Jason Hartman starts the show by sharing why you should immerse yourself in the most historically proven asset class, income property. He breaks down the multiple dimensions and the various factors that prove that income property is the best investment class. In the client case study segment, Jason Hartman interviews Ani Wee. She starts by talking about how she came upon the Creating Wealth Show. She also tells her story of monetary and portfolio growth from her income property investments.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the company leet solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show listeners from 164 countries worldwide. Welcome to episode number 824 824. This is your intrepid what exactly does that mean? intrepid? Yeah, well, I don’t know. Am I intrepid? This is your host, Jason Hartman. And thank you so much for joining me here today. I just got back from another brunch over at Tony Shay’s house. Yeah, Tony Shea, the founder and CEO of Zappos. He has these interesting Sunday brunches at his very unassuming trailer park here in Las Vegas. And he does them every Sunday. Really a very generous guy to host everybody there. And you know, it’s an interesting crowd to say the least. Tony Shea is definitely a hipster. So, going to his brunches. It’s probably not what you would expect from a billionaire. And he is likely the most popular man in Las Vegas. He’s redeveloping the whole downtown and really doing some phenomenal stuff. So I just love it and you, you may have read his book Delivering Happiness or, you know heard about all the corporate folklore about Zappos and amazing customer service they have and so forth. And, and then he sold the company to Amazon, you know, did incredibly well. And then he’s using his money to do all kinds of cool things in the city and, and other stuff as well. So that’s the one thing I want to say. I just want to remind you of that, you know, when I was in Peru a couple years ago, I remember I did a show from there, or at least an intro from there, and maybe you’ll catch this on a flashback Friday episode, or you’ve already caught it. And you remember what I said there? Because the group I was with in Peru, one of the hotels they put us up in was, it was so beautiful. I mean, it was just, it was spectacular. And a couple of us were just so impressed and we went down to the front desk and count out that like you know, and of course hotel room prices are all over the board. I know y’all know that never pay the rack rate for a hotel. You can always negotiate a hotel price. But you know that that hotels was so gorgeous and and like in the closet, you know, they had four bathrobes, two women’s bathrooms, two men’s bathrooms, you know, so you could take your pick of different styles. And I mean, it was just it was phenomenal. It was a phenomenal hotel. And I have stayed in some gorgeous hotels over the years. But this one was phenomenal. And it just came to mind. And what I said when I was recording the show that day, is take care of this money thing. Take care of this money thing. It’s a thing, right? It’s a thing in all of our lives. And we’ve just got to take care of it. And look, I grew up poor. I did not have money at all. And you know, money isn’t everything. As the old saying goes we’ve all heard it but it is something is definitely something and you would have to be completely in love. Sure, and jealous and green with envy as the saying goes, to deny that money isn’t something it is something it matters. It matters in our world. It matters to capitalism to freedom to being able to do good in the world. And I just kind of thought of that again today because I was looking at all this stuff Tony Shay’s doing and it’s just really phenomenal. And also, I am going to be talking to you in the upcoming weeks from Europe. Yeah, I’m going on another trip to Europe. And, you know, speaking of that money thing again, it is I mean, look, I like getting a good value better than anybody. Okay. And, you know, I got a very good deal on my airfare. I can’t believe how cheap it was really. And then I upgraded You know, my class a little bit there. But I don’t like to waste money either. Right. But you know what I’m thinking about my first trip to Europe as an adult, right when I rented a car drove around with friend and You know how a couple of different trips to Europe just really, or anywhere in the world for that matter, I’ve been to 80 countries now how I just always try to economize and stuff like that. And you know, I’m thinking Isn’t it just so freeing not to have to think too terribly much about money right hey, look at even billionaires and I know a few billionaires and many many deca millionaires and, and sent them millionaires couple of those to deca means more than 10 million and sent them means, you know, like 100, right? More than 100 million. So, you know, even they like getting a good value. They don’t like just wasting their money, especially if they didn’t come from money, you know, then they appreciate it more because they remember how their life used to be usually and that’s one of the one of the good things, but it’s really just a it’s much more efficient for you to live in such a way where you don’t stress about money. So take care of this money thing. That’s the First thing I want to say on this episode today, and we’re going to talk to a client of ours, a client case study on IE we, who will be with us in a moment here. You know, her story’s interesting, a single mom really did some phenomenal things in real estate. You know, she talked to me the other day, and just went on and on about how, you know, listening to this one specific podcast episode of mine, changed her entire life, changed her entire