In this episode, client Jeff Morris asks Jason Hartman’s advice about investing in Chicago. They discuss the cash flow and rent-to-value ratios, maintenance costs, and the vacancy rate in Chicago and determined that it’s the least expensive world-class city in the U.S. Jason and Jeff also talk about the advantages of buying a group of properties all at once and compare the rental properties in Little Rock and Memphis and Chicago.
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This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
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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 1000s 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. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:03
Welcome to the creating wealth show. This is your host, Jason Hartman. And this is episode number 553 553. Thanks for joining me today. We love having you listen, and we’ve been getting such great feedback on the show. So thank you so much for all of your support. And for your reviews on iTunes and telling your friends about the show, and all that good stuff. We really appreciate it. And that’s what keeps us going. Booking great celebrity guests, and thought leaders and people who really know what’s going on. We’ve got some great shows coming up for you. On Wednesday, our next episode, not this one, we have a presidential candidate. I’m going to let you guess who it is. And of course, we already had one. We’ve had four presidential candidates on the show now including, of course, Steve Forbes, probably the most famous one of the bunch. Pat Buchanan, maybe the second most famous, but we also had Dr. Ben Carson on the show. Of course, he was in the recent Republican debates, which you probably saw those were like the highest rated debates ever. So anyway, we’ll keep them coming. We are trying to get Donald Trump on the show. And also either Rand Paul or Ron Paul would love to hear from them. But yes, Wednesday, we have a presidential candidate coming on to talk to us as well. So look forward to that. But today, we’re going to talk hardcore real estate stuff. We’ve got one of our clients, Jeff Morris coming on the show, and he will be our guest today.
But before we get to that, two big announcements, well, one big announcement and one not so big announcement. How’s that sound? The big announcement is we have our next venture Alliance trip all planned out. And I tell you, I am so excited about that. listeners. Have you ever been to the east coast for a fall foliage tour? And have you ever been to see the biggest mansions in the United States? Now this kind of stuff exists in Europe, but there’s only one place in the US where you have these spectacularly opulent, incredible mansions. And yes, that is Newport, Rhode Island. That is where our upcoming venture Alliance weekend is. It’s our second venture lions weekend. There’s a lot of excitement about this. And that is at the end of September. And I’m actually going to do I’m working on this I’m pretty sure I’m gonna do a side trip to Martha’s Vineyard. I have never been to Martha’s Vineyard. I’ve never been Newport, Rhode Island either. But I’ve been on fall foliage tours. And let me tell you, it is spectacular. I know we have a lot of East Coast listeners. So if you want to come if you’ve been thinking about joining the venture Alliance, the only mastermind group built around, of course, fun adventure, great trips, great camaraderie, lifelong friendships, creating deep bonds between people but also on doing deals together. You can come as a guest and our guests fee for our Newport Rhode Island trip at the end of September. I believe the dates are September 25. That weekend. I’m also going to do a side trip to Martha’s Vineyard. Pretty sure working on that probably the Thursday before. So if you want to join me for that, and the venture Alliance weekend, you’re welcome to if you’re thinking about joining of course you can do that at Jason hartman.com in the Products section. But also you can come as a guest if you’re not sure if you want to join and we’ll apply your guest registration fee to your membership. Again, guest fee for this one is $2,000. And the membership is of course still at its early bird price at 10 grand a year. I know if you’re not used to these mastermind groups that may seem high. But really, it’s cheap. I’m a member of a mastermind group where I pay $25,000 a year to join. And I gotta tell you, if you ask me years ago, if I thought I would ever be spending like $100,000, a year on memberships and stuff like this, I would have said, You’re crazy. But it’s the new country club. It’s where you get to meet with people and hang out with people that are doing big things. And it’s aspirational. And that is so critically important. So check that out. Let us know if you’re interested. I know there’s been a lot of questions, a lot of interest about venture Alliance. And I don’t talk about it very much on the show. But again, that is our next event. So I hope you’ll join us for beautiful, stunning, spectacular, Newport, Rhode Island and fall foliage, it’s just going to be an awesome trip. So we’re really looking forward to that. And then Jason Hartman University live is coming up in San Diego on the other coast. So you would go coast to coast here, don’t we? That’s August 29. And 30th. This event is selling very quickly, we only recently announced it, we’re in our second tier of early bird pricing, that’s going to increase again at the end of the week. So you can get in on that. And again, here, this is a totally new event. It’s two whole days, it’s a whole weekend, we’ve had our meet the Masters event for many years, we’ve had our creating wealth, boot camp for many years, we’ve had our property tours for many years.
But here we’re doing more of a workshop format event where we’re going to cover market analysis, how do you pick what market to invest in? We’re going to talk about property analysis, you know, how do you analyze a property from the land to improvement ratio, the rent to value ratio, the return on investment, the cap rate, the cash on cash return. And I think importantly, although I don’t talk about it a whole lot, the debt coverage ratio, the debt coverage ratio, we’re going to talk about property acquisition, creating a real checklist for how to analyze the property once you’ve purchased it, or right before you purchase it. So what things you got to check off what things you need to look for. And then we’re going to talk about managing your manager versus self management, and then overall property portfolio planning. We’re also going to talk about land contracts. We’ve got it looks like we’ve inked three special guests for this event. Number one is our land contract expert. He is flying out for the event. And now that we’ve got all the compliance issues, we didn’t think some of the things he was talking about before were totally compliant with Dodd Frank. Now that we’ve got that ironed out, I’m super excited, we’ve had a lot of clients investing in land contracts. But also there is an opportunity, it’s fairly limited. But there is an opportunity to do what we call ground floor deals to where you can actually make some big capital gains. And so we’ll talk about that as well. This is just going to be a great event, we’re going to have our Chicago local market specialist fly out for this event, he will be speaking only on Saturday of the event, he doesn’t think he can stay through Sunday. So we’re gonna have Kim come out, we’re gonna do some panels. And this is just gonna be a great event j Ah, you live. Of course, this is free for venture Alliance members, and early bird pricing for everybody else. And then you know, if you want to write a review in iTunes, my ethical bribe here, many of you have written reviews over the years, and we sure appreciate that you reviewing the show in iTunes. If you want to write a review, just send me a screenshot to this email address. You’re ready. It’s reviews at Jason hartman.com reviews at Jason hartman.com. Send a screenshot of your review. And we will email you back a promo code for a 30% discount. Hope that helps and hope you love it. And you know what, there is a lot going on in the real estate world that I want to talk to you about. We’ve got a bunch of articles to share with you. We’re gonna tee some of those up for the next episode. But at risk of me going long again, let’s just get to our guest. And let’s talk to Jeff Morris. We’re gonna do a client case study here. We thank him for coming on the show and doing this. I think you’ll learn a lot from it and enjoy it. So here we go.
Hey, so I’ve got a caller on the line, one of our clients, it’s Jeff Morris, and he’s purchased in Memphis and Little Rock. I’m not sure anywhere else, but Memphis and Little Rock and he’s asking about Chicago. Jeff, how you doing?
Jeff Morris 9:47
I’m doing great, Jason. Thank you.
Jason Hartman 9:49
Good. Hey, thanks for agreeing to come on the air so spontaneously, by the way. I asked you because a lot of I think a lot of listeners have the exact same question you asked me when I asked you If we can go on the air with it, so fire away.
Jeff Morris 10:03
So So Jason, I’m looking to purchase six properties before year-end, I’d like to simplify the process by using one provider and making my purchase in one marketplace. I just visited Chicago shortly after your visit. I like the dynamic economy there, the area just feels like it has a lot of energy. And and I’m just trying to figure out if Chicago makes sense, versus some other market in the country?
Jason Hartman 10:30
Yeah, Jeff, it’s a great question. And here is the thing. I think it’s, you know, like anything in life, you know, it’s a two edged sword. It’s, there’s pros and cons to everything. But, you know, I mean, look at Chicago is and granted, these properties, of course, aren’t in the city proper. They’re in outlying suburban areas of Chicago. But, you know, the Chicago land area, is, you know, that’s a world-class area, if you were to go to Europe, and you were to talk to someone, a European person, about, you know, the cities in America that they should go and visit or those cities they know about, they’d say, New York, LA, Chicago, you know, that probably be number three, maybe San Francisco, they’d say is number three. And then you know, you get down to some other cities, they might say, Dallas, they might say, Houston, they might say, Seattle, etc. And forgive me for whichever ones I missed in that example, but you get the idea. Okay. And so, I mean, I love that about it. And I think it truly is a hybrid market, where you’re going to have a lot more potential for appreciation than some of our more linear markets, like little rock Memphis, which have great cash flow. But in the things I do not like about Chicago’s I don’t like the high taxes, I don’t like the relatively speaking landlord, unfriendliness. And I think in those types of markets, you kind of have to know what you’re doing a bit, you know, or you have to be working with a very good team there. And one of the things you asked me, Jeff, off air is about our team, and how you’re looking to simplify and just use one local market specialist, and execute on six more properties before the end of the year. And I think that’s an awesome goal. By the way, our Chicago provider is one of those that can really do that, like an assembly line and make it very easy for you. They have when we toured with them, I mean, everybody was just so impressed with their operation. And I don’t know, did you go to their office? By the way, when you were there? No, I did. Okay, well, let me tell you had you gone to their office, you would have been totally impressed. You can see some pictures on our Facebook page, which is inside of Facebook, just type Jason hartman.com. I know, that’s kind of strange to have a website name inside of Facebook, but but that is the name of our page. And there are some pictures from that tour there. And they’ve got a pretty impressive operation they have in house lending, they have in house property management they have in house tax appeals. So one of the things you’ve got to be on top of there is, you know, managing the rather high property taxes, they have a whole department that just does that constantly for their own properties and for their clients. And, you know, that’s a good feature. But you know, it is a city, you know, Chicago is a world class city. And so it does have a lot of energy, like you said, I mean, they’re some of those suburban areas are really charming, you know, they’ve got nice main streets with, you know, beautiful plantings and high end stores and shops in them. And I got to tell you, you know, I haven’t been there many times myself, you know, going again, this time, I was pretty impressed. So I think you’ve got some real benefits there. You just got to know the pros and the cons. The cons being high taxes, landlord? Well, I’m not gonna say landlord, extreme unfriendliness. It’s not California or New York, probably not as bad as those, especially some of the cities like Santa Monica, San Francisco within those. But that’s those are definitely two of the big cons. So when you look at your RV ratio, it’s got to be a little better than you might expect in a market with lower taxes to offset that con side of the equation. Does that make sense?
