Jason Hartman starts the show reminding us that the best insurance is a high loan balance. He welcomes client, Adam Jackson, on the show today to discuss how in five years he was able to get 14 properties with infinite returns. Adam shares his journey and discusses his career from the USMC vet to his work in the aerospace industry.
Announcer 0:02
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 multimillionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:53
Welcome to Episode 1541 1541 today, we’ve got a fantastic Stick client case study and you are going to want to learn from how this guy did it. We’ve got our client, Adam Jackson on with us. And he’s been investing with us for the last five years and get this, almost half of his portfolio is now in the infinite return phase. He’s a former Marine, and now in the aerospace business, and just doing a little investing on the side, and this is the beautiful thing about income property, you can acquire the asset and then you can get all your money back as if you sold the asset, but you don’t have to sell it. You can still own the asset and still get the returns from the future of the assets performance. After you received all your money back. That is fantastic. Isn’t it Alright, so in our intro portion today, and by the way, this guest will be in two parts. So we will have him today and the second half of tomorrow but the first part you’ve got yours truly. And I’d like to start off with a quote. And this quote is a Shakespearean quote. So what does the Bard have to say to us? Well, in Julius Caesar, act four, comes this gold nugget of wisdom. There is a tide in the affairs of men, which, taken at the flood, leads on to fortune omitted, all the voyage of their life is bound in the shallows and in miseries. On such a full sea. Are we now a float, and we must take the current when it serves or lose our ventures. That’s good. I mean, Shakespeare talks weird. We all know that right? But really, really an incredible quote. And it just really goes to show us that so many times, we are faced with such incredible opportunities. And you know, we just finished our team call and we were talking about our clients who had purchased properties through our network over the years and people that purchase properties 10 years ago, eight years ago, five years ago, three years ago, even a year ago, have made great money. But you know, what’s interesting about that? Is that the same time there were people saying 10 years ago, eight years ago, five years ago, one year ago. Oh, the bubbles gonna pop on. I’m gonna wait until they were saying this three months ago. What am I talking about? I’m gonna wait I’m gonna keep my powder dry. I’m not gonna buy anything yet, because I’m gonna wait because it’s going to all collapse. And then I’m going to buy everything when it collapses. Yeah. Good luck trying to time the market. It sure seems like every brilliant market timer would have been out in force in March. That was only six months ago, folks, well, five months ago, depending on how you look at it, and they would have said, Wow, we’re in a pandemic. Yeah, the markets gonna collapse. Now again, you know, I’ve said this, we’re in the third inning here, folks, we got a ways to go here. But look, just buy properties that make sense from day one, and that is your insurance. You can ask for a better insurance policy than that. Just buy properties from that makes sense from the day you buy them. And you’ve got a very nice insurance policy. Now there are other forms of insurance policy included in your properly structured properly purchased real estate deals that follow Jason Hartman’s 10 commandments of successful investing, and even the next 13 of them up to the 23 commandments, but you only really have to follow the first 10. And you’ve got all sorts, all sorts of insurance. One thing I say is that the best insurance has a high loan balance. Well, that’s going to come true again here, folks. Our heart goes out to the people affected by the recent hurricane. And I’ve got an article in front of me Of course, this pushes up the prices of commodities, which are already more than high enough, right. This article says hurricane Laura Wallops areas with high mortgage delinquency rates. Wind surges hit over 150 miles an hour in Louisiana with dead Damage estimated in the billions. Insurers will have to fork over billions of dollars to pay for the damage that property owners incurred from Hurricane Laura last week. By the way, just a side comment, this wasn’t my point. My point will come in a moment. But my side comment is in every time you see one of these hurricanes, or really any natural disaster for that matter, sometimes, many times actually, it is an example, in another odd way of Joseph Schumpeter, the economist Joseph Schumpeter, his creative destruction. Now, it’s not very creative, admittedly, but it’s destruction. And sometimes, and I know this may sound cold and heartless and awful. But sometimes when you step back, and you look at the big picture, you see that a lot of this destruction was actually good for the people whose home was destroyed. Now, nobody will feel that way in the thick of it, certainly not. It’s terrible. But many of these people, and I’ve talked to them over the years and some of them are clients, like in Hurricane Katrina, I remember one of them. property was completely wiped out. And at first he thought, This is terrible. But then, but then he got his