, you’re you’re basically gaining 20 $500 per month and say for example, every property, you have a property manager who’s a crook, and they’re ripping you off to the tune of 100 bucks a month. They’re making up some fake repair or overcharging you for something to the tune of 100 bucks every every single month. You’re gonna lose $500 You’re still $2,000 ahead. Do you see how Yes, you things can go wrong? Yes, property managers can stick you they can nickel and dime you they can rip you off. But the amount of damage is so much less than the amount of damage that people don’t even see because you can’t hear the dogs that don’t bark when you’re investing in that Southern California market for example, or that Miami market. Good or that Boston Market or New York or, or, you know, whatever you get the idea, just that expensive market that makes no sense. So that’s the point I want to make to people. So essentially,
Oliver 19:11
look for rent to value ratios that makes sense. We look for that at least that 1% as being one of the big criteria is here.
Jason Hartman 19:21
Yeah, yeah, get get the have the target be that 1% number per 1% of the value per month. 500,000 brings you 5000 per month. Okay, that’s the deal. All right. Here’s one of our questions from from one of my clients named Blake is asking more specifically about property management. And when you have a tenant in place, and essentially you’re trying to come to an agreement with the property managers, and you tell them hey, we’ve, if any type of repairs over X amount, for example, $250 I want to know about this. Contact me before, don’t do not go out there. So what Blake is saying you He wants to authorize that repair. And I would say, absolutely look at folks. And we’ve talked about this on past podcasts. This is a great question Oliver. And Blake, thank you for saying that, Oliver, because I’m glad you brought this up. And I haven’t talked about in a little while. But certainly we have on past episodes, there are two types of discretion your property manager has, okay. And remember, a lot of people self manage their properties, and we can teach you how to do that. That’s part of the content in the Jq or Jason Hartman University members area. But the deal is that the property manager has discretion and they need this discretion to fix anything to prevent a an emergency from becoming worse. So say for example, a pipe breaks and they need to call a plumber on an emergency basis to get them out there to stop the leak. Okay, your property manager needs discretion to do that. Okay. But what they often asked for that they that is not required is a bunch of discretion for either monthly or per incident type of repairs. And there’s a difference between monthly and per incident. Okay, a
Oliver 21:19
big difference.
Jason Hartman 21:21
So the first thing I want you to do is when you get that property management contract, I want you to read it and understand it. Look, folks, you have got to be a good manager of your managers, that is your responsibility, and we’ll help you do it. But ultimately, it’s your property. So this falls on you, you got to read your contracts. And the thing I want you to consider negotiating in those contracts, is I want you to say to the manager, look, I am not going to agree to a $250. Or even worse a three or $400 per incident, not per month. By the way, a lot of times it’s per incident, discretionary budget for you the manager, because I’m really reachable. And you can just email me or you can send me a text or smoke signals telephone calls. voxer would be the best way to communicate ever invented in all human history. Make your manager use voxer. Because it’s the best way to communicate ever. You can do that. And they can reach out to you and say, hey, look, something broke, we need to fix it. It looks like it’s gonna cost $200. And then you can say yes or no or get another quote. And I want you to make the manager send you a written quote, if it’s, you know, if it’s a more expensive item, not if it’s 50 bucks, don’t, you know, don’t don’t worry about that. But you should have discretion, and I think you should cap these discretionary items for the manager to maybe $200 per month. did not say per incident, I said per month, because during a month, they could have two incidents. And suddenly there’s $400 from your rent is gone at their discretion. And you got to watch this Don’t, don’t give them that much. I mean, keep them on a short leash as the saying goes. And the responsibility you have if you want to make their leash short is you’ve got to be available. And you’ve got to respond quickly to communications about stuff like this. I personally, I make mine $100 per month. I don’t want to see anything more than $100 per month, discretionary coming out of my rent check, unless they contacted me and I approved it. And if it’s a big item, tell them you want three written quotes in here. Let me tell you one more thing about written quotes or written estimates. I call them quotes. Because if you call them an estimate, that means it’s just an estimate. I want to quote Okay, if I can get it But you don’t want it on the property managers letterhead, or just in an email from them saying, Hey, we sent the vendor out there. And they said it would cost $325. Well, who’s the vendor, I want this quote from the vendor on their document. And their document, of course, would have their name at the top, you know, Joe’s Air Conditioning Repair, and it would have their address and their phone number. And you could just call Joe up and say, Hey, Joe, can you do any better on this? Part of this is really a matter of setting the tone with your manager and making them understand that you are paying attention. And once you kind of train them to that you don’t have to do it forever. Usually, you just have to do it at the outset. Or the first time there’s an issue. Make sure they know you are and you are a an astute, aware investor who’s paying attention. Who’s not going to get nickeled and dimed. Okay, exactly. why this is such a huge topic as well as because investors out there, we’re really here to help you, we want to make sure that your investments are performing well. We also want to ensure that your cash went on your properties that you are that your funds aren’t being gobbled up by all these little expenses here and there. So now, Jason, one last thought on this over here is what happens when your managers just goes out there? And if you’ve got $100 cap per month, if they’re out there spending two $300. What would be your recommendations on how to deal with that, other than just changing property management companies? Well, first of all, if it’s in the contract, they can’t do it. Okay? Because they have to follow that contract. I mean, look, they don’t have to people can just ignore contracts, but that’s not gonna happen too much. Okay. And this is one of the other things is that we provide a lot of leverage over these managers because we’ve sent them a lot of business. So look, if you have a problem with your manager, I mean, not if it’s a little thing, okay. But if it’s an ongoing thing or it’s a big thing, contact your investment counselor at at our company, and they’ll help you with it. I mean, all over Look, you’ve helped clients that bought a property from you a long time ago. And they reached out to you and they said, Hey, you know, I got this problem and, and you know, sometimes you just cc them on an email, and Oliver or Sarah or Carrie or Fernando or whomever, whichever investment counselor can just chime in and say, Hey, I don’t think this is right. And when they see that there’s some oversight going on. And especially when that’s oversight from us, who gives them a lot of business. It matters to them, and they’re going to take better care of you.
