In the first part of this episode, Jason Hartman talks about the bullish signs for the real estate market and the S&P movement for the last 12 months. In the interview segment, he speaks to Andrew Cushman about the “tricky” economy, with the odd unemployment numbers compared to stock market success. They also discuss rental scarcity, real estate movement, migration in the US, and opportunity zone.

Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multimillionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 0:53
Welcome to Episode 1605 1605, our guest today we’ll be talking about many aspects of real estate, the rental market, multifamily housing, a little bit about commercial real estate, and just how the demographics coming at the rental housing market over the next decade, are nothing short of phenomenal. So I want to say congratulations to all of you, because you’re in the right place. You’re listening to the right show, you are doing the right things, you are buying these good quality rental properties in these excellent linear in maybe some bordering on hybrid, or real estate markets nationwide. And you’re finding them on our platform at Jason Hartman comm slash properties. So congratulations to you. So the size and scope of the changes in the economy and the world in our lives is absolutely staggering. And I just thought I would share with you some numbers that I was recently reading about. And it was just entitled, the numbers of 2020. It’s been an absolutely outlandish year, no one would deny that. And by the way, I interviewed another guest today, a Stanford economist, will probably publish his interview next week. But that interview today, is he talked about the remote working situation, the money printing, it’s absolutely it’s all just it boggles all of our minds, doesn’t it? It really does. The scope of these massive, massive changes cannot be underestimated. So here are some numbers, just to make you kind of get some context of what’s going on. Right? So $4.5 trillion. This, ladies and gentlemen, is the amount of money sitting in money market funds, okay, the amount of money sitting in money market funds. And we should all know, I just give you a reminder that this is not FDIC insured, and it is not any kind of a guaranteed investment. So just a word of caution on money market, that money is at risk. Admittedly, the risk is much lower than being in say stocks, but it is it’s risk capital, you know, people can lose money in money markets, they can also lose money in FDIC insured bank accounts. Because as we’ve talked about in the past, the FDIC if there was around the banks, if there was a banking disaster, there is no way that insurance policy has anywhere near the level of reserves necessary to pay claims. See, it’s just like any other insurance policy folks, FDIC insurance is, well what do they do? They underwrite the risk in various banks, they charge a premium to provide insurance to those member banks. And then if a bank goes belly up, they have a claim the depositors have a claim on that insurance. And that insurance, of course, is $250,000 per vesting. So one of the ways you can increase if if you have a lot of cash and hopefully you don’t have too much cash sitting on the sidelines, because that would not be good. But if you do if you do, you want to spread that around into different entities and different banks. So you’ll want to check out our webinar on that where you can set up different entities. Jason, slash protect protect your assets plan your state, reduce your Taxes. And this FDIC insurance goes by vesting. So if you have if your name happens to be Jane Doe, and Jane Doe is a real estate investor, and Jane Doe says that she’s going to have $250,000 in her personal bank account, which I hope that wouldn’t be true, because that would be very much at risk, you would be much better off having a couple of different entities maybe LLCs, or a trust or something, and have the account in those names. So that you spread the risk so that each vested account each entities account could make a separate FDIC insurance claim, if worst comes to worse, okay, so do not go over that $250,000 per vesting, ideally, right? Okay. So that number that I just shared with you in the money market funds, is down slightly from $4.8 trillion in June, but it shows just how much money is on the sidelines, earning less, you’re ready for this, hey, I better give you a drumroll on this one, folks, because you’re gonna need it cuz this is gonna blow your mind. drumroll please. There’s your drum roll. That money sitting on the sidelines, is earning less than point 7%. That’s four and a half trillion dollars, just in money markets, waiting to be invested. Folks, that’s huge. And that is a bullish sign for the real estate market. Because that money will, at some point come off the sidelines and flood into various investments, some of them being commodities. And when we’re real estate investors, we’re really just commodities investors, right? Because we invest in packaged commodities or assembled commodities. Right. So there you go. That’s a staggering number. Let’s get to the next staggering number. 