life, listening to that one episode. Now, what could change your entire life? You know, what do you want to do in your life that could completely change it? I would urge you just get to that breakthrough point. I mean, for example, if you’re listening to the show, and you’re thinking, Well, you know, I’m on the periphery, right? You know, I bought a couple of properties, but I’m not like really doing it, right. I’m not really building a big portfolio. And maybe that’s what you want to do. Hopefully it is because income property is the most historically proven asset class in the world, right? It is. And that’s what we, we teach you about here a little bit of business and life success stuff as well on the creating wealth show, but it’s mostly about income property investing, of course, it’s the most historically proven asset class in the entire world. So what do you need to do to get more immersed in that whole thing immersion get immersed in it? Well, one of the things you could certainly do, as a shameless self promoter, I will say is join the venture lions mastermind that will get you more immersed because you’ll be hanging out with some friends that are really going after it. They’re going after life in general. But certainly after building good real estate portfolios, come to our live events, when we have live events, come to them come to all of them. And by the way, if you’re a venture Alliance member, those are included with your membership. But that’s a really important thing. You know, get yourself more immersed. That is a key thing in life in immersion be immersed in, in the thing you want to do more and more very, very important. Now, I want to talk to you about crap rate. I mean cap rate. Now, for this episode for the first time, I’m going to call it crap rate. And it’s not the rate of how much crap you’re willing to tolerate or anything like that. I’m calling it crap rate, because I see some clients making a big mistake, focusing on the crap rate for a property, the capitalization rate, cap rate, capitalization rate, obviously, you know, I’m kidding, right? I’m making that word up crap rate. But why shouldn’t you focus on the cap rate? Why is it you know, look at we have never promoted this metric that is commonly used in commercial real estate, where they are used to making lower return on investment for many reasons we’ve discussed on many prior episodes. In commercial real estate, they’re used to using cap rates. Why is it the thing in commercial real estate? Well, in commercial real estate, it’s much harder if you’re buying a big building a big office building or you know, hopefully not a big retail center as the retail apocalypse is in full swing as I predicted it would be 20 years ago, more than 20 years ago. I remember going to a presentation at the Pacific club, a swanky private club in Newport Beach, California, used to be a junior member there. I remember hearing a presentation from some retail brokers who were talking about commercial real estate and I said, Hey, you know, this internet thing, I think it’s gonna turn into something. You know, I said this 20 years ago, before anybody really knew what the extent of that would be, obviously, right? But I said, Don’t you see this putting downward pressure on shopping in the physical world? And they said, Well, no one guy got him to kind of come around, you know, he was an old time. Made a ton of money in, you know, in retail properties. And I got them to kind of come around and see my point of view on that. And I’ll bet you nowadays, he really sees my point of views 20 years later, because the retail apocalypse is upon us. And we’re going to talk a little more about that and what it means to our tenants, our tenants need to have jobs to rent our properties. Well, actually, they don’t really need to have jobs, because they could be on the dole and have section eight government handouts. But that’s another type of investing. So not necessarily good or bad. By the way, you know, a lot of people will do very well in section eight, and some people hate it, I find that there’s not much middle ground there, as I’ve talked about before, but back to the crap rate, because that is where we were going, the risk of being on a tangent here before we get to our client case study interview. The crap rate is not that meaningful. Why you know what I’m gonna say, right? You know what I’m gonna say, because it doesn’t include a couple of very important things. It doesn’t consider appreciation, and it doesn’t consider leverage. And see in commercial real estate. Typically, of course there are every By the way, I wanted to make a disclaimer, everything I ever say on this show ever, there is an exception. There’s always an exception. No rules or laws apply universally, including this one, including this one does not apply universally, even the universal law is not universal. And so typically, commercial real estate does not appreciate as well as the good old humble single family home, talked about that analyzed it, many other episodes not going to go into it here. So that’s one thing. The other thing is, the financing is not as good on commercial real estate as it is on residential real estate investments. So if you’re using crap rate, and you’re comparing it to say, buying a Walgreens on a triple net lease buying the property a Walgreens leases from you or an office building or something like that that would not be an accurate comparison. Crap rate is not a very good metric for the residential real estate investor, what you should look at is the overall return on investment. So when you go to Jason Hartman comm slash properties, and you look in our properties section, and you look at the overall return on investment, that