insurance payout. And a developer bought the property, because they were doing an assemblage assembling a bunch of properties to build a high rise where these little single family homes used to be. And that is an example of, in a way creative destruction. Because he made a ton of money off that deal. Okay, you wouldn’t think it you’d think oh, you know, it’s terrible. It’s tragic, right? A lot of times, tragedy seeming tragedy can turn out to be Really, really positive thing. And you’ve all seen this before in your own life. You all can think of examples in your past, where one thing, you know, a lot of times it’s a relationship, right a relationship that ended maybe you got dumped. Right? Maybe you got dumped, and you’re sad about that. And then you realize later, Oh, am sure glad I got dumped, because that can make room for someone a lot better. Right? And a lot of times, it turns out exactly that way. So you know, it’s, um, one of the key things in life is the concept of gaining perspective, perspective, perspective perspective. You got to stand back from the canvas of your life and stop focusing on one or two brushstrokes. And as the old saying goes, look at the big picture, you’ve got to look at the big picture in that big picture, it can turn out to be much more positive, much more positive than you think at the time. So hurricane Laura, okay, here’s the thing. As I’ve always said, the best insurance is a high loan balance. The best insurance is a high loan balance. I promise you, there will almost assuredly be a bailout. It’s common votes. It’s always coming. It’s always coming. But guess what? What will be the bailout for the people who own their homes free and clear? I bet it will be nothing. Okay, Jason, you’re overdoing it on the sound effects chill out. You know, it’s like a kid who gets this new toys new sound effect machine. It’s not new, but I just pulled them out of the drawer the other day. And so I’m liking the sound effects. So There will undoubtedly be a bailout program coming for the people who have mortgages and likely it will be a moratorium on mortgage payments, a forbearance program of one sort or another. It’s common folks. It’s always coming. And that’s the thing. You know, you’ve got everybody right now asking, Well, you know, I don’t know, I think the economy is going to crash, the housing market is going to collapse. Everything’s going to get really bad. Because what happens when all these moratoriums and what happens when all of the bailouts and what happens when the extra 600 bucks goes away, etc, etc, etc. Let me tell you what happens in today’s world. And I know you know, normally normally normally if the world were rational, I would never hang my hat on this. Now looking over at the hat on the top of my bookshelf, because in Florida, you know that Sun’s pretty hot in the middle of the day when you’re walking the dog Got to wear a hat. Especially because my hair is getting so thin. When does the cure for hair loss going to be invented? I’m waiting, I’m waiting. Otherwise, maybe I’ll shave it. Maybe I’ll just shave the head someday. Anyway, tangent alert. So you see all these people, you know, and they’re all worried about this, that and the other thing, but I think we really are in an era where we can hang our hat. hang our hat on the idea that there will be another bailout program coming. And certainly, as long as Jerome Powell is head of the Federal Reserve, Uncle Jerome is like the man with the goodies. Wow. More so than maybe any other Fed Chair. I mean, a lot of others. And you know, our email newsletter that will go out this week. I’ve been writing that and you know, I’ve been looking at and researching Fed policy over the years For that newsletter, this next one is going to be good folks, be sure you’re on our email list. Just go to Jason hartman.com. And make sure you’re subscribing I’m really dedicating some effort to that. I never really did before, I’ll be honest with you, really dedicating some effort to it, and our email newsletter that’s going out this week is going to have a lot of good content. So make sure you’re on the list, go to Jason hartman.com, put in your email address somewhere anywhere doesn’t matter. You’ll get on the list, you’ll get our email newsletter and make sure you whitelist us check your junk folder because sometimes they get filtered. That’s just the way it is, you know, the powers that be want to censor you when you’re talking about and by establishment. They don’t like you bagging on the Federal Reserve or questioning the establishment, which is what we do here. By the way, folks, we do that in case you haven’t noticed. Anyway, I’ve been researching that and you know, the fed you still really only have very blunt policies to deal with these these various crises. And now it has just invented so many really sophisticated tools. I mean, they all sort of at the end of the day come down to the same thing. Hashtag money printing. But, you know, the tools they have are much more Um, well, they’re much more, I guess I want to say they’re subtle. In a way either. I don’t know. I don’t know. I don’t know how to explain it. And I don’t know. I just don’t know what to say. But read the newsletter. It’s all there. Okay, what else? What else? Well, I think we probably better get to our guests today. really a wonderful interview. This guy was a great guest and, and Adam, we really thank you for being our client and really impressed with what