Jason uses this Flash Back Friday show from Episode 524, originally published in June 2015 to look back at a client’s success. Fernando talks about his financial independence day. He built a great portfolio after working at Apple Computers and investing. Now Fernando is one of Jason’s investment counselors and answers common questions his clients ask him.
When Fernando first met Jason, he had a goal to purchase enough properties to successfully achieve ‘financial independence day’. A couple of years later, he built an impressive portfolio and is now retired from his job at Apple Computers. Fernando is now one of Jason’s investment counselors and today he hopes to answer some common questions his real estate investor clients have been asking him.
You’re gonna laugh, but because of your podcast, we’re positioned well. So I don’t know how else to thank you, but thank you, your podcast and your services are amazing. And I wish I could do more as far as working with you guys, but I haven’t really but um, maybe in the future, obviously. But once again, our family is grateful to you and your services, and your information is priceless. Thank you so much.
Jason Hartman 0:28
Take care. Welcome to this week’s edition of flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason is handpicked to help you today in the present and propel you into the future. Enjoy. 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 creating wealth with Jason Hartman during this program, Jason He’s going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self made multi millionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:43
Welcome to the creating wealth show. This is episode number 524. And this is your host Jason Hartman. And today I thought we’d talk about just sort of some listener questions some common questions FAQ. type things that we’re always getting from investors, and just kind of cover those because there’s just an endless amount of these and listeners, please go to Jason Hartman calm and leave us a message. I don’t play every message on the air. By the way, some messages really are sort of not necessary. It doesn’t make for good podcasting necessarily. It’s just sort of maybe an operational type message. But you know, we do listen to all of those. And we love to hear your feedback on anything and everything. And of course, your listener questions are much appreciated. And also speaking of participation, if you’d like to come on the show, we’d love to have you come on the show as a guest. Talk about your investing experience, ask questions in real time, you know, kind of discuss issues. We’ve got such an intelligent listener base out there, and that’s why we just love to hear from you and have you on the show. Feel free to do that. If you want to book a time with me, just go to Jason hartman.com slash Jason, take 30 seconds fill out the little appointment request, and we may well just put you on the show. Okay. But in the meantime, you can also go to Jason Hartman comm click on the Send voicemail message, and we may well air your voicemail on the show one of those a couple of those questions I got, just before we start and I’ve got Fernando here, who’s going to be doing some of these listener questions with me, but two of the more number one it’s kind of funny. Why was I recording in the closet? Good question. Fernando, you’re here to Okay, so I thought I made that clear, but I guess I didn’t okay. on that. Just so you know, as an audio person. One of the things you look for is soft surfaces. hard surfaces are terrible. Okay. Glass, hardwood floors, marble. You know, this is all the stuff we don’t like. We like fabric we like soft because it makes the sense sound really good. And in my house that won’t be my house for very much longer actually because I’m moving to La Jolla, California. I have 18 foot ceilings and hardwood floors. So this place is it’s like an Echoplex. It’s terrible. It really is terrible for audio, my new place is going to be a little bit better. Even though I have marble floors I’ve kind of thought about how I’m going to put some baffling up and make the sound better. And I am not recording in the closet today. But I tell you podcasters audio if you want to do an audio recording the best place to do it is in your closet because it’s got basically it’s got padded walls okay with clothing hanging from the rack So, so that’s that. Hey, Fernando anyway, you’re here. I guess so. Welcome.
I am here. Yeah, you gotta make shift recording studio in your closet. That’s That’s good. It’s
Jason Hartman 4:53
pretty good. No, I’ve only I’ve only recorded one time from there but I’ve done it in a couple of hotel rooms, too. When I’ve been traveling, it’s pretty good. You know, the closet is the place for sure if it works, that’s what it counts and save the come out of the closet jokes because I can just hear Oh, you know? Oh, gosh. Okay, so another question I got is someone joined our members section that was useless. So thank you for that comment, by the way, and we are working on it. I guess on the member section, our audio recordings, use a flash player. And of course, flash and Apple don’t get along very well. And Fernando since he used to work for Apple before you retired with your investment portfolio with your properties, maybe you can comment on this. But yeah, Steve Jobs and Adobe kind of had a fight years ago, Adobe makes flash. And so he wanted us to do that another way and put them on to Vimeo. And you know, I think that’s, that’s a great idea. I’ve got one of my guys working on it now. Patrick, who’s in the San Francisco area who does some of our production work for us. is investigating that. So thank you for the feedback, we’ll work on it. But remember the content in the members section, you know, whether it be the monthly member calls or other audio content we have in there. It’s never going to be as easy as the podcast, the podcast system, especially if you’re an apple user, is the easiest thing in the world, the way RSS feeds work and so forth. And it’s just a great, a great technology that has obviously revolutionized the world of media. You know, this kind of stuff is a little bit harder, you know, when I download audio books or audio files, from non podcast sources, you know, there’s some few extra steps for me to and I do it all the time. So I hear you, but the, the feedback you gave us is good, and we’re working on it. Okay, Fernando, any comment on flash and apple or anything like that?
