In this client case study, Jason Hartman talks to Michelle Hawkins, a client who has attended a Meet the Masters live event and the most recent Creating Wealth Seminar and Property Tour in Cincinnati, Ohio. Michelle shares what has led her to invest in income property and also gives investing advice. They discuss inflation, real interest, and tax rates.
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 complete solution for Real estate investors.
Jason Hartman 1:03
Hey listeners, I just want to apologize for the audio quality on the first part of this show this episode. It is only the first part for just a few minutes during my monologue portion. And then when we have our guests, the sound quality is improved dramatically. So please bear with us. I apologize. We will try to make sure it does not happen again. Welcome listeners from around the world in 164 countries. This is your host Jason Hartman episode number 686 686. Well, I woke to the tragic news this morning, Sunday morning, as many of us did, to the terrorist attack in Orlando, Florida. A 29 year old Islamic radical went in and killed a bunch of people. He was targeted. gays apparently, these are the early stories coming out. We’ll see how this is corrected. We’ll see if this guy had contact with the FBI. We’ll see what his Afghanis ties were apparently he was born in the US, Afghani parents. And maybe most interestingly of all, will we see any coverage about him being on antidepressant pharmaceutical drugs on benzodiazepine type drugs? These mass shooters? That’s the thing they have in common. It’s it’s always the prescription drugs. Yeah, you don’t see this stuff covered. Because look at all those commercials on TV. For those pharmaceutical companies. Yes, I know. Very little coverage. Only the alternative media covers this kind of stuff. And then everybody doubts it because they say, Well, you know, you can’t run away. On what TMZ reported, I don’t know, maybe it’s a lot more reliable than CNN. Maybe someone knows. Did Donald Trump by CNN, either. Here’s the reason I asked. He that’s all they talk about Trump. I mean, it’s mind boggling. You know, I don’t have television. As you may know, I told you that I canceled my television a few years ago. I just have internet access in my house.
And so I watched streaming services and surf around on the computer. But when I go to a hotel, and I’m on my way to a hotel now because I’m on my way to be driven by my self driving car to be driven to San Diego, escape the heat a little bit and that’s a game changer. You know, like I’ve talked about because here I am. It’s going to be 102 degrees in Scottsdale, Arizona today. And it’s going to be 70 degrees in La Jolla, California today. Where are you? Going, and my car will drive me there almost effortlessly. And imagine when that car is completely autonomous, right? I could literally get into the car and go to sleep and go to the much more expensive real estate market that I don’t have to pay to live in. And the car will stop along the way and charge itself or fuel itself automatically. And I don’t even have to wake up the whole time I can be driven there. Five and a half hours, six hour drive. I’ll just wake up in San Diego to a much nicer planet.
Now listen, Arizona eight months of the year, has the best climate on the planet. If you ask me. I love it here. Eight months of the year. It’s spectacular. Literally spectacular. But of course in the summer, it’s tough. It’s It’s hot, but it’s a dry heat. So that self driving car thing will change the game. But I tell you it Back off my tangent. Anytime I go to a hotel, and I turn on the communist news network or the clinton News Network, or the crisis News Network, you know, CNN, CNN has so little credibility anymore. It’s mind boggling, but not with a large percentage of the population. They still do. So I turn it on, and all they are talking about is Trump this Trump that Trump everything else. Donald Trump, Donald Trump does that and the other thing, some stupid thing he said. Did he buy that state? Did he buy cnn did Ted Turner sell cnn to Donald Trump? You just gotta wonder. You just gotta wonder. But yeah, tragedy, another terrorist attack on US soil. And is terrible as this is. I bet there will be a lot more. So be ready. You don’t see this stuff happen in Texas. I wonder if this is ever going to happen to you Texas, is someone going to go into a nightclub in Texas and kill a bunch of people, when all those Texans would just pull out their side arms, because a bunch of them will have them with them and shoot back. He’ll get off a round or two, and then he’ll be dead. So, look, I don’t want to live in the wild west. I live in Arizona, I can certainly carry a gun around anytime I want here. It’s super easy. You know, no permit needed, but I don’t. Or at least I don’t often say that. Just in case you’re you might wonder. But yeah, you know, it’s, it’s tragic. They always pick the places where people aren’t armed. You look at Europe, nobody’s armed. So that’s a prime target. That’s where most of this this kind of stuff happens. It’s really sad. Our world especially the left, the left is the most guilty of this. The folks on the left they are Attack the symptom and never attack the cause. Attack the cause, not the symptom. That’s what you have to really look at. What is the cause? Is it a radical religious ideology? Is it pharmaceutical drugs? Is it immigration control that we need to talk about? I don’t know. You know, what is it? I’d love to hear back from you. In fact, if you want to have an intelligent discussion in you’re an expert on these subjects in some way, come on the show. I’d love to interview Yeah. It’d be interesting to talk about. Okay, so this is a real estate investing show, right? Yeah, it is. But I’m pretty upset about this, as I’m sure many of you are.