you’ve done. So thanks for coming on the show. I know we’ve got a couple more client interviews, booked client case studies. And if you’re out there listening, and you want to come on the show and share your case study, we would absolutely love to have you you’re certainly invited on and All of our listeners really love to hear these stories. So a couple of announcements before we get to him. Number one, we have for our empowered investor inner circle, we’ve got our first private meeting this Friday, you should have all received an email on that with the link to the zoom meeting. And also this Friday, we have a meeting for all the people who purchased the asset protection program. Okay, we really wanted to do a deeper level kind of advanced meeting on that, where we can really dig in, take more of your questions. And you should have also received an email on that. Be sure to join us for that on Friday. And we look forward to seeing you there. A lot of you have asked about the empowered investor inner circle. We’re going to have a webinar on that soon and open it up to our broader audience. So thank you very much for your interest in that. So that’s coming, you know Rome wasn’t built in a day. No, Rome was not built in a day. You know, it takes us some some time to get all this stuff together. But we’re doing it we’re getting there. So it won’t be long before you’re invited to check out the webinar and then join the inner circle group and we open it up to the meet the Masters attendees first, but we’d open up to everybody in the audience soon. If you want to check out the asset protection webinar, go to Jason hartman.com slash asset you can check that out. And yeah, I guess that’s it for today until we get to our interview here with our client. Let’s go through a case study and let’s hear about how he created infinite return on almost half of his real estate portfolio in five short years. Five short years. Awesome. Awesome. Awesome. Okay, here we go. Hey, it’s my pleasure to welcome one of our clients back To the show for a third time and that is Adam Jackson. He was on about three years ago. He’s in the aerospace industry. He’s a USMC, combat veteran. Thank you for your service, Adam, by the way, he spent a two tours in Fallujah. So it’s probably got some amazing stories there. He’s celebrating his fifth year as a real estate investor. And he’s about to close on his 14th property. And he, he voted with his feet and moved his wife and four kids out of the Socialist Republic of Connecticut, right? That’s right. Can not California to Orlando, Florida, so he’s, he’s my neighbor not too far away. Adam, welcome back. Thank you for coming back on the show and sharing your client case study story. These are the best shows and by the way, anybody out there listening who wants to come on share their story, we would love to have you because listeners just love hearing about real people doing real great things. So congratulations. Now you’re basically dollar cost averaging, you’re not timing the market, which I think is fantastic. And you talk about how you’re getting infinite returns on almost half of your portfolio. Now, what does that mean?
Adam Jackson 17:14
Yeah, so basically what that means is, I purchased a lot of the property’s over four years ago now. And since that time, they have not only had the loan paid down, based on what what I was collecting and rent and how that gets paid down by the tenant, but also the properties have experienced a decent amount of appreciation actually more than I thought they were going to experience. So in what’s kind of funny is that at the time when I was purchasing these, everybody was saying, oh, interest rates are great, they’re probably not going to go any lower. They probably won’t be like this ever again. So you better do it. Now. What what, and there was good reason to think that by the way, there was I don’t fault anyone and I fully believed it myself. Right? Yeah, don’t do but Fast Forward four years, and Now the interest rates are even lower. So you combine that with the loan pay down in the appreciation, I’ve been able to basically pull out at least as much cash as I’ve put in sometimes more, in some cases, as what the original downpayment and closing costs were, and my payment has only gone up by a very minimal amount, sometimes 20 bucks in some cases, that is amazing. So, so congratulations on that.
Jason Hartman 18:28
So before we dive in, too deep, Adam, give us a little bit of your backstory, if you will, of course, would love to hear about your career in aerospace. And, you know, what’s going on there. And I think you have, you know, some thoughts about how that’s a signal as to what’s going on with the economy as well. But you know, maybe start by when you probably discovered my podcast years ago, what When was that? What year was?
Adam Jackson 18:52
So I would say would have been 2015. Okay, at this point, yeah. So it’s been about five years now that I’ve been listening to you
Jason Hartman 18:58
and I remember you tended our meet the Masters event about three years ago, I think the 2017 event. Did you attend other events as well? Yeah. Well,
Adam Jackson 19:07
I’m not sure if that was with Ron Paul. or so. No, that
Jason Hartman 19:10
was 2008 20. Oh, okay.
Adam Jackson 19:12
So I went to that I’ve been to prophets in paradise actually the most recent one in Orlando. Oh, you a Memphis property tour. And then the most recent virtual meet the masters.