Oh, Steve Jobs had a longer explanation for why he didn’t think flash was the future and busy basically has to do with Adobe’s Flash products are basically proprietary hundred percent proprietary, and they control the development of future future enhancements, pricing etc. And that’s definitely something that that Steve Jobs Steve Jobs did not want to want to see. And he had concerns about reliability, security performance. And basically he just wasn’t wasn’t seeing flashes the future. And you know, I think there’s there’s newest standards that have come out, but the flash is still very popular. And I get messages every now and then I need to upgrade my flash version. And if you don’t, I just can’t use the web very effectively, which is, which is bad, isn’t it? Nice listeners to have a retired Apple executive here with us
Jason Hartman 7:46
retired based on his real estate portfolio and now owns 70 units. So, Fernando Once again, congratulations. That’s awesome. So hey, you wanted to kind of do some q&a stuff today and I think that’s a great idea so dive in.
Yeah, so I’ve been going through a great experience as I get more involved with Platinum properties and, and work with you and as as you know, and listeners know, we’re starting a new company that is going to provide a better experience for for investors. And part of that process, part of my learning processing in being able to contribute to, to this new startup is to understand the business from the inside and how clients interface with with Platinum properties and the investment. Okay, I know I know how that works from the client side since I started as a client myself, and I needed to to get a more holistic understanding of the business and and since I’ve been doing this I’ve been talking to a lot of clients. I’ve been coaching clients on the Financial Independence Day consulting, I’ve been answering questions meeting with people. And I’ve noticed a few patterns that that have come up as clients are asking some fundamental and some basic, very important questions. So I wanted to, to just bring these up and address some of them and also have you Jason talked about some of this and, and give, give the clients a good starting point for these these fundamental questions. So
Jason Hartman 9:36
remember, you’re listening to flashback Friday? Our new episodes are published every Monday and Wednesday. Good, absolutely. And Fernando, I know that’s really been an interesting experience for you moving from client to becoming an investment counselor. So yeah, what kind of questions what’s the first one
so for for clients that are that are new.
The common question is, is is this? Fernando I have no experience in real estate I you know, I want to get started but I basically don’t know anything. What’s the process in in basically what are the fees that I should expect?
Jason Hartman 10:19
Okay, well, let’s talk about the traditional process first and then let’s talk about our process version 2.0, maybe version 3.0, which is much much better if I must say so myself. So first of all, it’s important maybe for the listeners to know that my background for 19 years is in the traditional real estate business. I was I started at century 21. I went to work for REMAX was one of their top agents in the world for several years. You know, I used to list and sell people’s houses. I first started out for a little while, for my first year in the business selling HUD and VA repos in mostly in the Indian An empire of Southern California. And I did work with a lot of investor clients then. And then I kind of switched to working with investors a little bit, but mostly regular home sellers, mostly because I mostly have listings, but also homebuyers as well. And that was mostly in Irvine, Newport Beach area of Orange County, California. And so the traditional process the way people have always, quote invested unquote, in real estate, you know, they would, they would think, Hey, you know, I, my home’s been a good investment. I’m getting these postcards, notepads, and maybe a pumpkin from this realtor in my neighborhood, who I recognize and maybe I should call them up and ask them about investing. And here’s where the huge mistake begins. Okay, because first of all, the area in which you live probably isn’t the best area in which to invest because Cuz it’s you probably live, if you’re listening to the show in a reasonably nice area, maybe a very nice area. And those areas never have good cash flow. So if you know you’re you’re going to go around your neighborhood, you’re going to look locally, you’re not going to really be thinking like a real investor. And you know, you’re going to buy a property that’s maybe somewhere near you, not really ever considering any concept of rent to value ratios, land to improvement ratios, what I call the LTI ratio that reduces your risk when you invest. And you’re also going to be working with a person who just is not usually very competent when it comes to investment properties. The vast majority of the real estate industry is dedicated to people that are just you know, really nice people who network and have friends and they get business because they network have friends, not because they’re very good at what they do or very knowledgeable what they do. And look, I, I can say this because, you know, I r1 as it were, you