So I just thought it was worth a comment and of course, worth some prayers, but much more than that. It’s worth really doing something about on a more political level. So We have to talk about this kind of stuff. But yeah, so let’s talk about a investor journey. Let’s hear from one of our great clients today, who has recently started her journey to build a great real estate portfolio realizing that the pension system will not solve the problem, again, more symptom and cause discussion. These pensions are totally overrated. They’re going to be debased potentially through inflation. It’s a huge concern. So you’ve got to plan and that and create your own security in the world as all any of us can do nowadays. I remember Earl Nightingale talking years ago, about the laid off steel workers in the Rust Belt areas. And he would say, or the auto workers in the Detroit area, you know, he he would You know, someone would stick a microphone and a camera in front of one of these people laid off because the plant shut down or they laid off a bunch of workers. Well, I’ve been doing this 20 years I don’t know anything else. And romaine kills comment would, you could learn how to do heart surgery in your spare time in 20 years. Okay? We have got to take and make our day job, simply the stepping stone to our ultimate goal of building a very nice investment real estate portfolio. I have graduated, if you will, in my own portfolio into some bigger things which are kind of cool and interesting, but they are much more complicated. I still love the humble single family home I just bought a couple more of those myself. I’m going to be buying more as I go down my own path of diversifying I freely admitted one of the mistakes I’ve made is that I’ve over diversified so I’m trying to Be a little less diversified. If I can get myself down to like seven markets, five would be even better, but seven would be great. Lucky Seven, seven different real estate markets between my apartment complex holdings mobile home park, single family home holdings, I would be super happy about that. Again, your mind can remember three to five things really easily. You can keep track of that in your head and really know what’s going on with your portfolio. So don’t over diversify, but do be diversified. Remember, part of the 10 commandments, and then the next 10 commandments. And by the way, we’re going to be playing on some future episodes here. Some recent live recordings where I’ve updated some of this stuff, and I think you’ll enjoy that. I know you’ve told me you’ve enjoyed the past recordings but we’ve, we update this stuff. When we do these live events. There’s a new spin some new details new, distinct on it. We’re also going to analyze a an interesting duplex. With our guests here today, Adele bola Island duplex that’s a Newport Beach, California. See if you like that deal. Let me tell you about some of the other great shows we’ve got coming up. Gosh, we got so many in the can now for a while there we were a little short on inventory. We’re going to be talking about retirement risk and how to plan around uncertainty for a successful retirement. That’ll be with Jamie Hopkins.
We’re going to talk about a heist in the Federal Reserve with Matthew Quirk. Kevin mania is going to be here from Newsweek talking about how to play bigger, how pirates, dreamers and innovators create and dominate markets. We’re going to talk about we got a little more another interview on the Chinese market talking about breaking in ground and Chinese investment in us real estate. Arthur Margolin from Rosen Consulting Group in the Asia Society. We’ve got john our lot coming back which by the way, you No, I opened up talking about the gun control silliness. It really is. It’s just it just doesn’t make intellectual sense. And intellectual honesty is in short supply today, but we’re not going to talk about that it just so happens the author of that great book, more guns less crime, john r lot will be with us to talk about economics, and how do we regain control of our future. He writes for the American Enterprise Institute and Fox News. We’ve got congressman Dr. Paul Brown with us talk about economics and the Constitution, flat tax job growth and more. Yeah, we got some good stuff coming up. So really, some interesting interesting shows a lot more than that. So anyway, let’s get to our guests.