Jeff Morris 14:19
Yeah, it does make sense. Yeah. What what’s your, you know, the cash flow figures in that RV ratio seems to be really positive in Chicago, you don’t have any reaction that didn’t have any sense of crystal ball into the future how that marketplace might do versus Texas or
Jason Hartman 14:37
Well, I think here’s my prediction about it. So that, that’s another really good question. Because it’s one that people don’t often, I think, think of properly the way they might balance what I’m about to say in their head. So I think in Chicago, and we say Chicago, of course, we’re talking about Chicago land. We’re not talking about the city. We’re talking about outlying suburban areas, okay, but We’ll use the word Chicago generically. So in that area, you have pretty high rents. Okay? Because of course, you have some high incomes there. But I think that the RV ratios, the rent to value ratios will actually decline there in coming years. Why do I think they will decline? I don’t think it’s because rents will decline, I think it’s because prices will appreciate more so than they do in some of the more linear markets. And rents always lag those, they always lag price increases, historically, by a pretty significant margin rents, they escalate, but they escalate more slowly than prices in hybrid or cyclical markets, cyclical markets, they get left way behind. And that’s why, you know, some of the really expensive areas south Florida, California, northeastern states, they’ll just never catch up those or forget it, you’re never gonna have a good RV ratio in those markets, even in the depths of the worst economy in seven decades, in outlying Southern California, areas like Riverside, and San Bernardino, the RV ratio still didn’t come into line with massive price declines. So I think the RV ratios will actually get worse in that area. But when you go in now, and your basis is pretty low, you can afford to have that happen. And you might actually have some capital gains opportunities where you could sell and in 1031, exchange those properties into more linear markets in the future if you wanted to, or do or execute more quickly, Jeff, on the refi to your die plan. So by the way, where do you live? I didn’t ask you that.
Jeff Morris 16:40
I live in Newport Beach, California. Your old stomping grounds.
Jason Hartman 16:42
Oh, yeah. You’re a California guy. So where in Newport do you live? What area?
Jeff Morris 16:47
Beach front on the peninsula.
Jason Hartman 16:48
Yeah. Okay. So you live in the party zone? Yeah. Good. That’s where it’s happening. Unless you’re unless you’re on the point that it gets a little quieter there. But yeah, good stuff.
Jeff Morris 16:59
Yeah. The other thing, I got a sense of just just get a sense from talking to the provider, Jason, you know, thinking about vacancy rates, that sort of thing. I get a sense from talking to them. It’s almost like non existent, there’s people lined up and waiting for these properties. And they got a real massive, if you want to call blue collar working class population that can afford the rent, maybe they work for Public Transportation Agency, or just good paying, good paying jobs that allow them to afford $1200 $1500 for rent, so so I don’t know if you came away with any sense of that, as well. But I really like the fact that there’s such a large population, they’re waiting for quality properties that are really desirable to live in. So that vacancy doesn’t appear to be a big concern in that market.
Jason Hartman 17:44
Well, according to them, their average tenant stays 3.8 years. And that is pretty darn amazing. When we talk to people about you know, they want to buy apartments, and of course, you know, I like apartments, and I like single family homes. But if you can get a tenant on average to stay in an apartment for a year and a half, you have bragging rights. Okay, but in a single family home in an area like that. Yeah, I agree. That is that is possible. what it might mean, though, is that they’re not pushing the rents high enough. Because if your vacancy rate is too low, that often is a sign that you’re not charging enough, you know, you don’t want to have a super low vacancy rate. Okay, because there’s there’s a balance. In other words there, right?
Jeff Morris 18:34
Well, it’s interesting you say that, because this particular provider I spoke with, they do one year leases. And they typically don’t increase the rent, because they think about the trade-off between potentially having a vacancy than ever to fill it again. And even though they do seem to have people lined up that they seem to be reluctant to do price increases in general on rent during for tenants use who stay in the property.
Jason Hartman 18:59
I know, I heard them say that, too. And I I don’t know, I’m not so sure I agree with that. But, you know, turnover is one of the more expensive things you’ll have when you’re a property owner. So you definitely want to minimize turnover. But I think, you know, I think the psychology of rent increases and of course, it depends what’s going on in the market at the time. So for example, if housing affordability is really low, then you know, those tenants aren’t likely to go and buy something. If the rental market is really constricted, and there’s lines of people trying to get every property available in a in a market at a given time, then you can be more aggressive on rent increases. As I’ve said before, Jeff, my ideal is I want to see people try and get a 4% bump every year, but I know you can always do that. Okay. I can’t imagine too many tenants are going to move. If they’re paying, you know, say they’re paying $1300 a month. I mean, what What kind of price property? What kind of rental prices? Were you looking at at some of those properties in Chicago?
Jeff Morris 20:04
1400 to 1650?
Jason Hartman 20:06
Okay, so let’s take a $1500 property as an example. I mean, what if you were just to do a 2% bump and you raise it 30 bucks a month? If it’s 4%, it’s 60 bucks. I can’t imagine anybody actually moving for 30 bucks a month, you know. Don’t think they’d be more likely to like give up HBO, on their cable, if their budget is really that constricted than actually move. I mean, the cost of moving the cost of paying movers, you’re undoubtedly going to have to buy a bunch of new stuff, have some damage, spend money on cleaning, spend money on on this, and that, I mean, it’s just not worth the hassle. You know, that’s, that’s really what you do is you try to raise your rents a comfortable amount where it’s like, yeah, they might be a little annoyed about it, but it’s not worth moving. You know what I mean? I think that i i don’t agree with him that you shouldn’t raise the rent, I think a good landlord raises rents, you know, tenants will hate me saying that, but sorry. That’s just the way it works. You know, and you know, what, some of our clients are starting to do two year leases as a more common thing. And you can build the increase into the two year lease to or you can just make it a flat two year lease. But why would you see I don’t understand their psychology of saying they sign a one year lease, and they don’t raise the rent. Well, why don’t you just sign a two year lease? If you know, you’re not going to raise the rent? Just give them two years and lock them in? You know?
Jeff Morris 21:39
Yeah, not to upset the applecart. But what’s your sense when a, when the management company has a philosophy, philosophy about how to work with tenants get pushed, who’s calling the shots, you,
Jason Hartman 21:52
You’re calling the shots, because you’re the owner, but I will tell you, I think the one, one of our local market specialists, the one you’re talking about, we have a couple of them in Chicago. But they’ve got a pretty awesome operation going and they really do seem to know what they’re doing. So I guess my answer would be is I would buy my properties. And then I would evaluate it as I go. I mean, I cannot imagine a tenant in a $1500 a month property moving for a two or 3% increase in the second year. I just, I mean, who’s gonna do that? Really? Now, granted, if the rental markets really soft at the time, don’t do it. Okay.
Jeff Morris 22:34
So last question, Jason is to try to simplify this process a little bit I’m looking to do, I’ll call it one transaction at one time. So this provider indicated they could bring me six properties at different locations, different price points, just to kind of diversify my purchase, do you have any any thoughts on why a group of six at one time launching into a market like that all at once and advantages to any advantages or to gain out of the process by doing a group of properties at one time?
Jason Hartman 23:07
Well, the advantages are, you’re going to get it done, it’s going to be easier to just sort of dedicate like, Look, this month, or you know, in the next 4560 days, or maybe 30, you know, you’re going to get this done, get it under your belt and get out of the way. The disadvantage is, if you make a mistake, and you discover later that this wasn’t your favorite market, you’re going to be all in so to speak, right, rather than dipping your toe in the water. So it just depends, you know, what you do for a living, and you know, whether you’ve got your own business, or you know, you’ve got a corporate job, and what else is occupying you in your life, because, believe me, I mean, it’s, it feels like every, at least from my perspective, every time in my life, when I try to save money, I always end up spending more, at least in my time, you know, and so sometimes just getting things done is just, you know, deployment, if you’ve got the money, and it’s not working for you, now, you’ve got that opportunity cost on it, right? Until you’re invested, that money is losing you money in the bank. So, you know, there’s the opportunity costs, and then there’s the cost of your own time and managing the purchases, which you know, that sucks up some time here. You’re going to spend some hours on that no question, especially if you’re financing the properties. So the scalability of just getting it all done. There’s definitely some benefit to that. But again, you have to weigh that against opportunity cost of what is that money doing now? and opportunity cost of taking time away from other parts of your life, whether it be your profession or your personal life, but I mean, I don’t think you’re gonna make a mistake in that market. The only two real downfalls I think are the, you know, the regulatory environment not being that friendly to landlords. You know, Chicago is a mismanaged city. It’s a left wing environment. I don’t like any of that stuff. I’ll be the first to tell you, you know, they’ve got financial problems, like all left lefty areas do. There’s no surprise there. But Heck, I mean, it’s, it’s hard to dislodge reputation, you know, it’s been developed over the years. I mean, think about it, when you look around the US, Chicago is far and away the least expensive, world class city, you know, you can’t live in New York, or San Francisco or LA for the kind of prices you can live in the Chicagoland area. You know, even in the outskirts of any of those places I just mentioned, it’s, it’s, you know, it’s not even a contest as far as cost of living in price. So, you know, Chicago is kind of a Midwestern bargain area, you know, I mean, it’s got a lot going for it. So tell me about the rest of your portfolio, just to kind of evaluate the diversification, you said you had little rock and Memphis, how many in each of these markets.
Jeff Morris 25:59
So just just this year, Jason, I purchased two properties in Little Rock. And those are the loan articles around 125,000. One was a little over 100,000. And then I have two in Memphis, Tennessee, all through one of the providers that we toured there with in the local market,
Jason Hartman 26:18
and is that it? Do you own your house in Newport Beach? Or do you rent that one?
Jeff Morris 26:21
You know, I own that home.
Jason Hartman 26:23
Okay. All right. So you own that one that you live in? And then you’ve got four other rental properties? No other rental properties in the portfolio?
Jeff Morris 26:31
No, that’s it.
Jason Hartman 26:32
Okay. So you’re gonna see, like the sharpest contrast in the United States, probably, when you compare a little rock, which is super landlord friendly to Chicago, which is not as landlord friendly at all. Okay, so, so, so get ready for that one, it’s gonna be like, whenever you face and you eventually will, we all do, at some point in your ownership of those properties. If you hopefully keep them for 27.5 years, you’re gonna face a bad tenant in Little Rock and a bad tenant in Chicago. And it’s going to be just like a totally, you know, black and white experience, I bet. Just a totally different experience. opposite ends of the spectrum, you know, so that’ll that’ll be interesting.
Jeff Morris 27:15
Yeah. Hopefully, that that’s an interesting experience. I have a long time for now.
Jason Hartman 27:19
Yes. Or maybe you never have it would be ideal, but you know, and odds are you will, I’m just warning you in advance. Okay. So, so good. Yeah. Yeah. Good. So, you know, but I wouldn’t do I definitely wouldn’t be doing more than six in Chicago, given your diversification, okay, because you’re basically in in four markets, including your Newport Beach, noninvestment property. And then when you go back to do more, maybe next year, do more in Little Rock or Memphis, or you could pick another market like Atlanta or a Texas market maybe or something like that. Okay.
Jeff Morris 27:52
Yeah, yeah. Okay. That’s great. Appreciate that.
Jason Hartman 27:55
All right. So does that help you out?
Jeff Morris 27:56
Yes, very much. Thank you, Jason. I really appreciate your feedback. Thank you very much.
