Jason Hartman starts the show by playing a sample of Jason Hartman Minutes, Flash Briefing on Amazon Alexa. The Flash Briefing talks about ROI and Jason discusses the consistent qualities of investment property. Later in the show, he interviews James Castelle, who purchased his first investment property within two years of listening to the Creating Wealth Real Estate Investing Podcast. James shares his story shifting from the typical stock-market investment to property investment and why he favors it.
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 0:53
Welcome to Episode 15,833,000. Wait, that’s not quite the right number. Welcome to Episode 1583. Thanks for joining me today from 189 countries worldwide, soon to include North Korea, Myanmar, Cuba, and Mars, as well as the lunar base station in the International Space Station. And all of you who purchase Virgin Galactic tickets for 250 grand which by the way, I have considered doing myself more than once. But I figured I’d wait till it just gets a little better and probably a little cheaper. To all of you listening. Yes, we welcome you to our listener family from across the solar system. So Gosh, what’s going on? What’s going on, folks? A lot of stuff going on. As always, there’s been so much going on this year 2020 has been the year of just too much news and not enough time. I would love to go seven days per week on a permanent basis. But I actually got, you know, one of you reached out when we were doing seven days a week during the the height of the quarantines and one of you actually complained You said you couldn’t keep up with the episodes. So okay, fine. You don’t want the gift I’m giving you Fine, fine, fine. We’ll go back to five days a week. So here we are. But now, we have live streams, we have YouTube channel. And guess what else we have? We have a le XA. Of course, and not enough of you folks are listening to us on your Amazon Echo device. And there’s a lot of good stuff there. You know, we’ve done a lot of these oldies, but goodies, these short little takes on there. And I am going to share with you a sample of just one of them today, because I think it’s a good lesson. By the way, our guest speaker today will be a client case study another client case study don’t you always love hearing it from people that are actually doing it. So it’s always good to hear it from someone who’s actually following a plan. And today, we will do that you’ll hear from one of our great clients, we we love it when all of you folks come on. So if you’re out there listening, and you are one of our esteemed and wonderful clients, we’d always welcome you onto the show to talk about your real estate investing experiences and how they have hopefully, hopefully changed your life for the better giving you a more abundant life. abundance is what it’s all about. Right, folks? Okay, so I was talking about the Al e xa. You know, I have to spell that because the kid is listening. And she’ll start, start talking. So I’m going to play something that you can just go enable, go to Amazon, and search the Alexa store for Jason Hartman, actually just search amazon for Jason Hartman. And you’ll see all of my books and stuff up there as well, that I never even mentioned to you. And you’ll see where I wrote the foreword for somebody else’s book or whatever, you’ll see a lot of stuff there. So go to Amazon and type my name and take advantage of all that stuff. But one thing that is totally 100% free in there is the Alexa skill. And you just enable that and you can put it into your flash briefing. And every day, you say, you know, Alexa, play my flash briefing or Alexa news and our flash briefing that Jason Hartman minute. It’s called, we’ll come up. And let’s go ahead and hear what is on tap for today as we learn about ROI. So this is just a few minutes and then I will be right back. Let’s hear from Alexa. Alexa, play my flash briefing.
Jason. Here’s the latest from your flash briefing.
And today’s briefing from Jason Hartman.