Let’s talk to one of our clients. Michelle, who recently attended our Cincinnati, Ohio market, Cincinnati sort of date meeting between market tour and creating wealth seminar and she’s got some good comments for you on that. Visit Hartman education COMM And check out some of our great educational products there that go into a lot of this stuff in more structured, detailed manner. That’s at Hartman education, COMM And of course properties at Jason hartman.com. And we will be announcing another event soon. We’re working on that now. So stay tuned for that as well on future episodes, and let’s get to our guest and talk to Michelle.
Hey, I wanted to welcome one of our clients to the show, and she’s a newer client, but a longtime listener to the podcast, and that is Michelle from the San Francisco Bay Area. Michelle, how are you?
Michelle Hawkins 13:36
I’m great, Jason, how are you?
Jason Hartman 13:38
Good. Thanks for joining us and you are a musician. So you’ve got a very nice microphone and you sound great. Thank you. This is a totally professional interview here, folks. I’m sure I sound terrible compared to Michelle. So you know, unfortunately, that’s not supposed to I think it’s supposed to be the other way around. But you joined us for our last meet the Masters event last January. And then for our Ohio property tour and creating wealth seminar recently, how’d you like it?
Michelle Hawkins 14:06
I loved it. And I would absolutely recommend it to anyone who’s out there listening. If you’re on the fence, and you’re, you’re wondering if this real estate investing is for real, I just would recommend that you go to an event because you’ll meet people. And you’ll, you’ll see that there are real people who are actually doing it and that it’s not a scam. It’s actually a real thing. And it works. And, and there’s a lot of people out there doing it and doing very well.
Jason Hartman 14:37
Yeah, thanks for mentioning that. I really want to encourage listeners to come to events, at least come to one so you’ll get to meet us and know what we’re all about and meet our clients. It would be much easier Michelle and everybody listening for us to just be sort of this online business right? Where we didn’t do live events. Live Events are lost. splitter for us they don’t they’re not profitable by the time you make it all happen and promote it and so forth. But they are profitable for us in the sense that once people come to events and meet other more than more important than meeting me or our team of investment counselors and our staff whoever happens to be at that event, it’s meeting the actual people the other listeners to the show the other clients hearing their stories and the good and the bad and the ugly it’s not all roses by any means. And I don’t know Michelle either they are those the only two events Ubuntu masters and then this last Ohio property tour.
Michelle Hawkins 15:40
Yes, yeah, Masters was my first event.
Jason Hartman 15:42
Did you hear any horror stories?
Michelle Hawkins 15:44
Not at masters No, but, but I did meet a lot of really wonderful and interesting people and got to hear you know, where they were in their investment journey. And it just really gave me confidence to actually pull the trigger.
Michelle Hawkins 16:01
Because, you know, it’s scary,
Jason Hartman 16:03
you know. And you’re you’re sort of the typical kind of investor that we have, I’d say, I’d say the largest section of our clients are people that are in your similar situation. They’ve got a home, it’s appreciated. They’ve got a lot of equity in it as Do you. It’s that old concept. We used to have this ad It was a great looking at, I wish I could find the image we hired an illustrator to make it and everything in it. It was when really the vast majority of our clients were from California, because that’s, that’s where I started out. It said, turn your castle, meaning your home into a kingdom. And it had and the idea was harvest the equity from your highly appreciated home or your paid down mortgage that you’ve been sitting on for years, either one and diversify it around the country into these much more sensible, stable linear markets. So you have the best of both worlds. You still control that asset, you still own it, you know, just refi that money out and buy some other income properties that makes sense that actually work. You wanted to talk about that, and pensions and so forth. And I love how you say, because as we were off air, before we started, you talked about this, this whole idea that is so ingrained in society. And of course, it’s ingrained, because Wall Street has lobbied Congress, and they’ve had laws passed. I don’t know how much of they were behind irisa, but probably a lot back in the 70s. And they’ve been promoting these ideas for four decades of that we’ve got to sock all our money away in the stock market, rather than use it today. And I think you could use it in a much better fashion, and wait till you’re 59 and a half or 70. To enjoy it. What did you say about that? share that with the listeners, I thought that was a really good thought.