Jason Hartman 27:59
Yeah. My pleasure. And thanks for coming on the show, Jeff. And, you know, I do want to say that I’m sorry, I can’t be kind of, I feel like I want to be really more definite about a lot of this stuff. But again, this stuff is a million Shades of Grey, it’s just it’s never a black and white decision. You know, I can’t say, greenlight, Chicago, it’s perfect. It’s like human nature. There’s lots of little frailties and little idiosyncrasies to it. And at some point, you just got to kind of jump in, and, you know, and make it work, even if it’s not the exactly right thing. No,
Jeff Morris 28:35
Well, you know, it’s just, it’s two or three things that I heard about that local market that I found compelling. This market specialist was able to tell me the absolute lowest rent they’ve ever rented in a particular neighborhood within a certain parameter. And that number was great. It was within $50 of what they were telling me, even if I get the lowest number, that’d be a great return terrific results. And then the other thing about having people applying and teed up and lined up to rent your properties right away, just because that marketplace is so huge, and so many people, that just gives you a sense of confidence that you’re gonna have a very good cash flowing property without, without a great deal of risk is going to sit vacant for a month or two months, and that sort of thing.
Jason Hartman 29:16
Yeah, you know, I just got to tell you one more thing. I know, we’re kind of extending our conversation, but I think this will be interesting. You’ve probably heard my mom on the show over the years, a couple of times, you know, she’s been on maybe four or five times now. Right? And you know, this constant debate I have with my mother, your family members never really listened to you completely write you a total total stranger will invest a million dollars with me, no problem. My mom, if I could pry out, you know, 100,000 to buy one property, I’ll feel like I climb Mount Everest, you know, like, it’s a huge success, right? It’s just a weird part of human nature again. And so you know, we all we all know that right? And so, you know, my mom always did the Southern California thing and in the last several years She did buy some properties through our network. And she bought one in Gulfport, you know, right by her in Gulf Shores, Alabama, okay. And she just rented her house in Canoga Park, which is in the Valley area of Los Angeles. And once again, my crazy mother who loves to get behind the wheel of a car, drove herself. Oh, now she came, visited me in San Diego, then went up to Canoga Park, and I don’t know she doesn’t mind, right. She likes to drive. She just loves going on a journey in an adventure. It’s a long, it’s crazy. I mean, she’s I say, My mom is an extreme do it yourselfer. But you know what I, I kind of fight it and teaser about it. But in a way, it really keeps her engaged and active and involved in life. And I think that’s a good thing, ultimately, especially in her age, and so forth. And so, you know, she rented that one. And then she goes, because she self manages everything. She does not use a manager or anybody to help her with anything, practically. I mean, every time she goes, one of her houses, her trunk of her car is it’s got tools. I mean, it’s like amazing. It’s crazy, right? So So then after the Canoga Park property, she goes to Gulfport, and she’s working on writing that she puts her signs out, you know, on the corners, a little bootleg signs for rent, you know, and, and just her phone number on it and takes all the calls herself. And, you know, all of that stuff. And I’m not suggesting this extreme self management, but I do suggest another version of it, we’ve talked about on the show, but here’s what my mom said to me just the other night, that was really interesting. She said, You know, I just don’t like running these houses in these little towns. It’s just, I just don’t get enough action on them. You know, I don’t get enough calls. And she said, I put all these signs out. And I’ve only had, you know, a few inquiries on the property. And I said, Mom, hang on a second. The property in Canoga Park, Los Angeles area that you just rented, that one’s worth, I think it’s worth about 450 500,000 maybe right now, okay. And she rented it for somewhere in the ballpark of 20 $500 point five RV ratio. And I said, What’s your property in Gulfport worth? And she says, I don’t know. And I said, Well, what do you pay for it? And she says, I think I paid about 140. So I asked the address. I looked it up on Zillow, it looks like it’s worth about 125 according to Zillow right now. Okay. So you know, she bought it at the peak, and it’s, it’s, you know, gone down just a little bit, no big deal. Okay. But I said, What are you asking for rent? She goes, 1175. And I said, Mom, look at this. This is the debate we’ve been having for years, you think you had such a success on your Los Angeles area house at a point five RV ratio? If you rent, if you put the golf port place up at point five? That means you’ll be asking what $650 you’ll have a line around the corner. It’s all about ratios. It’s not about the price. And so you obviously understand that, try and get your family to understand. Good luck.
Jeff Morris 33:16
Exactly.
Jason Hartman 33:18
But but but to your point about Chicago, and that’s why I mentioned that long explanation to your point about Chicago, you know, in that kind of market, you’re going to have, you said it yourself at the beginning of this talk. It’s there’s a lot of energy, right, you’re going to have a very vibrant mass market have a lot of people, a lot of service providers, a lot of contractors. So oddly, your repair costs will be very competitive, because there’s more service providers competing for business in a bigger metro area. And you’ll have a lot more tenants to choose from. So I you know, I think you’re gonna have a good experience there. I would I would do it, especially if you want to just knock six out quickly. I’m in favor.
Jeff Morris 34:04
Okay. Great. Well, that’s it. That means a lot to me. Thank you, Jason. I really appreciate your your your feedback.
Jason Hartman 34:09
Thank you so much, Jeff, appreciate you coming on the show. And I appreciate your business, too. I’ll stop the recording and then we can wrap up, okay.
Announcer 34:16
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be.
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Really now How is that possible at all?
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Simple. 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.
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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.
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Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
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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.
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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.
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Yep. And that’s why Jason offers a 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.
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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.
Sara joins Jason Hartman in this episode to talk about their clients’ successes in building great portfolios. They also discuss the service that the group provides and how real estate is fragmented, preserving the opportunities for small investors. Jason and Sara also chat a little bit about over-diversification, land contracts, and the shoulda coulda woulda mentality.
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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 1000s 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. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show, this is your host, Jason Hartman, with you for Episode 559 559, thank you so much for joining us today. And I’ve got Sarah here with me. You’ve heard her on the show many times before. And we thought today that for part of the show, we would, instead of doing a little talking behind your back, we would talk to you directly because we’re always talking about you because we care and we love you. And that’s our clients and listeners too, of course, but mostly clients because we’re more engaged with clients than listeners, because we’re talking to clients constantly. So we thought we’d just, you know, go through some kind of like common issues, questions, goals that clients have when they’re building a real estate portfolio, and creating passive income or eyes, I always like to make the disclaimer, semi passive income, you know, me, I don’t believe in passive investments, I don’t think they exist. Now, don’t get me wrong, I believe I would believe in them. If they existed, I just don’t think they actually exist, I guess you would say, I’m a passive investment atheist, I’m a non believer, because I think you got to pay attention to everything out there. If you know anything, you put your money into even the bank, ask the Cypriots, you know, that’s what they call them, those people in Cyprus that had all this money in the bank that lost a bunch of it during what they call the haircut. So that’s a very important thing. And that’s what’s going on out there no such thing as a passive investment even in the bank. And Sarah, what do you say to that? Do you agree?
Sara 2:38
Oh, I definitely agree. We’ve got some great ones. But you know, each of them have their little intricate problems, and some are good at, you know, some things and others are good at other things. And it’s nobody’s perfect. So I guess that’s just life, though, right?
Jason Hartman 2:52
Yes, everything requires attention and management. But income property doesn’t require terribly much intention in management. And as we’re going to see, today’s we’re talking about some of our clients, instead of talking behind your back, and we’re talking about you on the show, don’t worry, we won’t identify you directly. So don’t worry about that. You can still maintain your anonymity. But as we’re talking about that, you know, the most common goal, Sarah, of investors, when they come to you now, you know, generically, everybody would say, Well, I want to make a profit, or I want to make money, or I want to get a high return on my investment. But really, the goal is the freedom. I mean, people just they’ve got their good corporate jobs, they’ve got their business, and it generates a good living. But again, it requires a massive amount of attention, right?
Sara 3:45
Yeah, absolutely. And, you know, what I’m really noticing with our clients is that they’re really attacking these big portfolios of properties. I mean, the guidelines, you know, the Fannie Freddie guidelines have loosened up a little bit. But now we’re seeing these big portfolio lenders come in, as you’ve heard us talk about, and allow investors to go beyond that those, you know, 10 properties is what they’ve been waiting for.
Jason Hartman 4:11
Yeah. So what Sarah’s talking about is, of course, those agency loans, where the government makes the secondary market with Fannie Mae and Freddie Mac, and the 10 loan per person limit. So, you know, single person 10 loans, married couple potentially 20 loans, 10 loans each if they can both qualify separately for the properties. But now, I mean, and this, this is why I had this idea for an episode is that I was, you know, I was going through and looking at some of the accounting, and I just see all of these clients just repeat, repeat, repeat. And it’s the same people that are just buying and building some pretty decent sized portfolios. Congratulations to all of you listening. I mean, you know, there’s so many names I couldn’t even mention but bill, Jesse, gosh, there’s just a lot Have them and we’ll, we’ll kind of dive down on some of them. I mean, you’re just you’re just building some nice nest eggs for yourself. Wow. I mean, I applaud you. Yay. Clapping, we should have some sound effects like a clapping that would be really cool. If we were if we were actually professional, we would have some audience applause noise you know? I have it in my house, actually, you know, when I walk around and do things, it claps for me. I’m joking, of course.
Sara 5:27
Well, I finally got my emoji apps. My 12 year old daughter finally downloaded that emoji app. Do you know what that is? With a thumbs up and a happy face?
Jason Hartman 5:36
No, no, no, you you don’t even need emoji anymore. It’s built into your iPhone. And it’s on Facebook. Right? You don’t even need an app.
Sara 5:43
Well, you need it on your keyboard. Yeah,
Jason Hartman 5:44
She’s probably got this super super emoji app. Yeah.
Sara 5:48
Yeah, we need the emojis that clap and make noise.
Jason Hartman 5:51
Okay, so listeners, here’s your emoji. You’ve got a big smiley face. And a big thank you. I don’t think there’s an emoji for Thank you. And then a big applause because really, I mean, you know, as I’m seeing the closings here, and and looking at who’s buying the property, and you’re, you’re building some good sized portfolio. So congratulations, Sarah, talk in front of their back a little bit and not behind their back. So tell us about some of these clients and what’s going on, you know, recently here, recent purchases, closings, whatever.
Sara 6:24
Yeah. So my most recent communication was last week, I got an email from a client. And he said, I finally took the plunge and fired my boss. And you know, he’s got a home based business that, you know, kind of blew up for him. And he’s been using a lot of that capital to now invest in properties. And you know, he started with one or two, and it kind of snowballed. And so now he’s really diving in and investing with his family. And that’s Russ. So congrats to Russ.
Jason Hartman 6:50
Yeah, Russ. I’m seeing your name a lot here. So congratulations. Good job. Good job.
Sara 6:55
Yeah. And we’re I’m trying to get Ross to come join us on the podcast, but he’s just so busy with all of this right now. So
Jason Hartman 7:01
we’ll wait Ross Ross, you said Ross.
Sara 7:04
I said, Russ.