Oliver 26:40
Exactly. I can’t say how right you are there. Whenever there are issues that come up that we need to get involved with. We are there for you. Were there for you to help you the clients. Yep, good stuff. Okay, next question. Now to move on to our next question over here. This is maybe a bit more of a personal one. I’m not sure if it relates to real estate it probably does but what would you say is the biggest mistake you made? And how did it impact your life? Oh my God, we
Jason Hartman 27:07
don’t have enough time for mistakes. There are too many, too many to list. I don’t know even where to go with that one, but I bought a jet a jet plane. Yeah, so you should you should have known me then. No, I bought a jet. But I never took delivery of a jet because during the Great Recession, the company making the jet Eclipse aircraft went out of business. They went bankrupt. And it’s really what I talk about when I talk about pooled money assets or pooled money investments. When when you’re investing in a stock a bond or a mutual fund. This is really kind of the same thing. Because what happened in that Eclipse deal is the the executives basically skimmed a bunch of money off the top okay. I mean, look, I believe they did and other people believe they did. It’s, I don’t know that it was ever litigated or proven. But, you know, certainly they were paying themselves, they took salaries, they probably took bonuses. A lot of investors were very upset about it. Right. And and when I say investors, I say that because a bunch of people, a couple thousand people put down big deposits on those planes. And then the company went BK and never delivered the planes. And so that’s what happened to me and I lost a bunch of money.
Oliver 28:31
What would you call your jet?
Jason Hartman 28:33
Oh, I didn’t have a name for it, but never thought about that. We I didn’t get that close to delivery, unfortunately. But yeah, so so you know, the old The old saying if it flies, floats or the other F word. It’s better to rent than buy.
Oliver 28:50
That’s what people say.
Jason Hartman 28:51
And I also had a big yacht too. I had a 48 foot boat. And that was a huge waste of money. So you know, just rent these things. You know?
Oliver 29:00
Have them on demand don’t buy you don’t need just like we did at the venture Alliance back in San Diego, we rented this huge yacht that was,
Jason Hartman 29:07
you know what you just get on and off of it, you don’t have to clean it, insure it, maintain it. You don’t have to deal with anything, it’s so much easier. So just rent stuff, sharing economy, you know, assume we’re not even gonna own cars, we’re just gonna do sharing economy type on demand, transportation, it’s just, it’s kind of crazy to own stuff in some ways. The point is, you want the usability of stuff, and you want to be able to use it and control it or not necessarily actually own it yourself, because with ownership comes a bunch of responsibility. Now, of course, I don’t mean that for investment properties, but in a way, you could argue all over, that you don’t really even own your properties if they’re leveraged because you only own maybe 20% and the bank owns 80%. Now they don’t really, um, in in the real sense, but they’ve put up 80% of the money. And you control 100% of the asset. It’s a beautiful, beautiful thing. So in a way, it’s, it’s kind of like having an option on the other 80% that you didn’t even pay for, you know, they they loaned the money on it. And guess what? you outsource the responsibility of paying that to a tenant, you, you outsource the debt to the tenant. It’s a beautiful, beautiful, incredible equation.
Oliver 30:24
It definitely is. And that’s why we are in it.
Jason Hartman 30:28
We love it.
Oliver 30:29
Here’s another one for you, based off, you know, we, you’ve been doing this for about 12 years now. And obviously, you’ve been able to help a lot of people on the way. And we’ve been able to hear from these great clients, you know, many times on the podcast or at our events when they come and you know, obviously what I’ve noticed is that our greatest reviews always come from our clients. But you’ve been able to impact so many people’s different lives across this time. Based on everything you’ve done so far. What would you say that you are most proud of?
Jason Hartman 30:58
You know, I’m really proud proud of our business model and our team, our people. I think we’ve just got a fantastic team of people, of course, you included our other investment counselors, and our other staff members who’ve been with us for many, many years. It’s just, it’s the type of environment where people and I know this sounds totally trite. And if you don’t know us, and you’ve never done business with us, probably sounds like total BS, okay? But you guys really care about the clients, and you go to bat for the clients. And I just love that. I remember years ago during the Great Recession when Sarah came to me one day and, and she and she was having a hard time, you know, things weren’t going very well. And she was just kind of getting started in the business and, and she came to me one day when we had this big expensive overpriced office back then, you know, Class A office building in Orange County. She came to me and she said, Look, you know, I really like this because I feel like we’re really helping people. We’re really, you know, we’re really doing something good. And I thought, that’s when I knew I had a really good person, because she wasn’t just in it to make a sale. You know, she really had to believe in something and a lot of people are doing things they believe in, but a lot of people just aren’t, you know. So it goes both ways. And I just love our team. And I love that. I don’t feel like I have to manage all of you, you you self manage, you really do, you know, I don’t have to look over anybody’s shoulder and question their ethics, or worry about my reputation being soiled by one of my team members, because I’ve got really good team members that really care and they’re always going to do the right thing. Now, it hasn’t always been that way. We’ve certainly had a few bad apples over the years and I will mention one not by name. But maybe six months ago, I was talking to one of our clients. They had an investment counselor from the past. In our company, and they said, I think all he cared about was himself. And but those people don’t last at our company, you know, because they’re just the quick buck mindset just doesn’t work.
Oliver 33:13
Now, I definitely know that if anything, Real Estate’s definitely more for the long term patient. One, most definitely.
Jason Hartman 33:18
So I’m really proud of our business model. I’m really proud that we’re helping people self direct their financial future. I’m really proud that we’re taking money away from the crooks on Wall Street, the modern version of organized crime, and I’m really proud of our team. And and, you know, I guess I should add that I’m really proud of our clients too. We’ve got so many fantastic clients that look, folks, if you have not been to one of our live events, and by the way, we have one coming up. And Oliver, maybe you can talk about that because you’re helping us plan it. I recruited you to do that, which I
Oliver 33:54
think was a little bit better decided. I had
Jason Hartman 33:57
to give you I had to I had to bribe you a little bit. But, but if you haven’t been to one of our live events and you haven’t met our other clients, and met our team members, but really most importantly, our other clients, that will be an event, you know, meet them. They have no agenda. They have no stake in saying anything good about us, right? But you’re going to come and you’re going to hear good things. You’re going to see real people following our plan. Real people, please come to our live events. Let me tell you something. With the prices, we charge our live events, we if we’re lucky, we break even, okay, we do not make money on live events. All right. They are generally a loss leader for us. We do them because we want to have that high touch approach. So that several times a year we’ll have an event where you can come and meet us and you can meet our clients. And you can see that this is real. This is not some pie in the sky. infomercial I was just reading on one of these real estate forums today about someone who got burned, because they bought this $41,000 program from this real estate guru. And they got nothing for it, that person could have purchased two properties with that money. You know, and it’s just so sad.