Michelle Hawkins 17:57
Well, it’s just this idea that your hard earned money doesn’t really belong to you. And that the government’s basically saying, you know, oh, we’ll let you put your money away so that you can have it when you’re 70. Right, rather than, like, as if that money doesn’t belong to you in the first place that you didn’t earn it. Right? So why should you be able to enjoy it during the prime of your life? Right when you have, you know, the energy and vitality to travel the world or do whatever you want to do. But instead, they’re saying no, you know, you should really just stick that away where you can’t touch it without great penalties. And, and we’ll just let you have some of it when you’re 70.
Jason Hartman 18:37
But isn’t that a good idea, though? I’ll just play devil’s advocate with you for a moment. The government encourages people to save money for their future rather than the government taking more in taxes and then promising to give it back to us later when we don’t have an income right or what I mean, where’s the Where do you come down on that?
Michelle Hawkins 18:58
Well, That’s sort of nanny state ism, right? It’s the idea that you are not intelligent enough to do something good with your money. Or, you know, if you if you want to do something more aggressive or something more clever with your money, you know that they don’t encourage that, right? They just encourage you to do the simple, safe, boring, and actually, really, not really not effective thing with your money. I mean, the reason why I’m here, Jason is because I did the math. You know, you know, when I first when I finally got this tenure track position, and I was in a place where I could really step back and look at a bigger financial picture of my life. I was curious, you know, where am I going to be at retirement? And I looked at my pension, and I did a bunch of projections. And when you take into account inflation, it’s not pretty, it’s not what people think it’s going to be. And then I looked at, you know, socking away the max is Look, you know, four, three B and in a, an IRA Roth or, or normal. And you add all that up you, you know, say maybe the stock market is going to do a percent. And then you take into account inflation and the fact that that money will be taxed at income as
Jason Hartman 20:18
income, right when you withdraw it and, and, and look, nobody listening would be dumb enough to think that tax rates will be lower. Because Because Michelle, here’s the thing, like, the way I heard that pitch to me many years ago is, is that look, when you retire, you’re going to be in a lower tax bracket. And I’m thinking what the that on its face is such a messed up idea. The idea is that I’m going to retire and be poorer than I am now. I hope I’m going to be a lot richer than I am today when I retire. Yeah, so just that part of it first is wrong. But also the fact that the government is so dysfunctional, and so broke The idea that tax rates will actually be lower. Yeah. You know, based under I mean, the thing they’re saying is that under the current tax scheme, that, yes, if you’re making a lot of money today in the prime of your career, and you’re working hard, and you’re in their peak earning years, and then when you retire, you live more modestly. Which who wants that idea? Right? But whatever. We’ll take that on its face and let it go. And your income will be lower. So your tax bracket will be lower? Well, yeah. But first of all, the tax scheme doesn’t it’s not a it’s a dynamic thing. And as the government gets more broke, they tax more. So that’s the first problem with that theory. And then the second problem is who wants to be poor in the future?
Michelle Hawkins 21:47
Jason Hartman 21:48
Crazy. It makes no sense. Yeah. So if you do, let’s talk about that math you did for for a minute. So if the s&p does 8%, for example,
Michelle Hawkins 21:58
I don’t know. Do you think it’s gonna do a percent and the foreseeable it’s so overvalued, currently slated due to random printing? I don’t know.