is the key metric, that is the proper number to look at. Now, if you want to look at something close to crap rate, okay? Look at the cash on cash return if you want, okay, but, you know, I’m telling you, again, you can’t compare that to other investments, because it doesn’t give you enough information. It’s not multi dimensional enough now, even the overall return on investment does not include a couple of things. It doesn’t include money. A trademark mouthful phrase that you can’t say 10 times fast, even if you try really hard. In fact, maybe we should have a contest who can say this 10 times fast, and you’ll win a prize, inflation induced death, destruction, inflation induced debt destruction, inflation induced debt destruction, blah, blah, blah. Okay, so that’s the metric that of course cap rate doesn’t include, but even the overall return on investment doesn’t include inflation induced debt destruction, the hidden wealth creator in real estate investments. Additionally, what else doesn’t include well, none of the returns on any of our performers, look at the overall lifetime value of your property portfolio. When you get the advantage the huge advantage by the way of the 1031 tax deferred exchange, when you rebalance your portfolios when you do the 241, or the 341 rebalancing of your portfolio, and you take advantage of the 1031 tax deferred exchange So you get to reinvest all of that capital without paying tax. You sell your business, you sell stocks, you sell bonds, you sell that mutual fund, you’re gonna pay tax, you got to pay the government, before you get to reinvest the money. With income property, under the 1031 tax deferred exchange, you can reinvest the whole thing that is beautiful, not your post tax dollars, you get to reinvest your pre tax dollars. phenomenal, phenomenal deal. None of it includes that. So if you’re going around and you’re comparing even the overall return on investment, which looking at Jason Hartman calm in the Properties page, you know, typically you’re going to see overall return on investments and of course, this is a performance of course, it’s a projection Look, just assume it’s not going to work out as well as projected, okay, it might be better. I mean, it happens better many times. In fact, the client he studied with Coming up, you’re going to hear a story that’s way better than what’s on our Performa. Okay. When you hear Ani we’re talking a few minutes here, okay, but just assume it’s not gonna be as good as that cut it in half if you want and take that projected 35% return and cut it in half 17.5% but just know that even the 17.5% which is phenomenal it’s truly amazing and those of you new listeners who don’t believe anything I say and think I have no credibility and think I’m crazy and I’m, you know, the hokey broker that’s about to go to jail, right because you don’t know how to calculate return on investment yet because you haven’t listened to me teach you that. And by the way, you should go to Jason Hartman calm and on the front page. Watch that free video we have because that really leads you through reading the Performa and understanding the numbers in 27 minutes for free. You can learn to be a great deal analyzer. Okay. Rate deal analyzer and that’s a critical component. But yeah, even the overall return on investment does not include the benefit of inflation into step destruction which is huge. You know that from those of you who’ve been to my creating wealth seminar or my jQ Jason Hartman University live seminar, or have listened to the show and heard me talk about that, you know, that’s very significant. It also does not include the tax benefit of the 1031 tax deferred exchange, which plays out over time, even internal rate of return IRR the holy grail of metrics does not include that either of those things. Okay, so there you go. All right.
Hey, without further ado, because I risk the already this intro is getting very long and I have a whole another part of the show for you. Our interview a client case study with Ani, we so let’s listen to Ani and hear her story. It’s a great story. And she is one of our clients from Alaska. how unique is that? So here is Ani Hey, it’s my pleasure to welcome another client back to the show and this will be a client case study with a listener and now client from Anchorage, Alaska of all places we don’t have that many listeners in Alaska, but it’s always great to have one and I have been to Anchorage and Fairbanks before and through the Yukon Territory as well up in Alaska and Canada A long time ago. It’s very beautiful up there. And our client is Ani we and Ani. Welcome. How are you?
Ani Wee 17:32
I’m doing very well. Thank you, Jason.
Jason Hartman 17:35
Yeah, well, it’s good to have you on and I just loved it when one of our investment counselors introduced me to you the other day. It was so great to hear your story and I I just always love to hear someone tell me I changed their life. And that’s always great, hopefully for the better. I think so in your case, it sounds like but give us a little bit of your background. First of all, what do you do for a living?
Ani Wee 17:58
Yeah, I work with Federal government as an auditor, and that’s, you know, most people with it’s basically accounting work pretty much all the reconciliation of schedules and, and doing audit. So I think we’ve done for close to 10 years now and I’m I’m pretty happy there.
Jason Hartman 18:19
Good stuff. Did you grow up in Alaska?
Ani Wee 18:21
No, no, I grew up actually is I am from Taiwan, the Republic of China. I relocated to America when I was 16. I went to a boarding school in Michigan and then I just settled down and went to college in a different state and then I moved to Alaska, actually for the job.
