Income property investor Andrew Baker joins Jason Hartman to talk about historical data, the future, and all things financial. They discuss capitalism and how it affects the US economy how it causes the sharing economy to develop, cryptocurrencies to exist, and blockchain algorithms to reinvent financial transactions. Jason also plays a Mark Steyn clip from his book After America. He also comments on the European versus US lifestyle. Andrew and Jason also share that investors should invest in the most historically proven asset class, the single-family home.
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in 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 1:03
Welcome to the creating wealth show. This is your host Jason Hartman with number 870 870 164 countries worldwide. Welcome. Thank you for joining us today. We do a 10th episode show, every 10 shows, we go off topic, we talked about something of general interest. And today we’re going to talk about a lot of stuff about general interest. But first, we’re going to talk a little bit about real estate, because everything comes back to real estate investing and income property investing in the most historically proven asset class in the entire world. We’ve got a returning guests here today, one of our clients, and that is Mr. Andrew Baker. Drew, welcome. How are you?
Andrew Baker 1:45
Good. Thanks for having me back.
Jason Hartman 1:46
Yeah, it’s good to have you back on the show. You were on the show a few years ago, you talked a little bit about your young life starting investing in income properties in your mid 20s. Really, I guess or late 20s. And now you’re married and Got a kid you got Scotty and, and your wife Katie. And we’ve been friends for I don’t know, about 1012 years now, right? Something like that. Yeah, yeah. It’s it’s been just great to watch you grow and develop and accumulate more properties over the years and you’ve got 10 properties now. And you’ve got I think Memphis, Indianapolis and then your own home in the Socialist Republic of California. Is that correct? Sadly,
Andrew Baker 2:21
yes, I have a house in California. So, you know, we’re in a nice area. So we live in orange right near the circle, in an old, like, historic community, and I think it’s one of the oldest county like cities in Orange County. So yeah, it’s really nice here. But uh, you know, just seems like more people are moving in then or moving out. So it’s nice that the neighborhood kind of has are getting revitalized, but at the same time, it’s getting a little crowded. So you know, it’s funny how many people are moving out of state though. I’m just in orange. We’ve had half a dozen friends move to Texas. So it’s kind of funny. Yeah, just did a fair Well today for someone who’s going moving to Texas,
Jason Hartman 3:03
as I’ve often said, If Texas were to secede from the union, it would become the Hong Kong of the United States. And it says Hong Kong is to China, Texas, would be to the US. That’s my metaphor on that. You know, of course the freer the marketplace, the less government intrusion, the healthier the economy, and really the healthier society in general. And we’re going to, we’re gonna play a little clip from none other than Mr. Mark Stein today. He’s a quite famous New York Times bestselling author, radio and TV personality. Mr. Sarcasm, I just love his sarcasm, but he’s a truly intellectual guy, I love him or hate him. pretty controversial. He puts stuff out there that, you know, some people won’t like, he talks a lot about this free market stuff and some I what I love about his work is and I you know, I have my disagreements with him too, of course, is his counter intuitive way of looking at things. You know, most people just kind of in this is interesting, you know, I’ve read A lot of books about this and heard you know, experts talk about this how the brain is a cognitive miser, our brain is the biggest energy suck in our body. Okay? So our brain tries to be lazy on purpose, it tries to conserve energy and not think too much. Because thinking actually takes a lot of power, a lot of energy. And I’ve heard the stats, comparing, you know, how much wattage if you will our brain uses compared to the other organs in our bodies, and the brain is a man it’s a, that’s a, that processor takes a lot of power, it takes a lot of juice to juice your brain. And if you don’t believe this, whenever you’ve been engaged in a lot of thinking in a day or in a lot of perceiving and the one example I think is a good one, at least for me, that I think everybody can relate to because other intellectual endeavors or maybe harder and this is not exactly, quote, intellectual endeavor, unquote, but I’m gonna Put put it out there it’s the shopping mall so so the the reason the shopping mall at least for me tires me out is because my brain is just being stimulated with overload so many things to look at so many things to perceive. What’s the price of this? What’s the price of that there’s so many people there’s all these products signs colors, you know just wow in it just tires me out when I
Andrew Baker 5:25
go to the mall, you won’t have to worry about that because most of the malls now are going to be closing
Andrew Baker 5:31
Jason Hartman 5:33
the retail apocalypse as it’s been called. And I think there is a potential us apocalypse I think there is certainly a European apocalypse going on. I just got back from from Europe. Two days ago, I and spent a day in New York and now I’m back, thankfully in Las Vegas. And yeah, it’s pretty interesting. But the thing I want to point out about that brain being a cognitive miser My point is Andrew, I think you’ll agree with me here is that most People, I mean, all of us to a degree, we want to conserve our brainpower. So we don’t try to think too hard a lot of times. And, you know, that’s what I love about a person like Mark Stein, because he really digs You know, he, I can tell he’s the kind of person and I’d love to have him on the show in the future. We’ve asked him once, and we didn’t get a response, but hopefully we will get them soon. We certainly had a lot of other more famous people than him, but he seems to dig deeper. You know, like when I can tell he’s the kind of person who when he thinks of something, he thinks deeper and then he thinks the layer deeper than that and peels that onion back. And that’s what makes him so interesting to listen to. But tell us
Andrew Baker 6:38
about that house down the street. I don’t know what you’re going to say. You wanted to talk about that to your point. It is funny because you know, your brain is a muscle and if you don’t use it, it’s gonna atrophy and you know, with her, and the more you flex it, the more you know, you’ll be able to use it to your advantage and we kind of laugh my wife and I because you know It had been awhile that we started going to this gym more regularly. And, you know, when you’re trying to figure out the weights to do exactly how much, you know, lifting you need to do. It’s funny how this grade school math you go, Oh gosh, I’m so bad because I haven’t had to exercise that part of my brain in a while. And, and so we had to just sort of laugh at it. But But yeah, as far as this house, you know, so we live in this little historic community. And I want to read a house description for you. This is about, you know, probably 10 doors down from our house. And it’s, I want I want you to both guess how much it’s for rent. And then and I think you might get a kick out of this. So it’s a four bedroom, three bath, Queen Anne’s Victorian style house. It’s 2200 square feet. And it’s for lease and it’s cute inside, you know, original dug for, you know, flooring and, you know, and so I’m just curious, what do you think a four bedroom, three bath house would rent for you might be pretty good at this in your neighborhood. It aren’t marked on our neighborhood.