Jason Hartman 22:07
Right, of course, but that that’s a complex discussion to have. But if we say if we say someone listening is 30 years old right now, and for the next three decades, do you think the s&p will average 8%? God? I don’t know. But let’s just give them that. Let’s say it does average 8%. Okay, sure. And let’s say that real, I’m not talking about fake manipulated inflation rates, but real inflation over that same course of time. Okay. Now, you know, Michelle, that when I presented the inflation induced death destruction concept, last weekend in Ohio, at the creating wealth seminar, inflation from 1972 to 2001, in that 30 year mortgage period, any one of the millions of people that had three decades long mortgages at fixed rates back then inflation averaged 5.3%. In official numbers, this is not this is what the government told us it was, which is always they’re estimating lower. Okay, the CPI said 5.3%. And I think you can assume that whatever the official number is, you can conservatively add 50% to that. Okay, no, argue with me if you want maybe, you know, some people would say you can make a double that if the government said it was 5.3, on average, that it was 10.6. I’m not going that far.
Michelle Hawkins 23:36
The fact that they don’t, they don’t take into account energy, which everyone uses and has to use, you don’t have a choice, right? And food. Right? You know, all you have to do is be the person who drives and go shopping in your household. And you know that it’s all a lie,
Jason Hartman 23:52
right? But the distinction is though that’s in the core rate of inflation, that’s not the CPI. Okay, so in the CPI, they do count that stuff. But they
Michelle Hawkins 24:00
manipulate the hell out. Yeah, they don’t it’s not real.
Jason Hartman 24:03
It’s not real. Of course, it’s not real. We know that for sure. You know, any sophisticated person knows the government is lying about they’re manipulating the inflation rate massively. So let’s just say that over the next three decades, the s&p does 8% in real inflation is seven and a half percent. Okay, seven and a half. We’re, you know, assume it’s slower, say it’s 5%.
Michelle Hawkins 24:30
I did 4% and was still horrified right? Well, yeah.
Jason Hartman 24:33
Okay. And did you do 8%? On the s&p?
Michelle Hawkins 24:35
Yes. Okay. And I’ve just plugged it into some, you know, there’s some great online calculators you can find, yeah, so I just plugged in all these different scenarios and was shocked.
Jason Hartman 24:45
Okay, so here’s why Michelle is shocked. I think, Okay, I’m gonna just tell me if I’m wrong. You were shocked because it’s 4% inflation and 8% return on your funds in the s&p. Then you’re going to get taxed either. If you convert that into a Roth, you’re going to get taxed immediately or later, you’re going to get taxed when you start to withdraw, and the tax rate will probably be much higher. But look, you live in my former home state, the Socialist Republic of California, and I love what you say you say, it’s lonely being a libertarian in San Francisco.
Michelle Hawkins 25:22
It really is. And it’s, it’s shocking, because you would think, you know, with all the supposedly free thinkers that, you know, these ideas would have more traction out here, but well, you know,
Michelle Hawkins 25:34
it is what it is. Yeah. Right.
Jason Hartman 25:35
That’s, that’s, that’s very true. So your, your tax rate is probably going to be somewhere in the neighborhood of 40 to 45% when you include this, right, yeah. And then there are a bunch of other taxes we won’t even talk about. So you’re gonna pay, just just route it. So you’re going to pay 40% of that. You’re hardly making any gains. You’re not making any Yeah, yeah, you just treading water, right? You you you have inflation at 4% you have return at 8%. And and then you pay 40% in taxes. When you take withdrawals and distributions later. It the whole thing does it just doesn’t work. You’re absolutely right. It doesn’t work. So, so that’s what attracted you to real estate investing, right?
Michelle Hawkins 26:24
Well, when I realized that I just, you know, said, well, there, there just has to be another solution. So, I just, you know, I literally went to the library and checked out every book I could find on investing, you know, stocks and real estate and I, I just looked up every podcast I could find and just started learning, learning learning. And I stumbled across yours and just kept coming back to it over and over again. And really started thinking about it and learning about it and it’s, it’s the only way
Jason Hartman 26:55
you know, what books did you look at and read and any recommendations good, bad, ugly. Big nerds like to hear about that if you remember which ones,
Michelle Hawkins 27:03
the ones that I ended up liking the best.
Jason Hartman 27:05
Yeah, the ones that you didn’t like or you do.