3.6 million. That’s the number of long term unemployed Americans who have been out of work for six months or more. That number is growing. Okay, it is growing still. And it shows just how hard it is to get the economy back to full steam. Now, of course, this is especially pronounced if you live under the terrorist regime of someone like Gavin nuisance, the governor of California, and you know, it’s it’s just an epic disaster in places like that. New York same idea, right. Same idea in any leftist place. Because more lockdowns you know, no one’s no one’s counting the disaster caused by the closures. The lockdowns, the quarantines? No one’s counting the increased suicide rate, the increased drug use the increased alcohol use the skyrocketing addictions, the amount of depression, right, no one’s really counting this stuff, or at least we don’t hear about it if it is being counted at all. You know, it’s it’s not as simple as the COVID issue, right? There’s more to it than that. Okay. 13 million Americans are receiving expanded unemployment benefits as part of the cares act. And those benefits will expire on December 31. Unless there is an extension. And by the way, I have tremendous faith that there will be an extension, the government loves to hand out money to do stimulus programs. The government loves it. So I don’t think we need to worry too terribly much about just a cold exploration without something filling the void. There will be something I’m pretty darn confident about that. There may be a little lag diamond between maybe it won’t happen until the after the next presidential term, whether it be Trump or Biden. So that’ll happen obviously, you know, January What, 21st? Right. 22nd. So we’ll see. We’ll see. Now, the number of jobs that have been added back, right, since May, compared to the 22 million people who were laid off during the pandemic 12 million have been added back. Okay. 12 million. So we’re, we have a 10 million job deficit from the pandemic issue. So there you go. There’s some numbers. I got to More for you. You’re ready, the return on the s&p 500 year to date, guess what it is 12%. That’s after a 34% crash in March. Wow, a 40% recovery through the summer as they pumped in the money, right? And a five or 6%. That’s been added since then a 12%. Gain, year to date. All things considered ups downs, sideways. Not bad. But that doesn’t even come close to the return produced by a multi dimensional income property asset. Real Estate has massively outperformed the s&p and the smps. And doing pretty great all things considered. But the problem is that many people sold, they sold out during the down times. So they sold on a loss. And they’re still underwater, right? It depends exactly when you entered and exited the market. This is the problem with trying to time the market in any market, not just stocks, not just the s&p, housing, pork bellies, coffee, beans, whatever, any commodity any stock, any investment. Market timers, really have a tragically bad history, a tragically bad record of trying to make money. Okay, so here you go. Here’s one more number, the percentage of stocks listed on the nysc, the New York Stock Exchange, trading above their 200 day moving average. See that moving average, by the way is telling based on what I said a moment ago, that last number, because that moving average, of course, it as the name would imply is a moving average of 200 days, right? And it keeps moving through time as we move through time every day, the 200 days changes which Bayes it calculates. So people, even though the s&p is up 12% year to date, many people of course, sold out when there was a huge crash of 34%. Obviously, the reason there is a crash is because people were selling the supply and demand, right. That’s how the stock market works. And so many of those people, even though the broader s&p is up for the people that just didn’t do anything. Many of those people lost fortunes this year. And so they might be negative 10% year to date, rather than 34%. Somewhere negative 34% of faith, good, the worst of all things right. But what’s interesting is that the money printing, thus far knock on wood has worked, because it has puffed up the stock market. And obviously, other assets as well. 82% of stocks listed on the nysc are trading above their 200 day moving average. And that’s the highest since 2013. Right? amazing, incredible big numbers. Really, really just hard to believe the kind of numbers we’re seeing in this world. Okay. Another interesting