Oliver 35:19
That’s a, unfortunately a theme that appears to be going on over and over and over again in all these different events all over the countries all over the world. All over the world. There you go. And the biggest thing is, you know, sometimes I speak with clients that are brand new, or they listen to the podcast, and they’re like, hey, Oliver, you know, I really want to get involved, but I’m really hesitant. I mean, I have either purchased or lost money in buying into some program out there. And what I always tell them is the biggest benefit that you can do is come to an event here, you will be able to meet people that may have one to maybe 2030 or 40 properties that have done it. They they’re just you know, normal people. They’re great people. They’re all But it just goes to show you that it really can be done. And it really is possible. So just come to an event for those of you that, that I know you, you know, my voice come to an event I’m talking to you specifically first time investors come to this.
Jason Hartman 36:16
Absolutely, yeah, absolutely. Okay, so let’s talk to them about our event real quickly. And then maybe we’ve got room for one final question after that. So this event is in Phoenix, and we’re just getting the hotel all synched up. So we’re gonna announce the the actual venue soon, but we’ll have a very nice event. It’s two days. It’s something where you’re going to learn about how to use software to evaluate your real estate deals, and track your portfolio and help manage your investments really valuable. It’s a totally new event for us. We’ve never done an event like this before. It’s it’s a completely new concept and events for us, of course, For those of you who have been following us for a while, maybe been to many events over the years and we have a lot of repeat people coming to our events, you know, that we have are creating wealth event, you know that we have our Jason Hartman University event. And you know that we have our meet the Masters event just once a year. Our next meet the Masters I think will be our 18th meet the masters. Wow. Why? Well, because we used to do it twice a year. Okay, now it’s too hard to plan. So we only do it once a year, because a lot of work. That’ll be right around January. But this event will be right after our venture Alliance event. And so it’ll be September 10, and 11th. In Phoenix, September 10, and 11th. In Phoenix, it’s just going to be an awesome event over anything else you want to say about that.
Oliver 37:43
It’s gonna be great. It’s gonna be fun, you’re gonna be able to learn, we’re gonna have a bit of a different format. This time we’re going to do a bit of a q&a panel, we’re actually going to walk you through a typical buying procedure, I guess you can say from Australia. apprentices for acquisition. Yeah, exactly. And on the panel, what’s really going to be helpful to is we’re going to have the the property managers as well as the providers. They’re the ones that are actually doing the rehabs on these homes, you’re able to then ask them a bunch of questions that that may have come up on some of your properties that you want to know, you know, how would this property manager that may be a little different in a different market handle this? Or what would they have done for me that maybe the other one ones,
Jason Hartman 38:23
let me tell the listeners something about this event. So one of the things we are attempting to do with this event is take a little bit of the weight off our meet the Masters event, because I think last time when we did meet the Masters in La Jolla, San Diego, California area, last January, we had we had too many speakers and it was too rushed. So we’re planning to have four local market specialists at this event. And we’re gonna we’re gonna evaluate for markets. We’re going to do it mostly in a panelist format, so rather than letting them get up there and speak and their speaking ability is sometimes good, and sometimes it’s bad. Okay. Elizabeth, one of our wonderful clients who’s a venture Alliance member, and helping us plan our Seattle event for venture Alliance, which is the weekend before this, by the way, she said, Jason, let me come out and train your speakers please. And, and the other speakers are great, but the local market specialists are not speakers, okay.
Oliver 39:25
I can’t wait for Elizabeth to do this. I guess he’s gonna be awesome.
Jason Hartman 39:28
But we’re gonna do this as a as a as mostly panel discussions. And we’re going to have property managers, their local market specialists who acquire properties that you can buy, so you’re gonna have it’s like, it’s kind of a combo software event and Buying Event. And you know, like best practices in acquiring investment properties event. So income property software plus Buying Event, it’s at Jason hartman.com. Check it out early bird price right now. 297 per person, which is going to go up as the event gets Closer. So register immediately at Jason Hartman comm slash events, Jason hartman.com slash events. I think you’ll really enjoy that. Oliver, one final quick question.
Oliver 40:13
All right, one final quick question. I’ll keep it short. We can leave you on for another time. It’s what is your most prized possession and why?
Jason Hartman 40:19
Well, that would have to be my dog Coco. But But dogs should not be considered property. You know it because they are like human beings. But anyway, that’s the way the court system looks at them. But one state court I read an article last week, they actually ruled that dogs are not property. They’re, they’re sentient beings. Of course they are. They’re totally emotional and incredible creatures. But yeah, so if it had to be a possession, since it’s considered a possession, it would be my dog.
Oliver 40:50
All right. Do we have time for one more?
Jason Hartman 40:52
Well, I have to make one announcement about that. Coco will be at the event in Phoenix Coco Hartman, my dog So you’ll definitely want to come just to see
Oliver 41:02
for now amazing. We all love cocoa. Awesome. Okay, what? One more go. All right, one more here. What do you think the top three most important qualities are real estate investors should possess or develop to become and remain successful when utilizing the buy and hold strategy,
Jason Hartman 41:19
really internalizing the 10 commandments, my 10 commandments of successful investing, number one, number two, being willing to delay gratification for something bigger in the future and having the patience to do that. And number three, which kind of dovetails into that that one is managing your emotions, you will hit bumps in the road, there will be times when this is not easy. There will be times when you think, gosh, is this really working? Do I want to give up you’ve got to understand how to keep score. So many investors are winning. Yet sometimes when something bad happens like you got to replace an air conditioner. Or a tree branch falls on the roof or whatever you have a bad tenant you have to evict. So many investors are winning when they think they’re losing. And they think they’re losing just because they don’t know how to keep score. They don’t know how to do the math. They don’t know how to properly analyze their investment, and all of its beautiful multi dimensional characteristics. So that’s one of the things frankly, you’re going to learn at the event we just mentioned on September 10, and 11th, in Phoenix, so come to that.
Oliver 42:32
Exactly. And for those of you new listeners for the 10 commandments, you can find those that our websites had Jason.
Jason Hartman 42:38
Yeah, absolutely. Good stuff. Hey, Oliver, thanks for these questions. And I know you’ve got more of them. We’ll do them on a future
Oliver 42:44
podcast. Okay. Fantastic. Great speaking with you, Jason. All right. Take care. Bye, bye.
Announcer 42:50
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be.
Announcer 42:57
Really now. How is that possible at all?
Announcer 43:00
Wall Street believes that real estate investors are dangerous to their schemes. Because the dirty truth about income property is that it actually works in real life.
Announcer 43:10
I know I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead
Announcer 43:22
stocks and other non direct traded assets or a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
Announcer 43:33
That’s because the corporate crooks running the stock and bond investing game we’ll always see to it that they win. This means unless you’re one of them, you will not win.
Announcer 43:43
And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing.
Announcer 43:58
Yep. And that’s why Jason offers over one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.