Michelle Hawkins 27:08
You know, I started out, you know, looking at stocks. So of course I, you know, there’s do the Intelligent Investor, right famous, famous one that supposedly it’s Warren Buffett’s book, or the one that influenced him value investing. So I was trying to figure out, you know, what’s all this value investing? And I read Tom Vogel or vocal, what’s the vanguard guy Bogle? I think Google the little the little book of investing group. And basically, the more I learned about it, the more I learned that you cannot beat the index, right? That’s sort of the common wisdom now
Jason Hartman 27:42
that’s the random walk down. Very famous book. Yeah.
Michelle Hawkins 27:46
And you know, you can’t you can’t beat the index. So that’s the best you can do is find a no load index fund.
Jason Hartman 27:52
Right, Vanguard. If you’re gonna be in stocks, I don’t totally disagree with that. I just thinking you’re in the wrong thing if you’re in stocks, so. But conceptually, I think that’s what’s hilarious about all these people spinning their wheels on Wall Street. They all think they’re gonna beat the index. They’re gonna beat the high frequency traders. They’re gonna beat the professionals that live, eat and breathe this stuff. It’s all they do. It’s their whole life, and they can’t beat the indexes. It’s it’s like, it’s hilarious.
Michelle Hawkins 28:26
The hedge fund managers, that’s
Michelle Hawkins 28:28
what I’m saying, Yeah. Hey,
Michelle Hawkins 28:30
Warren Buffett’s gonna win his bet.
Jason Hartman 28:32
That’s what I’m saying. It’s hilarious that people actually can talk about this stuff with a straight face. It’s just mind boggling to me. Yeah. So you came to the conclusion after all of that stuff that that real estate was the thing do you have a second best favor for real estate? Oh, gosh, after real estate,
Michelle Hawkins 28:54
Oh, you mean for investing or for books?
Jason Hartman 28:56
for investing or books, either one. I was talking about investing when I The question.
Michelle Hawkins 29:01
I mean, of course, there’s Rich Dad Poor Dad is the classic read that many years ago. And then there’s just, there’s so many on real estate investing. And I am drawing a blank. William William Nickerson. Oh that’s great.
Jason Hartman 29:15
That’s a classical stuff. Bill Nickerson, William Nickerson, he I think he started writing books about it in the 50s. Oh, no, he was before then. Yeah, it was like late 50s. Or at least his story started in the late 50s. I one or the other. It’s a great story. He’s got one I think is really famous one is called how I turned $1,000 into a million dollars in my spare time in real estate, some crazy things. Yes. And my guy was legit, you know, he did the real thing. But keep in mind that he was doing that in a different environment. There was a lot of inflation that he benefited from during some periods of his investing career. So that was a that was part of it. But yeah, his stuffs great. It’s just you have to add a zero to everything. That’s all. I remember when I was hearing a synopsis on an on an audio book of his story, and the narrator said, and he bought his first property for, wait for it. And it was like $7,000. And it was in Redondo Beach. I think Elena. I’m kidding. I don’t know where it was. But it was in some high end area, sort of. And it’s funny story. Bill Nickerson is great. He’s he’s, he was one of the he was really one of the first I think, to contrast that you want to hear about an amazing deal. Michelle, tell me what you think of this deal. Now that you are an educated investor, I got one in my former hometown, Orange County, California. This is on this is in this really charming area called Balboa Island. Okay. Okay. You might be looking at this because I showed you where it was in that Facebook group. This problem is a duplex on Balboa Island. I wonder what the listeners are gonna think of this deal. You know, if you’re interested, contact us, we can we can help you buy this property, okay because you know we are a California licensed company. Okay. So So here you go, you’re ready the price? Well, before I tell you the price, let me tell you some other stuff about it. It’s two units. Okay. So the total size of the building for both units is 40 579 square feet. And the price per day was built back in 1976, two stories. So 100% occupied, both sides are occupied, and the price per unit. This will give away the overall price obviously, is $1,750,000 per unit. So it’s three and a half million for the duplex and the gross rent multiplier. We really never talked about this one as a metric, but it’s so mind boggling that I I thought I’d share it. It’s 54.01 is the gross rent multiplier. And that gives you a cap rate of, like they said in the William Nickerson book, wait for it. Point, five 6% cap rate. point five, six. Now all of you listeners who understand this or you’ve gone to Jason hartman.com and click on Properties and looked at the performance, you will see cap rates anywhere from probably seven to 12% in that range, okay. And most of them will be around eight, or 9%. Yeah, something in there. Right. So this cap rate is point. It’s not even it doesn’t even have one. It’s less than one. Okay, it’s point six, five or five 6%. I cannot believe how terrible the steel
Michelle Hawkins 32:50
but it’s in California.