Jason Hartman 18:45
Okay, so that’s I was gonna ask you, how did you end up in Anchorage, Alaska, you know, that’s sort of an out of the way place. Give us a little insight before we talk about your real estate investing story, because I think a lot of the listeners will be interested you know, not a lot of people go to Alaska. I have been and I feel very fortunate to have been there and you know I did an Inside Passage cruise from Vancouver I’m on the way there and then on the way back I did some back country stuff and I remember going to was it Denali Park I think and, and, and seeing all of that and you know, just gorgeous up there, obviously. But hey, I was there. Actually, I gotta tell you something funny. I have a picture. I gotta find this picture. It would be great for a Facebook flashback Friday or Throwback Thursday of me standing on the Alaskan pipeline at midnight, and it’s his Brightest Day. Because I was there on the longest day of the year, the summer solstice June 21. And you know, it really messes up the sleeping patterns. I remember we were in that famous fish restaurant you have there Simon and Seaford I believe it’s called. That’s when I really loved Alaskan halibut and discovered it and I thought it was about six o’clock and I looked at my To watch it it was 10pm
Ani Wee 20:04
for me, because a lot of times I have to, I really have to have a military clock here otherwise, I have a hard time remembering whether that’s two o’clock in the morning or two o’clock in the afternoon. And because the light is you know, summertime is all 24 hours available, much more so in Barrow, Alaska, which is the northernmost northernmost town here in America, rather than anchorage anchorage is a little south and it’s a little easier in terms that they like to recognize what I did when I lived for many years in Barrow Alaska and and and that was a challenge for me to try to figure out what exactly what time is exactly the time am or pm. And so you so you,
Jason Hartman 20:52
you lived way up there. Wow, that’s just amazing. And so do a lot of people use the military clock the 24 hour clock up there.
Ani Wee 20:58
A lot of people Do because it’s easier to know, you know, like two o’clock in the military time will be 14 hours. So it just easy to recognize because you can, you know, get him can trust your sense of time from that. Our darkness a lot of places. Yeah. And so yeah, it’s a lot easier. Yeah, absolutely you cut out for just a moment but I think people got the message. It’s very hard to recognize time with that. So I mean, you you you work for the government, you’re an auditor. Tell us a little bit about your real estate story, I guess. How did you happen to come across my podcasts a few years back in a into a I was going through a personal divorce at the same time, the market crashed. So I had a lot of questions about the economy at large. And so I was looking for answers in with the alternative media has led me to share Just website, website and website and podcast. I started to listen to him. And pretty soon I remember he did an interview with you. And, and I, I, it resonated with me. And because I am I was listening to a lot of messages given to me by people who are more of a golden silver invest investment. And, and, and a lot of people were telling me that, you know, in terms of the global economic crash, real estate will be a liability more than an asset. So a lot of people were advising me to purchase heavy metals, such as gold and silver versus metals.
Jason Hartman 22:50
And the interesting thing about all those precious metals people on E, they have the right premise, and their arguments are correct. They just don’t have the right Conclusion I’ve been very as you know, from listening to the show, I’ve always been very fascinated with them, but they just they just don’t get they don’t get the whole picture.
Ani Wee 23:10
Yeah, I definitely resonated with your idea that about, about precious precious metals, I use precious metal more as an insurance policy versus an investment strategy. And so, and before I think before I ran into your podcasts, I was just finding real estate I was I started the real estate investing actually because of the book Rich Dad Poor Dad by Mr. Kiyosaki. But then I didn’t really know what I was doing so I would buy it I suppose I would, you know, like, say for my neighbor died of breast cancer. I bought her her condo which is just right next to mine. I live in a multiplex. And I just went and pay cash for it, you know, I just didn’t really think about levering June or anything because in my world where I came from, people tend to pay for things in cash and they don’t have the money they just don’t buy. So so it was very strange to think to hear you talk about leverage, because it was the antithesis is what how I was brought up you know, and then I keep listening I just I said well, you know, having the sale please keep an open mind because it is true using leverage you can buy more so I made some fairly investment just you know, buying condos and one I hearing Anchorage Alaska, but they’re not as lucrative and investment now looking back after having heard your podcast for several years, I look at my old investment, real estate investment I realized there really not generating very good, you know, income for me. But today in the meantime, fortunately, during that period of time, I just happened to live in the area where we have a lot of military personnel wanting to move out of base. So despite the fact, condo investing wasn’t the greatest investment I can think of, but it wasn’t the worst investment either, such as no putting your money in a CD account. So, so I ended up breaking even I later sold a condo and then move the investment to Florida instead. So I first started purchasing property from you. I think after hearing your podcast for several years, into a one, three, that’s when I decided to purchase a property from your network.