know, improper grammar intended, you know, the real estate industry is is just not staffed by very good people, for the most part, maybe 20% of them are pretty darn good. You know, when I owned a real estate company for eight years that I eventually sold the Coldwell Banker in 2005. You know, I trained real estate people, thousands of them really at seminars that I would do for the industry and stuff like that, and then working for my own company. And I mean, most of them just aren’t very serious about their career at all. They don’t take courses they don’t want to learn. You know, there’s there’s a joke in the industry that you know, real estate is for people who couldn’t get a real job, and I’m not the only one who says that I’ve heard it many times from other people, you know, so that’s what you’re usually faced with. Okay, that’s the traditional way to invest. And certainly there are, you know, that said, there are great real estate people out there that are engaged in the traditional real estate business, but it’s like anything in life, you know, it’s the 8020 rule, right? The Pareto principle, and maybe in real estate, it’s worse than 8020. It’s maybe 9010. Okay. So, so that’s, it’s important to understand, that’s the way most people do it. And they achieve vastly inferior results. And that’s what I used to do. You know, I used to help people do that plan. And it just didn’t work very well. You know, it worked when you were lucky. When, you know, maybe you you had some appreciation that just happened by accident, not necessarily by anything you did. But it isn’t the way to go. It’s not the way to be a good prudent investor, a good conservative, prudent, successful investor. So the way we do it is that you listen to the podcast, you gain some education for free, okay? You learn about it, you learn a solid philosophy for investing and a unique philosophy for investing. So you listen to the show, and you learn about it. And then you go to our website, Jason Hartman calm or you and you, you know you fill out an inquiry form and interest form there on the website just take you 30 seconds to do that, or you call us and you talk with one of our investment counselors. And we help you assess your investment goals, whether they be income and cash flow, or appreciation or tax benefits or asset protection. And then we help direct you to different pre screened markets nationwide, that we have affiliate relationships in We can refer you to those those vendors, those providers of property those local market specialists, or LMS is not to be confused with MLS multiple listing service. I know those are the same letters and in different order. And we can refer you to these people who will help you acquire investment properties. And we basically act as an area agnostic source for you to bounce ideas off of, for you to learn from. And also we help you exert a lot of leverage over the different providers who are selling the properties to you. We’re area agnostic, so if one market doesn’t make sense, or if that provider that local market specialist and isn’t doing their job, will refer you to someone else, and there’s really no other place that you can go to get that exact formula the way we do it. We call it the complete solution for real estate investors. And it usually all starts by you just visiting our website, filling out a contact form. And then we contact you. And we have a conference call with you. We arrange three way calls after that with different local market specialists. And we help you select properties in markets that we recommend that we’ve researched, that we recommend, and that we have relationships in. So, Fernando, do you think that answers the question?
Yeah. So in summary, number one, get educated on what we do. And podcasts are a great way to get educated, choose a market and number two is to choose a market that we recommend on the website. And number three, let us know when you need help and or is ready for an introduction to the provider or local market specialist for that market. And that kind of summarizes it.
Jason Hartman 17:55
Okay, so Fernando, I think I think you’re you said it much better than I did. And you took like eight less minutes than I. That’s not fair. He listeners Fernando’s making
you give the full answer that’s well, let me just Jason if I if I may, when we talk about gadget getting educated the podcasts are obviously the preferred preferred vehicle because they are free and there’s so many different podcasts. I usually recommend clients to listen to a few podcasts. There’s a few about certain markets that we have done recently, and the one on Chicago was done a while ago, it’s it’s broadcast for 85 real estate investing in Chicago with local market specialist john. That was a good one. There was one that we did on Jackson, Mississippi, and this is podcast five 08 Jackson, Mississippi real estate investment market profile with local market specialist Brad and there is an older one for Memphis that we’ve done those as podcast. 255 It’s also pretty interesting. This is a relates to the property to that we did a Memphis a few weeks ago. listeners, they’re interested in general education could listen to podcasts. 405 This is the one that talks about how to read. Sorry, the investing on one on one how to read a property pro forma. Oh, that’s a critical one.