thing. Well, I’ll talk about that later. But Facebook, remember, Facebook’s Libra currency? You haven’t heard much about that. Right? And I like the name because hey, I’m a Libra. Right? And that’s the best sign in the Zodiac. So, so you haven’t heard much about that lately? Remember, there were huge objections, rightful objections, okay. And I’ll talk about that a little more later. But just remember what I’ve always said, folks, whether it be Libra aetherium, Bitcoin, any cryptocurrency Litecoin Kanye coin, which, I guess that never really made it. There are many coins that have just gone under. They’re in a coin graveyard, right for cryptocurrencies. They all represent competition for the most important product, most important product, the most important economic widget of every government on Earth. What do governments produce? Well, many libertarians and conservatives would say governments don’t produce anything. They simply take in money in the form of taxation, and most would not understand this, but you do because you listen to my show. Also inflation as a way governments take in money and becoming rich. So they take in money through inflation and taxation. And then they take a very large handle fee, they buy a $900 hammer at the Pentagon, or a $2,000. toilet seat for another government agency, or you’ve all heard the stories like that right of massive government waste and corruption. They pay off lobbyists, lobbyists pay off politicians, they exchange favors, quid pro quo. It’s a total scam, right? And then they give back a small amount of that money they take in after their very large handling fee, in the form of government benefits, you know, welfare, highways, whatever, right? Whatever they do police force, fire, etc, etc. And that’s what governments do. But just remember, the governments of every country on Earth, they do really produce one thing. One thing they do produce, so the people who say governments don’t produce anything, they’re just a middleman that takes a very large handling fee. They’re wrong. governments do produce at least one thing. currency. Not to be confused with money, currency, dollars, euros, yen, pesos, Brazilian reality, whatever, whatever rubles, whatever their currency, that is the product of the corresponding government. And let me tell you, like any person in business, they don’t love competition. They would rather have a monopoly, a monopoly is way easier than having a competitive marketplace. So guess what monopolistic powers do? I mean, look at it now in the world of big tech, these big disgusting tech companies, they’re operating semi monopolies or duopoly, whatever, right? And they’re doing everything they can to hang on to their monopoly, because it’s easier for them, and much, much more profitable. Same is true with the criminals on wall street like Goldman Sachs, right? Goldman Sachs doesn’t want any competition. So they tell the government to go create tons of regulations. Zuckerberg at Facebook, right? He’s saying we need to be regulated. And that’ll help them hold on to his monopoly. Right. So governments don’t want any competition for their currency. Of course, they don’t, why would they? That’s their main product, maybe it’s their only product, it’s probably their only product. Why would they want a competitor? They don’t. So just think about that. Just stick that in your pipe and smoke it folks. You know, as the saying goes, put that in your pipe and smoke it. They don’t want competition. Okay. Tonight, empowered investor network members. Tonight, we have our zoom meeting at five o’clock Pacific, eight o’clock eastern time. And wherever you are around the world, please do your adjustments for our zoom call. Because tonight we are dissecting and disassembling property management agreements, we’re going to tell you what you should say no to what you should negotiate. And I think it’s going to be very interesting, one of our clients muthiah is joining us on that call. And then our investment counselor team will as well. And we’re going to really go through some property management agreements and say, This is the good, this is the bad. And this is the ridiculous. So if you are a member, you received an email, of course in the community forum, the social network for the empowered investor network, the inner circle, you got the zoom information in there. So we look forward to seeing you tonight. And if you’re not a member, talk to your investment counselor, and ask about how you can become a member. So you’ll get all of these terrific advantages of being in the empowered investor inner circle. Okay, without any further ado, let’s get to our guests. And we’re gonna play part one today, and we’ll have Part Two tomorrow. And we’re going to talk about a variety of interesting things including rental housing, demographics, here we go.