Jason Hartman 25:57
Yeah. And so the first property you bought through us had was a duplex, right?
Ani Wee 26:01
Yeah, it was, um, you interview this gentleman named jack and, and I mean, I heard many, many interview before and I don’t really know why I just really liked the interview. And so I went to your website and then I noticed there’s a duplex I say, oh, multifamily, because most of the properties on your property when you know on your website is single family. Yeah. So there was the first time I saw a duplex and there was two Oh, a, he looks you know, kind of new and so I started doing some research around the area and I discovered an issue with Chinese drywall. So I called up Sarah and then she gave me the name of jack so I contacted him I discussed about this duplex, so I purchased it from jack Lee for some da thousand dollars. At the time. I didn’t really have the money because my money were all tied into it. condos I bought a couple investment condo plus I live in the condo myself and most Alaskan You know, a lot of a lot of Alaskan like condos just because it’s really hard to do maintenance.
Jason Hartman 27:18
Alaskan winter it’s very difficult. Yes.
Ani Wee 27:21
Yeah and on top of that there’s you know and then the problem with a condo is always the condo view and it’s which is pretty hefty, maybe about three $400 a month. So but at the time, you know, I that’s what I did. So I, I talked to jack I said them, you know, he I think originally was listed for 80,000. And I said if I pay cash, you know, he agreed to take some TA. So I just went to the bank and for the first time they’ll put a cut in line with equity equity was what I call a line of equity loan against my condos as I didn’t have a mortgage because I was paid for cash. So Got a low interest loan and pay jack and bought the duplex from him.
Jason Hartman 28:05
Now that one, that one just about doubled in value, right. Did you did a cashout refi. I believe on that.
Ani Wee 28:10
Yeah. Well, I continue listening to your podcast afterwards and then you know, jack secretary, Laurie manages to manage the condo until jack decided to retire So, so I bought it in somewhere in April 213. I just recently maybe around like January of this year, I did a cashout refi or it was appraised at $150,000.
Jason Hartman 28:38
And you are How much did you say 89,000 70,000 78,000? Well, so yeah, that’s fantastic. Congratulations that doubled in value. And and you bought a bunch more of them, right. Didn’t you buy?
Ani Wee 28:51
Yes, I did. I and the reason why I only did I did a cash out refinance because the rent has also gone up. I would have Soda if the rents stayed as $100 per side each month, but the rent had gone even, you know, a 50 per sign each month from from 500. So it was not really a good idea to sell, even though I was getting getting a lot of offers. People write me postcards or letters for wanting to buy.
Jason Hartman 29:25
By that by the way, folks, if you don’t have investment properties, yet, if you haven’t started your investment career yet, you’re gonna start getting and it’s such a great feeling, isn’t it to every month on all of my properties, I get constant postcards and letters from people saying they want to buy my property. And I just know that I am controlling the world’s most valuable commodity income property, you know, in the whole world pizza path to your door, you know, there’s such a limited supply of it. It’s just a wonderful position to be and to be that the seller you know, you in the driver’s seat when you’re the seller, and or the owner, I should say, you know, hopefully you’re not selling them, but you know, occasionally we do sell and when we rebalance our portfolios, but yeah, isn’t that a great feeling though?