Jason Hartman 19:37
Yeah, thank you, Fernando. That’s it. And by the way, there is a YouTube video on that too, that you can you can find on my YouTube channel, which is called I believe it’s called Jason Hartman real estate. I think it’s like the lowest rated channel on YouTube but you know, we’re just not begin video over here. I don’t know why me I think it’s because I have a face for radio. But we you know, are the podcast is hugely popular. So thank you listeners for making it so, but yeah, we just never mastered the YouTube thing. But anyway, that is a great, you know, it’s a great audio, you can listen to the podcast, but if you want to see it, there is a video too and it’s about I think 27 minutes long, really foundational content. Okay, super important.
And I remember you when when I got started, you told me Fernando if you learn how to decipher the pro format, how to play with the various assumptions. This will teach you so much and I agree 100% that that was that was critical. So this is very important. This podcast 405 is very important. 405
Jason Hartman 20:42
so Episode Number 405 folks, little over 100 episodes ago, listen to that one. It’s it’s really fantastic.
Okay, so yeah, and client studies are very, very popular those podcasts he started the case by case studies. These are Very, very popular. You just did one with Joe. I just listened to it today. It was very good. I don’t remember the the number for the one today, but I can. I can list it in a minute. The other ones that were I think would be great for new clients to listen to our episode 514 client case study with Phillips Phillips Sullivan.
Jason Hartman 21:26
Oh, yeah. Phillip Sullivan’s great. He was on just recently. Five 514 Okay. 558 458 is another client case study. Yeah, you misspoke you said 558. So 458 right. Okay.
Yes. 450 sorry. I’m with Fernanda,
Jason Hartman 21:41
this is with David Bordeaux. Yeah. David Porter, awesome guy. Yeah. Great Investor. Yeah,
yeah, they really great guy and the one that I was on, which is 459. And this is the client case study with Fernando. So
Jason Hartman 21:54
Fernando. Wow. I know that you’re promoting your own thing.
Well, No, it is actually interesting. When I talk to clients that already know about me, it makes the conversation go a lot faster.
Jason Hartman 22:07
Right? It does. It does. That’s one of the great things. You know, folks, you listen to the podcast you it’s asynchronous. Okay, so that’s just a big word for saying that you get to listen at your convenience. We publish it our convenience. You know, it’s just a great thing. And then, after you do some listening, and you get to know us, you get to know our clients, you hear it right from them, okay, our clients and their own experiences come to a live event. That’s another thing I really want to stress, Fernando, come to a live event. You know, some of these events, we’re kind of crappy at promoting them sometimes. So some of them are relatively small, where we might just have you know, 25 people on a property tour, and come to a live event. Meet us. undoubtably. Some of our past clients are at these events and some new client as well and and you know you have you share a bunch of meals with us and get to hang out with us get to know us get to know the process. So that’s another thing I’d really recommend is a live event.
Yeah, I agree 100% I always tell people that that is one of the best ways to to really step up their game you know, get get educated with a podcast and then and then network with existing clients and come meet us. Yeah,
Jason Hartman 23:27
good stuff. Good stuff. Okay. So do you want to switch to another question? Sure. So
all Do you want to talk about fees as well?
Jason Hartman 23:34
Oh, yeah, yeah. fees. So we charge $900,000 up front. No, no refund at all policy. no refunds available.
You’re gonna scare some people, right?