All ROI is not created equal. ROI or return on investment is a common benchmark for evaluating different investment alternatives. For people used to the stock market, it is generally assumed to be the appreciation in price of a security from the time it is bought to the time it is sold. Many people who are familiar with income property investment have come to know the ID, EA l or ideal framework for evaluating investment returns. I ‘s income cash flow from your investment. For income property, this typically takes the form of rent revenue. For stocks it takes the form of dividends. For a business venture, it comes from your sales to customers, and for bonds it comes from interest payments. income is one of the most important investment characteristics because it provides consistent cash flow that does not depend on a future sale or increase in equity value. D is for depreciation. investment strategies that involve the purchase of physical property, such as real estate or equipment can benefit from depreciation. depreciation is a non cash expense that recognizes the reduction in usable value for a piece of property over time. Its power in driving investment returns is that it shields your income from taxation so that it can be reinvested to produce greater gains. Ease for equity. Some investment strategies such as income property or business ventures make use of a self liquidating loan to finance the purchase of physical property. As the loan payments are made, it systematically result in an increase in wealth for the investor, since part of the payment goes toward an increased equity stake in the property. This aspect of investment is most powerful if the loan payments are financed by revenue from a customer or tenant a appreciation, the most typical investment strategy for generating value is appreciation. This is when the value of a stock or the value of a property increases over time. It has the potential to generate fantastic rates of return if values adjust upward very quickly, but can also bring danger if values collapse. Furthermore, appreciation is only realized when the investment asset is sold. This can lead many investors to think they have made money when the value of an asset increases but they do not sell only to see the value of their asset punch when market sentiment shifts. L is for leverage the use of other people’s time and money constitutes leverage. Leverage allows an investor to amplify the impact of their money, it can produce tremendous gains and tremendous losses. For income property investors leverage typically comes from alone use to purchase their property. for business owners leverage comes from the people that are employed to run their company. In both cases, it results in amplified profits during expansionary times and amplified losses during times of contraction. One of the great traps that many investors fall into is the assumption that all ROI is the same and that $1 of returns is just $1 of returns. This viewpoint fails to comprehend the impact of volatility on investment returns. Many people with 401k investment accounts have seen multiple charts showing the long term rate of return for the US stock market and assume that those returns will continue to compound out into infinity. Many other people saw large amounts of money being made by home flippers, who purchased property quickly renovated it and then sold it for a considerable profit. In both cases, people see a big payout that can be highly volatile, but fail to see the volatility. The other end of the spectrum comes from people who dislike the perception of volatility, and choose to invest in fixed income securities with guaranteed principal value. These financial instruments are certainly less volatile, but frequently failed to keep pace with inflation. Some people do find debt instruments that exceed the rate of inflation. But that return comes with an increased risk of default that is not always comprehended by the investor. astute investors understand that ROI really separates into both stable and volatile categories. returns from income, depreciation and equity are typically stable, whereas returns from appreciation and leverage are more volatile. It is important to understand that all five elements are important parts of a holistic investment strategy, but excessive emphasis in anyone to the exclusion of others can spell disaster. Income property investors have benefitted from the five drivers of ROI for quite some time. By prudently investing in assets that produce significant income, generate tax deductions, build equity through Self liquidating mortgage and still generate potential gains from appreciation through leverage. It creates a holistic strategy for building wealth that is very difficult to replicate in the financial markets. A typical example of this is an investment property that is purchased at a discount from a distressed seller in a region with strong rents. Once the property is purchased and rehabilitated, it will generate income from rent paid by the tenant. If the property is prudently purchased in a strong area, this rent revenue should exceed the mortgage payment and expenses by comfortable margin. This will also generate regular net cash flows that can be reinvested into future projects. It will also result in the systematic building of equity from the self liquidating loan, even if no appreciation occurs. In addition to this, the investor may qualify for depreciation benefits that will reduce their tax liability. If the property is purchased with leverage, it will also amplify the impact of any future price appreciation, but will not cripple the investor if the price declines since the rent revenue is sufficient to cover the mortgage payment.
Jason Hartman 11:12
See, that is of key importance. I’ll let it continue in a moment. But first of all, it should be noted that this was recorded about 12 years ago, okay, 12 years ago. And it’s still true today. That’s one of the wonderful things about income property. It is just so consistent, beautifully, beautifully consistent. This is why there would never be a CNBC type news show about real estate investing, because there’s just not that much to say, there’s not a play by play, it doesn’t change that quickly. It’s unexciting. And that’s the beauty of it, right. That’s the beauty of it. But when she was talking my narrator there, and by the way, this is all our content. That’s just one of the voice pros that we hired voice professionals. And when she was talking about that, about leverage, I’m not sure if you caught it, but number one, she mentioned self liquidating debt, self liquidating mortgage a couple of times. And of course, what that means is that it’s self liquidating in the concept that it pays off itself, it pays itself off. But tenants pay the mortgage, we don’t pay our own debts. Another beautiful feature of income property, the ID EA l ideal acronym. She also alluded to that several times and and she talked about the the good and the bad of leverage. But that bad, most of the time really only applies to non income property investors. The people that use leverage with income properties that have used it imprudently, are generally almost always almost always buying those properties in cyclical markets, where the property never made sense from day one, they violated commandment number five, Thou shalt not gamble of my 10. Now 23 are we up to 23? I think we’re up to 23 commandments, right. But that’s number five, that’s one of the original 10. And the property didn’t make sense from day one. And that meant that they had to have appreciation to bail themselves out and got themselves into trouble with leverage. But usually, that is certainly not the case with income property investors. So let’s keep listening
your investments in this fashion. It effectively blends all five ROI factors to create a balanced portfolio of stable value with upside value potential and limited downside risk. Ultimately, it becomes quite clear that not all ROI is created equal, there is no one form of value that is inherently better or worse than another is. Rather, it is about a creation of a blended value portfolio that balances the value drivers effectively to generate wealth and prosperity. This kind of holistic value cannot be found in the financial markets, only investors who are astute enough to recognize the opportunity and assertive enough to act we’ll be able to build this type of wealth portfolio.