Ani Wee 30:11
Yeah, it was. I know I never gotten any postcards. Well, my Alaskan condos, even you know, but but I was starting getting postcards for this particular duplex many postcards. And I decided not to sell and then I just continue to rent them, you know, just rent it out. And I used the proceeds of the money to purchase I think one more property, a single family home for $10,000 in Fort Myers. This time, the duplex that was sold to me by jack back into a one three was located in a server for Myers, Florida, although Lehigh acres, so and so I bought a I know I didn’t really leverage Either I just I just put to put them, you know, cash down, just make the transaction faster. And but I, I was very, I was very surprised by the appraisal record of 100 $150,000. And then later on I attribute to the fact the fact that for my or area has the number one job growth or number two is one of the top at least top 10 in the nation for job growth and population influx. So, if you tell you though, if you talk to any of our clients that bought properties back in, and I love how you say the numbers, you always go to Oh, two, row eight and so 2008
Jason Hartman 31:44
you know, but any of our clients that bought, you know, anywhere in the last seven years, I mean, they have just cleaned up, you know, it’s incredible the kind of appreciation they’ve had. And that leads to the next issue. You know, generally as you know, from To the podcast, and as all our listeners know, we believe in buy and hold investing, you know, why would you sell an asset that produces 2025 30 35%? Or even, you know, 40 45% return on investment every year, right? That’d be crazy, you know, when you look at the overall return, because it’s a multi dimensional asset class. And, you know, if you want to look at those, go to Jason hartman.com, click on Properties and look at the actual performance if you’re not familiar with how we calculate all that, but, you know, we generally believe in buy and hold, but occasionally the properties appreciate so much and, you know, that’s a great problem to have, okay, it’s a great problem to have. You really do need to rebalance your portfolio because the the rents the income never keeps up with the appreciation. You know, it’s always out of sync a little bit. And, and so I would ask you, and this is an interesting part of our case study for the listeners. Today, your property you bought it for the first one that you were talking about here, the first one you bought through us, you bought it for 79,000. And it appreciated to 150,000. Now, what is the rent on that? And do you remember what the rent was when you bought it and what it is now, for example, like it was a comparison there.
Ani Wee 33:18
Yes. When I bought it into a one, three front jack, it was $500 on each side, so it will be $1,000 1000 total.
Jason Hartman 33:27
Okay, so a little better than 1% rent to value ratio, and you acquired it at acquisition.
Ani Wee 33:32
Okay. And now it’s a city, so I’m getting 1700 dollars a month.
Jason Hartman 33:38
Wow, that’s fantastic. Those rents have gone up very, very nicely. And you know what, you don’t need to sell that property. Don’t don’t don’t feel you need to do that at all because you’re still getting better than 1% rent to value. I would even almost question I wonder if it’s worth more than the appraisal you got. You know, maybe it’s we’re really worth 161 71
Ani Wee 34:00
According to the appraisal report because they use different methods to come up with their figure, according to the appraisal report, so you say use the rent method, it would be appraised at maybe around 168,200 70,000 but then but then the appraiser decided to use a more conservative cost approach or some other approach and then he came up with 150,000 but yes if you look at the it’s on a quarter acre lot he has a septic and a well probably not exactly If I had known he has a septic and well and and sometimes he does involve more work when you are
Jason Hartman 34:43
Yeah, those aren’t that’s not ideal, by the way.
Ani Wee 34:45
Not ideal, but it was better than a lot of properties have it so
Ani Wee 34:50
yeah, so I bought it and I have a little repair, you know, with the wells and the septic tank, but it’s not nothing big. Nothing major happens. I think I had to change your oil pump one time but it but I think that the area has a lot of potential and I got a lot of yellow postcards
Ani Wee 35:13
you know that
Jason Hartman 35:15
yellow postcards a famous yellow postcard please sell your host to us.
Ani Wee 35:19
Yes and interest and I think that the people who who are truly investors knew the intrinsic value of the duplex because of economic development in that area. And and demographic studies like Mr. dent has done also indicated that a lot of really really dense area they like to move to a warmer climate and Florida is considered a very desirable area. And I think for Meyer Cape Coral the hikers happen to be without any major industry in essence pollute, you know, pollution control. There’s really no pollution. There’s no heavy industry. The area is, you know, enjoy some sunny weather, which is almost like the opposite of Alaska.
Ani Wee 36:10
You know, a lot of stuff. It’s the
Jason Hartman 36:12
it’s the polar opposite of Alaska almost. Pardon the pun. Yeah.
Ani Wee 36:18
So I just attract that baby boomer population, you know that, like, yes, 10,000 people reach their 65th birthday, every day now and just more and more people moving in isn’t?
Jason Hartman 36:32
Yeah, it’s amazing for sure. Okay. So I want to make sure I mentioned a couple things. So the listeners get some more education out of this. You talked about the appraisal. And you know, I’ve talked about this in the past, but just for everybody. There’s three basic methods of appraisal. There’s the comparison approach, which applies to condos and single family homes, mostly, there is the income approach, and you talked about how the appraiser did the income approach and wanted to appraise it, basically. For more money, but then he got more conservative on you. And he did the cost approach. So three basic approaches comparison, income approach and replacement cost approach. Okay, just so the listeners know that because I didn’t want to gloss over that it was an important point.