Jason Hartman 23:46
Yeah, yeah, I know. I’m obviously joking around here. No, we don’t charge anything. I mean, it’s our surfaces are free. Okay, now why are they free? Do you think we’re doing this as a charity? Heck no. I’m a capitalist. Okay. You know, what we do is we get we operate a referral network. So we get a referral fee from the local market specialist when you buy a property, but I do want to stress something about that. That’s very important. See, most of the sort of real estate guru models are based on the idea that, you know, they they get you all jazzed up, they sell you, you know, a coaching program for an outrageous price. You know, $27,000, I met one of our clients that, that spent $62,000 on I think Robert Kiyosaki his coaching programs, you know, we we don’t do that. Okay, we’re in the real estate business. Now, what does that mean to you the listener? Well, it means a lot because there’s no disconnect between the real world and what we talk about here on the podcast, and what we talk about About and we do have some educational products that are very inexpensively priced. But you don’t need to buy any of those. Heck, if you want to go to Jason hartman.com, we do have some products there. You know, for a couple hundred bucks, you can get some good educational products. But, you know, there’s no requirement to buy anything from us. Not even real estate. But the difference is, is that what we say here on the podcast, what we say in our home study courses, it has to come true in real life, or we don’t make any money will go out of business. Because we offer properties for sale. We’re an actual real estate company versus the typical guru model, get you all jazzed up by telling you a bunch of unrealistic things that you know, you can you could potentially find the needle in a haystack deal. You could potentially do this in real life. That’s what You know, their promises, but it is so hard and so time consuming, that it’s just not realistic. So, Fernando, you want to hear a I’m want to hear a joke, a bad joke,
go ahead and
say, Yeah, I
Jason Hartman 26:16
should say no. So So here’s my bad joke, okay. And this one is something that is commonly used in the world of multi level marketing or network marketing. Because those deals, we’ve all heard the presentations. They’re always, you know, that sort of too good to be true category, right? And so, so this one is similar to that. And it’s about a guy who dies, and he goes to heaven, and he’s at the pearly gates. And who’s at the pearly gates, I think St. Peter, right. St. Peter’s at the pearly gates, and says to them, well, you are here at the gates of heaven, and you have a choice to make. And he says, Well, what choices that well, the choice is, do you Want to go to heaven and spend eternity here? Or do you want to go to hell? And and the guy who had just passed away says, Well, of course I want to go to heaven. Well, that’s a silly question. And he says, Well, actually, some people decide they’d rather go to hell. Some people think it’s quite fun down there. And he’s and he says, and here’s the thing, no obligation, you can go and try it tonight. And you can go and check it out. And if you don’t like it, just come back and you can spend eternity in heaven. So the guy says, Well, what the heck, I’ll try it. And so they send him down to hell. And the guy is totally impressed. You know, there are beautiful women down there dressed in gorgeous evening gowns. All the guys are dressed in tuxedos. They’re holding champagne flutes drinking Dom Perignon, you know there there’s beautiful buffets with food and there’s dancing and music, and he couldn’t believe it. He thought this is phenomenal. I guess hell isn’t so bad after all. And he goes back up to St. Peter. And he says, You know what? You were right, that I loved it down there. So send me back and he says, Are you sure? You know, once you make the decision, it’s for eternity. And he says, Yeah, I can’t see anything wrong with it. It seems pretty good. Well, he gets back down to hell. And it’s nothing like it was the night before. It’s really awful. And first off, it’s hot, but you know, it’s a dry heat. Like they say about Phoenix, where I live, where I live for not too much longer, right. And he looks around and, and people are wailing and pain and, and, and they’re disheveled and they’re, there’s nothing to eat, nothing to drink, and, and, you know, people are climbing and clamoring and trying to get scarce resources. And it’s just it’s just awful beyond beyond belief. And he pulls someone aside and he says, Hey, what happened? I just made the decision to spend eternity here. I was here last night and it was great. And he says, Oh, you came last night. Well, that was the opportunity meeting. And and Oh yeah, well that’s that’s how it is. And and that’s, that’s basically what these real estate gurus out there are doing. Okay. They’re selling this opportunity, but it’s almost impossible to achieve. Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday.
Yeah, I actually had a client comment on that, that that he’s just wary of the chi osaki type programs where they charge thousands of dollars for a bunch of classes for Day Dreamers.
Jason Hartman 29:58
You know, you could use that money to buy property. I think in some ways, we’re the opposite. We say, you know, don’t spend any money with us buy some properties, okay? Now, look, if you’re a more advanced investor, and you’ve got more money and more resources, and you’ve developed some wealth already, you know, you can join our new thing, the venture Alliance mastermind group, and you know, that’ll cost you a little bit of money. But as you’ll see on our first weekend coming up, and by the way, Gary Pinkerton just joined us as a guest for that weekend. So welcome, Gary. We’re looking forward to seeing you in San Diego. Oh, that’s great. And, and you know, Gary Fernando.