Jason Hartman 7:06
Oh, sorry. I thought you said Ross. Well, I’m thinking of my friend Ross. That actually owes me a phone call. So maybe I did that with my mind playing tricks on me there. But I don’t know. Listeners. What did she say? Did she shoot herself in the shoe? See, see, Sarah. That’s how we know how long people have been listening. Because only the secret group of longtime listeners get that reference of shooting yourself in the shoe.
Sara 7:34
Yeah, I can’t wait till we all just forget about that.
Jason Hartman 7:39
Okay, I’m gonna bring the rest of you up to speed here for just a quick second. Sarah has this funny, charming way of taking famous old sayings and tweaking them a little bit? Not intentionally, just by accident. They come out so funny. On one episode, she goes, she goes, I don’t want clients to shoot themselves in the shoe. And I said, Sarah, it’s shoot yourself in the foot. That’s the same. And so anyway, that was, you know, a bunch of listeners emailed us and saying, oh, haha, Sarah, don’t shoot yourself in the shoe. And I thought it was a female thing, because you’re always thinking about cool shoes and stuff. But I don’t know.
Sara 8:26
All right. All right. Back to the show.
Jason Hartman 8:30
You got any more funny things for us there?
Sara 8:32
I don’t, but I’m sure you’ll catch me in one pretty soon here.
Jason Hartman 8:37
And by the way, if you’re tuning in for the first time, just so you know, we usually don’t have all this fluff and silliness. Sara and I are just kind of a little fried here. It’s toward the end of the day when we’re recording this. And it has been insanely busy lately. So I think I think Sarah, maybe we’re getting a little punchy. Usually the episodes are quite on target on topic and a little serious. This one’s almost like a morning show where people are just kind of giggling and being kind of silly. But anyway, so Kathy has been buying a lot of properties lately. Yeah. Kathy from California. Hi, Kathy.
Sara 9:09
Hi, Kathy. And she just registered for our Jason Hartman University live event in San Diego by the time our listeners hear this, I’m sure
Jason Hartman 9:18
it’ll be right before him.
Sara 9:20
Yeah, they can still come. Yeah. So that’s going to be an awesome event. So she’ll be there. And then let’s see, we’ve got Jesse who just closed on a portfolio of about nine properties. I believe it was in Memphis, so congratulations to Jesse.
Jason Hartman 9:37
Yay, Jesse. So just in jet, but Jesse was buying stuff before that. I mean, Jesse has been building quite a portfolio right?
Sara 9:44
She is and she’s starting to you know, she’s been investing with us for a while. And so she started to get into that over diversification of markets. And so now I think she’s kind of consolidating a little bit. You know, she’s really diving into having to manage her managers and So she’s wanting to not downsize her portfolio but just downsize in terms of location.
Jason Hartman 10:05
Yeah. And then then that, by the way is, you know, a problem that I had myself and, and, you know, one of the mistakes I made in building my portfolio is that I over diversified, you know, one of my commandments is thou shalt diversify. And I totally agree with that. But what that means is three to five markets. Okay, not 10 markets, okay, not 12 markets, that’s just too many, it’s too many different people to deal with and, you know, cities to understand. So, you know, consolidating to three to five markets is a great choice. I firmly agree with that. But you don’t want to be in one or two, you want to be in at least three?
Sara 10:46
Well, and I want to just touch on that. And it kind of explain how that happens. So, you know, a lot of times the listener will call in and they’ll say, Oh, you know, I want to invest and, you know, I want to buy a couple of properties and get my feet wet.
Jason Hartman 11:00
Sara, you got that saying, right, that is the same. What were you gonna say, I want to get my head wet. I want to dip my legs in the water.
Sara 11:12
We’re having a heatwave here in So Cal, it’s like 100 degrees today. So I’m super hot. I’ve had a headache all day. So yes, I would love to just dive into any pool of water right now.
Jason Hartman 11:21
You’d like to do more than get your feet wet then, right.
Sara 11:24
Yes, I would, I would.
Sara 11:27
But But what I was gonna say is so and so listener will call in and they’ll say, okay, want to invest? And I’ll ask them well, you know, how much money would you like to invest in? What is your time horizon for getting started, you know, give me an idea of your six month goal and your, you know, five year plan. And a lot of them won’t open up to me at first, just because, you know, it’s a new relationship. They don’t know us, they’re getting to know us. And so they’ll start with one or two, and then, you know, they’ll start to get comfortable. And they’ll go into another market without ever, you know, verbalizing their goal to me. And so now I’m working a little bit harder on getting clients to open up and they really are, so that I can advise them, you know, look, if you’re gonna buy 20 properties, I’m not going to do two here and two here and two here, you know, let’s really come up with a better plan, you know, to simplify this for you. And so that’s that’s kind of I think, maybe what happened with Jesse was I don’t think she knew she was gonna buy all these properties. At first, you kind of got started and you know,
Jason Hartman 12:27
Well, I yeah, I absolutely must say that this becomes addictive. You know, usually when we talk about addictions, that is not a good thing, right. But there are a few good addictions, collecting income properties is a very nice addiction. Exercising is a good addiction, listening to Jason Hartman podcast is a great addiction, that’s like the best one you can have. Okay, so. But yeah, you know, it really does, you know, once you get going with this stuff, it’s like you want to buy the whole world, I remember when I looked at that map, of where I owned properties, and where my little mini real estate Empire was all over the country. And again, I was over diversified. But I tell you, it was certainly cool to just, you know, see that, that the point is, though, if you’re in three to five markets, now you want to start doubling down. because number one, one of the great things is you have some feedback on that market, you know, what the market is, like, you know, what the local market specialist is, like, you know, how well, you like their operation and get along with them, and like the way they do things. And so in those strong places, double down and get more properties. So you’re in, you know, ideally, no more than five markets.
Sara 13:45
Yeah, I totally agree. And actually, you know, one of the ways I’m advising clients is, you know, look, if you’re planning to do this, you know, big portfolio within two years, focus on one or two markets at a time, and do all your properties there first, you know, I don’t want to say one, I, you know, but probably start with two markets and acquire in those two markets, because what happens, and I think kind of what happened with Jesse and a lot of our clients is a new market will come up, and they’ll get really excited about that. And so they’ll, they’ll jump into that market. And then, you know, maybe a year goes by, and they haven’t doubled down yet. And all of a sudden, you know, a year or two years, that market doesn’t make sense anymore. Like some of those markets can change quickly.
Jason Hartman 14:27
Right. They get in other words, they get frothy, just so that was sort of what we’re saying when it doesn’t make sense anymore, is that they the market gets a little frothy, and it becomes more of a hybrid market than linear market. And the rents, you know, they escalate much more slowly than the prices do. So you get in that situation where that cash flow that you got when you started in that market. You just can’t achieve it anymore. You can’t get those kind of numbers anymore. So very important thing. Yeah,
Sara 14:55
Yeah. So you know, in other words, maybe they waited too long to double down. In the meantime, they had, you know, opened up, you know, two or three other markets. And so that now they have, you know, to hear to their, you know, their, they’ve got two and four markets, and maybe they can’t, you know, move on in that market because it’s changed. And so, you know, if, you know, you’re wanting to deploy a certain amount of capital, you know, just communicate that to us, so we can help you, you know, structure these portfolios. And, you know, Jason, as you said to me, the other day, I have this kind of algorithm I use in recommending markets and market specialists. And I know, you know, where the inventory is hot, you know, we’re, we’re getting a lot of Prop properties, you know, where, you know, maybe the management is, is better than other markets, where we’re getting the best communication. And there’s like, all these things that play into us recommending markets, I mean, of course, numbers, and, you know, location is the most important thing, but, you know, there’s so much more to it in terms of the teams and communication with our market specialists.
Jason Hartman 16:01
So this deserves a pause, because this deserves some real attention for a moment. Okay, Sarah, look, I have said many times, we would rather recommend a B market within a team than an a market with a B team any day, because the characteristics of the market, then, you know, look at that as definitely important. There’s no question about it. But more important than that are the characteristics of the team with which you’ll be working. And I can tell you that we’ve had this happen to us. And Sarah, I’m not going to mention the name. But you’ll remember one client who lives in Orange County, who we both know, this client had purchased several properties from us. And then in one of the areas where we really didn’t have a good local market specialist at the time, because, you know, we’re, we’re area agnostic, and we’re local market specialist agnostic to if, if a team is working well for us in the beginning, and then they start to get, you know, look, I’ll give you an old Napoleon quote, it’s a great quote, by the way, and here it goes, you want to write this one down, listeners, it’s a good one, here we go. I’ll repeat it twice. Napoleon said, the most dangerous moment comes with victory, the most dangerous moment comes with victory. And he said that, because the human nature is we always get complacent, maybe we get cocky, maybe we get, you know, too confident or entitled. And that’s what happens with some local market specialists, we will refer a bunch of business to them, they make a bunch of money, and then they become complacent, and they’re just not as good as they used to be, you know, they kind of take the relationship for granted. And we don’t want that. And so we’ll we’ll stop recommending as much business or if they’re really bad, we’ll fire them, which, you know, we’ve only had to do, you know, a handful of times over the years. So this particular client that I’m talking about, you know, started buying some properties on his own in this in this market that I’m referring to, and it didn’t go so well, because they have no leverage, you know, on a one off deal. Or, you know, if you go and you find someone yourself, and you buy three properties from them, I mean, they’re not going to treat that relationship as any big deal. We bring, we aggregate through through quantity to that local market specialist, so we can really get their attention and get some good service from them, and some good deals for our clients. So talk a little bit Sarah, about some of those issues. Of course, the market the numbers, does the market makes sense? Is that a good place? Is there in migration, job growth, you know, good rent to value ratios, all these other factors? What’s the age of the inventory? What’s the rental market? Like? There’s some like a zillion little factors, okay. But the, I want to call them the soft factors, okay. The things I just mentioned, were the hard factors, okay, the the sort of more data driven empirical things, but the the soft factors, like personalities, like, you know, if we have a client that’s really, you know, high strung, and a local market specialist who does a good job, but they’re kind of laid back, or vice versa, maybe the local market specialist is really hard or high strung, and the client is really laid back. Or, you know, that’s just an example I can think of off the top of my head. I mean, what what do you do when placing that local market specialist in that client, you know, deciding who to introduce to who, and especially in markets where we like the market, but maybe we have three different local market specialists in there that we can choose from? which one does the client get and why talk about that a little bit?
Sara 19:53
Well, so first of all, I’ve mentioned before, I’m an investment therapist, right which by the way, let’s give a shout out to Gabe. Right,
Jason Hartman 20:03
Gabriel. Thank you, that was so cool.
Sara 20:06
He sent a shirt that said investment therapist, and that was awesome. So we love that.
Jason Hartman 20:11
That was awesome. Thank you, Gabe.
Sara 20:14
But just recently, I’m also realizing I’m a matchmaker, right? So I’m a matchmaker between the investor and the local market specialist. And and you were right on point when you said, you know, look, if you have somebody that is high touch, meaning, you know, they, they need constant communication, they’re detail oriented, you got to make sure to put them in touch with the person who can deliver on that. And more often than not, not everybody can deliver on that, it seems like a simple thing to you know, return a call and return emails quickly and send photos, but, you know, some are better at it than others. And so, you know, we were definitely partnering up, you know, the investors with the right fit for their communication style.