Announcer 44:12
We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing, and achieve exceptional returns safely and securely.
Announcer 44:23
I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.
Announcer 44:31
And this set of advanced strategies for wealth creation is being offered for only $197 to get your creating wealth encyclopedia book one complete with over 20 hours of audio go to Jason Hartman comm forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.
Jason Hartman 44:47
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 properties investor network, Inc, exclusively.
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.
To begin the show, Jason Hartman and Oliver celebrate clients who have purchased several income properties and those who use their self-directed IRA’s to make the most of their retirement accounts. Jason also talks about how real estate investors should manage their properties or manage their property managers and also provides tips to make your properties bulletproof from a rental standpoint.
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.
Announcer 0:13
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 independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution. For real estate investors,
Jason Hartman 1:03
Welcome listeners from around the world. This is your host Jason Hartman coming to you from a very stormy and rainy Scottsdale, Arizona today. God is putting on a big show for us. You know as much as nobody really loves summer in Arizona. I gotta tell you I love monsoon season because we have some of the coolest swankiest storms ever. And the cloud formations are just awesome. I’m just a huge fan of weather. I don’t know if anybody else out there agrees with me. But I love weather phenomena. It’s just it’s just really interesting to me for some odd reason. So if you didn’t in the last 710 episodes, know that about your host now, you know. Anyway, this is your host Jason Hartman episode number 711. And I’ve got all of her here with me coming to you from San Diego, California. Oliver, how you doing?
Oliver 1:57
Hey everyone doing great. Thank you, Jason. I’ve got to say there’s no monsoons going on here in San Diego.
Jason Hartman 2:02
Boring boring boring you all you have there is high taxes and crowded places. Well, you do have the ocean.
Oliver 2:10
You can add in the beautiful beaches, the oceans and everything that comes along with that.
Jason Hartman 2:14
I’ve been there done that, but okay, I do agree with your lesson when I lived in La Jolla for for my seven month stint to get my tax break. I would go and try to watch the sunset every day I could. And they were they were beautiful many times although, interestingly, Arizona has is considered to have the most beautiful sunsets. And I don’t know exactly why that is. I read an article about it, but can’t remember. It’s just really interesting sunsets here in the desert. You know, the desert has interesting skies. You get that once in a while in California. And when you do, it’s spectacular because it’s over the ocean especially but it’s really interesting. So yeah, we were getting some water here and we need it badly. In fact, water You know, there are a few documentaries about this that are interesting. And as you probably know About your host folks, I love documentaries. I’m a Netflix documentary addict. I’m constantly watching them. There’s some interesting ones about water and you know, water may well be the next gold. They call it blue gold. It’s a big deal. And obviously, obviously, the entire human race needs it. But the problem is, if you’re thinking about, well, should I invest in water? The problem is you have to invest in a company that has something to do with it. And you leave yourself susceptible to violating commandment number three, which is thou shalt maintain control. And the three primary problems there are, you might be investing with a crook, or you might be investing with an idiot. And assuming they’re honest and competent, they take a huge management fee off the top for managing the deal. So maintain control, be an income property investor, and that is how you can best control your financial future. Don’t relinquish control to somebody Be a direct investor. And speaking of which, before we get into some of the meteor content of today’s show, come to our event upcoming in Phoenix. Brittany is going to absolutely hit me over the head if I forget to announce that we have a raffle, folks, we have a nice little raffle. And we’ve done this before on prior events, we’ll give away a few free tickets. And all you need to do is go and enter. It’s super easy as go to Jason hartman.com. Slash raffle. Jason hartman.com slash raffle and just enter in a whole bunch of you have already purchased tickets. If you’ve already purchased a ticket and you win, we will refund your money or did I say refund without? I think I did. It’s refund with a D Thank you make another cup of coffee still this morning. But we will refund your money. And if you haven’t purchased a ticket yet, you might just win. So Jason Hartman dot com slash raffle it takes a whopping 30 seconds to enter. And for a bonus entry, if you tweet your entry on your Twitter account, you’ll get two entries. So there you go, pretty cool. Jason hartman.com slash raffle. And we’ve got to announce and congratulate some of our direct investors who are not relinquishing control of their financial future, to some guy that went to a great school, who’s wearing a nice suit, in a beautiful class, a office building. That, by the way, is probably owned by an insurance company. Just so you know, insurance companies love to invest in real estate. That’s their primary investment, I’d say. And so you’re not going to give your money to that guy. Were in the nice suit at Merrill Lynch or Ameriprise or Charles Schwab or whatever now beautiful office, you are a direct investor, you’re going to be in control, and we help you maintain control in a better, more systematized way. So, Mary Ellen and guy. Now these are just Olivers clients. We’ve got several other investment counselors, as you know, but we’re just talking about all of our clients behind their back on the show today. They’re gonna they’re gonna hear this pretty soon. I think they’ll hear it. I bet they will. They’re regular listeners. So congratulations to Mary Ellen and guy purchased nine properties. Tell us about them. Oliver. Yeah, they purchased nine properties from us. They started with us only about nine months ago. They came on nine properties and nine months you
Oliver 6:32
got it, they came.
Jason Hartman 6:34
Hey, let me interrupt you for a moment, Oliver. Look at folks think about it. You can have a baby in nine months. And that kid will cost you about $250,000. Or you could buy nine properties and that’ll probably cost you about $250,000. So you decide, but if you have a kid by those nine properties, because hey, that’ll pay for their college education. It’ll you know It’ll be a great you know, create a legacy here. We’re not doing this stuff necessarily just for ourselves, although we’re gonna get, you know, a comfortable life out of it. We’re doing it to create a legacy as well. So,
Oliver 7:12
yeah, go ahead, it definitely will create a bit more of a legacy for you. And I think this is probably the only podcast online where we’ll hear the comparison between nine months of having a baby or nine months and birthing our own a nine houses.
Jason Hartman 7:26
Yeah, well, you know, we make odd comparisons. We take the financial world and bring it into the real world a twist on it.
Oliver 7:33
Yeah, put a foot put a funny twist. So Mary Ellen and guy started with us about nine months ago, they came on to our Florida property property tour back in I think that was September of last year.
