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.
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
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
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.
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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.