It’s my pleasure to welcome Andrew Cushman to the show. He is a real estate investor, apartment syndicator and has some interesting thoughts on demographics that we want to look into. You know, as I said, 10 years ago, and I recently renewed my 10 year forecast for another 10 years, I said that the demographics coming out the rental housing market for the next 10 years. I said this 10 years ago are nothing short of phenomenal. And I’m renewing that prediction because the next 10 years look incredible as well. So Andrew, welcome. How are you?

Andrew Cushman 19:58
I’m good. Thanks Strap me on Jason’s good to talk with you. And I would agree with your assessment 100%.

Jason Hartman 20:04
Yeah, you’ve got about 1800 apartment units that you’ve syndicated. You’ve done a lot of home flipping and investing. And we met through a mastermind group that were involved in, I had the pleasure of speaking at that group in January. And you’ve really done some good stuff. So where are you located? By the way, you’re in Orange County where I used to write

Andrew Cushman 20:25
Yeah, I live down down in Southern California not far from Yeah, your old home of Newport Beach. And then we primarily invest in Georgia and Florida. And then we also like the Carolinas, and Tennessee, and we used to be in Texas, good stuff.

Jason Hartman 20:39
Well, talk to us just in general about your macro view of the market, in terms of real estate, the economy in general. And then let’s get into these rental demographics. And by the way, folks, if you’re watching on video, we have some good visual aids, feel free to make comments down below, if you’re watching on video. And then if you’re only listening to the audio, we’ll try and translate the visuals into a way that you can understand them as well. Okay, what’s your macro view?

Andrew Cushman 21:09
So, you know, the economy in general that? That is that’s a tricky one right now, right? We’ve got, you know, we’re hearing we’ve got 1012 15% unemployment, but the stock markets are all new highs, we have stimulus that seems to be benefiting the wealthier folks, and and those who own assets, like real estate, whereas the the lower income folks don’t seem to be getting as much of that and seen and, you know, are kind of struggling. And it’s really, it’s difficult to predict, you know, where How is that going to settle out? Right, you know, what is real unemployment? The what was people’s real incomes, what’s real occupancy going to be? You know, we, you know, we call the appearance of the Coronavirus, you know, Black Swan event? I don’t know what the opposite of that is maybe a white penguin or who knows, but I mean, it’s gonna take just about a miracle to just make this all just go away, right? I mean, there’s gonna be some repercussions. And I, you know, when I study it, and when I talk to people far smarter than me, I get completely opposite conclusions, right? One person can have a great argument for why everything’s me fine in six months. And I listen to somebody else who has a great argument for why this is going to be the next great depression. So I think the reality is probably going to be somewhere in the middle. And what the question I like to ask is, you know, as far as investing goes, What can I do to put a tail end at my back, or, you know, wind in my sails, so that almost no matter what the outcome, I should be in a good position. And that’s when I look, you know, that’s where I look at, okay, you know, what asset class or what investment class has those tailwinds. And to me, rental real estate is probably the best positioned to benefit from not only the long term trends that you alluded to Jason, before this started, but what’s going to be accelerated by the current the current crisis, right? So for example, you know, we’ve already talked about this in much talk about the baby boomers starting to downsize and move into rentals. And, you know, already there was a trend for for them to want to age in place, right, not move to the home, not move to the retirement center, but to stay in a house or an apartment or something like that. They are the second largest generation, there’s 70 million of them. And they are in the process of downsizing and, you know, trying in renting, so they have the flexibility to lower payments, they don’t have to worry about maintenance, all that right. So we’ve had that trend going on. behind them is is Gen X, which is a smaller generation. Right? That’s you and I, and you know, we’re starting to get to the point where, you know, lifetime warranty doesn’t sound like quite as good, a good deal, great deal anymore. But we’re kind of in the middle. And then after that we actually have the biggest generation, and that’s the millennials and they’re from you know, 1981 to 96, depending on who you’re talking to. It gives defined a little bit differently. But that generation is 72 million. They’re even bigger

Jason Hartman 23:56
than it’s interesting, because as you quote these numbers, you know, the demographers disagree on Yeah, how many millions? Because, you know, I’ve always gone with the number that the baby boomers are 76 million, the millennials are 80 million, slightly bigger. Gen X, my generation only 46 million. So folks, just understand the demographers vary depending on the cutoff here. They do they do fudge a little bit on it. Not a big deal. The concept is the same, but go ahead.