Jason Hartman 14:23
Okay, so be sure to subscribe, or I should say enable the Alexa skill on it, just go on Amazon and enable the Alexa skill, the Jason Hartman Real Estate update or Real Estate Minute. I don’t know it kind of has two names, flash briefing, and then you can put it in to your flash briefing. And that take advantage of all that great free content. And the amazing thing about it again is how incredibly durable this investment is. Because a lot of those were originally produced 10 to 12 years ago and they’re still just as accurate. Just as valuable and just as true today, as they were back then, so truly, truly amazing. In other news, boy terrorism going on in France, multiple knife attacks, yes. When you have gun control, they just use other things to commit their heinous acts. And all of the people who are law abiding citizens can’t have guns to defend themselves. Because, well, there’s a lot of stupid people in the world that just don’t know how to run a country. And, and, you know, France would be an example of that, right? Hey, don’t worry. I’m not picking on France only we got a lot of stupid people running the US tune. In next week, it could get a lot worse. So yeah, let’s hope the election works out. Well, oh, by the way, speaking of the election, you know, I have decided not not to do the election night coverage. And I’ll tell you why. Because I want to do it the day after, I just don’t think we’re going to have any news. And if we do have news, it’s going to be at three o’clock in the morning. But I even think then, because this election, especially for the white house is so highly contested, that no matter what happens, the other side is going to say, oh, it wasn’t fair, right. So I don’t think it’s worth doing the election night coverage. I think we should do our live stream the day after, when we have more to talk about. So stay tuned for that. So we’ll probably do it next Wednesday, not on election day. But Heck, if something big happens, I might get the urge to just do an impromptu quick live stream and in jump on YouTube and Facebook. So look out for that. And that’s why when you subscribe to our YouTube channel, you have got to turn on the notification bell, click the bell after you click subscribe, and click Like every video and make nice comments on all the videos to just subliminal message there. And click that notification bell. So the moment we go live for the moment we post a new video, you get the notification so you can be well informed, well informed. So more details on that later, but I think we’ll just do our live stream on Wednesday. We’ll recap the election the day after, and I think we’re gonna have a lot more to talk about. So I think it’ll be more interesting for you, rather than sitting there looking like deer in headlights and saying, Oh, well, this might happen. Am I not? You know, it’s just not that interesting. Let’s just hopefully we’ll know the next day. And we may not know for three weeks, who knows it’s crazy. But back to France, these tragic knife attacks, right? You make guns illegal. They use knives, they use trucks, they use cars, they use pressure cookers. There’s an endless number of ways that disgusting scumbag people can hurt other innocent people. And it’s horrific. It really is horrific. But in France, these awful knife knife attacks, you know, one was on a church, both are being categorized as terror attacks. And you know, God forbid, they can’t say where the terrorists are from, or, you know, what, what their motivation is or what their religion is because that would be racist, right? So you never even hear that in the article. It’s all genericized anymore, right? But yeah, they, you know, one was in a church slashed a woman’s throat. I mean, this is just awful. And this just goes to show you that Europe has destroyed itself, due to political correctness, immigration and socialism, those three things, the death knell of Europe, my home continent where I was born, you know, it’s just this like, continental suicide. That’s what we should call it. It’s not continental breakfast. It’s continental suicide. It’s so sad. And you know, we have state suicide. Just look at New York and California. They’re doing state suicide. So you got continental suicide, state suicide, you’ve got national suicide. It’s just awful. I mean, I don’t know what it is with, with people that run these places that are so bent on destroying these places. I mean, you look at Gavin nuisance in California. And you almost can’t draw any other conclusion except that he’s literally trying to destroy the state. It’s absolutely unbelievable. It’s