Jason Hartman 8:06
Well, I don’t know. But I wish he would tell me one number because I can guess the other. And interestingly, I just a little quick sideline. Before we wrap this one up yesterday, I was in Uber car. And the driver, the Uber driver was from Bangladesh. And he told me that he had an apartment in Bangladesh that he purchased in 1998. Or maybe it was 97. Yeah, 9720 years ago, and he paid $100,000 for it. And he said it had skyrocketed, I think I think the city is called DACA. I think as the name forgive me if I’m wrong on that. But I had read that both Bangladesh and Sri Lanka had two really expensive real estate cities. So he said, and he we were talking all about real estate and he didn’t know I was in real estate, by the way. We were just talking about New York real estate and somehow it got onto this. He said today it’s worth $875,000
Andrew Baker 8:56
Oh my gosh.
Jason Hartman 8:57
Yeah. Can you believe that? 20 years later and hidden So the market there is skyrocket. And I said, How much do you rent that for? And he said, Well, I rent it for $1,000 a month. And I thought, oh my god, terrible. And he thought he was doing great, of course, and he said, but but the tenant pays for the maintenance fees, which are like two or 300 per month. So 12 1300 per month, really, right, whatever that means. But then he said he was looking at a place to buy because he rents in New York City, and I was telling him that not in New York City, specifically but Long Island, okay. And, and he said, he, he’s looking for a place to buy and he’s looking at a place but the downpayment is pretty steep. And I said, How much is the place you’re looking at to buy? And, you know, I said, How much does the house you’re worth you’re living in now, how much is it worth? And I can’t remember which number I think we were talking about the house he lives in now. And he said it was worth $430,000. And I said, Oh, well, I’m guessing you can rent that place for 2500 He said exactly how
Andrew Baker 10:01
do you know that?
Jason Hartman 10:02
I said, Because no matter where you go on planet earth unless it’s government controlled, in terms of the marketplace, the ratios are always the same. Okay, now on his Bangladesh apartment, he should be getting at $750 per month at 1% rent to value ratio, or RV ratio, which I told him, he thought that’s impossible. And I said, Yeah, I know. That’s why you should sell it and buy eight houses with them for 1000 a month each.
Andrew Baker 10:29
You’re a bridge. Which boy, isn’t it? That’s getting hard? Well, it is. Yeah, even the 1% which is kind of surprising. I would have thought that that was a metric that would be easy to obtain, but it’s the market the markets appreciated, it’s pretty hard to get 1% but you know, still haven’t be the target. get as close to it as you can with decent quality properties. Of course, if you go to crap properties, where it’s gonna be really hard to collect the rent, you can get 1% all day long, even better, but well, you can get it on the performer but can you get it in real life? That’s the question. Okay. So, so you got to give me one of the numbers on the house either what the rent is or the value. Okay, before I tease this out totally I want to read you this description because I think it’ll just bring more into light. So you’re gonna find this funny landmark 1905 three story Queen and Victorian with four bedrooms. Two and a half baths is rich with history and was the original set for the movie big momma’s house. So this is a house that obviously is nice, but you know, I think big momma’s house was with Martin Lawrence. And it was like, you know, Martin Lawrence dressing up in a fat suit and being like this kind of, you know, grandma with a spoon wanting to hit you or something? I don’t know. I don’t know. I you know, so I what I thought was funny is like, here’s a house that’s representative of someone who’s, you know, middle class, maybe even slightly, you know, lower middle class and this is the house that they picked, like, you know, how many times have you seen Commercial where someone’s going to the front door with an apple pie. And you look at the house and you go Yeah, that’s supposed to be the middle income, you know, middle class type house going next door asking if they have sugar. And today those houses are worth millions of dollars. And I just thought Boy, that’s funny that that stuff is like so unaccessible now to people who are even upper middle class you know and so this house is like they said a four bedroom two and a half bath they’re asking 70 $500 a month for Wow. And and that Yeah, and in fact, I thought that was so insane.
Jason Hartman 12:37
They’re never gonna get that or they I mean, that’s no way
Andrew Baker 12:39
you know, why don’t
Andrew Baker 12:42
you know it’s hard because the zestimate a house like this was selling for about has gone up. I’ve seen about 1.2 1.3 which is they’re not gonna get 70 which I mean in 7500 is what a house in Laguna Beach was selling for was renting for 70 $500 Maybe even slightly cheaper than that, like a nice house and Laguna Beach was at this rate, but I’ll tell you what, Jason, I’ve looked at other rentals and literally three, four doors down. a two bedroom, one bath $4,000 a small three bedroom two baths. $4,000 It’s just nuts. So,
Jason Hartman 13:25
yeah, that’s that’s crazy. That’s crazy. Well, interesting stuff for sure. So yeah, the point is having these smaller, less expensive houses diversified into many markets with good RV ratios are that’s the way to go. I mean, it’s just totally the way to go. So yeah. What what’s your next game plan with your real estate portfolio?