Andrew Cushman 24:27
Yeah, you’re exactly right. If you compare, you know, Freddie Mac versus I mean, pew, or they’ll have different numbers, but the research center Yeah, do the overall trend is about the same. And so the millennials are getting to the point now where they’re they’re forming households, but they’re very unlikely to buy because number one, they a lot of them tend to value flexibility, and amenities and they don’t want to take care of a house but even a bigger factor is the is the multi trillion dollar student debt bubble, right. That is preventing many of the millennials from being able to buy houses, they are becoming renters. And not only are they becoming renters, they’re staying renters much longer than previous generations. Right. So we have two huge waves of demand crashing at the rental market. And this applies equally to single family and multifamily, right. I mean, there’s different preferences and you know, you can parse out, but the demand is there regardless. In fact, even right now, single family demand seems to be even slightly higher than multifamily, as as people seek space and move out of cities and

Jason Hartman 25:28
things like that, but again, the multifamily has to be defined in terms of, you know, what type of multifamily as it is that high rise, mid rise, low rise, garden style, you know, it’s just so much different. And this is, this is why folks, you can’t listen to the national news media and and their soundbite analysis, it just isn’t good enough. Go ahead.

Andrew Cushman 25:56
Yeah, there’s

Jason Hartman 25:57
a lady on CNN, he’s been predicting the demise of the housing market for the last 10 years. Right. You know, and Peter Schiff has been predicting the end of the world for 20 years. And, you know, Zero Hedge has been predicting it forever. And it’s just yeah, it’s really annoying, frankly. Yeah. Well,

Andrew Cushman 26:14
and you know, we and we have a mutual friend David Osborne, his is it what he says is don’t wait to buy real estate, buy real estate, and we’re

Jason Hartman 26:22
staying, I operate by two, yeah,

Andrew Cushman 26:24
you got to ignore the noise and buy something that makes sense today. And then you hold on to it. So. So that was that’s the demand side on the supply side. And this, this data is coming from Freddie Mac. So this is kind of the same thing, where, depending on your source, the numbers might add up a little bit differently. But they estimate that demand is 1.6 2 million household units per year. Right. So that, you know, we that’s the demand for housing every year. And we haven’t supplied that level of homes or apartments since 2007. So what that means is every year since 2007, we’ve been running a deficit in increasing the severity of the housing shortage. Now that’s very right in 2009, and 13.

Jason Hartman 27:08
Yeah, note on that, by the way. And in 2011, that was a short, brief anomaly, because of the over construction that occurred, because the the lending was so ridiculously liberal, there really was a housing shortage way before that. Also, there was this brief spot, you know, like a snapshot in time of maybe a couple of years, that there was actually an adequate supply of housing, but still, you know, there was a very significant homeless ness problem even then, or maybe, especially then, because it was recessionary time. But yeah, you know, and of course, that also is a stat, you would have to parse up a zillion different ways in terms of location, product type, price range, etc, etc, etc. but go ahead.

Andrew Cushman 28:00
Yeah, yeah, you’re absolutely right. Um, there’s some markets where there’s, you know, 30% vacancy and, you know, rural, maybe declining towns and then well,

Jason Hartman 28:09
in other words, Detroit, I mean, Detroit, yeah. poster child for disaster. Right. And in Detroit, obviously, we saw them bulldozing homes for a while.