Jason Hartman 7:45
And we were in Orlando. Yeah. Yeah. They started there. Listen, listen to the podcast, went on to the property tour bought three homes right away. Then they came to our meet the Masters event in January in San Diego. Got another Actually, shortly after the event, they actually went out to Memphis took a tour there went out to Little Rock, bought another bunch of properties out that way. And now they’re actually they’ve already purchased their tickets amongst one of the first ones to buy their tickets for our next Phoenix event. So this just goes to show how been involved and how really getting to some of these events and meeting our providers meeting us. getting in contact with some of our other investors really does make a difference in terms of giving you momentum and moving forward. Yeah. And you know what, that’s why I would say, listeners, you’ve got to come to some live events come and there is just a whole nother dimension that occurs if you’re just sitting back listening to the podcast, hey, we appreciate you listening. But come to live events. We have had people come from Australia, New Zealand, Japan, England, in different places in Europe, Canada. I got kicked out Give me a break. That’s not that far away. Hey, listen, we have people at this event that we are having in Phoenix. We have people coming from, yep, Phoenix to. So wherever you live, get to some of our live events really meet other people, other clients of ours. So you know that we are the real deal. We’ve been doing this a long time. We’ve got thousands of clients, and we’re going to take good care of our clients, as always, and by the way, we’re going to talk about a little rent back challenge here or not rent back but rent ready challenge. And how, you know, in this case, we can’t really take credit, the client kind of took care of themselves, but I want to tell you all about it. So you can, you can understand how to do it for yourself to, you know, just meet our clients, shake hands with people have some private conversations with them. You know, of course, you’ll hear us up there giving the presentation and so forth teaching you about going through the mechanics of property investing, teaching you about using software to evaluate and manage your investments, all of these methods practices as a real estate investor. And by the way, this is September 10, and 11th. Coming right up just a little more than a month away. We’ll do all that for you. But the one of the big benefits is you’re going to get to talk over lunch or at the break or, you know, whenever to other people who are actually doing it investing with us. And you know, we are trying to be just as transparent as we possibly can. We want you to hear the good, the bad and the ugly. This is not perfect, but it’s just better than everything else, at least everything else I know of income property, the most historically proven asset class in the world. So yeah, come to a live event. And I think also, like Oliver says, For your own motivation, it will give you a lot of motivation. When you see other people doing it. You get to meet them in person and hear their stories that will really add a whole new dimension to your investing. So
Oliver 10:57
Exactly. hear their stories, and also hear about Some of their strategies that they’re implementing, I mean, sometimes I’ve got, you know, a couple husbands working full time, the wife is at home and she’s taking care of the kids. And granted, that is a full time job in itself.
Jason Hartman 11:13
That’s a more than full time job.
Oliver 11:17
I’ve noticed a we’re coming up with strategies on how to get them qualified in order to start putting properties in their names. So that way, both individuals can actually acquire their full nine or 10 properties conventionally financed in their with the reason you say nine is because they might already own a home. Exactly.
Jason Hartman 11:33
So 10 each exactly 10 H, but yeah, yeah, absolutely. And so that there’s some good strategies and you will learn we learned tons of stuff from our clients, and we try to share some of it here on the podcast, of course, and definitely at our live events too, because we have our clients share and talk to the audience and and also just through their questions, so yeah, yeah, good stuff. Okay. So they’re coming to the Phoenix event. So you can meet Mary Ellen and guy there. They’ve got Four properties in Memphis, one in Little Rock, and one in Mississippi as well and good stuff. Okay, so what about Scott, all of our eight properties in the last one and a half months, Scott, congratulations. You are jamming eight properties in one and a half months. Wow.
Oliver 12:17
And a month and a half. That is huge. It’s a ees purchase a lot of properties with us here in a very short period of time. He really he’s a he’s living in the Birmingham area. He’s already got a couple of rentals there. He heard about us, went on a quick property tour and went ahead and purchase four properties at on that property tour alone. Fantastic. And then we decided to start diversifying a bit. He picked up another property in our new port, Richey area, and then another two in Memphis.
Jason Hartman 12:46
Fantastic. Good, good stuff, Scott. And then we’ve got Tomas, who I met with with you just about a mile a month, month and a half ago and, you know, I wonder if he would mind if I share that. Chicago story he shared with me.
Oliver 13:01
I don’t know if I remember the Chicago story, right?
Jason Hartman 13:05
It was about being carjacked.
Oliver 13:07
Oh, yeah. I mean,
Jason Hartman 13:09
yeah. He goes on to tell me this. This has nothing to do with real estate directly. But he goes on to tell me about this story about how he was in Chicago and got well not carjacked. But motorcycle jacked, right. And, and someone in this bad area came up to him and the person he was riding with, you know on motorcycles with a gun and said, Hey, give me all your money. Right. And and I I told him that he was making that story up that that was impossible it could not have possibly happened. Because guns are illegal in Chicago. I think
Oliver 13:50
this story may have occurred 20 or 30 years ago, too. Did you all get what I’m saying?
Jason Hartman 13:56
No, doesn’t matter. It’s very strict. gun control laws. The point being that criminals that’s my punch line. Okay. Anyway, I I think that went over kind of like a lead balloon, you know, and the whole gun control argument but
Oliver 14:12
Yeah, a little bit let’s go ahead and congratulate Tomas. He’s He’s purchased seven homes in the Memphis market recently he’s got a fairly diversified portfolio already as is. So he wants to go ahead and focus on one of the nice Midwestern areas. He’s got some fantastic really nice B plus a properties out in that that market and he’s just looking at acquiring some more there and also expanding to a new market here probably sometime soon
Jason Hartman 14:37
When I saw the expression on his face when I said that that could have never happened. He was like meant for a movie. I mean, it was such a great expression. I just loved it and he just cracked up after I said that. That was an awesome story. He’s working on another big multihomed purchase at least last I checked, you of course have a more recent update than I Oliver, but yeah, he’s doing a great job investing. And he’s, he’s a very successful entrepreneur. So but you know, again, the idea is, look, if you have that awesome corporate job, or maybe not so awesome, but at least you’re earning a lot of money, we’ll put it that way. And if you have a situation where you’ve got a business and that business is kicking out money, folks, you’ve got to diversify. Don’t have all your eggs in the basket of your business, a lot of entrepreneurs make this mistake, okay? So you’ve got to diversify outside of your business into a more stable asset class, your business may be awesome. If you stick another 50 or hundred thousand dollars into your business, you may see a really quick return on that because businesses typically will give you a more instant gratification. But But the thing you pay for that the risk you take with the business side of it, is that businesses are obviously far more volatile. So they’re great in some ways, but in other ways, they’re not as good. So you’ll want to get some of your chips off the table and outside of your business into a different investment. And obviously Tomas with his situation. He’s just doing an awesome job of that. So he’s going to be a big time real estate investor, and I’m very impressed. So good job, Tim.