Andrew Baker 13:48
drew? You know, I’m not sure I think I have to. I think I would like to go into another market and you know, or possibly, I am looking in northern Indianapolis. Like fissure, Carmel, or Noblesville, I’m sort of looking into those areas right now. Because there’s a lot of investment going on there, some big companies are moving into that area. And, you know, you can get a nice new build for, you know, 225,000 and rented out for maybe, you know, 1800 to 2000 a month. And I think you get a better quality tenant, you know, you don’t have instead of having one renter that’s renting a place for 1000 bucks a month, and you have, you know, a utility utility bills and property taxes, you know, I don’t want to have everything. If I can, I’d like to find a place where, you know, it’s maybe a little bit more expensive, but you have a higher quality tenant, you have more rent, you don’t have you have less complexity, you know, you don’t have two dishwashers. So I’m kind of looking in that that that area, but since I own so many in Indianapolis right now, and I’m not sure I might tease it out and think about somewhere else. Interesting stuff. Let’s talk a little bit about the US and where it’s going and kind of contrast with some of the rest of the world a little bit. And then let’s talk about some technologies that are going to really impact real estate investing, and the world in general. As you all know, listeners, I think it’s an amazing time to be alive. But interestingly, I must have had a doctor in Jekyll, you know, personality, or Dr. Jekyll and Mr. Hyde personality, because, in some ways, I’m like this super optimist, right? But in other ways, you know,
Jason Hartman 15:35
I listened to a lot of negative stuff. And I don’t know maybe that’s the you know, I just try to balance myself out. I am a Libra After all, the sign of the scales. So maybe that’s the reason but you just got to hear both sides of the equation. And remember that everything is relative. The question to always ask ourselves, I think is Compared to what? I think that’s the magic question of life in every category, compared to what with a question mark, and as bad as things are around the world, as bad as things are in the US as mired in bureaucracy and political correctness, as we are in the US, and you know, it’s it’s better than Europe. I’ll tell you that I just got back from Europe and what a mess. So many levels in so many ways. But yeah, I don’t know. I mean, Drew, any any thoughts on that? I want to play a little clip from Mark Stein here.
Andrew Baker 16:39
Well, you know, it is funny. I think my actually my first time traveling outside the US in a major way, like I went to Canada and Mexico, but I think my first trip outside the US was to the Caribbean and I think when we traveled for a month together, and so it was interesting doing that trip with a group of friends and getting disturbed. That’s when you and I
Jason Hartman 16:59
traveled together. With a couple of other friends this was like seven years ago I think we bought the Jet Blue all you can jet pass and traveled around for a month everywhere JetBlue flew Yeah, that was pretty. I wish they’d bring that program but yeah, I think
Andrew Baker 17:13
I think they stopped it because of us. They were losing money. Yeah. But you know, it was funny when when I when we went and traveled over there getting the chance to see the contrast and I remember doing that trip, I think we went to St. Martine and Angola and then came back to you know, the boring Orlando Winter Park and going into the Walmart with those like blinding halogen lights and just seeing all the abundance just how much it hits you in the face versus going to you know, what basically is a third world country you know, a pig with lipstick on and, and seeing that contrast. So yeah, it is funny how much how much abundance we have here. When you say compared to what?
Jason Hartman 17:57
Yeah, compared to what exactly and I tell you how This morning I woke up at about 5:30am. And I went out I did a bunch of errands really quickly. I stopped at Lowe’s hardware store and I just could not believe the abundance the selection. Then I went to Trader Joe’s and I couldn’t believe the abundance the selection. And Trader Joe’s is a small grocery store. And I’ll never forget, I’ll never forget that time that I got back from my first trip to Latvia. Now I went to Riga Latvia, for my third time on this last trip. My country count still stands at 81 countries. I did not visit any new countries this time. I just repeated. And you know what they built this new Albertsons grocery store in Irvine, California when I lived there in quail Hill in Irvine, California, and I know a lot of listeners in Irvine, so they’re gonna be hearing this and saying, Yeah, and I walked into that Albertsons, and I just I was overwhelmed with the abundance of selection. how cheap the prices were, and how it’s just incredible. Like how, As Americans, we do not appreciate this enough. We’ve got to just constantly appreciate this, the standard of living, and I’m not saying everything’s about money, it’s certainly not. But it’s, that’s part of it. Okay, there’s no question about it, it means something. And that’s really true. But on the negative side, let’s just listen to a little clip from Mark Stein’s book called after America, get ready for Armageddon. It’s interesting Drew, because I played the Harry dent interview from a year ago on on the last episode of this show, and you didn’t hear that yet. But
Andrew Baker 19:44
tell us a little bit about your thoughts on your last Harry dent book that you finished? Well, I don’t know in the interview that he calls to have the duck to have the next 10 crashes or something. Yeah, he
Jason Hartman 19:56
made he made a lot of doom and gloom predictions and you know, I don’t know what this is about. about these guys, but in general, I think the doom and gloom thing just sells better. You know, there’s an old saying in the newspaper business, if it bleeds, it leads.
Andrew Baker 20:08
Why? Yeah, I think he, I think he believes what he’s saying. And I, for a while, I believed what he was saying, too. And I think what should happen on paper and what happens in reality are different things, you know, stuff takes longer to happen, stuff happens quicker than it should, you know, so kind of how it how it manifests itself. I think sometimes even though maybe he’s right, in philosophy, you know, it doesn’t always work out that way.
Jason Hartman 20:33
You know, that’s true. That’s true. But yeah, Harry dents got a lot of predictions that are just all over the board. And I don’t know, I don’t know what to think about them. But, but we’ll see. But let’s listen. Let’s listen next time for a minute. Okay. I think you’re gonna have some good, interesting thoughts on this. And I think our listeners will be fascinated. Pardon the audio quality. I’m literally just playing this from my iPhone speaker. So here we go. This will be about a seven minute clip, but we’ll probably interrupt it for some commentary. So let’s listen And Mark Stein from his book after America.
Andrew Baker 21:03
Okay, so where is it?