Jason Hartman 19:23
Excellent, excellent. Good stuff. So 2015 and why did you get the bug? What what interested in you in real estate or, you know, income property?
Adam Jackson 19:32
Yeah. Well, I was always somebody who religiously contributed to a 401k, a Roth IRA, saving for retirement, living below my means, and that sort of thing. And in the back of my mind, there, there was always this feeling of, well, how am I really going to save enough? I mean, I mean, realistically, it was it just didn’t make sense to me.
Jason Hartman 19:53
How would nobody ever got rich saving money?
Adam Jackson 19:56
Exactly. And so I started to embark On this personal development phase and really kind of into this program, and I listened to all the classic personal development mentors and things like that, but I ended up listening to a book called seven, seven years to seven figures. I can’t remember who wrote it. But basically, it started talking about real estate. And then I thought it was really interesting, got really into that started to read and read and read. And then I searched for podcasts. And you were really the first one that came up and once I started listening to it, I just never stopped.
Jason Hartman 20:31
Yeah, by the way that that book you mentioned. That’s Michael Masterson. He’s been on the show. That’s Pena, so that’s not his real name Michael Masterson. It’s Mark Ford. I that’s a great book. I also read that book. I’ll tell you his book that I like even better is called and I think you practice this in the military By the way, the concept and sounds weird. of ready fire aim. That is a great book of Michael Masterson.
Adam Jackson 21:00
I have read that one. That’s a great one. Yeah,
Jason Hartman 21:02
I like it. But I mean, obviously, you went through boot camp and all of that stuff. You know, when shooting, I hear that some of the training, you know, that, like the marine training is, is this concept of ready fire aim? Because I understand that if you actually think about it, if you overthink the shot, you’re less accurate than if you just fire. It sounds counterintuitive, but and I don’t know if you remember that from any of your training a long time ago, but I just thought I’d mentioned that because another another military that told me about that.
Adam Jackson 21:35
No, I mean, that’s absolutely true. Now Now, when you’re when you’re sharpshooting or when you’re on the target range, yes, like you will make small adjustments, you will take a shot, you’ll see where it landed, you might adjust your windage or elevation. But I mean, I can definitely relate this more to what my job was in the military, which was on the one tank and those are all using cruiser, fully automatic weapons. So typically what we do, there is You start firing and in with all the information that you have, you take your best first shot or burst. And then from there you walk it to that target if it’s if it’s off at all right, right, the concept does hold.
Jason Hartman 22:13
That’s a great metaphor for real estate investing. And, you know, I think you know what I’m going to say, Adam, because a lot of people, you know, I mean, we have investors who are advanced investors, wealthy that are, you know, buying up portfolios of properties, but we also have brand new people that are thinking about doing it. And you know, some of them get in this trap where they want all the information before they do it. And you can never, ever have all the information. So your example of operating the Abrams tank, is you’ve got to fire, get the information from where that shot lands, and then adjust. And that’s how life is right. It’s that the law of life and investing and whatever is that whole process of doing something getting into information from it using that information to do it better than next time. Right? I would definitely agree. And also, once you finally engage, okay, you engage that target. A lot of times what happens is you end up finding information out there might have been certain conditions with that scenario that you were unaware of that first meet, maybe had heard about them, maybe you had trained for them. For instance, the fact that I bought properties going back to real estate, and four years ago, I mean, I didn’t know if the interest rates were going to go lower. I could have never imagined that I didn’t know if the appreciation was going to happen the way it did. I mean, I invest for you. So there’s all these other factors that you can eventually take advantage of with the information that you learn after you get started. Yeah, nobody can know all the information or how it’s going to work out in advance. You’ve just got to jump in and do it and adjust adjust along the way. That’s the only way anything in life works. I mean, that’s the way surgery works when a surgeon goes in and does surgery, right? It’s the way everything works. You just cannot know everything in advance. You’ve got to give up that need for certainty, and just go do things and and, you know, I like to say, cultivate what I call rational recklessness.
Adam Jackson 24:17
I like that.
Jason Hartman 24:18
You got to be a little bit reckless, you know? Yeah. Good. Anyway, go back to what you were saying. So, you were talking a little bit about timeline and things like that. And I interrupted you.