Oh, yeah. I know, Gary. Well, he’s
Jason Hartman 30:37
great. He’s a great guy. It’ll be great to have him there. And that’s something if you want to do some bigger deals and partner with some other people in that group. It’s a unique mastermind group dedicated to to that kind of thing, but you certainly don’t need to do that. You don’t need to spend one penny with us. Get the free education on the podcast. And talk to an investment counselor will refer you to the local market specialists. And what we talked about here when we talk about performers and properties, you know, if we can’t show you properties like that in real life, don’t buy them, you know, and then if you don’t buy them, we’re not going to earn a referral fee. And we’re going to go out of business ultimately, right. So, you know, and we’re in business, we’ve got a thriving business. So obviously, it seems to be working and it’s been working for many years and, and, you know, there there are problems. It’s not perfect by any means. It’s just better than everything else. So, so anyway, good. Good question. Good question. So thank you for asking that. What’s next? Let’s do one more.
Okay, next one. Question about what entities are usually used for real estate income investing.
Jason Hartman 31:51
Okay, so LLC is the limited liability company is the most common vehicle, but you don’t have to use any entity. at all, you can just buy real estate in your own name. And you can protect your assets pretty well by just getting good insurance, liability and real estate is very easy to insure around. There are complicated discussions that we could have on entity formation. The reasons for doing that I’m not a lawyer, I’m not a tax advisor. So there are a lot of complexities to that. We’ve talked about them on prior episodes, I’ve interviewed attorneys on prior episodes and, and tax advisers on prior episodes that have discussed that in detail. One of the great things you can do is go to Jason Hartman calm and just search various keywords, you know, like asset protection would be one of them. And you can find all the occurrences or at least most of them, where I’ve talked about that on prior episodes, so, but the LLC is the most common entity, Fernando, did you want to add something to that without us getting into a very long conversation about about entity You know, there, there’s a lot of complexity there.
Yeah, we could spend a whole episode on that or more. No, I usually point people to one of Mark koehlers book, Mark Kohler is an attorney, a CPA and he’s spoken in
Jason Hartman 33:11
who’s been on the show before.
The show was spoken in our events in the book that I like is called what your CPA isn’t telling you. And you can find this in iTunes or Amazon. You also can find more about mark and his website Mark Kohler com.com.
Jason Hartman 33:31
Yeah, and it could be lawyers are liars. That’s another book he his older book and, and he’s spoken at our events or meet the Masters events several times. So you know, most people listening know him. And yeah, he can, he can offer some good advice on that, too. Yeah,
yeah. And that book just quickly that what your CPA isn’t telling you he describes the different entities that could be formed and how they can be a can be arranged for real estate investments. It’s an interesting book.
Jason Hartman 33:58
Yeah, good, good stuff. Okay, good. Did you want to get maybe one? One more in? We got to wrap up here, but we could do one more.
Yeah. Let’s see.
Yeah, there’s a question from Elliot that I wanted to discuss. And his comment was, it seems you guys really like Memphis right now. But the properties are a bit more expensive than say Birmingham, Alabama, is the quality of the properties reflected in the $30,000 price difference? Ooh,
Jason Hartman 34:31
that’s maybe a good question for Fernando. But I would say yes, it is. I would say in a lot of this, it doesn’t necessarily mean that it’s because of Birmingham or Memphis. It’s not necessarily related to the city itself. But it’s related to whichever local market specialists we happen to be working with in that city. And their focus on what kind of properties they are focusing on. Right. So you could have, you know, a higher or lower end property in any given market. You know, every city pretty much offers a range of properties, right? And that that may be more speaking to the local market specialist and what they like, or what their focus is at the time. And we have local market specialists that we will change them in our relate in our business relationship with them. For example, in Birmingham, we’ve been talking to our local market specialists, they’re about getting some B and A type properties rather than the C and D type properties that they’ve mostly specialized in. And so, you know, it’s just a different kind of investor for each A B or C property class. And what they like, you know, it’s not necessarily the market but I would say yes, that’s the 30, you know, and it’s not really 30 as a standard, but 20 or $30,000, on average, maybe price difference. is reflective of the properties. Fernando, what do you