Andrew Baker 21:07
crescent moon. Half a century ago the future felt different. Take 1969 quite a year in the aerospace space. In 112 month period, we saw the test flight of the Boeing 747 the maiden voyage of the Concorde drf’s deployment of the Harrier jump jet and Neil Armstrong’s giant step for mankind. Buzz Aldrin packed a portable tape player with him on Apollo 11. And so Sinatra is ringing Dean recording a flight to the moon became the first human music to be flown to the moon and played there at any other nation beaten NASA to it. They demand the occasion with the Ode to Joy or also spread Zarathustra, something grand and formal. But there’s something marvelously American about the first human being to place his feet on the surface of a heavenly sphere, standing there with a cassette machine blasting our friend and the Count Basie band in a swing in Quincy Jones arrangement, the Susilo swagger of the American Century breaking the bounds of the planet in 1961 Before the eyes of the world, President Kennedy had said American ingenuity a very specific challenge and put a clock on it. This nation should commit itself to achieving the goal before this decade is out of landing a man on the moon and returning him safely to the earth. That’s it no wiggle room. A monkey on the moon wouldn’t count nor an unmanned drone nor dune buggy that can’t take off again but transmits grainy footage back to Houston as a rustle in the crater it came to arrest it. The only way to win the bet is with a real live actual American standing on the surface of the moon planting the Stars and Stripes. Even as it happened, the White House was so cautious that William Sapphire wrote President Nixon a speech to be delivered in the event of disaster. Fate has ordained that the man who went to the moon to explore in peace will stay on the moon to rest in peace in America did it. Fly Me To The Moon Let me sing forevermore. What comes after American yearning and achievement democratization. Everybody gets to go to the moon. That almost forgotten Jimmy Webb song from 1969 catches the spirit. The age isn’t it a miracle that we’re the generation that will touch that shiny bauble with our own two hands. Whatever happened to that? four decades later, Bruce childs and Professor of theoretical Medicine at the University of Buckingham in England, wrote that, that landing of men on the moon and bringing them back alive was the supreme achievement of human capability, the most difficult problem ever solved by humans. That’s a good way to look at it. The political class presented the boffins with a highly difficult and specific problem, and they solved it in eight years. telogen continued 40 years ago, we could do it for heatedly, but since then, we have not been to the moon. And I suggest the real reason we have not been to the moon since 1972, is that we cannot any longer do it. Humans have lost the capability. Of course, the sound of the line is that humans stop going to the moon only because we no longer wanted to go to the moon or could not afford to or something. But I am suggesting that all this is BS. I suspect that human capability reached its peak or plateau around 1965 75 at the time, of the Apollo moon landings, and has been declining ever since. Can that be true? Tell them is a controversialist gadfly in British entity. But comparing 1950s to the early 21st century, our time traveler from 1890 might well agree with it. And if you think about it, isn’t it kind of hard even to imagine America pulling off a moon mission now? The countdown the take off a camera transmitting real time footage of a young American standing in a dusty crater beyond our planet, blasting out from his iPod, Lady Gaga and the Black Eyed Peas or whatever the 21st century version of Sinatra and the baby daddies. And half lingers in collective consciousness as a memory of faded, grander, the way a 19th century date farmer in Nazareth might be dimly aware that the great ziggurat of Earth used to be around here someplace. So what happened? According to Professor Charlton, in the 1970s, the human spirit began to be overwhelmed by bureaucracy. The old can do spirit. Oh, you can try to do it, but it will toss every obstacle in your path. Go on, give it a go. invent a new medical device, start a company Go to the airport to fly to DC and find a patent. Everything’s longer, slower, more soul crushing. And the decline in human capability will only worsen in the years ahead. I think
Jason Hartman 25:09
this is one of the comments I want to make. I want to just stop that for a moment about the European experience. And, you know, Drew, I just I mean, you’ve been to Europe, I’ve been many times I was born there. It’s my ancestral homeland. It’s just shocking, that, you know, it’s like, what the US is becoming if we don’t fix this, hopefully, the Trump administration will fix it, who It remains to be seen. I don’t know Trump’s certainly got his share of problems and issues. You know, no one would deny that not even not even a supporter of him. But it’s like, there, it’s every obstacle is thrown in your path. You just try to do a simple thing. And the European response that you hear all too often is, well, that’s not the procedure. It’s not policy. But you know, at least in the States, you’ll have some creative thinking, someone will go out of their way to try and make the customer happy. But it’s just so just like bureaucracy is, is just ingrained in the culture. And everybody seems to look at the government is like their uncle that’s protecting them, instead of the Reagan era, you know, is, is that like the most dangerous words are? I’m from the government, I’m here to help, right? But I look at the government mostly as an imposition as something that gets in the way. And it’s, you know, that’s just, you know, when you’re in business and you live in the real world, and you’re not some Professor living in some college womb, or some student that just got out of that college womb. When you live in the real world you find out to be true. Yes, we need government. It provides some things that we need, you know, I don’t like anarchie But it just it just gets in the way it just stifles innovation. Mark Stein was talking about how, in the old days, all of these great new medical cures were invented. And now with the FDA, it’s just become this. This bureaucracy that’s corrupted by money and lobbyists and special interests just like everything else in
Andrew Baker 27:27
favor. Oh, no,
Jason Hartman 27:29
I don’t I say Yeah.
Andrew Baker 27:31
You know, it’s funny, I was having a conversation with someone about, you know, how the European mindset is, you know, buying your groceries that you need that day and like how that out, you know, in America, we just have this gluttony and how we have so much excess and like how the Europeans do it so much differently. They, you know, have five pieces of clothing that they would wear over and over again and sort of this minimalist lifestyle,
Jason Hartman 27:54
that’s why they some of the subways
Andrew Baker 27:59
some of that’s to be admired But I was telling the person I said, Don’t you realize that they’re doing that of necessity? Yeah, they can’t they don’t have that abundance. They don’t have that option. So they’re doing with what they can. So even though I think we can get a little out of hand, I just thought that was kind of amusing.
Jason Hartman 28:17
Look in the US you can you can say Americans are gluttonous, and you’d be right. Okay, that’s not that’s not untrue. Unfortunately, it’s a sad thing about the US, but at least, I’d rather have the ability to be a glutton and have to exercise my own self control of not becoming an out of control materialist or packrat or collector or out of control consumer or out of control. overeater Okay. Then the then the other way around, where I could be, you know, the person who is forced into, you know, minimalism, you know, like, yeah, let’s at least have the choice. Let’s have our economy and our culture and our legal system. Give us the freedom of that choice. Now we may well become our own worst enemy and not be able to control ourselves, right? The kid in the candy store metaphor. But, you know, that’s what freedom is all about. We with freedom comes responsibility, and that responsibility is self control. So let’s just finish up this mark Stein thing and then we’ll go on.