Adam Jackson 24:27
So? Oh, yeah, I guess this would this would just kind of go back to what I was doing with the properties as far as the approach of just consistently buying and not actually timing the market, not actually, you know, waiting for any significant kind of downturn, ebb and flow. Just Just continue to do this, getting control of the asset as soon as you can. And let it go to work for you. BMB the trajectory is incredible.
Jason Hartman 24:56
Absolutely. So get in control of the of the real estate. As soon as you can, and then let it work for you and then make those course corrections, right.
Adam Jackson 25:05
And it doesn’t take very long. I mean, again, only four years, I had more of a seven to 10 year plan, which I thought would have been realistic maybe for some sort of an exit plan or some sort of harvesting equity. But it happened even sooner than I thought.
Jason Hartman 25:18
Good stuff. Yeah, that’s awesome. So which markets are you in? What metro areas?
Adam Jackson 25:23
Yep. So I’m currently in Memphis, Jackson, Mississippi, also Jacksonville and Ocala. Hmm. So you’re good to know. Yes. So they’re, they’re nice and local. I can drive to those within an hour. I know not everybody has that luxury, but but that was definitely a selling point for me. And also Talladega, Alabama,
Jason Hartman 25:42
okay, good. Good stuff. And you live in Orlando? That’s correct. Fantastic.
Adam Jackson 25:47
So how did it start? I mean, you listen to the podcast, and then where was your first property? So the first actually what I did was I bought three properties right off the bat in Memphis, okay. And Those have actually proven to be some of my my best stories, some of my best winners. Yeah. I mean, ever since then I’ve really enjoyed the Memphis market. I can tell you though, what I did was I was going through the pro formas from a Memphis property tour, not it was really like three years ago at this point. And I could not believe the deals the way that the the way the pro formas looked, you know, they’re just the amount of cash flow and the rent to value ratio. But I was told that even years prior to that they looked even better.
Jason Hartman 26:32
Yeah, I can tell you that it’s, it’s never too late to start and the deal I’m still finding deals that look great today. So yeah, absolutely. I agree with you, and you use property tracker to to track your portfolio. And are you also using it to evaluate new deals. So you know, it certainly makes you hone in and you’re very familiar with the way that first year projection looks on the performer. You know, you’ve learned how to That works. And by the way, anybody watching or listening, if you go to Jason hartman.com, if you do one thing and one thing only, go watch that free 27 minute video on the front page of our website, it’s totally free. It will teach you how to read and understand every single number on that performer. And it’ll really teach you how to evaluate a real estate deal. And it’s probably the shortest best course on real estate investing ever. And it’s free. So 27 minutes, there you go. But yeah, so at the time when you were buying those properties, Adam, did they feel expensive to you?
Adam Jackson 27:36
Well, being from the Socialist Republic of Connecticut,
Jason Hartman 27:39
they call cheap, right, right.
Adam Jackson 27:41
Because they were barely in the six figure range. So they did seem fairly inexpensive to me. However, I would still have to make a 20 to $25,000 investment. So I think that maybe just kind of getting over that, especially with a Roth IRA at the time. I think that the contribution was 5000 or 5500? And, you know, probably something similar to that with what I was doing with the 401k. So, you know, obviously it’s a bigger investment, but the thing is, is that the money starts working, the the currency starts working for you immediately. And you don’t have to put it off. So yeah, I wouldn’t say it was inexpensive, but still a good chunk of change to me at the time. Mm.
Jason Hartman 28:24
Okay. And you know, what were some of the good and the bad things that have happened to you over the years, you’ve been investing for five years, you’re up to 14 properties in all the markets you mentioned. So congratulations on all of that. You know, you said you were surprised pleasantly surprised at how some of them have performed and that the appreciation you’ve gotten. So that’s awesome. But there have been some lessons along the way. I’m sure some things you have probably some regrets. I’m guessing. Any thoughts? The real world picture is what we want to paint here.
Adam Jackson 28:56
Yeah, sounds good. Well, I mean, I can tell you right off the bat, I have zero regrets. Only because anything that happened that might have been to the negative was actually offset by the lesson, you know. So I definitely learned an important lesson. Through those negatives, I can tell you that at the time that when I was going through and harvesting all this equity to dump back into the other three properties that I’m firing just in the last few months, I can tell you that those properties performed very, very well in general. And I think a lot of that might have had to do with with where I bought and what I bought, but I can tell you that the cash flow has been pretty solid for the most part. And now I have had some some issues. I think it’s very important to stay on top of your management. I think that if you have some sort of a charge that you need more detail on or maybe you just want to question for certain reasons, I think it’s very important to stay on top of the management. Demand those answers you know, demand the answers demand pictures are real. Yes,
Jason Hartman 30:00
absolutely, absolutely like that.