Jason Hartman 32:51
Oh, yeah, that’s right. That must be golden land. Oh, yes. Yes. Magical golden. Love it. Yeah. So here Here’s the the the income on this property is $64,800 and the operating expenses are $43,427 leaving in and oh I have a net operating income up look if you invest three and a half million dollars, this is going to be your noi your net operating income. It’s going to be 19,430 bucks.
Michelle Hawkins 33:31
Sign me up, Jason.
Jason Hartman 33:33
Yeah, but here’s the funny thing. Lots of people will buy this kind of thing all day long. I mean, maybe not quite as bad as this one. But lots of beachfront duplexes and, and this isn’t even on the beach front. By the way, I know what street This is on. I’m very familiar with it. A lot of these you know beach area properties sell for these reduced Oculus, they’re just terrible deals. And look, you live in the San Francisco Bay Area. I mean, you got this kind of stuff all over the place. In fact, if we if we did the same type of analysis on the house in which you live, because you told me about it, I bet it’s not too far from this one, you know, in terms of the cost by versus the income it would produce, you know? Yeah, it’s amazing. And all these people that buy this stuff actually call themselves investors. It’s hilarious.
Michelle Hawkins 34:32
Well, are they just looking for a place to store their money in dollars? Right,
Jason Hartman 34:37
a lot of that a lot of those are Chinese buyers, right?
Michelle Hawkins 34:40
They just want to buy or store for their money. They don’t even care so
Jason Hartman 34:44
so. Yeah, that’s kind of true. I mean, think, yeah, that’s a good point. In a world of negative interest rates are in some places. You literally have to pay the bank to hold your money. And if it’s here in the US, you barely get paid for Bank to give you money. I opened up a couple of accounts at another bank just to be under the standard, the FDIC limit great problem to have. I love that problem. But and they, I actually got a thank you note, I couldn’t believe when I After opening the account and I think it’s because the woman like my dog so much, but I don’t know. They used to give you gifts like toasters and stuff when you open bank accounts, but not anymore. It’s like, it’s like they’re doing you a favor for keeping your money. I guess that’s the way you can look at this property. Yeah, that’s about what it is. But it does have a corner lot. Well said. So there you go. There you go. Unbelievable. What else should we talk about anything? Yeah. How about more of the Do you want to talk any more about the fears of doing this and that type of thing, Michelle,
Michelle Hawkins 35:53
Jason Hartman 35:55
I mean, some of the concerns you’ve had and some of the things that have gone through your mind well
Michelle Hawkins 36:00
You know, that’s, I’m sure it’s similar to what a lot of people are thinking like, well, what what if the tenants destroy the place? Or what if they don’t pay, you know, vacancy and all of these things, and that definitely is a concern. And so that’s why I decided to come to some events because I wanted to be able to just vet the entire process. That’s what’s great about me, the Masters is that you meet a lot of different providers. And, you know, you can kind of get a sense from their presentation as to how organized they are. But then beyond that, I actually saw my first properties in Memphis. And so I actually went to Memphis for a day, and it’s worth it, it’s worth the plane ticket, to go there for a day just to see the operation, and know that it’s real, right? The properties are real, the company is legitimate. You meet the people that you’re going to be working with virtually, you know, moving forward. And so that’s a great idea. You know if that’s not one of our events, but go and meet with our providers in one of our markets have a you know, just fly out there and have them drive you around and show you their operation their properties, go see their office, meet their staff meet their team. This stuff’s real. Mm hmm. And I can tell you from Cincinnati that we were just blown away with the provider there. She’s awesome. And, and I think she sold a lot of properties just based on just what a fantastic businesswoman she is.