Andrew Baker 29:24
It’s not just access bureaucracy, but insufficient cash. Yes, we can drone the dopey Obama trans of 2008. No, we can says Talton. Not if you mean land on the moon swiftly win wars against weak opposition and then control the defeated nation. Secure national borders, discover breakthrough medical treatments, prevent prime design and build to a tight deadline, educate people so they are ready to work before the age of 22. Houston, we have a much bigger problem. To be sure there’s still something called NASA and it still stands for the National Aeronautics and Space Administration. But there’s not a lot of either aeronautics or space in the inbox of the agency’s head honcho. A few days after Charlton penned his elegy for human capability, NASA Administrator Charles Bolden appeared on Al Jazeera and explain the brief he’d been given by President Obama. One was he wanted me to help re inspire children to want to get into science and math. He wanted me to expand our international relationships. And third, and perhaps foremost, he wanted me to find a way to reach out to the Muslim world and engage much more with dominantly Muslim nations to help them feel good about their historic contribution to science and math and engineering. Islam The Final Frontier to boldly go where no diversity outreach consultant has gone before. What format foremost Vanessa is to make Muslims feel good about their contributions to science. Why as recently as the early ninth century, Mohammed Al Parviz me invented the first universal horror quadrant. Things have been a little quiet since then, or at least since tacky. Alvin’s Observatory in Istanbul was razed to the ground by the Sultan’s janissaries in 1580. If you hear a Muslim declaring we have liftoff, it’s likely to be a triumphant animal. After lighting up his crotch, as far as I recall, the most recent Islamic contribution to the subject of space exploration came from Britain’s most prominent in Abu Hamza, in 2003, declared that the fate of the Space Shuttle Columbia was God’s punishment, because it carried Americans and Israeli and a Hindu, a trinity of evil against Islam.
Jason Hartman 31:18
Can you believe
Andrew Baker 31:19
that the likes of Abu Hamza, they’re not as easy as it should be not in Europe and Canada, where the state is eager to hold you into court for Islamophobia. But the last one is, NASA is the government agency whose acronym was known around the planet to every child he looked up at the stars and wondered what technological marvels the space age would have produced by the time he was out of short pants. Now the starry eyed Muppets or green boomers, the agency that symbolized man’s reach for the skies, has transformed itself into a self esteem booster is an operation. Is there an accompanying book, Muslims have amassed infidels are from Venus. There’s your American decline right there. From out of this world out of our minds and increasingly unmanned flight from real historic technological accomplishment to unreal a historical therapeutic touchy feely multi culti so we can’t go to the moon. By the time you factor in getting to the airport to do the shoeless shuffle in the enhanced pat down, flying to London takes longer than it did in 1960. If they were trying to build the transcontinental railroad now they’d be spending the first three decades on the environmental impact study and hammering in the golden spike to celebrate the point at which the feasibility Commission’s expansion up from the fifth floor met the zoning board’s expansion down from the 12th floor. Google and Apple and the other Latter Day American success stories started in somebody’s garage, the one place where innovation isn’t immediately buried by bureaucracy. Or at least in most states, not until some minor municipal functionary discovers you neglected to apply for not sitting around on my ass all day permit. Apple and company doing those garages they invented in refined home computers and entirely logical response to late 20th century America. When reality seizes up, freedom retreats and retrenches to virtual reality to the internal where once space was the final frontier. Now we frolic in the canyons of our mind. We’re in the Wilbur and Orville era of the internet right now but at the federal commission vacations commission and other agencies. They’re already designing the TSA uniforms for the enhanced cyber pat down. And wait,
Jason Hartman 33:06
you know what I’d call those. I call them the political correctness thought police at Google, Facebook and now Airbnb. It’s just absolutely scary. This is like the new Nazi book burning the new Fahrenheit 451 where these huge companies get to decide who rents a house illegally, by the way, based on total discrimination, shame on Airbnb, read about it, folks. It’s it’s, it’s in the news. Okay. And and Google and Facebook, the literally the morning after we heard about the Trump election, I’d never heard the word the phrase fake news before in my life. And suddenly fake news was everywhere. That’s how Trump got elected fake news, right. But yet, these big news media organizations have been engaged in fake news for at least four Read decades, it’s, I mean, CNN has been caught red handed the communist news network with their fake news propaganda. So many times it’s pathetic. I mean, it’s just it’s this is just pathetic. So yeah, the the thought police are here. I mean, it’s just unbelievable.
Andrew Baker 34:20
Yeah, it’s really funny that this whole article this whole, you know, essay is talking about NASA and you know, I remember this article that I read not too long ago talking about how how the social warriors the social justice warriors were really upset with target because apparently they hadn’t come out with a female version of a NASA shirt for little girls. And so they had a boys shirt but they didn’t have a girl shirt. And it was funny because target actually responded linking to the girl’s shirt because they had even gone that far of having both the girls and a boy shirt and, and so we’re so consumed with, you know, doing what’s politically correct. Rather than accomplishing anything substantial, you know, and that kind of leads into what Elon Musk is doing with his private SpaceX because NASA just couldn’t get anything done. He went on, you know, now Elan Musk, the world’s biggest crony capitalist. Yes. Well, I mean, you know, the thing is the government loves to give money to Boeing and all these other companies, you know, the industry, the war machine. And, you know, he does tap into that, but, you know, he has called for ending all the subsidies, which I guess is easy to say. But, you know, it’s the thing is, the rules are so skewed that you have to play by that game, otherwise, you’ll lose, you know, whether,
Jason Hartman 35:37
oh, and that’s, and that’s okay. So that same standard then should apply to Trump’s cabinet. You know, the guy who said he was going to drain the swamp, which arguably, he’s not draining the swamp. I don’t know. Yeah, maybe he will. Will, you know, the jury’s just out? I don’t know. I don’t know what to make of Trump. Yeah, it’s too early. But But, you know, all the liberals criticize Trump saying look at who he’s put on. his cabinet, you know, all these people from here and there? Well, how Who’s he supposed to put on the cabinet? Like, you know, I mean, how do you how can you not put people that are big execs and people who have power and connections on a presidential cabinet? I mean, who you supposed to put, you know, the homeless guy down the street? I mean,
Andrew Baker 36:23
yeah, no, don’t be a little
Jason Hartman 36:25
like an impossible thing.