Adam Jackson 30:03
I can’t hammer that home enough. Yeah. And don’t be afraid to. I mean, if you have to, I mean, have a healthy amount of tension. If you have to do that, and let them know that you’re not, you’re not afraid to take your service or your business elsewhere. I
Jason Hartman 30:18
absolutely couldn’t agree more. Now to that end. And, you know, we’ve, as you know, have been really pushing and teaching people how to do self management, long distance self management, which, you know, like I’ve said many times, if you asked me if that was possible, 1314 years ago, I would have said No way, but it’s totally possible. And, you know, we have all these great tools to do it nowadays. And, you know, we just launched the empowered investor, inner circle, and all of that stuff, too. You know, our goal is to help, you know, thousands and thousands of investors really take control of their properties by doing self management. And the amazing thing I find is that sometimes because you get at third party that intermediary that middleman out of the way. It’s actually easier. It actually takes less time. Now it sounds like you’re not doing any self management yet, but you’ve probably thought about it. I don’t know. Are you
Adam Jackson 31:13
self managing? I think I’ve thought about it a lot. And actually, I was very, very close to firing property manager at one point to do that. And then we ended up improving the situation. So I didn’t actually do that. It has been on on my radar, and that’s partly why I bought in Florida, although I’ve had no issues there, of course, so but that’s definitely something I would I’d be willing to entertain. I think it’s a it’s a great thing to do.
Jason Hartman 31:38
Yeah, just the fact, Adam, that you, you know, hopefully we’ve conveyed to you that you have the confidence to do that. It puts you in a different negotiating position. When you’re asking for justification for an expense from your property manager. You know, now you can do it hopefully with some more confidence with some more guts to say Look, if I need to pull the plug and get another manager or just self manage, you know, I know there are options, right? And it’s gonna just make you a more powerful confident investor. Right?
Adam Jackson 32:10
Absolutely. And I think it’s kind of funny because I’m seeing parallels between my read my initial reluctance to actually purchase a property. And now fast forward four years, or maybe even a little bit more. Now I’m sort of at that same Crossroads with, okay, well, now, do I take these matters into my own hands? Do I take the plunge into self management? Mm hmm. So that’s one of the one of the things I’m definitely thinking about. Yeah. But But you know, like, going back into the portfolio, some of the good some of the bad again, most of those properties have performed very, very well. I’m at infinite returns on on many of them. I can tell you though, actually, this is a good story, my worst performing property. I finally I purchased it three years ago, and it was at the lower end, so I’m probably close. To like to maybe a see property, and I finally had my first month of cash flow in about two years. So think about that. I mean, that I finally got it stabilized, I think. But what’s funny is that when I look in my property tracker, and I look at the overall return, I’m still looking at a double digit. It’s a 15% return. Right. So you know, it’s funny, because you, you have alluded to or talked about in detail in the past, you know, if the deal only goes half as well, is it as it’s projected? Yeah. You still get these double digit returns? Yeah. All right. And that’s what I’m seeing here, you know, between appreciation tax benefits, but but the lessons I think that’s that’s priceless. So, absolutely. One bad egg, though, I think, yeah, one may get one at some point.
Jason Hartman 33:49
So your worst deal is 15% annual return on investment. That’s right. I love it. Yeah, that’s the worst deal, folks. It only gets better
Adam Jackson 33:59
to believe Yeah, I wouldn’t have believed that myself. Yeah.
Jason Hartman 34:04
And that’s, that’s a lower that’s a lower end property in terms of what we sell and what’s in your portfolio, right?
Adam Jackson 34:10
Yeah, it’s a lower end property. But I can tell you that I have another lower end property, I only have two in the portfolio. And that has been outstanding. I have a I have a section eight tenant in there. And the rent comes in like clockwork, there’s hardly ever a repair, the tenants are all leasing up. But that’s another thing. I’ve received so many renewals on leases this year. It’s just incredible. So you know, I can tell you that all the properties that I have There are currently leased, and I collected every rent last month including back rent from a property that was missed from the previous month.