Jason Hartman 21:03
and someone listening who hasn’t invested with us, or hasn’t invested at all might be thinking, you know, they work at a corporate job. And it’s a well run company, and things get done, and people communicate. But in this world, this is a world of mom and pop businesses. It’s very fragmented. Real Estate school is super easy to pass. Unfortunately, I think it should be a lot harder. But you know, look at one of the hardest tests in the country, for example, actually, now that we’re talking about that the bar exam, okay, the bar exam, and then the series seven securities license to sell stocks and bonds, right? I mean, those tests are much harder than the real estate exam. And there’s a lot of idiots doing that stuff, too. Okay. So everything is fragmented, really, you know, it’s, it’s not like you’re working with IBM, okay. You know, it’s just, it’s just not like that anymore. In today’s world, so. So yeah, I agree. You know, you got to embrace the fragmentation. That’s what keeps Goldman Sachs out of our business, because they don’t want to deal with these little mom and pops. And they can’t work their way around that. But it, it preserves the opportunity for the small investor, which is a wonderful thing.
Sara 22:22
Yeah. So I agree. And our clients are doing great. They, you know, because of all the teachings you do on your podcast, you know, they’re really learning how to manage their managers. And, you know, we have a few clients that are starting to self manage their properties. But, you know, for somebody that works a full time job and doesn’t have a lot of time on their hands, we certainly take a lot of the guesswork out of it for them. And, you know, this can be done alongside your, you know, full time job or your full time soccer mom program. I happen to you know, have both So, you know, it can certainly be done.
Jason Hartman 23:01
Okay, so any other clients you want to mention and kind of like what they’re doing. You know, Toby, Mark, you there’s just so many Tina, I mean, I’m looking at your list here, Chris, Kevin, I mean, last just just last month, by the way, Sarah, you did I think what 47 transactions, is that correct?
Sara 23:21
Um, I don’t know. Maybe? Yeah. Last month was busy. Last month was busy. Yeah. So you mentioned Toby from Hawaii. And she’s another client that we started working with years ago. And she, you know, she sent me an email, I don’t know, a few months back and, and she had kind of a challenging year, about a year ago, I would say, last year, and the year before, she had some vacant units. And so we were communicating on that. And then a few months ago, she said, You’re not going to believe it. All my units are leased. And so that was really exciting. And so then, you know, she started acquiring again, and she we actually talked yesterday or the day before, and she says, Wow, when I close this next, you know, portfolio, I’m going to have 19 properties.
Jason Hartman 24:06
Fantastic. Congratulations, Toby. That’s awesome. 19 properties. Good.
Sara 24:11
So congrats. And she, she is busy. She She works full time. She’s a mom. She is always I think anytime she and I talked to each other, we’re both in the car. You know, so she’s super busy, but she’s made the time to, to acquire a pretty good portfolio.
Jason Hartman 24:30
Good stuff, good stuff, you know, Anoop and Carlos and, boy, there’s just Damon. I mean, you know, Steve, of course, Rich. I I just wish I could say full names. So it would, you know, be easier to communicate about it but but you know, there’s just a lot of people who I just see these repeat names over and over again, that are just stocking up on property. Wow. Um, I’m getting a little envious of our own clients here. Like I need to be buying more stuff.
Sara 24:59
You should. I can help you find some properties if you like.
Jason Hartman 25:02
I bet you can. But you know me. What a difficult client I am sorry, you wouldn’t want me.
Sara 25:06
Yeah, you’re pretty difficult.
Jason Hartman 25:10
No, I’m not. I’m easy.
Sara 25:12
I gotta put our top-notch market specialist. Yeah. How about one more shout out? How about Andy and Stacy. They’re from the southern California area. And they’re young. They’re a young couple. I want to say early 30s, late 20s. Maybe? I think they’re younger than me. I don’t know. Anyways, they just closed on about five properties. I think all in Memphis, too. And that was their second shot. I mean, they were acquiring properties about a year and a half ago. They’ve been out to our meet the masters and they’re doing great. I love to see the the young, young kids. You know, doing this at an early age is awesome.
Jason Hartman 25:57
Yeah, that really is good. You know, wherever you are. Most people have that same thing, you know, that reluctant investors lament that I many times share, and I’ll try to be sure to share that again in San Diego. But you know, I hesitate to make a list of all the deals I’ve missed. And that type of mentality that should have coulda woulda, and that you don’t look at the only moment any of us have control of ever is now and it’s gone. And now and it’s gone. And so if you haven’t started, or if you haven’t done much yet, in terms of building your, your income property portfolio, just keep going just buy some more properties. And start today, wherever you are, is where you have to start. You can’t start 10 years ago, it just doesn’t happen. So you got to start today, and just grow your portfolio from there. So absolutely Good. Good stuff. So any other clients you want to mention? I just think people love to hear their clients stories, if you you know, have any unique parts of them.
Sara 26:59
Uhm, you mentioned I think you mentioned like the whole list. I don’t know. I mean, Damon,
Jason Hartman 27:05
Tell us about Damon
Sara 27:07
Damon, he’s been a client for a while as well. I mean, he he just got started with the land contracts as well as Bill.
Jason Hartman 27:15
Bill’s been doing a lot of land contracts, by the way. And by the way, just explain that to the listeners. Again, we ran that as a flashback Friday recently. And we also ran that episode. And I think, January or December originally. I know it was sort of a quick turnaround for flashback Friday, but that local market specialist will be at our San Diego event. So we wanted to refresh your memory on the land contracts. He presented at our Meet the Masters event last January. And you know, people are buying paper through our network, not just properties. They’re buying the paper on the properties too. Right?
Sara 27:51
Yeah. And I think that’s a good fit for people who want to use some of their IRA funds to invest. I think, you know, that’s a good source. And then we’ve got, you mentioned Rich, he’s on the East Coast. Rich is my buddy. He’s like one of our nicest clients, and all of our clients are awesome. They’re all nice, but rich, like every time we email, he’s like, oh, thank you so much. And it makes my day he’s like, so gracious. You know, for our help. And it’s funny, cuz he’s like, the nicest guy, right? But then he told me the other day, he’s like, man, I really don’t trust anybody.
Sara 28:30
You know, but he’s doing really good, too. He’s, he’s got a nice little portfolio. And yeah, he’s been great. So
Jason Hartman 28:39
Good to hear. Good to hear. I think I think you’re gonna get some people mad at you that you singled him out as the nicest. Now everybody’s gonna try and win the nicest award.
Sara 28:47
I like flowers, Starbucks.
Jason Hartman 28:51
Oh, shut up. You should be sending them flowers and Starbucks. Don’t say that.
Sara 28:55
I’m just kidding. I’m just kidding. He doesn’t send me any gifts. I promise.
Jason Hartman 29:00
Sarah, don’t shoot yourself in the shoe.
Sara 29:02
I won’t, I won’t.
Jason Hartman 29:05
Yeah, and in the past, you know, over the years, and many of them have been on the show. So we kind of tried to mention some clients that haven’t been on the show. And of course, if you’re listening to this, and you’d like to be on or you’ve been on before, we’d love to have you. We love hearing your story and your case studies. I think it’s super valuable to our other clients. You know, whether it be Philip or David or any of the people we’ve had so many over the years that have come on the show. You know, Neil is always participating in the monthly member calls. So I’m very grateful for that. You know, it’s just always nice to have clients on the show. And we really, really appreciate that.
Sara 29:46
Yes. And please come out to our events. If we haven’t met you in person. I love meeting our clients in person. I mean, it just it just I don’t know it’s when when you’re working with somebody and you’ve met them. It’s just a different feel like I can’t explain it. But I love meeting our clients in person. And I hope to see several of them at our upcoming event here. Again, I’m sure there will still be a few seats left by the time you hear this.
Jason Hartman 30:13
Yeah, we’re recording this episode a little bit early, by the way, so we’re kind of ahead in our production. But yeah, our San Diego event is coming up fast. Okay, and join us for that, go to Jason hartman.com. And register. That’s Jason Hartman University Live is the name of the event JHU Live, just on the Jason hartman.com website, you can register in the events section, we’d love to see you there. We’ve also got our venture Alliance event little just just slightly over a month away. Newport, Rhode Island, that is just going to be fantastic. I’ve been working with all over one of our investment counselors who’s helping out plan that event. And boy, that’s just going to be phenomenal. I can hardly wait, what a fantastic event, we’ve got a great speaker that is 98% confirmed coming to that event. And he lives in New York City, and will be coming up to Newport Rhode Island to present the ins and outs of the hard money and private lending business. You know, many of our clients do do that as well. And then you can buy the paper, buy the notes at a discount the land contracts, we’ll be presenting that at the San Diego event. So just a lot of good stuff. And we really just appreciate our clients so much. And we’re having a banner year, I mean, business is nothing short of phenomenal. So we thank you all so much for your business and your continued support. We offer lifetime rental coordination to help you with your properties. If you have a problem, years in the future, from from when you bought the property, just let us know. We’re always happy to help you just continue to earn your business. So thank you very much for that. And Sarah, any other thoughts? In closing? Let’s wrap this up.
Sara 31:56
No, I mean, we covered a lot. Thank you so much for having me on the show. And until next time.
Jason Hartman 32:02
Yep. We’ll see as many of you as possible at the event. One more thing I’ll just say about our live events. Come out and meet us come out and meet our clients. So many of our clients repeat these events. And they come over and over again. Now this event. JHU live is a totally new event. So that really will be different than our creating wealth boot camp than our meet the Masters that our property tours, it’s different than that. So that’s a new event. Okay, so we got something new going on, which is exciting. But you get to meet our clients and talk to them, and hear about their experiences and learn from them and then also learn from us. So just make it a point to come see us in person live somewhere in the country, maybe once a year, I think that that would be a really good goal to do that once a year. So we’re always sort of in touch with you and can see you in person. Okay, so thanks so much, Jason hartman.com is the website and also for a discount on the San Diego event. Just write a review on iTunes, and send a screenshot to reviews at Jason hartman.com. That’s reviews with an S it’s plural reviews at Jason hartman.com. Send me that screenshot of your review, and I will send you back a promo code for a 30% discount. We’ll look forward to seeing you there. Or maybe even at our venture Alliance event. At the end of September. Happy investing everyone and thanks for listening.
Announcer 33:30
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be
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Really now How is that possible at all?
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Simple. 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.
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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.
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Yep. And that’s why Jason offers a 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 to exploit the incredible opportunities this present economy has afforded us.
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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.
In this episode, Jason Hartman and Naresh talk about the impact of technology on inflation and the rate of change in inflation rates. Then, Jason explains how deflation affects the real estate market and reiterates that cash flow allows you to weather the downmarket storm. Increasing your knowledge and learning pertinent facts and figures will help you anticipate upcoming market changes.