think? Yeah, so a couple comments of first one we you know, as we, as we upgrade our our software and we’ve been talking about the work that Jason and I have been doing on this, we’re going to come up with a dashboard metric which is likely going to be called it some sort of a barometer that quickly can tell the investor what sort of quadrant this property falls under, and it’s going to slide from income to appreciation in one axis and from class A, B and C on the other axis. What this will tell the investor is if this is a lower end property, maybe a Birmingham property, the the skew is going to be towers, more income, more cash flow for a class C type property, so it’s fall gonna fall in a particular quadrant, which will give you a basic understanding on what sort of investment This is good. investment is different when you go for a lower end property as a class C property as you compare to a class a property in general, when you look at the lower price properties, you know, Birmingham is a good example, Jackson, Mississippi is another example. They have lower prices for the for the homes that’s typical. And rents also are lower. But the projected return on investment is usually higher in many cases, if not the most cases. But what this also means is that the tenant base can be more transient, which turns into that will create more turnovers. What I’ve seen in our what probably should be expected is over an extended period of time. markets like Memphis and Birmingham might perform similarly. Sorry, excuse me. But the lorien power prop properties such as one in Birmingham, the ones he brought Meet him in Jackson might require more babysitting from the investor morning more involvement from the investor. So I tend to think of the lower class see properties in markets that specialize in class see more tired towers, the more experienced investor, a new investor wouldn’t necessarily have the experience or sometimes the patience and the understanding to deal with more issues which should be expected. When you have lower lower rates. Yeah,
Jason Hartman 38:34
I agree. And, you know, for investors look at you can have a good or bad tenant on any property. Okay. You know, there have been bad tenants who have rented mansions from people and, you know, cause problems, okay. But by and large, that you know, as a general rule, and of course, it’s general it’s a stereotype I get it, that if you if you stick with the A and B properties, you’re Going to have less, less attention that you need to pay to those properties, the see and even lower properties. In some cases, they will generally look better on paper than they work out in real life. And that’s something to know. Okay, so yeah, good point. Good point. Fernando. It’s already 39 minutes, we got to wrap up. More questions. Yeah, we do have more questions, and let’s save those for a future episode. So those were great. And I thank you for bringing those to the listeners, Fernando, that was really good. Just do you want to share any any general thoughts before we go just as we wrap up here.
Just one other trend that I’m seeing when I talk to clients again, I’m learning quite a bit quite a bit in this process. But there’s a lot of apprehension to get started to buy the first property in the know Sarah, our other investment counselor has mentioned this in the past that that’s One of the main pieces of advice that she gives to clients is Don’t, don’t wait to get started and buy your first property because the learning for that first property is going to be so much greater and the depth of the learning is going to be much more than you can get from just listening to the podcast and listening to to the other clients really by buying their first properties when you when you when you learn, so don’t overthink the numbers too much. You know, there’s there’s slight differences between one property or another. But if you were picking one of the properties from the market is that we recommend you usually going to be in the right going the right direction with with a property that has a good chance of performing well. So don’t spend too much I spent six months before I got started buying properties, analyzing different properties with a spreadsheet and trying to understand The minute differences between one property tax versus another, you know, how much was paid being paid for insurance for one versus another, and it’s really it wasn’t necessary. I think I lost about six months. You know, I should have started six months before. So don’t wait. Yeah, right. Yeah.
Jason Hartman 41:19
That’s, that’s, that’s a great thing. Fernando, you know, this business of investing in anything in life. It’s always on the job training, if you will, you’re gonna learn the most when you actually do it. When you actually have a property, and you have your money in the game, it brings a new you to the whole thing. Okay. When when you’ve got something at stake. And so I think that’s important. You know, don’t agonize about stuff gets started, you know, the journey of 1000 miles begins with a single step. It is amazing how Time passes so quickly and how you can Grow your investment portfolio so quickly and really, really do some amazing stuff. I’m going to talk here on an upcoming episode about my own experience and in you know, as I have throughout the last 523 episodes, but but more about my own experience and in just this amazing growth you experience you know, I I recently along with one of our clients sold 125 unit apartment complex, and now we’re buying potentially three more properties through that 1031 exchange a marina. Yes, I never thought I would own a marina mobile home and RV park and another larger better apartment complex. And you know, this is how you become a real estate mogul. You know, it all started with the first little crappy one bedroom condo that I bought when I was 20 years old. And you know, diversify. And a whole bunch of other properties. So there’s a lot you can do here. The most important thing is that you get started. So, Fernando, thanks for talking to me about this stuff and bringing these great questions to us today. And listeners, thank you so much for your continued faith on us. Thank you for listening to the show. Go to Jason hartman.com. Leave us a message, check out some of the home study courses the blog, contact us. We’ll be glad to help you no charge as your investment counselor, and we just look forward to growing with you and helping you invest in I wish everyone happy investing. Thanks again for listening.
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