Oliver 16:20
What about Margaret? Margaret, she, she’s relatively new on the scene. And she’s been listening to our podcasts. She actually told me when we first started chatting about six months ago, hey, Oliver, I’m starting at, I think it was podcast number 200. And I’m working my way up. I was like, oh, wow, that is fantastic. She told me she’s essentially done, you know, about a 50 or 75. In two or three months. I said, Wow, that’s, you know, that’s amazing. I said, probably worth those starting from where we’re at right now and sort of working your way back to that way. Just so that way. She’s gotten some of the more relevant information because otherwise she was asking about some of the property tours that we have in Phoenix and I was like, No, no, we’re not in that. area at right now. Anyways, I cannot believe that. So starting in Episode 200 going down episode at the time probably I don’t know where were we at the time maybe 660 or something like that just kind of guessing. And Margaret Yeah, you deserve an award because you’re still listening to me.
Jason Hartman 17:20
So thank you very much for listening. I, I’m sure I have offended you many times by now. I’ve set a lot of stupid things and you’re still listening. So you certainly deserve an award for putting up with me.
Oliver 17:33
But definitely and we actually got a chance to meet with Margaret as well. She came on to our our Ohio property tour about a month and a half ago. She loved our provider, she put a property under contract right away and just been sort of working with her in terms of implementing some of that strategy and getting some properties in her name to apply and get more conventional financing.
Jason Hartman 17:57
That’s fantastic. Well, good stuff. Good stuff. Margaret, congratulations and thank you for listening to the show.
Oliver 18:05
Little sound effect there. Okay, what about Nick and Denise? Nick and Denise? Yes. they’ve they’ve purchased about four properties with us already. One in the Columbus market a couple in Memphis and then they use their self directed IRA to buy one and Chicago. Fantastic. Yeah,
Jason Hartman 18:21
self directed IRA is the way to go. I absolutely love my self directed IRA. Before I did that many years ago, I can’t believe the difference. I mean, getting control of your retirement funds is just a major advance. For any investor, you’ve got to have a self directed IRA for sure. And, and we can help you set one up, we can refer you to different providers who, who do that. So yeah, that’s absolutely a must good stuff.
Oliver 18:49
Congratulations. And for those of you out there that don’t know this yet, you can get financing through your self directed IRA. So just ask us ask me as your investment counselor about how We can help you with them.
Jason Hartman 19:01
Great. Absolutely great. Nick and Denise. Fantastic. And then Michelle, who is a client, but she is also teaching part of the program coming up our, our software weekend that’s coming up in Phoenix that we talked about September 10. And 11th. Michelle is great. She’s actually a professor. So she knows how to teach tours. I just get up there and you know, tangent. And so she’s been building a fantastic portfolio and what what’s the latest with her?
Oliver 19:31
Yeah, she she’s in the the Bay Area, she went ahead and did a refi on her home. She’s got that all taken care of. And now we’ve got a number of properties under contract with her in Memphis, we also got some going on and in the Chicago market as well. So we’re looking looking forward to closing on all of those here soon. And probably getting involved with with maybe another market or if not, we’re sort of going to win see once these close and then sort of strategize from there. So where to move forward.
Jason Hartman 20:01
Good stuff. And Michelle, of course, was on the podcast about maybe, I don’t know, I want to say 1015 episodes ago, she came on the show and shared her story. so fantastic. Michelle, Congratulations and good for you. Good job. What about Michael?
Oliver 20:16
Yeah, Michael, Michael and Michelle. They actually came to our meet the Masters event in January. And I’ve been working with them. They started with their first purchase in March. And since then, it’s almost been a one a month type of thing. So since March, they’ve put one property under contract almost every month. So now they’ve totaled about five properties with us. And we’re just again, using that same sort of strategy. Putting X number of properties in Michael’s name, why properly number of properties in Michelle’s name and just really utilizing financing right now at these super low rates. It’s It’s amazing,
Jason Hartman 20:53
good stuff. That’s a great way to do it. You know, mortgage sequencing and mortgage planning is a very important part. Have this and we’ve done several episodes talking about that before. Of course, we can help you with that directly. any of our investment counselors can help you with that. So good stuff. Let’s just wrap up here. Talk about Adam, Dave and Greg. Greg is doing a fantastic job. He’s been on for Oliver. Give us an overview of that. And then we got a dive into some content
Oliver 21:20
here. All right, Adam, been working with them for about a month now. He’s already put four homes under contract. So congratulations, Adam. David, we’ve been working together now for about, I think six months. He’s already when he’s already purchased about five houses. And he’s looking at expanding his portfolio here quickly. And Greg, we’ve had him on the podcast before. He’s the one that went from just about zero dollars to about $4,000 in passive cash flow, and about seven months, which is amazing. Yeah, that’s fantastic. Good, good stuff. Well, congratulations
Jason Hartman 21:52
to all of you and all of our other clients. You’re just doing phenomenal things out there. We are so impressed with you. We appreciate your business. We also love to learn from you, and love to get you on the show. We’ve had many of our clients on the show over the years. We just thank you so much. So that’s that’s great news. Good job, good job to our clients and
Oliver 22:10
gratulations. Guys.
Jason Hartman 22:13
Okay, all over. Let’s talk a well, a little bit on the event. Just note that room block is almost sold out. So what happens is, when you go to Jason hartman.com, slash events, and you register for the event, you are emailed the hotel information, we’ve got a room block at a special rate, only 129 per night, and this is a resort, okay? And so, you know, it’s if you want to bring your family to one of our events, this would be a pretty fitting event for it because there’s lots to do. There’s a big, you know, big huge pool area. I think there’s water slides and
Oliver 22:48
stuff. There’s water slides, there’s mini golf, there’s even a lazy river. And for those of you that are thinking, oh my god, this is a resort is there going to be a $50 Resort fee per night? The answer is no. We’ve already got that taken care of and It’s included in that 129 per night rates.