just unbelievable. And then in other news, I love this line from Senator Ted Cruz when he was grilling, jack Dorsey, the founder of Twitter with his big disgusting beard. He looks like Charles Manson. He looks like a nutjob. I mean, wow. Chase This guy looks scary. And he is scary. He’s a scary billionaire. I mean, as jack Dorsey a billionaire, he must be a billionaire. Right. You know, he founded square and, and Twitter and you know, he’s got some other things going too and you know, obviously an innovative guy but he’s a total scumbag. He’s addicted. hater. I mean, he is censoring speech. And Ted Cruz says to him, Who the hell elected you? And then, you know, one of my friends wrote back when I posted that on Facebook, which, you know, Facebook is probably the least guilty lately of all these disgusting companies, including, I’m gonna include apple in the disgusting company category to, by the way, because they’ve been pretty disgusting lately. And of course, Amazon is obviously disgusting. And is Jeff Bezos trying to buy CNN, oh, god forbid. Wow, it’s just unbelievable. We’ve got all these elitist, a whack job dictators that are running various types of media. It’s absolutely, it’s absolutely appalling. So hopefully the government will do their job for change. They’re starting to they’re waking up to what I’ve been talking about for years. And they’re starting to, so we’ll see if that that continues. If Biden wins, it probably won’t, because they’re all left wing leaning. And so, you know, they like Biden, hey, listen, being a socialist or a communist is a great deal. When you’re at the top of the food chain. It’s an absolutely great deal. I mean, you know, you can just, you know, impose your Fiat on to all of us peasants, all of us, hoi polloi, all of us little people. And these big dictators can sit up there, and they can control what we see what we hear what posts you see on social social media, what you see on the news, which articles get posted, which are called fake news by independent fact checkers. Who are these independent fact checkers anyway? Did someone elect those independent fact checkers, and someone fact, check their credentials? What political parties do these independent fact checkers work for? Do they have a name? Or are they just a mysterious committee and their star chamber? Or they are a governmental body that we have recourse against? If they do something wrong? And they are fact checking is inaccurate? Do we get to sue them? Is there any recourse against these mysterious, secretive, independent fact checkers? Folks, this is the world we live in. I can’t even believe it. If George Orwell were alive, he wouldn’t believe it. I mean, this is like COVID 1984. Right? in the media. It’s it’s, you know, it’s this Orwellian mess. It’s absolutely crazy, the world we’re living in, but hey, look, cheer up, folks. We’ve got income property. And that always saves the day, doesn’t it? So more on that on all of our stuff. And here, you’ll hear from a client here in a moment, go to Jason hartman.com. Check out the properties on our platform. And take advantage of all our resources there. Also, you can always call us in the US at one 800 Hartman. And here without further ado, because I have been on a bit of a tangent and on a rant. So I hope you enjoyed it. And by the way, one more little rant. After this election is over with, we got to get focused back on to the important work of society. And what is that important work? It’s outlying leaf blowers, those damn leaf blowers, we have got to outlaw the leaf blowers. The leaf blowers are the worst invention of humankind. So after after this election is over and all this chaos is over. Let’s focus on what’s really important folks. That’s outlaw leaf blowers. And while we’re at it, let’s outlaw all of this noisy, polluting, disgusting, gasoline powered landscaping equipment. It’s absolutely appalling, but especially the leaf blowers. They’re the worst of the bunch. dumbest invention of mankind that has to take the cake. All right.
Here is our interview, a client case study. Let’s listen in. It’s my pleasure to welcome James Costello. He is one of our clients and he’s been listening to the podcast for a long time. It’s just so exciting and great that he’s coming on to share his story. James, welcome. How are you? I’m doing well. Jason, how are you? Good. Good. Hey, thanks for joining us and tell our listeners and viewers Where are you located?
James Castelle 24:22
I’m just a little bit outside of Atlanta, metro Atlanta area.
Jason Hartman 24:26
Good stuff. And how long ago did you discover the creating wealth podcast?