Ani Wee 37:17
Yeah, that was it. And I think because of the vendor wants the most conservative approach, so that’s, that’s why he chose and so basically how it works is that one side of the duplex, one tenant pays the mortgage, the property tax, and the insurance. And the other side is pretty much pure cash flow unless I have a shoe repair related issue such as replacing washer dryer or issues with the garbage disposal. But but it’s, I’m not self managing it I have a property manager and my property managers name is Kevin and and I find him extremely reasonable Because, because I learned from your podcasts, you know, to scrutinize the property management agreement. What I have found is that seven is also a real thing. bester he’s not just a property manager. He’s not just a realtor. He’s also an investor. So he has experience in all three area. So he immediately agree with me that the lacing should be split 5050. So, so that, you know, a lot of time when you look at a property
Jason Hartman 38:30
of the agreement, they want to keep the late fees. We’ve talked about that before, and I don’t I don’t like that. Yeah, yeah. Yes, folks. You know, one of the things I want to tell you is that don’t be afraid to push back a little bit on property management issues. You know, you can negotiate, read that contract, don’t give them too much latitude on discretionary repair items, because there’s just a funny thing about life, that when you give them a lot of latitude, they tend to take it. So and we’ve talked about that many times in past episodes, you got to be in control of your property management experience. Okay, so very important,
Ani Wee 39:06
very important. And the second thing I like about him is that he doesn’t charge me the markup fee for repair. So those are the two things and interchange for for that I agree to make payments on all the repair directly to the vendor. So save him a little bit of paperwork and that also give me some level of control if I you know, and I can contact the vendors directly. So I it’s
Jason Hartman 39:30
an expensive repair, ask for more quotes and call them a quote, not an estimate, you know, in your emails and your discussions. Granted, it may not come out exactly that way but calling it a quote will help you in case you need to argue with them later. But only you know, I want to ask you how many units do you have now total in your portfolio?
Ani Wee 39:52
Well, because I was so happy with my my duplex investment in Lehigh acre. I Later on purchase for more. So I have a total five duplexes. I also so that’s 10 yeah 10 and then I also own two single family homes in the area where Kevin Manik 1212 properties and then you own your own condo and the one next door to you, right? I sold the one next to me but I, what I did is I bought another one from your network in Jackson, Mississippi from a gentleman named Brad and I, you know, again, I heard your interview with Brad fall I decided that’s interesting opposite strategy because he’s a, I consider him more of a specialist for section eight housing at a time so. So it was a $50,000 investment in a single family home in Jackson, Mississippi, and it produces a $725 a month on rent, and I know that When I purchased that property I knew the appreciation of, you know, in Jackson, Mississippi would not be as high as in Lehigh acre or four miles is pretty much just a cash flow.
Jason Hartman 41:15
Yeah, that’s a much more linear cash oriented market. I agree. Yeah, absolutely. Absolutely. Good stuff. Well, what are your plans? Next on E? You’ve got I guess what that sounds like it’s about 15 units now total. Right.
Ani Wee 41:29
Right. Yeah, I have. I have one. I have two more single family home in Arizona, that that I purchased prior to becoming a podcast listener. And, and those were purchased in tool kit, tool 11. And tool 12. Oh, you You did good. On those two. We were back in the Arizona
Jason Hartman 41:52
market a little while it got too expensive. So we stopped recommending it but in Phoenix, you know, that’s a sort of a hybrid model. it, so it gets a little expensive at times, and then we’ll stop recommending it. And, you know, throughout the cycles, we’ll go back in and recommend it for a time and, you know, if you’re, if you’re there and you have properties, just keep them. I mean, you’re stabilized, you know, you’ve got, hopefully a good tenant so forth.
Ani Wee 42:15
Yeah. tenants and different property manager. And then on top of that, you know, I had really cheap debt at a time, because when I was in Toy 11 and 2012, the interest rate were 375 for 30 year mortgage 3.3 point
Jason Hartman 42:34
seven sighs
Ani Wee 42:35
Yeah. And, and then now the ones that I purchased in the high and the rest of the youth house, Southwest Florida, there was a 4.75. So so the debt in Arizona at the time was considerable, considerably cheaper. So I think talking to Sarah about at some point, I would need to do it again. 31 exchange because the rents in the area didn’t keep up like Florida. The rents in this little Arizona town that I purchased real estate pretty gone up but they didn’t go up as high as the rent situation in Florida but this Florida situation is kind of abnormal because that’s the for Meyer has a number one ranking increase in I think in 2014 to a one five out of the whole entire nation. So for a while my already don’t Iran also increased all the time when I purchased it. I think at a time when I purchased it into a lab and I was only getting maybe about seven 750 but now I’m getting 1150 currently, so it has gone up but then the property South has even gone higher
Jason Hartman 43:53
is the rents the rents will never keep up with with a with a hybrid or definitely not a cyclical appreciation market, you’re always behind on the rent and rents they lag because they’re one year leases because the comps aren’t good for rental values. You know, it just it just doesn’t it’s a much more fragmented market you know, there’s just not a an exchange of data. When it comes to sales prices. There is a true exchange of data in the multiple listing service and at the county recorders office, but that’s not true on rents, and that can work for and against you as an investor. And you know, we’ve talked about that on past episodes. Ani we’ve got to wrap up though, but you know, I just wanted to ask you kind of In conclusion, you know, any thoughts you have for investors, anything you want to share with them before we wrap it up?