Jason Hartman 23:02
Yeah, I can’t stand when hotels do these resorts, a little extra nickel and dime charge. So yeah, good stuff and then you also in addition to getting in on the room block rate, you also get early bird pricing so hurry because that is going fast and the price will escalate very soon. So get in on that Jason Hartman calm slash events. Let’s talk about make readies when you change tenants now, you know one of the practice a lot of our investors like to do is number one, minimize tenant turnover because of course tenant turnover is costly. You want to keep your tenants for a long time, but at the same time, you don’t want to be too soft on the rent. You’ve got to raise your rents. Okay, so this is a fine line. It’s a balance. A lot of our investors are doing two year leases. Sometimes they’re doing a two year lease at the same price. Or sometimes they’re doing a two year lease with an escalation built in for the second year. And mostly with a tenant. This is not very hard. To get by, because the tenant, their their mindset is what do I have to pay now? versus what do I have to pay in, you know, 13 months from now, right? And so if you do a $1,000 a month lease, for example, on your one, and then the second year, you say, well, the lease will be $1,030 a month. So you do a 3% increase in that example, the tenant will probably agree to it No problem. Maybe even and I’ve given you this target before, but of course, it depends on the economy. It depends on everything depends on interest rates, depends on housing supply depends on a lot of factors that we’ve talked about in prior episodes. But I always say the target is see if you can raise it 4% annually, so that would be a $40 increase. You want to raise it enough to where you can get a good yield out of your property, but not too much where it really incentivizes the tenant to move. So what I’m saying is, if you do a two year lease, I think you can be softer on those escalations, where is you might do that to your lease at a 2.5% or a 3%, increase 25 $30 rather than $40 or 4%. In that example, because you’re not going to have any turnover, you’re not going to have a make ready in between tenants, you’re not going to have a month or more of vacancy, and it’s going to be a lot easier. You’re not gonna have any lease up fees, and things like that minimizing tenant turnover is very important. On the other side of that equation, though, you hear some investors and some of our local market specialists, I think, wrongly, brag about how low their vacancy rates are. And all over you know what I’m going to say here, don’t you? If your vacancy rate is too low, meaning your properties are just occupied all the time. You’re not raising the rent enough. Okay? The vacancy rate should be a target number. It should not be you No puffing up your chest and bragging about how you’ve got 100% occupancy and you never have a vacancy? Well, the reason for that is probably because you’re not raising your rents like you should. Okay, so the best practice here is to have a target vacancy rate. So if you have a portfolio of 10 or 100 properties, and you have a vacancy rate of somewhere around six to 8%, meaning your occupancy rate is 92 to 94%, you’re doing pretty darn good. Now, you What you don’t want is you don’t want a vacancy rate where it’s what’s called an economic vacancy where tenants just aren’t paying you or on the other hand, or you have that vacancy rate, where you’re just not being a good manager or your managers not being a good manager, your property manager, and sometimes we self manage. Sometimes we manage our managers and you want them to market your property as well. You want to maintain your property as well. So you minimize vacancy rates. Okay. So this is all a balance, right? It’s all a balance.
Oliver 27:08
Jason, that’s some great advice that you just provided there. And I’ll just add on a couple little things here. Investors, when you’re looking at your properties pay attention to when that lease is the lease end date is going to be, and I’d say at least a month, or if not even two months before then speech, your property management company, make sure that they’re touching base with the tenants see where where the tenants at and to touch on Jason’s two year lease. People love options, including tenants, they love options, I’d say as a property manager, provide the tenant with two options either an option one which would be for example, like a four or 5%, let’s say a 4% increase in rent, if they only want to renew for one year, or if option two, which would be a two year lease where you essentially just raise the rent 2% per year.
Jason Hartman 27:59
So that would be really soft increase,
Oliver 28:02
soft increase, but also it but if you don’t get
Jason Hartman 28:03
the security as a lead exactly dance, it’s worth doing softer increases, okay? So these are all things that you just have to weigh out. Each property is different, each tenant is different. Everything is an individual circumstance. And that’s why real estate does not lend itself real well to statistics, which is what we actually also wanted to talk about today, but we’ve run out of time. So we’re gonna have to save that for a future episode because what we’re going to talk about all over, we’re gonna get you back on the show real soon here. It’s not going to be far away. And we’re going to talk about market indexes these indices, like Case Shiller, or the federal how they’re the various government indexes for real estate prices and rents and vacancy rates and whether there’s appreciation or depreciation, all important stuff, which we will definitely get to on a on a future episode, but obviously We can come back to that vacancy rate issue a little more in just a second. But let’s talk about the make ready issue. Look, folks, your job as a real estate investor is to either self manage your properties, okay? Which, you know, we’ve taught you how to do in many past episodes. And in our members section at Jason Hartman calm we actually have some private member’s calls just about that topic about self management from a distance, which is a can be a great practice. But if not, you need to manage your managers and don’t take everything they say is the gospel question them, you know, it’s like those bumper stickers used to see on really cheap crappy cars in the hippie generation in the 70s. And a little bit in the 80s. You know, it was question authority, right? And, and you do need to do that, because just just recently with one of our clients and this is this kind of stuff, we want to feed back to you so we so appreciate clients sharing their stories with us so we can share them with everybody. yalls and we can raise the bar in terms of best practices for management. And in this example, the manager, they were between tenants and the manager wanted to charge them a bunch of money for a make ready? Well, the client actually went to the property and got this make ready done for about one third of what the manager wanted to charge. And most of that, well, really, the vast majority of it came from the tenant security deposit. So here’s another thing I want to explain. And this is one of the reasons I do like self management. Because although you know, a good manager is worth their weight in gold, as I’ve said many times before, but one of the advantages of self management is you don’t have this inherent conflict of interest that you get with a property management and they can’t help it. It’s not the property managers fault. It’s just the way the system is. So property managers have to serve two masters if you will. They have to serve the tenant and try to keep them happy. And they have To serve the owner, the investor and try and keep them happy, right? So a lot of times, the manager does not want the tenant to get upset with them and go online and start writing bad things on Yelp about them or whatever, right. And so, in this case, they try to keep the tenants happy. And sometimes that’s at the expense of the owner, the investor. And they’ll say, do this pay for that don’t take anything out of their security deposit when you really should be taking stuff out of their security deposit. So what I’m saying is, I’m not giving you any hard and fast rule of yes or no this or that. I’m just saying, question authority. Run it by us. Don’t take everything as the gospel from your manager, okay. And don’t be a doormat, okay? Now, our local market specialists are gonna hate me saying this, right? Because it’s contrary to their interest. But look, I know who my customer is. And my customer is you the investor who’s listening to me right now. It’s not the manager. So Any thoughts on that?
Oliver 32:01
Yeah, definitely. Something seems out of line, especially in a make ready or even in a maintenance or repair item if something seems absolutely insane. And in this case, it was the client messaged me. He emailed me He’s like, Oliver, how does it look to you? And I was like this. This is not ridiculous, totally ridiculous. I had no idea. So I definitely got involved. And what I would say to you guys out there to investors, speak with your investment counselor, ask them just ask them for their opinion on if something looks absurd, because chances are, if you think so it is. And then once they see that once the property manager sees that we’re now or we there’s some oversight going on, they’re probably gonna maybe take a second look at what it is that they sent your way. They’re going to you want to make your property you know, it’s like riding a horse. I remember when I was a kid, and I was at summer camp in Malibu. I wasn’t rich, but I did go to summer camp in Malibu a couple times.