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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 1000s 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. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show. This is your host, Jason Hartman. We are at episode number 557 557. Thank you so much for joining me today as we talk about several issues with my temporary co host and that is Mr. Naresh. He’s back on the show for is this the second time Naresh.
Naresh 1:21
This is the second time this month, Jason. It’s a pleasure to be back on looking forward to some good discussion, discussion.
Jason Hartman 1:26
Are you on the show a long time ago? I think you were, right?
Naresh 1:29
I was on about two years ago. And I remember that show very well, because we had an inflation deflation debate. And I told you some things that surprised you. I told you that I was a huge Bernanke key fan. This is one Bernanke he was leaving the Fed. I think he was leaving, like within the next two weeks that we ran that interview. And I also told you that deflation was coming. And you gave me some some heat for that. But that was about two years ago.
Jason Hartman 1:55
Well, so the question is, who is right now that we look back? I mean, I don’t know. I almost want to say I’m wrong. But I’m not because we’ve had a little bit of inflation. But man, it’s been so mild, that, you know, I hope I’m not like totally wrong on this prediction about inflation, because I was a pretty much an inflation bug A few years ago, and it boggles my mind, that they’ve been able to just, I mean, I know it’s baked into the cake, we know the inflation is baked into the cake. I mean, you’re you’re well, at least you were a bit of a gold bug. We’re gonna talk about that today. So we can we can address that one in a moment. But, you know, it’s it’s definitely from a monetary and fiscal perspective baked into the cake. The only thing that could overshadow that could be the, I’m gonna say, the trump card, because we’re gonna talk about Trump today is technology, as I’ve talked about many times, that’s the one that’s really hard to understand, you know, how big that impact of all of this incredible technology and this progress that were on the verge of what that impact will be. But, you know, I mean, we haven’t really had real deflation, right? I mean, I mean, you’re not gonna try and like collect on our bet, are you?
Naresh 3:13
Well, we didn’t, we didn’t, we didn’t make a bet. But if you look at the inflation rate, so we spoke in probably late 2013, early 2014, and I’ll give you some data, January 2014, or we’ll take December 2013, the inflation rate was at 1.5%. So not, no major inflation. Compare that to when we actually saw major, not major, but we saw some inflation in 2011. After it appeared, we came out of the recession, we saw the effects of the bailouts and the stimulus packages in 2011, the inflation rate hit almost 4%, September 2011.
Jason Hartman 3:50
Okay, but but we do i do have to interrupt here, of course, and our vast majority of our listeners know, but in case you are new tuning into this show, those official stats are always understated, even in this environment. So I would say and, you know, feel free to disagree with me on this, Naresh. But I would say that you you have to assume that the real inflation rate is 50% higher than the official number. So they tell you, it’s 4% it’s really six. If they tell you it’s two, it’s really three. Okay, that’s what I’m saying.
Naresh 4:24
Yeah, I’m not gonna argue with how the numbers are calculated, and said on a percentage basis. If you just look at the improvement, or you know the the decrease in inflation, that’s kind of what I look look at rather than the actual number itself. So same thing with unemployment, of course, the government calculates it their own way. And then you probably have john Williams on your show who runs shadow stats calculated, we have his own way. What I look at is I’m more interested in the I guess the chart rather than the actual number itself, right.
Jason Hartman 4:57
You’re looking at you’re looking at the the change the rate of Change
Naresh 5:01
Exactly the rate of change.
Jason Hartman 5:02
Okay, so So tell the listeners why. And you know, of course, this is massively important to real estate investors, you know which way this goes. And I’ve shared my scenarios and my plans. And you know, with income property being a multi dimensional asset class, the beautiful thing is you can adjust your strategy, regardless of the environment, inflation being the home run, the best thing, especially a lot of inflation being the home run for real estate investors, deflation being something that you’re, you know, By comparison, you’re going to do probably better than most everybody else. But again, it’s not gonna be a home run in stagnation, we’re just kind of nothing happens, then you’ll you’ll be better off than everybody else. But again, certainly not a home run like the the inflationary environment is the home run.
Naresh 5:50
Well, it that we had our little debate back in, I think, December 2013. Now, fast forward, today, I gave you the number back then it was at 1.5%, the inflation rate,
Jason Hartman 6:02
Maybe this needs to be a flashback Friday show. We’ll have the audience vote. Who won.
Naresh 6:09
Yeah. And now fast forward, the latest number that the government put out for June of this year 2015, the inflation rate is almost at zero that the official number is at point 1%. Most of 2015 has been in negative territory. So there’s actually been a good amount of deflation in 2015. And the latest projections for the July number. There. They’re saying that July was the most deflationary month that the United States has has faced since 2009. So we’ll see what that number ends up being. But I think deflation is is the worry right now, not just in the United States, but globally. That’s why China is doing all sorts of stimulation into its economy. Greece got another bailout. And all this could end up or it will end up, in my opinion, delaying when the Federal Reserve raises its interest rates. I think they were supposed to do it in September. Now it looks looking like that’s going to be delayed because of this deflationary pressure. So I’m curious, Jason, what are your thoughts on this? And what does this mean, for real estate moving forward?
Jason Hartman 7:26
Yeah. So first of all, interestingly, and I just read this this morning, believe it or not, Greece, the Greek economy actually grew in the last quarter. I mean, it’s amazing, right? You know, you look at what’s going on, and you think, you know, how can the economy possibly be growing in Greece, it actually did grow slightly. So that’s incredible. But my thoughts are, like I said, it’s baked into the cake from a fiscal and monetary perspective, the fact that we haven’t had more inflation. It kind of amazes me and the fact that we still are the reserve currency of the world amazes me, but at least I understand why that is true. And it’s because we have the biggest economy, the biggest military, and a lot of weight to throw around in the world and, you know, forcing other other countries to take our dollars and keep it as the reserve currency. But in terms of real estate, you know, in a deflationary environment, the whole game is about yield, or a stagnation environment, either one, or stagflation, I should say, it’s all about yield. So then the income property asset becomes a cash flow type of asset, a cash on cash return asset. And if you look on the performers at Jason hartman.com, in the Properties section, just pick any property in there, and you’re likely to see cash on cash returns projected anywhere from you know, in this, I’m just kind of guesstimating here what they are, because I’m not looking at it, but anywhere from maybe eight to 12% annually as a cash on cash return, maybe even 14% annually on some of those performance. But if you see that, you know, that just shows you Naresh as long as you maintain the same income and expense ratio on a property. Even if the property goes down in value, even if the value is cut in half, you still have the yield. And in that environment, remember, economics is a relative game. It’s it’s not that you need to make you know 100% annually, you just need to do better than everybody else because the the marketplace and the entire economy although there is a lag time and by the way, the lag time concept is what kills people. Okay, everything ultimately adjusts. It just takes time for it to play out. And the people that get killed are the people who don’t in real estate have staying power, or in any other investments have staying power. And it reminds me of that sort of famous old quote, you know, where the stock market investor complains, well, the market is irrational, I’m right. And someone says to him, well, I have news for you, the market can remain irrational a lot longer than you can remain solvent. And so, so so that’s the key. So for the real estate investor, if you can maintain somewhere close to that income and expense ratio on your property, regardless if the value is going up or down. Now, I mean, it’s hard to argue, I mean, it’s pretty much impossible to argue that real estate has been deflating, because it’s been inflating a lot over the past few years. So there’s definitely inflation there. But real estate prices aren’t directly in the consumer price index, I believe it’s called This is from memory, the rental equivalent value or something like that. And they have this equation for working out how much housing expense influences the CPI. But now you might be thinking, well, Jason, now this is a good question. Okay. Well, Jason, if we do have a lot of deflation, and say that deflation affects real estate prices, which, by the way, the trend has been the complete opposite the last several years, coming out of the Great Recession, there’s been quite a bit of real estate inflation, especially in the cyclical markets that I believe are in a bubble. They’re in bubble territory, I believe. And those will adjust to maybe they’ve overstepped. So you know, what happens? Well, if the values go down, won’t the rents go down? And the answer to that question is may be, here’s why. You got to really dice this up. Remember, when I talk about creating wealth seminars, I talk about my three dimensions of real estate. And there are really more than three dimensions. But that just sounds good. So I call it the three dimensions. Two of those dimensions are rent, in other words, what you can rent the property for, and another dimension being the value of the property. So if values decline, all the renters out there think, Well, I’m not going to buy because the markets declining. And this is the way markets act in stocks and precious metals and real estate. This is just the nature of markets in general, where the little guy always gets in or out too late. If we were looking at a chart right now, and you like looking at charts Naresh. And you see, you know, you see the chart go up and you see it go down, you know, the little guy never buys in the trough, and never sells at the peak, it just does not happen. That’s not the way markets act, because there’s this lag time of media. So the there the little guy is all bathed in the stew of media out there. And they’re reading articles, oh, Real Estate’s going through the roof. It’s the best market in years. And you know, they got to get bathed in that for a while before they react. Okay. And by the time they react, you know, you’re, you’re approaching a bubble. That’s typically how it works. So the little guy always acts way too late. Okay, that’s just the nature of the beast, it happens in pretty much every market. And every cycle, you can see it over and over, it just always repeats itself. And similarly the thing, same thing happens on a downturn, you know, as, as the price of whatever it is widgets, houses, stocks, precious metals is going down. The little guy always says, Well, you know, I’m gonna hold on a little longer, see if it comes back up. And then you know, they usually end up getting discouraged at the, you know, at the trough near the bottom, and then they sell and they lose money. Okay, so this is what happens. And this is why you need to practice what I call sustainable investing. Because if you have cash flow, then you can weather the storm you’re never forced to sell at an inopportune time. And similarly, stay married. Because if you are married, and I’m not, but I’m looking, and I know you’re looking too, right Naresh?
Naresh 14:17
I don’t know about marriage. I don’t know about marriage. That’s for that’s very different show. So.