James Castelle 24:30
About 2018? I think
Jason Hartman 24:33
so just two years ago, and you’ve you’re in the 1500 Club, I think, right? You’ve
James Castelle 24:38
listened to the episode. I went back and I listened to ones that were prior to me finding your podcast and then now it’s a daily habit to listen to them every day.
Jason Hartman 24:49
Good stuff. Well, we really appreciate you listening and I’m glad you’re finding him valuable. for about two years ago when you started listening to the podcast. Were you researching other real estate stuff or You know, thinking about investing? What was the evolution of it?
James Castelle 25:03
Yes. So I was actually at that point more in the stock market, kind of the more traditional way of investing. And I wasn’t overly thrilled with, with how that was going. So I started looking at other places to put money. And I don’t know why, but I had never really even thought of real estate. And then I found your podcast, looking for, I guess, creating wealth. And that kind of started the whole thing. And I always spent longer than I needed to researching, you know, a couple years, but it was finally time to start it. Yeah, yeah.
Jason Hartman 25:38
Good. Good for you. Good for you. So yeah, the stock market Isn’t it funny that light and like so many other people, James, they, it’s the same thing. They don’t even think of real estate investing. They don’t even think about income property that much, because I think we’re just conditioned, you know, Wall Street has such a giant advertising and marketing platform, that they just conditioned us that, well, you know, like even in school, right? It’s like, Oh, you know, start a IRA and put money in it. And, and not that school teaches much about financial literacy, but a little, little bit, and it’s all going to be about the stock market. It’s it’s incredible that, like the elephant in the room, is income property. And yet, I know that people listening might think, Well, everybody knows about real estate investing. Well, you do, and you’re listening to the show people, but the rest of the broad world doesn’t necessarily think of it. They think, you know, the way you invest is you buy a mutual fund.
James Castelle 26:39
Right? It’s generally not the go to idea, but it is, and at least in my opinion, and yours as well. Foreign way better than
Jason Hartman 26:48
the Wall Street casino. Right? Right. Yeah. The Wall Street casino, like I call it the modern version of organized crime, as you know. Yeah. Well, so why is it better in your eyes?
James Castelle 26:59
Well, the this the ability to leverage the tax benefits the cash flow now. So I’m sticking everything in a in a Roth IRA and just hoping that it grows so that I can finally use it when I’m in my 60s. And who knows what it’ll be. Now, by the time that’ll happen. I like the predictability and the many ways that it pays you to principle pay down the appreciation, which is a bonus if it happens, but the cash flow every month that I can use whenever I want, that’s even more appealing.
Jason Hartman 27:29
Yeah, right. Right. It’s a multi dimensional asset classes, we always talk about, you know, totally agree with you there. It’s it’s really phenomenal. In fact, for those watching, I’m just going to share my screen and put this up here, because I think it’s telling in terms of what we’re talking about. Income property is ideal. And this is an old acronym. This has been around for a while. But income depreciation in a good way depreciation, meaning tax benefits, equity, growth, appreciation, and leverage. So those five ideal components versus you know, stocks, just one or two. And there’s really more more than this, but it goes with the ID al acronym, income, depreciation, equity, growth, appreciation and leverage. So I’m glad you recognize that and I wish more other people recognized it, because they really should, they really should recognize it. So you started listening to the podcast? And then you recently just took a dive into it. And you’ve got your first property underway. Right? And where’s that one?
James Castelle 28:38
That one is in Alabama? Just a little bit outside of Birmingham. It’s so
Jason Hartman 28:43
it’s Gadson? Right guessing correct? Yeah, good stuff. And what what led you to that market? Like why in particular, I know you’re working with one of our investment counselors, and he probably gave you some guidance on that. But you also i’m sure made the pick. Because if you’ve listened to 1500 episodes, more power to you. But you’ve heard a lot of market profiles from over the last 16 years and just a lot of different information, it’s kind of easy to get kind of lost and all that I would think, right? Well,
James Castelle 29:11
some of the things I liked was the the amount of inflow of people coming into Alabama to live. So that is, that was a good starting point, at least there now the population is declining. And really it was that you can find property there that really had good yield for a pretty minimal out of pocket investment. In this case, I had looked in the metro Atlanta area first, but I couldn’t find anything even close and let alone the property and gas and his brand new construction. So that was definitely a bonus as well. I don’t anticipate a lot of maintenance or anything like that for a little while.