Andrew Cushman 28:18
Yep, they were given away for free or Yeah, all that kind of stuff. So. So we’re running, we’re consistently running a housing shortage. I think in 2017, even if things were strong and recovering, we were still short 370,000 units of housing. This has been going on for a decade. The current projection I’ve heard for 2020 is that we’re up to again, this varies depending on who you get the data from, but we’re up to like 1.49. Right. So getting there but still short. And Fannie, Freddie Mac has a projection of their high, their median and their low. And they’re predicting anywhere from a shortage of between now and 2030 of 900,000 to 4 million housing units shortage, right. So when you have two large waves of demand crashing into the rental market, you have anywhere from one to 4 million units shortage, that really leads to one thing and that is, you know, increasing occupancy, increasing rent levels, and therefore increasing value value on on that rental property. And so when we look at just the macro picture within the United States, those demographic trends, which are, you know, set to play out for at least the next 10 years, especially as that millennial generation is just now starting to move into the rental market. That wave is about a 10 year long wave that’s going to you know, push push rental rates push occupancy, and again, it’s a huge tale and now that’s the the really high level picture, which even becomes really important as an as a real estate investor and Jason, let’s share my screen here. Okay.

Jason Hartman 29:54
Now this what we’re showing here is a data from Harvard University. Okay, you This is the Joint Center for housing studies, we’re looking at a map of the US. And the great thing about this map that Andrew is sharing is that you can highlight an area like say, for example, Memphis, one of the markets we’ve been recommending for many years, along with many others, Memphis is certainly not the only one. And you can you can look at the flow of the population. And it’s it’s pretty encouraging for investors for sure. Go ahead, Andrew, do you want to highlight that one? Yeah. So

Andrew Cushman 30:31
there’s two maps here that I want to highlight. One is just total population change. And effectively, you know, if you’re a rental, and if you’re an investor rental property, you want to position yourself in the counties, and this is done by county that are kind of this green, dark green, or greenish blue color, right? That’s where population growth is the strongest or the highest. And then the red, the red colored counties are ones that are losing population. And then the white is where it’s basically flat. So you look at your areas, of course, you’ve got you know, tech, you’ve got San Antonio, our over blocks it but you’ve got San Antonio, Austin, Texas, Dallas, Fort Worth, Houston, most of Florida is high growth, most of Tennessee. And then like, you know, Jason, you mentioned you’re in Memphis, that’s dark green, that’s looking really good, Carolinas, Arizona, Utah, Idaho, there’s markets all over the country, where you have good growth, and even in some regions or states that are somewhat maligned for, for losing people, you can almost always find at least a county or sub market that is growing for for whatever reasons, right? Because you have different levels of domestic migration. That’s why all real estate is local. But the thing I do have to say, as a caveat there is you have to look at the type of migration it is, you know, is that your target renter, for example? And you also have to consider, can you buy a property there? That makes sense? You know, can

Jason Hartman 31:57
you get a good rent to value ratio, etc. So, you know, in the Great example, is California, you know, my old home and your current home? Yeah, I almost hate to keep mentioning California, but, you know, it’s it’s the biggest state in the country. And, you know, if it were its own country, it’d be like the sixth largest economy. So it’s a pretty significant thing. And it does show an example, a bad one, largely, sadly, it’s just so mismanaged, and it’s really tragic. But California, you know, is finally having some net migration or net net loss of population, right. But over the years, it’s had actually net gains. But the question is, who is the game coming from? Is it coming from illegal immigrants? Or as Hillary Clinton used to call them workers without papers? I mean, you can’t make up this politically correct. You know, these these are such wise, it’s unbelievable work. If you know if they’re all workers without papers, okay? They don’t have the income level that is going to make a good renter right through to rent your typical house. So you know, you’ve got to really parse this stuff up. It’s much more complicated than it might look on the surface. Right. What

Andrew Cushman 33:21
in Jason, I couldn’t have teed this up better. Let me show you highlight exactly what you just said. So if you look at this map, where I have up right now for total population change, California looks great, right? lart lots of dark green color where they’re, you know, the highest rate of population growth. But if I go down to the legends, the bottom and I toggle it from total population change to domestic migration, meaning people moving from within the country, right, California is terrible. The whole thing changes. Wow, California turns red. So what does that tell you? Wait a second. The first map said California is growing like crazy, but the second one says it’s losing people. Okay, well, who is it losing like? It’s losing the people who have the good incomes that can afford to flee the state? Yeah, right. And that that’s key right there. Right. So you’ve got to look at both of these maps it perfectly highlights what you were just explaining to everyone and then you look into Okay, and