Jason Hartman 14:22
Okay, okay. Well, you seem to be pretty motivated. You know, when you talk about your dating life, so, but what was I talking about? Now? We got off on a tangent. Oh, yeah. Do not get divorced in a down market. That’s my lesson. because it forces you to liquidate assets at the wrong time. Okay, only get divorced at the peaks, right. So time your divorces, that’s what I always say. But that’s what happens. So the little guy as the market is going down, usually continues to quite happily rent. Okay? If they’re a renter, you know and what i’m talking About as the little guy that’s renting now, and you move into a market cycle where the real estate prices are going down, and the little guy stays and says, Well, why would I buy now? Prices are going down. And that guy has to get bathed in that media bath for a long time. And then he hears Oh, now prices are going up, you know, a couple years later, the cycle switches, and here’s prices are going up. And he says, oh, wow, maybe I should think about buying. And then he thinks about it for a while. And he hears a lot more news and time goes by. And then you know, everybody’s making multiple offers on property, things are going nuts. They’re going absolutely crazy. It’s getting frothy, you can you know, if you’re paying attention, and you’re smart, and you’re educated, you know, it’s a bubble, right? And then the little guy finally jumps in. And it’s not at the top, usually, but it’s near the top that the largest amount of people get motivated to buy. You know, you saw this in tulip mania in Holland, what, a couple centuries ago. It just happens in every market. This is the way it works. This is the way you know the way markets interplay with human psychology. So the answer to the question, that was really the question, is you’ve got to make sure you follow my commandment number five of the 10 commandments, Thou shalt not gamble. The property must make sense the day you buy it, or you don’t buy it. And that cash flow is pretty reliable. Appreciation and depreciation. They are darn hard to predict. And I have never met or heard of any guru, or known anybody that can truly accurately predict those cycles. Nobody. Okay. Not Bruce Norris, not the guy in San Diego, Robert Campbell, I think is his name. You know, not any of these gurus not Harry dent. Okay, who’s been on many times, but I tell you, though, maybe his oil prediction is coming true. And maybe his gold prediction is going to come true. So we can go off on those tangents if you like. So the answer to your question is, it becomes a game of yield in a deflationary environment where you just sit back and you collect your yield. And in that environment, every other investment is probably not yielding. So, you know, economics being a relative game, if your net worth is $100. Okay, and your neighbor’s net worth is $75 or $50. You’re rich, okay. It’s not about the the the nominal prices, it’s about the relative prices. Okay, and the relative yields. So if everybody else in this deflationary environment is only getting basically what they’re getting now, okay, in the bank, you can get a half a percent maybe give or take in the stock market. You know, most people can see that’s a bubble. Of course, you have dividend paying stocks, precious metals are down, you know, where are you going to get yield. And this is why everybody is rushing toward income property. It’s becoming this giant cottage industry, because it’s the only thing that makes sense. And I don’t think we can say we’re in a deflationary environment. We’re in an environment the past couple years of very low inflation, surprisingly,
Naresh 18:22
now, I don’t expect the Fed to raise rates when they come out in September, but I do think in early 2016, there will be a rate hike. What will that mean to income property investors?
Jason Hartman 18:37
Okay, so if there is a rate hike, first of all, the Fed doesn’t control long term rates. Okay. So they don’t control mortgage rates directly. But of course, the tone of the Fed does set markets, there’s no, there’s no question about it. I don’t think anybody could argue with that. But they don’t directly control mortgage rates. Okay. So if that happens, remember that three dimensions of real estate concept people that are in marketplaces only have three choices. They can buy, they can rent, or they can be homeless, maybe three and a half choices they can live with their parents. Okay. You know, is, is is a definite truth of your generation, Generation Y generation, right?
Naresh 19:20
Yes, it is pretty common 30 year olds living with their parents.
Jason Hartman 19:24
Oh, yeah. No, I know, it’s way too common. But But anyway, so you have that situation. And that’s the choices they face. So if rates are high, that means that puts housing affordability is usually lower in that high rate environment. So it’s harder for them to qualify harder for them to buy. It definitely has the effect of overall softening real estate prices, which, you know, if you’re a capital gains investor and a speculator, you definitely don’t like that. But if you’re an income investor, usually when housing affordability is low, we see upward pressure on rents. And the reason I say Usually, uh, not always is because of this. I know, I’m hedging that a little bit, I get that. And maybe you notice that in my language is because during the Great Recession, I’ll start this in about 2007 for three years in there between 2007 2010. Oddly, because of all the workouts and the loan modifications, I mean, that was bad. Usually a recessions not gonna be that bad. Okay, that was the worst economy we had in seven decades, everybody knows. But in that time, we didn’t see much upward pressure on rents. In fact, we saw some minor softening and rents, because the government stepped in too much. And we had an election in 2008. And all the talk was, Oh, we’ve got to keep people in their houses. But no one ever asked the question, are they living in a house that they really can’t afford, don’t deserve. And it’s too much house, ie, the school teacher who got a no income dock loan, and they make $65,000 per year, and they somehow bought an $800,000 house, like, explain that, to me. It’s psychotic, of course, right? But that kind of stuff was happening. So the talk was, well, let’s just keep everybody in their house. And so there was so much pressure on the banks to do loan modifications and workouts, and short sales after, after all, was considered that, you know, you have a lot of people living in their house for free, there are still people living in their house for free in the judicial foreclosure states, like Florida and Illinois, right, that it’s just insane. I mean, they got to kick them out and let the market clear and let price discovery occur. That’s a key term price discovery. Okay. So remember, multi dimensional asset class always gives you an opportunity to play the game in different ways. You didn’t ask what if the opposite happens? So I just want to talk about that real quickly. So what if, what if rates stay low, and housing affordability is good, and say the economy improves and wages actually go up, which hasn’t happened in quite a long time, in any real way. And so say that houses look cheap, well, then then the rents soften, but the prices go up, I see non correlating indicators on the multi dimensional asset class. So when that happens, tenants rush out, and they try to buy a house. And so you lose your tenants, your rents soften, and you got to accept lower rents, because there’s downward pressure on rents, when it’s a market where everybody’s trying to buy. So if that happens, your strategy is pay, my value is going up, I feel good refi till you die, or even sell the property if you want. But, again, I don’t often recommend selling. I definitely like the buy and hold philosophy. But you could sell into a 1031 exchange, and defer your taxes into a lower price, more linear type market. And the example there would be that, say, for example, in 2004, you bought something possibly from you know, for me, right? Okay, for my group, it was in Phoenix, and then those prices went way up. And then you sold Phoenix got a capital gain, although your rents were softening and Phoenix at the same time, because everybody was buying, okay. And you sold on a 1031 tax deferred exchange, and then you bought properties. In other more linear markets. At that time, we would have had you buy in Dallas, Houston or Austin, right? Or maybe Charlotte or Atlanta, or Indianapolis, and you would have, you would have moved into the more linear market with better cash flow, stronger rents, and you would have had a nice capital gain. So you, you probably would have been able to take that one Phoenix property and buy two in these markets. And you see how this is just such the ultimate wealth greater. You got you had no tax consequence. You improved your cash flow, took a capital gain, win, win, win, okay, boom, real estate investors. Just, that’s why that’s why you know, so many people who got rich in real estate, and nobody seems to know anybody who did it in the stock market. That’s not an insider. Does that answer the question?
Naresh 24:30
Oh, yeah, that was a great answer. And I think it was complete because he also talked about rates stay low. Now I don’t expect rates to to stay low, but it’s good to know, kind of what would happen if that if that were the case.
Jason Hartman 24:43
We’ll see. Hey, we’re, of course going along, as we always do. I want to postpone the talk on Mr. Donald Trump. But I do want to talk about because it relates to this discussion more gold and oil and China just for a few minutes if we can. But first, I definitely want to encourage listeners to join us in San Diego. If you like these concepts we talked about, we’ve got Jason Hartman University live a two day event in San Diego in the Mission Valley area, and it’s coming up quickly. Okay, so go to Jason hartman.com. Register for that, my ethical bribe is, if you want 30% off of that two day event, email a write a review on iTunes or Stitcher Radio for us. And email the screenshot to us at reviews at Jason hartman.com reviews, with an S, it’s plural reviews, reviews at Jason hartman.com. And we will email you back a promo code for 30% off, we really appreciate you writing reviews for the shows. And we would much appreciate that. So do that. And then right after that, you can go to Jason hartman.com and register for the event with that 30% off promo code. And then of course, we’ve got our super high end luxury event at the end of September about a month later. That is the venture Alliance. The second trip for the venture alliance in stunning, spectacular, Newport, Rhode Island, some of the biggest mansions in the world, definitely the biggest mansions, or the most ornate and incredible and opulent mansions in America and have Wow, that’s gonna be a great event. You know, we’re going to be hanging out with real estate entrepreneurs. And I’m lining up a couple of good speakers for that event. And we’re going to tour the mansions we’re going to have five star dining and venture alliances my mastermind group, it’s pretty exclusive. It’s real high end. So you can check that out at Jason hartman.com. Or ask your investment counselor about that. And we can give you more information about that. But those two events coming up. Okay, no rush. What about gold oil China? In just a few minutes here, what do you want to talk about there?
Naresh 27:02
Okay. Yeah, that’s a lot of stuff. So let’s start with gold. Gold, gold ties in more with what you just you just discussed on inflation fed rate hike and all that gold right now is out about the price is at about 1115. That’s $1,115. And I’m curious to hear your thoughts in general about gold because you’ve been pro inflation. I’m not pro inflation, but you’ve been thinking that there would be inflation and gold is generally tied to inflation. So if you look at a chart of inflation, in a chart of gold, you see that there’s a very strong correlation between the two. Of course, we talked earlier about right now being a very deflation of deflationary environment, which is
Jason Hartman 27:47
No. No. I’m not gonna let you say that on the show. It’s not a very deflationary environment. It’s a we are in an environment with very modest inflation, except in real estate. Okay. I mean, real estate in the cyclical markets has been inflating a lot. Atlanta is even, you know, that’s a linear market that went up 10% last year. Okay. You look at some of the really cyclical markets like South Florida, California, the northeastern the expensive areas in the northeast, and there are way more than that. Okay. So, we it’s not, we don’t have deflation. Okay. I’m just, I mean, do you think we have deflation? Really? I mean, was that is that your stance? I’m just curious. Like, we didn’t really settle on that.
Naresh 28:29
So compared to 2009. The the deflation not even close. Now, I guess I was wrong and saying we’re in a very deflationary environment. But
Jason Hartman 28:40
Let me interrupt you, though. In 2009. Food inflation was high consumer products inflation, except for technology based ones was was pretty high. Okay. So we had real estate. Now that’s interesting, by the way, counter cyclical, maybe. Real estate deflation from the Great Recession. But inflation in a lot of other items. I mean, food inflation was was pretty bad in 2008 2009. Oddly,
Naresh 29:08
Yeah. Well, again, I guess I’m talking more about the rate of change, and overall, deflation as a whole and inflation as a whole. And what you said was, I guess, stagnant inflation or low inflation environments. And so going back to gold, I’m curious to hear your thoughts why it is if inflation is supposedly coming, or if we even had inflation. Why has gold just been tanking so much over the past four years?
Jason Hartman 29:37
And why am I not telling all my listeners to go out and buy gold? Right? Well, first of all, I gotta say, Oh, my God, do we really need to talk about gold again? And the reason I say that, and you may not have even listened to some of these old episodes Naresh, but we have talked about gold. So extensively. I even told my listeners, this was a while back that I was going to shut up and stop talking about gold. But I haven’t talked about it in a while. So it’s kind of worth talking about. And you know, gold is is a measuring stick. Gold is money. I don’t think it’s a very good investment. There’s a good blog article on Jason hartman.com, you can probably find, you could just probably Google it. I think it’s called like seven reasons real estate is better than gold or something like that. It doesn’t produce income. It’s just not a good asset class in any way. I don’t know, we don’t have time to really go into it in much detail here. So just understand. Let’s let’s take that up on the next episode. No rush. We’re at 32 minutes already. There’s just too much to talk. It’s going to take us too long to talk about
Naresh 30:37
Agree. Like you said, gold, oil, China, there’s too much. So we’ll
Jason Hartman 30:41
Yeah, absolutely. Okay. So listeners, we got a lot coming up on that. And I definitely want to get to that. And we’ve got a lot of stuff in the back catalogue on that topic. So there’s a lot there on gold. And I’ve talked about it extensively. And you know what, it has been a while Naresh. So I am glad you brought it up. And you know, next couple episodes, we’ll get to the gold, oil, China topic. And by the way, it’s interesting because oil is down again. And that’s been fairly deflationary. So we’ll, we’ll talk about that. And we’ll see if Harry dent is going to be right about that stuff. Okay, listeners, thank you for joining us today. Go to Jason hartman.com. Join us for our two upcoming events. JHU live Jason Hartman University live in San Diego. And also, you can talk to us about venture Alliance, our mastermind group, we’d love to talk to you about that. And we will look forward to talking to you on the next episode. Happy investing to everyone. Thanks for joining me.