Jason Hartman 29:54
Yeah, no, I think you’re right. You know, with it with a new property. There shouldn’t be anything major for About eight years into it, you know, every property is different. And every tenant is different in terms of how much wear and tear they put on your property. But major expenses should be years away, you’ll always have a couple of little repairs here and there.
James Castelle 30:14
So listening to all those podcast episodes, you know, were there any particular topics James that like really interested you the most or questions you have on any of that? I would say my favorite episodes have been, I guess, rehashing how the debt is reduced by inflation. I think that’s really an important thing to keep in mind that the mortgage payment on this Alabama property is pretty low to begin with. But in 10 or 15 years, it’s gonna be a couple tanks of gas, probably.
Jason Hartman 30:45
Yeah, I think you’re exactly right. You know, when I was 11 years old, I remember my mom totally stressing out about the first house that she bought. And her mortgage payment was get this $416 a month. And she thought, Oh, my gosh, how am I going to do that? You know, but then, a few years later, it seemed like nothing in sight, because her income went up so much. It’s because during that time, there was a decent amount of inflation, and inflation made that seem cheap. And so you know, that’s inflation and do step destruction on the payment. But it’s also on the mortgage balance, too. You know, it happens in both things. So, yeah, inflation induced at destruction is like the hidden wealth creator. It’s, it’s fantastic.
James Castelle 31:35
Yeah, I do think that that’s important for people to keep alive as well.
Jason Hartman 31:39
Yeah. Now, you’re in the you’ve got your own business here. I know, your father started it. But you’re in the manufacturing business. Right? Correct. Yeah. You know, it’s great to see some manufacturing actually happened in the US. And some of it come back here. You know, Alabama’s got no shortage of that, too. So, you know, that I look at manufacturing is like the real economy. You know, it’s it’s the core of a real economy, versus a lot of these high flying, you know, software companies and so forth. They can evaporate pretty quickly. You know, deep Do you have any thoughts about that? Are there any like parallels with, with the business you have in income property investing or anything?
James Castelle 32:20
Well, I will say that, what what we do manufacturer isn’t necessarily used in construction, but especially with this pandemic, I’ve noticed that we are staying in a pretty decent spot, mostly because people want to buy more locally, they don’t want to wait six, eight weeks, especially if it’s anything that they can use for reopening school or business, which are some of the products that we provide, they don’t want to wait three months or four months to get something in, they can order it from us for competitive price and get it in a few days. We’ve been really fortunate. And in that regard, I think more companies for sure, are going to be reshoring here, especially after the distrust that might be in China, especially.
Jason Hartman 33:05
And I think you are absolutely right, my friend. And I don’t think we’ve really even seen much more than the tip of the iceberg on that. Because, you know, of course, Trump has been promoting that idea of, you know, since he ran the first time, with COVID, you know, just the distrust for China is very high around the world. Also, I think we realized when there were the shortages of ventilators, the shortages of personal protective gear like mask and eye protection gear and face shields and stuff. And you know, even the medical clothing, we realize, we cannot depend on other countries to provide this stuff to us. We’ve got to have some manufacturing base in the US. And of course, you know, when you have a worldwide virus, everybody’s hoarding those materials for their own country. And so what happened now, look what happened. Exactly. So I think that was a good wake up call for the US and hopefully, for every other country around the world, that you cannot be dependent on foreign powers. You can’t have another country making the boots for your soldiers. Or the tires for your Jeeps, or whatever, you got to make them right here at home. And so yeah, I think a lot of that manufacturing is going to come back to the US. And it was already happening. And this is just accelerating it. And that’s going to be really good for the economy.
James Castelle 34:29
I couldn’t agree more and good
Jason Hartman 34:31
stuff. Well, what do you want people to know? You know, I mean, I appreciate you sharing your story. Like, you know, what are your plans for the future with your investments and you know, anything else?
James Castelle 34:40
Well, I started with one it was important to me, this particular property stood out because it was in a it was in a pretty decent market, but even more so investing in the midst of a pandemic with the diction freezes and very high uncertainty, it was important that if Things went sideways that I would be able to, you know, float it for a little bit if I had to without it. I know on some of your podcasts, he said that he wouldn’t recommend investing if it was your last dollar. Right during that time. Absolutely. So for me it wasn’t I, ever since I started listening your podcast I was saving money for for more investment properties. So it was important that the mortgage payment was not outrageous. So I plan on adding more, I don’t know that they’re all going to be as inexpensive as the one that I got Gadson, or even in that market, but I plan on being in touch with the ration. Yep. And just keep adding to it.