Jason Hartman 34:17
one thing we should tell people about this look at the reason this is so important, is because the people leaving are the tax base. Yes, sir. The taxpayers. Okay. And yes, there are some ultra wealthy people in California. Sure. And then there’s a lot of poor people so it’s a banana republic. And I don’t mean the store, you know, look up the definition of banana republic. It’s a country where you’ve got this ultra rich class and this ultra poor class and very little in the middle. What you want for a stable societies, a large middle class, that’s the important demographic in my opinion. I love the middle class, and love them or hate them, but so does Donald Trump. And so this is The thing, you know, the the ultra rich people, they don’t really pay much in tax a lot of times because they have so many sophisticated entities, they do offshore tax planning, they have all kinds of loopholes, they take advantage of, and, you know, these big companies in Silicon Valley and so forth, like apple, Shame on them, and, and all the rest, you know, who are, you know, they set up these companies in Ireland and, and, you know, the Netherlands, and then they got another company, you know, and they, they do this the whole game, to avoid paying taxes, where they’re really located. It’s a complete scam, but you know, they circumvent the law. And, and so, when you lose the tax base, and you lose those property tax revenue, then things start going downhill really quickly. And as we can see, California is desperate. And it’s not the only place there are many other places New York certainly to, and they’re really just attacking the population that’s left, they’re becoming very predatory on them to collect revenue. I mean, New York is, it’s just a huge problem, you know. So when you see that happen, that is a hugely significant trend. This is really, really important. Just click on international migration for a moment, because that’s kind of next. So let’s just look at that one. So what does that one telling us? That’s pretty good in some of the areas, right?

Andrew Cushman 36:27
Well, yeah. And what it doesn’t say is what kind of defining international so if you look at it, Southern California has got a ton of international migration, right. So is that people just coming over the border and staying there? Or is it rich people from China fleeing Chinese oppression, and moving their money to California, which it has

Jason Hartman 36:48
been a lot, right, California benefited from that? So

Andrew Cushman 36:51
yeah, and just just near where I live, I literally about two miles down the road, there was an area that was largely Hispanic 15 years ago, and now it is completely Asian. All the signs like that nothing’s even in English anymore. It’s all high end Asian stuff. Right?

Jason Hartman 37:06
Well, that’s really a form of gentrification, if you will. So yeah,

Andrew Cushman 37:10
so you’re absolutely right, it makes a big difference. If you’re, if you own rental if you own rental property. That’s that’s a really important factor. Right? And then if you look at Florida, you’ve got a ton of international migration as well, my guess is that might be the mid to higher income people, but I don’t know.

Jason Hartman 37:25
Well, you know, in South Florida, I mean, that’s pretty expensive. And that’s a lot of Latin American, it’s a lot of Brazilians. And, you know, certainly a lot of Europeans, a lot of British people, you know, hang out in Florida, and you’ve got the Canadian snowbirds. And so, like anything, this is so mixed in, at the end of the day, you can parse and do statistics, all you want. But I think for the pros, and this is why the pros are valuable, the people that are really just engaged in this stuff all the time. Hopefully you think that’s like the two of us, right? You just sort of get a feel for it. And some of that is definitely anecdotal. It’s not all empirical stuff. You know, you just have a sense of it. Really. Sorry, I can’t give you more specifics than that. But yeah, anyway, tell us more of the insights you learn from this map and and click on the total population change again. And let’s look at some of these markets. Indianapolis, Memphis, Atlanta, some of the Florida markets we really like you know, whether they be Jacksonville, Ocala, Southwest Florida. That’s a bunch of different cities and areas. But

Andrew Cushman 38:35
yeah, I mean, if you were to pick a if you were to pick a two states where it’s almost hard to go wrong, it’s Florida and Arizona. I mean, whether you’re looking at total population change or domestic, those two states are winning and what I what I mentioned earlier about as a rental investor, investing in an area where the wind is at your back, that’s why these two markets are some of them some of the most popular ones. Same thing with Memphis right, it has both total population change and domestic pagano high a high positive level. Same thing with Atlanta, Dallas.