Ani Wee 44:42
I think it’s important to make up your mind, buy real estate for and wait, don’t wait to buy real estate. I think it’s important and then also to I would consider duplex investing side by side duplex. Because even if you change, you lose a renter, you still have another renter paying the mortgages and property tax, and insurance that will make it a lot easier for you to hold the property. And another thing I realized was my single family.
Jason Hartman 45:23
Let me let me just comment on that for a moment on if I can, and I don’t mean to, like totally disagree with you there or anything. I think the plexes are okay. But I’ll tell you something, you always get a better quality tenant in a single family home in the single family homes. Generally, although listen to your story, which is a great story. They generally appreciate better than the plexes and you know, we’ve sold lots of duplexes, triplexes, and for plexes, and then some big apartment complexes from time to time to, you know, you can do that same diversification with two single family homes, right? So I just don’t want people like totally go overboard on that idea. I’ve heard that argument a lot. There’s a lot of people out there that sell for plexes and develop them and say well, you know, one’s vacant you only have 25% vacancy. If you have a single family home and it’s vacant you have 100% vacancy yes you’re right I get that but you know, you can have for single family homes okay. So
Ani Wee 46:20
yes, you know, and what I have found is that with my single family home, even though I may have four or $500 a month on cash flow, but when a tenant move out, pretty much all the cash flow will put into updating the paint the carpet, a lot of state so and I think you should and the multiplex I think you should be very selective Personally, I don’t like triplex or four Plex because I think too many renters can gang up on the property manager. They do ganging up
Jason Hartman 46:55
on Yeah, that’s the other thing I meant to say even in duplexes they’ll do that they do when those people get together. Talk settings can become difficult for you.
Ani Wee 47:03
And so you have to be very selective. I don’t like the up and down kind of duplex. I only buy side by side, because it gives a little more sense of independence. And, and so I think you need both. I think we do need you know, duplexes, single family homes once you have a pretty good mixture. But you know, you got to start somewhere, right.
Jason Hartman 47:32
We’re all about diversification. So yeah, totally, totally hear you there. Yeah, it’s
Ani Wee 47:37
a family home and just kind of, you know, use that as an example, to learn, you know, as a starting point because, truthfully, I don’t think I would have learned as much about real estate investing, if I didn’t buy it, and then start making mistakes. But I would say pretty much all the silly mistakes. I have made my tenant basically paid for them. Oh,
Jason Hartman 48:05
isn’t that great? I love that comment on he that’s a great comment. All the all the silly mistakes you made your tenants basically paid for them for you. Isn’t that beautiful? we outsource our mistakes and our debt to other people called tenants
Ani Wee 48:20
Love it Yeah. And then you learn and then and then you’ve been making a decision you know, by the time when I moved to, to a one three out but I know when I start purchasing real estate outside Alaska, I already made a lot of mistakes that I can and pay for. So when I look at something I will be able to see why that’s a better investment than the one I made before. But if you don’t have any investment, real estate investment, you will not have the opportunity to learn to make mistakes and learn from it. And then you will not be able to tell which one is a better investment. I think you just have to get get it started somewhere and with the help of your investment counselor And then move forward.
Jason Hartman 49:01
Very good advice, Ani Wee from Anchorage, Alaska.
Thank you so much for joining us today and sharing your your client case study with our listeners. And I’m sure everybody learned a lot from you. So thank you listeners out there. If you’re a client of ours and you want to come on the show, reach out to us and let us know we always love to hear these case studies stories. So, Ani, thank you very much for sharing. Thank you. Bye bye. 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.
Leave a Reply
*
Be the first to comment.