Jason Hartman 35:42
Good. Good stuff, good stuff, keep building that portfolio. That’s great. So on the deal itself, you said it was pretty inexpensive. Did you think the property was a really good deal in particular, or towhead?
James Castelle 35:54
What would the interest rate that I could get the purchase price of the property. And then and I think I even put down 25% on that, and it was still relatively low out of pocket. One thing that had come up was I was doing a little bit of due diligence on the property itself. And I had reached out to, to my investment counselor in a rush. And I said in a rush this property seems a little bit high. And he rightfully reminded me that there would be an appraisal done on it. The last person who’s going to overland will be the lender. So he said, should not appraise out, now we can go from there. And that’s actually what happened, we got the appraisal back. And it was lower than the asking price. And we ended up settling on the appraised value. So it worked out well, even better than I was expecting. Actually,
Jason Hartman 36:45
you know, I’m so glad you brought that point up, James, because we have a lot of sellers of property vendors, brokers, they approach us, some of them say they’ll only do cash deals. So they say that they’ve got these properties that are terrific deals for our cash buyers, and we won’t work with them. We’ve turned many of those down over the years, because we get suspicious when they say cash only deals, you know that the lender becomes an essence kind of your partner, your due diligence partner in a way because you know, they’re going to require that appraisal, they’re going to at least do their side of their due diligence. They don’t want to overland or have bad collateral. And, and so they’re in the game with you. They’re they’re stuck in the game with you. And that’s, that’s a helpful safeguard. I think
James Castelle 37:37
it wasn’t egregious, but it was, you know, that it was a few thousand dollars that was taken off of it. So yeah, that was good stuff. And I would say the only other thing that I can think is it was new construction, I think the property was six months old when I bought it. And I would still recommend doing, you know, just paying the couple hundred dollars for an inspection even on a brand new property because nothing major, but there were several, maybe safety issues or couple outlets weren’t working. And that was all discovered during that inspection. So I didn’t trust that just because it was brand new construction, that everything would be perfect. And
Jason Hartman 38:19
you know, a lot of people ask us, should I have an inspection on a brand new home? And I would argue that if you’re not buying it from a big builder, a big builder with a reputation, if it’s a small builder, yes, you definitely should have an inspection, even on a brand new property. If it’s a you know, small builder that you know, doing a one off here and there type thing. Some of them are that, but if they’re a big like regional or national builder, you probably don’t need.
James Castelle 38:49
This was not a builder that I was familiar with. So yeah, and I mean, as a bonus, the tenant had been living there for a few months. So I got a bunch of pictures of the inside of it just kind of see how they were taking care of that place. And it was spotless. It looked in really good shape. So I even kind of got a glimpse into what kind of what kind of tenant was
Jason Hartman 39:07
in there. Good. Good, good stuff. What kind of interest rate Did you get on your mortgage? 3.6?
James Castelle 39:13
point six, five, somewhere around there.
Jason Hartman 39:15
30 years fixed. 30 year fixed? Yes. On an income property on a on a non owner occupied loan. That’s fantastic. It was
James Castelle 39:23
it was. It was awesome. Yeah,
Jason Hartman 39:26
it really was. That was great, right? If you never rent that property out, you’re probably getting paid to borrow already. With exact with inflation and tax benefits. Oh, good for you. That’s awesome. Good stuff. Well, James, thanks for joining us. Thanks for sharing your story. And I wish you a lot of success in your investing career. You know, in a few years, you’re going to be amazed at what happens it just really has a very quick build to it. You know, you’re going to have bumps in the road. Be ready for them. Don’t let them freak you out. You know, that’s everything in life that’s worthwhile has changed. ranges and properties can be that way once in a while too but good for you. So welcome aboard and happy investing.
James Castelle 40:08
Thanks, Jason. Thanks for all the information that you give. It really is valuable. My pleasure.
Jason Hartman 40:18
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.
Leave a Reply
Be the first to comment.