Jason Hartman 37:31
Yeah, she really is. She’s, she’s very good. Very good. She does a great job. No question about it, you know, other operators in other markets, they they do a great job, too. Maybe not as nice and event is that one, but they they run fantastic businesses, like I just bought two more properties in Memphis. And last year, I bought another two properties in Memphis from a different provider we have there. So we have a couple different local market specialists and now I’ve purchased Two from each in the last year and a half. It’s interesting, they both do a great job in a different way. They have different personalities and different ways of doing things. And that’s part of that whole embrace the fragmentation concept. But yeah, phenomenal. And I was really pleased that I got properties is good as I did. Because I gotta tell you, I was in fear that that wouldn’t happen given the dwindling inventory challenge.
Michelle Hawkins 38:27
You know, I’ll tell you what, what surprised me when I started doing this. When when I was actually shopping and was going to pull the trigger was that it’s actually competitive, right? You You do need to be able to make up your mind very quickly, because if you don’t, someone else will. And actually, that actually gives me some pause because it makes me think well are you know, why is everyone in such a hurry? Or why aren’t people taking a little bit longer to do their due diligence, but I think once you get to a certain point in your investing, you don’t Need to? You know, you just know?
Jason Hartman 39:02
Well, yeah, it’s the first time is the hardest. And after that you just kind of get a sense of it. And it’s really not that big a deal. But yeah, you know, you just know, and you might miss a couple of properties and lose them and just try not to get too discouraged. And then, you know, another one will come along. That’s really all you can say. But yeah, yeah, good stuff. Well, hey, this has been great having you share some of your experience and some of your thoughts on the show. Michelle, thank you so much for doing that. Do you have any particular plans or goals for your investing? I know you’re, you’re kind of a planner. So I thought I’d ask you that question.
Michelle Hawkins 39:40
Well, we’re in the process of doing a cashout refi on the house. And oh, good idea. Good idea. Yep, got a great rate, it’s locked in. So just waiting for that to close and then I’m going to go shopping for some properties I’m hoping to, to get my first 10 loans done this year. And then after that, we can do another They’re 10 for my husband. So,
Jason Hartman 40:01
yeah, yeah, that’s great. But you can do 10 loans each and you’re both working Yes, with great jobs by the way. And so that that’s a that’s a perfect plan 10 loans each and hopefully that’ll loosen up in the future to where you can even do more loans. You know, what seems so crazy to me is that, really if you think about it from a lender’s perspective, they should feel more secure making loans on sensible prudent income properties to borrowers than they should about loaning people money on their own home, because on their own home, they have no income. That you know, that’s just a completely risky deal. If you ask me. If people get laid off from their job or get into financial trouble one way or another, their own home is the hardest one to support because it doesn’t have the income the investment properties. There you the tenant is paying the depth for you now, not not with that duplex on Bobo Island mind you. Not even was, but on sensible ones it is right? Yeah. Yes, absolutely. So 10 loans each and then onward and upward from there maybe even more, right?
Michelle Hawkins 41:09
Oh, definitely. Yeah. No, the goal is to, I don’t know, 4050 something like,
Jason Hartman 41:15
past a good job.
Michelle Hawkins 41:16
I don’t want to retire to the State Teachers pension.
Jason Hartman 41:21
Yeah. That you’re not into that you don’t think that’s a good deal?
Michelle Hawkins 41:24
I don’t know. It’s that it’s gonna be there. Well, I mean, it you know, who knows?
Jason Hartman 41:29
That’s a, that’s a very valid concern. I think people in Chicago or Illinois in general, are feeling that and in California, I think there’s good, good cause to think that too, you know, there’s no security you got to make your own security in the world, especially nowadays. So do that. And do that by planning and acting and not relying on the government or anybody else for your security. Good. Michelle, thank you so much for sharing this today. I appreciate it. And happy investing. You sure Thank you for having me.
Michelle Hawkins 42:03
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This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
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