Andrew Baker 36:26
Right. I agree with that. I mean, you know, he’s gonna put people that he knows and have some connection to and have some authority as he should. I think it is a little weird when he’s putting, you know, Trump Jr. and Ivanka on the cabinet, even though maybe I’m told nepotism. Yeah, I think that, you know, when you’re taking your staff from your reality TV show and putting it in the White House, I just think it. I think it’s poor form. And obviously they have no experience. Trump thinks the presidency is a reality show. That’s what’s scary about Trump.
Jason Hartman 36:54
Yeah, I know. But I don’t know. You know, maybe he’s actually a genius and we just don’t know it. Because you He’s controlling the news cycle
Andrew Baker 37:00
I, you know, well, according to Trump genius.
Jason Hartman 37:04
Yeah, well, yes. If you listen to him, one man PR firm,
Andrew Baker 37:09
which was, you know, when he got elected, he was beholden to no one. I mean, he kind of stumbled into winning, in my opinion, and, you know, and then, you know, because they picked a terrible candidate to run against them. And, and then, you know, he was he didn’t know anyone anything. And it seems like he had the ability to drain the swamp. But you know, I don’t know. I, it doesn’t seem like he is, but hopefully, you know, I guess we should give him a little bit more time to try to get something done. I know.
Jason Hartman 37:38
Well, we’ll see. We’ll see. We’ll see. But it let’s talk a little bit about some technology and wrap up with this. You know, as pessimistic as some of the stuff we’ve talked about today is and Mark Stein talked about, I do really think it’s an amazing time to be alive. I think technology could just rescue us all. Hopefully, the government will get out of the way and let it all happen. But you know, to some extent market forces are so powerful that it you know, it’s they ultimately win. Okay. Even in even in North Korea and Cuba, the free market wins. You know, even with massive government control, there’s always a gray market, a black market that’s underneath the government controlled market that always ultimately wins eventually, at least. What did you want to talk about that’s going on with like self driving cars and these amazing technologies that I think will change the real estate game significantly. And just to bring that back into focus, you know, I’ve said before, but the three primary value drivers of real estate have always been what location, location, location, and location or geography are less meaningful than they’ve ever been in human history. I’m not saying they’re not still meaningful. I’m just saying they have less meaning than ever before. through technology through communications technology through transportation to Technology, especially the autonomous vehicle. What did you want to talk about there? drew?
Andrew Baker 39:06
Well, first, on a pessimistic note, I think it’s funny that we’re talking about NASA. Because in light of that, you know, Peter teal had a had a very funny quote that he made a few years ago talking about how we all wanted flying cars, and instead, we got 140 characters with, you know, Twitter and how, you know, there’s been a bit of a stagnation in terms of, you know, technology, you know, in the, in terms of transportation. So, I think that we’re coming to the point now, where things are going to change dramatically. And we kind of talked about this in private, where, you know, I think what’s interesting is, you see Uber, kind of taking over the inefficiencies of the taxi system and sort of trying to dominate in transportation. And you see Airbnb, you know, sort of going after hotels and the, you know, the lock that they have on that and kind of offerings, inefficiencies. people having access, whether it be in their homes and putting that to use. So why don’t you let me just talk about that for a moment. So what you see is you see how the sharing economy is taking all of these formerly dormant, unused resources in the world. Okay. And it’s putting them to work, which is an amazing, amazing thing. And it’s funny because the last European country I was in was Norway, okay, Norway, becoming a disaster of socialism and immigration, even though Norway’s got tons of money in their sovereign wealth fund, I get it, you know, with the natural resources and so forth. But
Jason Hartman 40:37
I’m telling you, Scandinavia, is not looking good. Okay. You just just wait 1020 years, you’ll see what I mean. Okay. But the amazing thing is, when I was leaving the hotel, I was asking the concierge to go to the airport, should I use Uber or what? And she said, Ubers illegal in Norway, and I pulled it up on my phone and I said, No, I got it. Right here. And I already used it once when I was here and she’s Well, it’s illegal. Well, so what if people use it anyway? And who cares if it’s illegal? You know, Airbnb is illegal in New York City, but people use it Okay, is that you cannot stop the power of a great idea. And that’s what the free market is. That’s what capitalism is the most natural and most successful, quote unquote, religion ever in human history is capitalism. And and everybody wants it, it’s totally natural. And you can’t stop it no matter what you do.
Andrew Baker 41:33
Go ahead. Well, you know, I I completely agree. I think what’s funny is that you know, when you look at Uber and transportation and Airbnb with real estate, how it has changed the landscape and in terms of how people approach real estate, you know, a lot of these beach communities have had to just add a lot because it’s changed the dynamic so much there. My wife and I, we went and walked down on the peninsula in Newport Beach, and it’s just every other house on the on that board Walk is just, you know, a beach rental. And so now when you have what would be a, you know, a place that someone would live full time, and you’re competing against someone renting it with four families for, you know, for a weekend, the prices just have changed so dramatically that it has, you know, and think about all the congestion and just issues. So, you know, I know a lot of people have been trying to stop it. Because it does have unintended consequences. But, you know, again, yeah, right, when you have a good idea, and, you know, most people wouldn’t be able to rent a place right by the beach at night, you can, you know, there’s kind of a there’s kind of a give and take, as far as you know, whether it’s good or not, but obviously, it’s the government wants to stop it, because, you know, the hotel industry is probably petitioning them to, you know, get on it, so they don’t take away from their monopoly But well, you
Jason Hartman 42:53
know, they’ve got their lobbyists for sure. Yeah. So to the taxi drivers.