Oliver 32:57
That is definitely a bit more privileged.
Jason Hartman 33:00
Yeah, that’s, that’s white privilege, actually. Yeah, yeah. That’s what the democrats would say white privilege. What you didn’t hear is that I was living in a one bedroom apartment where my mom was sleeping on a convertible sofa in marvista, which was a terrible area at the time. I hear that’s gotten a lot better now, because it’s gentrified. But at the time I lived there was pretty rough. So here’s the thing I want, I want to give you another best practice for your properties. And this is going to cost you a little bit more money, not much a little bit, but I want you to think about making your properties bulletproof. Now, I don’t really mean bulletproof. Okay. But what I mean is make your properties durable. And here are two great ways you can do that. Number one, when you repaint any of your properties, or if you’re involved in the initial painting of them, where you’re, I mean, you’re not painting yourself. I’m just saying you’re hiring the painter. You’re instructing the property managers to what to do. I want you to put either eggshell or low sheen paint on all the walls. For the cheap way to do this everybody will just use flat paint. Okay, now these are not eggshell is not a color by the way it’s a finish, okay? And it’s a very durable enamel like finish. Now in the olden days, you would only put this type of paint on your like the enamel paint, they called it back when I don’t even know if they call it that anymore. But that would be in the kitchens and bathrooms only because it’s you know, it’s waterproof right? But now you put eggshell paint or low sheen paint on all the walls not just on the baseboards and the and the doors and the woodwork or the kitchen and bathroom. You put it everywhere. Okay, and your painter might charge you a little bit more for it. It’s a little bit more expensive, not much at all. But I’m telling you that stuff is so durable, you know you get a scarf or a scrape on it. You just wipe it off okay in fingerprints, you Don’t have to do repainting and touch up painting. One of my houses, eggshell paint looked beautiful for like eight years, okay, on one of these houses, it’s a great investment. So eggshell or low sheen paint finish throughout. I mean, you don’t need it on the ceilings, okay, but everywhere else All right, that’s one rule. And then if you come to the place where you ever have to do a new flooring or red carpet, I want you to consider spending a little more money to put in the vinyl plank wood looking flooring, okay? Because this stuff, it just makes your house durable. Everything is moving away from carpet carpet is an old fashioned concept. You want hard surface floors in your houses because they will last and last and last. And if on the the reason people a lot of investors like this wood plank style, and by the way, I would not do the dark colors. Okay, that’s a personal preference. A lot of people do this dark wood and it looks dusty very easily. And I think it makes the house look too small. Okay, I just wouldn’t do the dark color. But that’s my opinion. But you do this wood. And if part of it needs to be replaced, they can literally come in with an exacto knife and cut that piece of vinyl out, okay, or whatever it’s made of, it’s not exactly vinyl maybe, and just lay a new piece in there with glue, instead of replacing the whole floor. It’s just a really easy repair and it just goes in like a like a board like a piece of wood would be if it were really a wood floor. So do those two things, make your properties more bulletproof in the long run? That’s gonna save you a lot of money. Okay, it really is.
Oliver 36:42
Yeah, it definitely will. And for those of you that have properties under contract, if you know that they’re they’re currently rehabbing them during the renovation. I would just, I mean, if you’re open to spend a little bit more money as the provider as your as a local market specialist, hey, how much would it cost if I were to implant vinyl and get that estimate, I think it’d definitely be worth it.
Jason Hartman 37:04
Yeah. And you can do that throughout you know a lot of people are doing the hard surface in all of the rooms except the bedrooms, I would just do it everywhere. Just do it everywhere and try not to have multiple different things like tile in the kitchen and the plank vinyl looking stuff through in the other rooms, try and just have one type of flooring throughout it makes your house look a lot larger. Okay, so just a couple tips for you there. And the other thing I’d like to say on that since we are talking about it, I would not be too scared of throwing in an accent color on a wall. Okay, you know if you take one wall and I used to use in some of my houses that I personally lived in and some of the offices we used to have this Ralph Lauren eggshell finish. I think it was called Malaya or Molina red. Oh my god, that was gorgeous. That color was it was like art on the wall. Okay. It was beautiful and it doesn’t have to be the actual Ralph Lauren paint which of course will cost you a fortune. They just mimic the color in any paint brand Sherwin Williams whatever. But Ralph Lauren Molina or Malaya I forgive me I can’t remember red. And I think you can do an accent wall I you know, it doesn’t have to be that color. That’s just an example I’ve done and many many compliments on it. But then if you’re a functional a person, they say don’t do red in the bedroom because it makes you awake. Okay, bedrooms are for sleeping. And well, one other thing. This is a family friendly show. Yeah, exactly. listening to the podcast. That’s the other thing you should do in the bedroom. Yes, absolutely. But you don’t want read in there but in our living room or kitchen area or something I can really jazz up a house. I think it’s nice. And one of the services I want to remind you about that we had on a as a guest on a prior podcast is the service called we go look, we go look calm. For 69 bucks. They’ll go Take a look. And make sure your property’s done the way your manager or whoever Told you it was done. Okay, for 69 bucks. So if you’re not sure that they really put in the paint First of all, make sure it’s on the quote, you know, it’s written in there so you know what you’re getting. And you can just have we go look go out or the home inspector if you’ve if you’re dealing with a home inspector in the process of a rehab, so lots of different best practices there. Just wanted to share them with you. Oliver, thank you so much for joining us today. Everybody. Go to Jason Hartman comm slash events and register for our upcoming event in Phoenix. If you want to win a ticket, you can try that at Jason Hartman comm slash raffle and win a ticket as well. Thanks for joining us, everyone. Happy investing.
Oliver 39:46
Thank you, everyone.
Announcer 39:47
I’ve never really thought of Jason is subversive, but I just found out that’s what Wall Street considers him to be.
Announcer 39:55
Really now. How is that possible at all?
Announcer 39:56
Simple. Wall Street believes that real estate and vectors are dangerous to their schemes. Because the dirty truth about income property is that it actually works in real life.
Announcer 40:07
I know I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead.
Announcer 40:19
Stocks and other non direct traded assets are losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
Announcer 40:30
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win.
Announcer 40:40
And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing.
Announcer 40:55
Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 days. Download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.
Announcer 41:09
We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing, and achieve exceptional returns safely and securely.
Announcer 41:19
I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.
Announcer 41:28
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Jason Hartman 41:58
This show is produced by the Hartman media accompany 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 properties, investor network, Inc. exclusively.