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Really now How is that possible at all?
Announcer 31:51
Simple. 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.
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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.
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Yep. And that’s why Jason offers a 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.
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To start this Flashback Friday episode, Jason Hartman shares an article from CNN about real estate’s new problem: not having enough homes. Then, Investment Counselors Ari and Sara give a debrief on the last Creating Wealth Boot Camp. Jason also talks about income property bonds, gives investing insights, and shares a “case study” article from The Financial Freedom Report.
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.
Jason Hartman 0:09
Hey, this is Jason Hartman, thank you so much for joining me. Do you know what day it is? Yes, it is flashback Friday, where 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 got to 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 right about a lot of things, but I’ve been wrong about a few. So you can give me a hard time about that if you wish. 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 1:22
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 whose own 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 2:11
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 be a packaged 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 in 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 deflation as to 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, 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 leveraged 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 D leveraged or defaulted upon so this deflation argument just really doesn’t fly with me. So anyway, enough of that. I’ve got some And are here we wanted to give you 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?
Sara 5:16
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.
Jason Hartman 5:26
We had people come from all around. We had East Coast, we had Hawaii. I don’t think we’ve ever had any people come from Hawaii to our event before, have we?
Sara 5:33
I don’t think so.
Jason Hartman 5:34
Well, I want to say mahalo.
Sara 5:36
Mahalo
Jason Hartman 5:37
And Aloha.
Sara 5:37
We do have some Hawaiian clients, though.
Jason Hartman 5:40
Fantastic. 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.
Sara 5:50
And gas is definitely not cheap. So I also want to thank Ozzy from New Jersey. He’s been a longtime podcast listener and exchange many, many emails. So it was great to put a face with the name.
Jason Hartman 6:00
Fantastic. Ari, what do you think of the day?
Ari 6:02
Good afternoon, Jason. The
Jason Hartman 6:05
We’re all 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’re being a little goofy today. Go ahead.
Ari 6:14
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.
Jason Hartman 6:26
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?
Ari 6:31
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.
Jason Hartman 6:39
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, we can 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.
Sara 7:12
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 and coming to our seminars, and you know,
Jason Hartman 7:26
Are they spies?
Sara 7:27
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 7:39
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.
Ari 7:58
I wanted to give a shout out to Phil, our Texas.
Jason Hartman 8:02
Yeah, Phil from Texas.
Ari 8:03
That was awesome. He came out. And a lot of people really enjoyed that market listening about it. And all the deals are going on there. And I think a lot of people got a lot out of that.
Jason Hartman 8:13
Yeah. And we also had Jennifer from Entrust, talk about investing with your IRA and the Roth conversion topic. Very, very hot topic. No question.
Sara 8:21
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.
Jason Hartman 8:31
And we’ve had her on the show before too. So some more detail there.
Ari 8:34
So I want to also thank one of my clients named Matthew for bringing Jason and I some fantastic Tshirts.
Jason Hartman 8:41
Those were awesome. By the way. The first one, the one, well, he gave me two of them, but one of them. I just 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. So 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.
Ari 9:10
That’s awesome.
Jason Hartman 9:11
Those are great. So thank you very much.
Ari 9:13
Yeah. Thanks, man. Thanks again for that.
Jason Hartman 9:14
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 IPB’s. All right, like ICBMs, intercontinental ballistic missiles. Okay.
Ari 9:31
And what does that mean, Jason?
Jason Hartman 9:32
Well, what an income property bond is, is a property that is usually a lower price 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 here. Now now folks, 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’ll 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 bulldozed 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 28% 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 gonna earn 1% if this only works out half as good as projected yourn, eight to 9%. That’s just a no brainer deal.
Ari 12:30
Well, I gotta tell you, Jason, I do a lot of researching, and I’m sure YouTube can attest for that.
Jason Hartman 12:35
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,
Ari 12:47
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. And they’re 40 years old,
Jason Hartman 12:58
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’s thinking? You know, I obviously did not get through to him here is 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.
Ari 14:00
Well, and here’s what I want to point out, Jason, is that you’re putting $25,000 down in this property and you’re leveraging your money to get a loan.
Jason Hartman 14:06
Yeah, the bank’s putting up the other 75%.
Ari 14:09
So here’s what a lot of people don’t understand. Some people might see a house in Detroit, Michigan for 25,000 say, well, I’ll just pay $25,000 in cash. Can you explain the difference between not having a loan versus having?
Jason Hartman 14:22
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 priced 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, because 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 when there are these little inexpensive properties, you can pay cash, those lend themselves very well to investing with your IRA, your 401 K, 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 end tierpoint, 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.
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday.
Sara16:00
Well, and I’ll bring this up because you mentioned Detroit, I had a client call in he’s been on my email list. I don’t know for two years. He’s attended many of our seminars. And he calls it 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 happen twice a week.
Sara 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
We are 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 gonna be here to service you. We’re gonna be here to take care of you. We are attached to the deal. We’re not just selling books and tapes and sending you on your way.
Sara 17:01
Well, and just to finish my story here. So he calls anyone
Jason Hartman 17:04
Did I interrupt you?
Sara 17:05
You interrupted me many times.
Jason Hartman 17:08
I’m such a big mouth.
Sara 17:10
Okay, this is not morning talk. Okay.
Jason Hartman 17:12
All right.
Sara 17:12
So anyways,
Jason Hartman 17:13
They might be listening in the morning. You know what I said before we started recording everybody. Oh,
Sara 17:17
Did you just interrupt me again?
Jason Hartman 17:19
I think so. I’m guilty as charged. Okay. 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.
Sara 17:43
Detroit
Jason Hartman 17:44
Maybe this is a morning show.
Sara 17:45
So the guy calls, he wants 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 I so I suggested Indi to him. And you know, long story short, that was about a month ago, he contracted and closed on his first properties in the rehab phase. And he called me the other day just to kind of check and he says, I can’t wait to buy more properties in Indi. And I’m so glad that you know, I chose Indi.
Jason Hartman 18:13
So I mean, you know, that’s a quality city. It’s not a disaster like Detroit. This is just doesn’t work. And the other question we’ve talked about on prior shows, we always get, as you know, what about California? Look, folks, we’ll be recommending California in the future, I am sure. It’s just got to get a little bit less expensive, because it still doesn’t work. The state has way too many problems ahead of that 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 is 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 it 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.
Ari 19:28
One thing I want to say real quick about the seminar. A question that came up a couple of times was people were saying, Well, what kind of weather do these cities have? What kind of dangers do they have as far as storms and floods and earthquakes and people are looking at their markets?
Jason Hartman 19:45
Yeah, good question. They’re all different. Every area has got something California has wildfires and earthquakes. And I’d say if you’re going to 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 clients.
Ari 20:08
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, cold, hot. Yeah, yeah. So So I would say, That’s not a big deal. People just need to get over that.
Jason Hartman 20:20
Yeah, they do. Because every area has something
Sara 20:22
Well, and you don’t have to live there. There’s plenty of people that already do and will rent your place.
Jason Hartman 20:27
The funny 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 or recommend it to you. But everybody says about Houston, ah the weather here is just awful, the traffic is bad, etc, etc. It’s sprawling metropolis megalopolis. And you’re right. But look, 6,000,000, 5 6 million people live there. So somebody lives there.
Ari 20:57
Well, it’s a disease that Brian Tracy calls excusitis.
Jason Hartman 21:00
Excusitis.
Ari 21:01
When people make excuses to not buy in these places because they hear things and they’re not living there. So
Jason Hartman 21:07
Good point. Yeah. Sounds like paralysis of analysis and other disease.
Sara 21:10
Well, and just to wrap this conversation up, and I have to run but exactly what Ari said
Jason Hartman 21:14
Are you off to yoga again.
Sara 21:15
Actually, I am. Hot yoga.
Jason Hartman 21:18
Sara, you have such a hard life.
Sara 21:19
Hey, I have a one-hour conference call on the way to hot yoga with a client.
Jason Hartman 21:24
Well at least, you’ll be more flexible.
Sara 21:27
So what I wanted to just say kind of in closing, and you know Ari 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 and Ari said, you know, nobody in that seminar had purchased through us anyways. And I just want to saym 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.
Jason Hartman 22:06
Yeah, 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’d become senile. If you live in the future, as Denis Waitley says, You’re on someday I’ll. Like I apostrophe ll, like I will. Do it today. Make it your now. Look, we are not saying that real estate is gonna 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 is 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 put into the stock market, the stock market is becoming very volatile again. I heard a prediction yesterday that the S&P is going to be around 7 to 800, from a very reputable guy who I’ve interviewed on the show, and that the Dow is 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.
Sara 23:15
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?
Sara 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 him in my newsletter. He writes a column in there from time to time and Puppy was there at the Masters weekend and at the creating world boot camp we just had.
Sara 23:46
Yep. And so Thanks, Matt, for that little comment there. I know you’re a listener of the podcast.
Jason Hartman 23:51
Thanks to you.
Sara 23:52
You’re one of you’re already registered for masters weekend in October. So I’ll see you then. Awesome.
Jason Hartman 23:57
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 in time. So planet advanced. Next, Creating Wealth Bootcamp is July 31. That’s a Saturday.
Ari 24:10
I also want to tell our listeners, they can purchase the creating wealth in today’s economy home study course on our 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.
Jason Hartman 24:27
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 dot com. Great point, Ari. Ari, it looks like we lost Sara, she’s off to yoga to learn how to become more flexible.
Ari 24:46
It’s okay.
Jason Hartman 24:48
The other thing is, so we’ve got the next boot camp 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 bailout 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 was 7.325, 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%. 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. So they took the maturity date from 2038, which was a 30 year loan originated in 2008. And it’s now not due until 2048. Okay. Her payment is dramatically lower. This property is now super positive cash flow, it has turned a so-so 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.com. Many of the other shows are still in their full length complete version. However, some of the shows like this one are in our members section where you can hear the show in its entirety. And again, you just need to go to Jason hartman.com. And you can get the full show there in the members section plus a whole bunch of other great members benefits and resources, 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.
Announcer 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 properties, investor network, Inc. exclusively.