Andrew Baker 42:59
I you know, I think Just kind of I’ve been looking at kind of these trends in. And I think when you say the shared economy, I think there’s a more broader issue here, which like, is about how people are circumventing all this congestion in the UK, in government rules, like whether it be, you know, for example, just solar power, you know, having to be tied to a grid. And now, you know, if you could put solar on your house, and that becomes affordable enough in the foreseeable future, or if you have an old like, you know, electric car, that you don’t have to go to the gas station, and you can power off your, you know, roof panels. Now, I don’t know if it will quite give you enough power. And I know there’s a lot of government tied up in that. But, you know, I think it’s interesting that all these technologies are basically trying to work around the inefficiencies that the government has put there. And I think that’s why we’ve had such a reaction to, you know, to Bitcoin, because the government what they’re doing with money, has, you know, most people are rejecting I think that’s a bubble. But but maybe I’m getting off topic, but I, well, well, the whole cryptocurrency and alternative currency thing as I’ve said before, I would love nothing more than to be wrong about this, I just don’t think the governments and central banks around the world are gonna let it happen. I mean, they’re gonna let it play out a little bit, but somehow they’re going to find a way to control the money supply, they must do that it is imperative to their mission. Yeah, it is where the governments and central banks around the planet gain most of their power through the control of the money supply that is the one last very reliable Bastion that you know, they they can control. And so I don’t have a lot of faith in alternative currencies that aren’t controlled by the government. Now people confuse the Bitcoin thing and I know we’ve got to wrap up through because you’ve got to go, but
Jason Hartman 44:52
they confuse the concept of the block chain, which is part of the technology on which Bitcoin for example, is built And they they confuse that with Bitcoin itself. Okay, those are different things they have to be separated Yeah, well the lock blockchain is great and and you know, any government or the United Nations or whatever, or any central bank can create a digital currency that uses blockchain technology and that would be awesome for them, but they will still control and manipulate it at some level. And that’s how they can control the literally The Wealth of Nations to borrow a cliche from Adam Smith. Not a cliche but a wonderful awesome philosophy. No, you should read The Wealth of Nations by Adam Smith. It’s incredible. The Invisible Hand but government needs to control that they’re not going to give that up okay, they are not Mark my words. They will never give that up.
Andrew Baker 45:47
Now it’ll you know, it’ll be and they’ll, some government will outlawed because, you know, there’ll be some news story, whether it be contrived or real. where, you know, someone’s trying to protect somebody.
Jason Hartman 45:58
Yeah. Oh, somebody’s trying to launch Money and this is the terrorists are using this. So we’re gonna make it illegal and if you do any terrorist and the prostitutes and the drug dealers and the International arms dealers, that’s all it’s gonna be in there, you know? And then there’s gonna be some crash and some bitcoin wallet company. You know, it’s already happened a few times and you know, China’s really come down on Bitcoin, folks, do not place your bets against, you know, the old saying, never bet against the Fed. With my philosophy of investing, you’re betting with the Fed. You’re you’re using, you’re taking the two most powerful entities on earth governments and central banks, and you are aligning your interests with them. And that is the way to go. If you ask me.
Andrew Baker 46:37
Yeah, I watched something on device. They have some great stuff, even though they have an agenda, where they were talking where they were talking about, you know how drug dealers now they’re doing the they don’t deal in US dollars anymore. They deal in gold, because it’s completely anonymous. You can’t track it, and they basically will just and it’s, you know, valuable and highly portable. So It is funny how that how the original money is sort of being preferred now and I don’t know how that will interplay with gold. I know some people have talked about cryptocurrencies backed by gold, but that I just don’t think it’s ever going to work. I’m not buying it
Jason Hartman 47:14
away. Well, this has been an interesting talk. We’ve been all over the board, Drew, we got to wrap it up, especially for you because you need to go. But um, anything else you want to say to our listeners?
Andrew Baker 47:23
Well, I wanted to tease out that last point that I think we were talking about, or we were talking about self driving cars, because I think that that is going to be the next big thing. If we have time to talk about it. That’s going to be the next big thing. And I think I talked to you about how that will change the real estate landscape dramatically. You know, I think now it’s quite amazing how you know, I’m in a, I was in a foreign I was in Denver for the week and didn’t know the area too well. I got on my phone. I went on Uber Eats and I delivered something to the place I was staying in where I didn’t have a rental car. Then you know, the friend I was staying with did this five years. Dollar subscription thing where every ride that you take with Uber is $5. And you can just go anywhere within the town. So, you know, we’re spending, spending $20 a day on, you know, just driving around going to different places walking around the city and then Uber and back. And you know, just how going through all the, you know, insurance and paying the city taxes for renting a car and doing all this sort of stuff just now and sort of getting usurped. And I think that what’s going to happen in the future is people are just not going to, you know, retire couples, and even maybe young people are going to create a nomadic lifestyle where it’s going to be too expensive or predatory for them to be in one place. So what they’ll do instead is just have a vehicle or you know, like, let’s say a self driving motorhome, where they will be able to commute all around and go from place to place and have it drive at night. And, you know, their services can be both mobile and their You know, lifestyle can be in enriched because they’re not going to be in the same place at the same time. And if they can have a peel box in, you know, in Las Vegas, and have that be their primary residence, well,
Jason Hartman 49:12
have it be better yet have it be in Puerto Rico. Oh, yeah, there you go. Even better. But but this is the thing is see all of this concept of taxation is about Nexus tax Nexus, right. And the tax Nexus is always based on geography. And now that geography is becoming difficult, you know, in the old days, if you were a business owner, you probably owned a physical business, which was either a store or a factory, or something where it was definitely clearly defined as to where that was located, and what jurisdiction got the privilege of oppressing, I mean, taxing you, and now that’s become very fuzzy. You know, I think, you know, I think about these immigration laws, and I’ve often thought, Well, what if I want to go live in another country for a while just to have an interesting new experience, right? Say I want to move to Europe, right? That, you know, maybe even Eastern Europe, the land of the supermodels. The problem is, I can’t put up with a stupid bureaucracy in the small thinking European mindset, right. But that’s what drives me nuts. And that’s why I’m glad to be home. But if I did that, you know, the immigration laws that would let me potentially move to another country would say, you know, look that what they don’t want you to do, is they don’t want you to go take someone’s job, they don’t want you to go to take the job of a of a native of a citizen that lives there. But see, I wouldn’t have to do that. I wouldn’t take anybody’s job because I just work from my laptop and an internet connection. Okay. And, you know, do my podcasting, we’ve got this global audience listeners, and 164 countries, clients all over the world that buy properties, admittedly all in the US but in multiple states and jurisdiction jurisdictions. And so, you know, it’s just, it’s just a total New World, and people can be much more nomadic than they’ve ever been. So like my quote,
Andrew Baker 51:06
geography is less meaningful than it’s ever been in human history. I think that’s really interesting. I mean, so I’ll be curious to see how it plays out. Because, you know, the government is going to keep trying to make more rules to pigeonhole people. And, you know, it’s it’s funny how they always are trying to incentivize certain things rather than give people freedom. So it may be whether it’s, you know, telling people that we’re going to give you a tax deduction, if you have more kids to say, and if you buy a house and you have a bunch of debt, we’re going to give you you know, this reprieve or this benefit or incentive. And so, you know, when people book that system, and, you know, technology becomes your friend to basically get around those, you know, incentives. It’ll be interesting to see what happens, you know, where the incentive is, maybe up front But I don’t know how it’ll play out as far as in the long run.