Jason Hartman 34:47
Okay, so that’s a good question. So at the time of recording now, you know, we’re sort of in the midst of the lockdowns are spotty as some areas some not, but you know, every world’s mass right now. Right? There’s been a lot of talk about rent strikes and eviction moratoriums and stuff like that. Has everybody been paying your rent all the way through this? Or is that just last month that you were referring to? Or tell us about the experience on rent collection?
Adam Jackson 35:14
Okay, so that would be specific to last month. I can tell you, though, that everything has been very, very consistent. I mean, there might be one property that I don’t collect rent on for a given month, or maybe it’s going through a turnover. But that’s generally the average I would say one property out of the the double digit properties that I own. My I might miss the rent for some reason or another. But, you know, I just thought it was a testament to a lot of a lot of the fear that has been out there. And I remember months ago, we were we were wondering, I mean, okay, let’s build up the reserves. This could be bad, but you’ve been you better hang on to your hats. And I think this is just a testament to the fact that every property that I have is currently leased. The the leases are being renewed and last month in particular, I collected every rent.
Jason Hartman 36:06
Yeah, that’s fantastic. So the asset is just much more resilient than most people think. Adam, I want to go back to that comment you made because I’m not sure everybody really understands it on your worst performing property, and how, you know, some people in the income property investing game and the real estate game, they think they’re losing when they’re actually winning. And the reason they think that is they don’t know how to do the math, they just don’t know how to calculate it. They don’t understand that like an iceberg. You know, most of it is below the surface of the water. And there are all these things giving you return on investment because it’s a multi dimensional asset class, and they don’t see it, you don’t see it right away. Sometimes you don’t see it until the end of the year when you keep the books on it or when you do your taxes and you get a big tax deduction. or whatever, right. But speak to that a little bit more and maybe help our listeners understand that a little bit.
Adam Jackson 37:06
Yeah, I’m actually glad that you brought that up just because recently, I had spoken with another investor who purchased a property. They tried doing it for only one year and had a major repair. This was just somebody outside of the network, and they did it on their own. And it basically wiped out whatever their projected cash flow for the year would have been. And I think it was at that point. I mean, I basically told them some version of what you just said, how there’s just a lot happening underneath the surface, right. And I took it upon myself to go in and really do a deep dive on my returns and the calculations there. Now, at the time of the I guess it would have been 12 properties I had, I was looking at roughly $3,000 a month in cash flow, which I think is pretty good. I think that those numbers are pretty solid. But what I did was I took into account the appreciation, I took into account the loan pay down. And then projected tax benefits. This is not include inflation paying down the value of the debt or anything like that. And that $3,000 turned into between 15 and $17,000 per month for the total return. So it’s actually pretty amazing when you look past the cash flow, what’s really going on, especially if you leverage these properties at a five to one or four to one, you’re really looking at some incredible returns.
Jason Hartman 38:33
Yeah, yeah, you are, you are. And because you get, you know, like people, most people just look at the cash flow. And they think, I mean, I remember there was a comment on one of my YouTube videos the other day, I didn’t have time to respond to this skeptic, you know, but I’m not going to convince him I just give up on some of these people. They just don’t get it. You know, you’re either gonna get it or you’re not gonna get it right. But this one guy watched the video, I guess. And, you know, he commented, how is this possibly worth it? I’m gonna buy a property and get 200 off A month. So what? And it’s like, oh my gosh, if you just took the time to understand, I mean, what you know, to that guy, like, I want to say, Okay, look, I’m not gonna try and explain anything to you, or teach you how it works or how to calculate return or anything. Just ask yourself this simple question. How is it that you know, and I know because everybody knows them, right? So many people who created a lot of wealth through income property, yet, you probably don’t know anybody who did that in the stock market or buying gold or, I don’t know, maybe Bitcoin if they timed it, right. But you know, I don’t think that’s a sustainable investment. How do they think it works? You know, because they certainly have looked around. And they know lots of people have become very wealthy through income property, yet they still don’t take the time to understand it.
Adam Jackson 39:52
I think a lot of this has to do with the infrastructure around what we look at when it comes to Wall Street, and the The conventional wisdom as to what investing actually is. Yeah, I mean, I know that we’ve all talked about this, but income properties are outside of that system. So there’s no one that’s going to be pushing that. But But again, like you say, the wealthiest people are the ones who either have made their fortunes in real estate, or who put their money in real estate, and there’s good reason for that.
Jason Hartman 40:20
Yep. Abby, you’re absolutely right. You’re absolutely right. This will be continued on the next episode. Thank you for listening and happy investing. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.
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