Jason Hartman 39:06
So comment on Arizona, and you didn’t mention a city there. You just said the state. First of all, again, you still have a lot of illegal migration in Arizona, of course, but I lived there for six years. That was one of my I definitely one of my favorite places to live. I really like Phoenix, Scottsdale, especially great town. And we we’ve recommended Arizona over the years, several times. We’ve moved in and out of that market in terms of a recommendation but it’s just too expensive now. Yeah, it’s not it’s not you know, it’s not California, but it’s still it’s still too expensive to really get the good rent to value ratios. And I gotta ask you to, you can do it in Florida. You can have stuff that makes sense in Florida, many places in Florida by the way. Certainly Memphis you can’t do it in Nashville. Nashville’s too expensive. Indianapolis is great Atlanta. You can still do it a little bit in Atlanta. Little Rock and Many of the Texas cities have become too expensive to, you know, over the years, had tons of clients buy in Dallas, Austin, San Antonio, and a lot of them are just too expensive now. But I gotta ask you this, do you do any business in opportunity zones?

Andrew Cushman 40:18
We we don’t. The reason being, we generally buy existing assets and renovate them and improve them. And to get the opportunity’s own benefits to work out. It is more skewed towards developers, because you have to spend more, you have to spend as least as much building or renovating as use paid to purchase the property. And that’s really difficult to do with a with a, you know, just renovating a 1980 construction apartment complex or something like that.

Jason Hartman 40:48
So I never got into the opportunity’s own thing. I always thought it was highly overrated. And I think Luckily, I’ve turned out to be, I think my decisions pretty good. And here’s why. Number one, COVID a lot of those opportunity zones area areas are the high density areas that people are leaving in number two, civil unrest. And a lot of those are certainly opportunity’s own area, and people are fleeing them now. You know, some of those areas just will not come back, maybe for I don’t know how long maybe a generation, because no business in their right mind is going to open in those areas and, you know, get be vandalized and, you know, not be able to operate because they have riots. And these idiotic, disgusting left leftist mayors will not enforce the law, they ought to be frankly indicted these mayors, because they, you know, they, they have an obligation to protect their citizens, and they’re not protecting them, because they’re just selfishly wanting people to vote for them. And all their voters are rioting in the streets. So it’s like a campaign rally.

Andrew Cushman 41:57
Yeah. Yeah, that’s, that’s, I may borrow that from you. Well, and you’re absolutely right. And then I don’t you know, we mentioned this earlier, but you the best way to guarantee success with a, especially rental real estate is buy something that makes sense today. And what I see with a lot of those opportunity’s own projects is they don’t make sense today. They only make sense, right? Everything comes together perfectly down the road, and you get the tax benefit, right. So a lot of those opportunities on deals are just bad deals. And you know, tax benefit doesn’t necessarily change that.

Jason Hartman 42:30
I always say, you know, don’t let the tail wag the dog, a tax benefit is great, but it should not drive your decision, the decision has to make economic sense. And one of my 10 commandments of successful investing is you you keep repeating it for me. And I don’t even know you know what it is, but commandment number five is Thou shalt not gamble. And the subtext of that is, the property must make sense the day you buy it, or you don’t buy it, period. It’s really quite simple. Thou shalt not gamble. So nothing extraordinary should have to happen for you to make a good return on investment, no extraordinary appreciation. Nothing. Just it should make sense from day one. Now, if some great things happen, like a bunch of appreciation, great, you know, but don’t don’t count on it. This will be continued on the next episode.

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