Jason Hartman 52:03
I would say if if someone is a government bureaucrat, they are in a high insecurity position. Nowadays, the power has swung away from governments, and it has swung toward the people. Thankfully, that’s the way it should be. And it is much harder for the government to figure out how to tax people nowadays, you know, they’re trying to keep up with it. But the law and the government are always behind the trend. So we’ll see how that unfolds. And we’ll talk about it more on the show. But needless to say, you know, owning real estate, in divert in diverse jurisdictions is going to be helpful to you in this new world. So following my 10 commandments of successful investing, owning real estate that is not in the expensive markets, because transportation is getting much better and easier and communication as much better and easier. There’s a new app. Forgive me. I was listening to The Wall Street Journal just yesterday. When I was coming back from the airport last night, that basically the you know, some of the new social media stuff that’s taking place in communications is basically where it’s like this living room, very lightweight communication. And if you look at Amazon’s new, it’s not the Echo, but it’s the new one with video where people can basically just drop in, it’s not as formal as making a phone call, or sending an email or a text message or even a boxer boxers my favorite way to communicate, where they can just kind of you drop in and open a video chat, like, like they’re in the same room with you is, is improving communication dramatically. So there’s a lot of stuff that’s changing things and making geography so much less meaningful. So if you’re buying the point here is if you’re buying the typical type of properties that we sell through our network, these suburban type properties in these lower price markets, I think the value of those is going to be pushed higher. Expensive type properties is going to be pushed lower. Right. Yeah,
Andrew Baker 54:05
yeah, I think that that’s interesting. I think that the top plot properties are going to plateau, because they’ve gone up so much. And that will push downward pressure on the lower properties, the properties that are more the be, you know, Beast type properties a second second to your property. Second City. Yeah, absolutely. Because I mean, you think about it in the last decade, you know, we were talking about with my wife went to a baby shower, in Emerald Bay, which is probably like the most expensive real estate in Orange County. And, you know, she was looking at the beautiful house, it was huge and $20 million. Yeah, exactly. So we went looked it up, and it was, you know, $8 million. And that’s what we’re wondering what the Zillow was, and I said, it’s probably worth more than this. But, but it’s probably worth 10 million and they bought the property in 2000 for a million dollars. And it’s funny because you know, it’s gone up 10 times. So that can’t happen again. They can’t go ahead. Not gonna go up another sustainable. Yeah. So I think it’s more going to flatten. And you know, that’s going to put downward pressure on, you know, people what used to be a million dollar house now, you know, that’s going to be more in the B property zone as far as, you know, some more suburban, I think, yeah, that’s, that’s where the, that’s where the action is.
Jason Hartman 55:24
So it’s more than necessity type housing. That’s, that’s where the action is no question about it. And, you know, being in New York City yesterday, I just thought what is the huge attraction about living here? You know, I was there a month ago on my way to Europe, I spent a day there on the way back and you know, it’s just everything is just high on the hassle factor. If he asked me, I don’t get it. I want to get it. You know, I thought maybe I’ll go live in New York City this fall. I’m still kind of thinking about that. Because I’m, you know, very mobile, and I really want to experience some other places. I was stuck in Southern California, the vast majority of my life so I’m kind of one Do that. But it’s just very high on the hassle factor. Of course, it’s super expensive, everything is a fortune. And so I just think that the power is moving away from places like that to the second tier, and even third tier type places that just make a lot more sense life is easier. You can still communicate and have all the benefits of those places. You know, like one of the things New York City people say to me all the time is, you know, you can get food from any type of restaurant 24 hours a day. Well, you can do that with Uber Eats now to folks. Just
Andrew Baker 56:38
Yeah, he’s also when you talk about the hassle factor, I have to laugh because my metric for those sorts of things is how big of a hassle is it to get a case of water in your house? And that’s that’s kind of my metric for how it how easy some more places, so maybe you’re in you know, rural, you know, Montana and you have to drive you know, an hour to the grocery store to buy something and drive it back or you know you’re in New York City and you have to go down five flights of stairs and you don’t have an elevator and you know then you have to walk to the market and don’t forget in New York City and if you have a doorman in your building you’ve got to talk him a fortune because he will not give you will not get your packages if you do not tip your unionized incredibly lazy, greedy doorman in New York City, but yeah, go Yeah, I heard that. Like, if you don’t get him a gift for you know, $5,000 or something for Christmas, they’ll like not Yeah, it’s just something ridiculous. I don’t know. It’s ridiculous. Yeah, yeah. So
Jason Hartman 57:38
yeah, interesting stuff. Interesting stuff. Drew, we got to wrap it up. I know. You’ve got to go to lunch. And our listeners have been listening a long time. So let’s let them go. But we’ll have you back on a future episode. Thanks for joining me everyone. Happy investing Be sure you go to Hartman education comm slash contest and get your last chance in to enter the Amazon Echo. Amazing Technology love that. Also go to Jason hartman.com and get in on the early bird pricing for our upcoming meet the masters of income property event in Southern California, San Diego in January. A lot of you we’ve sold a zillion tickets for meet the Masters already so thank you for buying those and getting in on the early bird special. Anybody who hasn’t done it yet, Jason Hartman calm click on the events section and get your tickets for that, Andrew, thanks again for joining me happy investing everyone.
Jason Hartman 58:29
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