In this episode, Jason Hartman talks about America’s mass migration, real estate excavator, vacancy, and rental rates in San Francisco. He also shares stories from the time he spent with Tony Hsieh in Las Vegas. In the show’s interview segment, he continues his conversation with Andrew Cushman of Vantage Point Acquisitions. They answer questions such as the market to invest in, how to identify growing markets, and where to start building a portfolio.
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 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 1606 1606, otherwise known as Hey, did you see that monolith in the Utah desert? Well, guess what? It disappeared? I guess it disappeared. Remember, hopefully you saw the movie 2001 A Space Odyssey. It is a masterpiece. Stanley Kubrick, brilliant director. Hey, why do the good die so young? Right? He was just a brilliant director. And it started off with that scene of the monolith, and the primates. And wow, that was, you know, everybody’s tried to interpret that ever since he made that movie way back in. What was it 1968? Well, again, you know, this monolith showed up in the Utah desert, and it has disappeared. Wow, this is a big mystery folks. Maybe the aliens came to get it? Who knows? Who knows? Anyway, so we’ve got part two of our interview regarding demographics and rental housing, future and so forth, coming up in a few minutes. But first, we’ve talked a lot about the mass migrations, I predict this will go in multiple phases. Were just in phase one, maybe maybe just starting a little bit of phase two tomorrow. It’ll be like these concentric circles as people migrate out of the cities. And guess what? I’m looking at an article about San Francisco Here we come right back where we started from, or maybe not. It’s entitled, San Francisco renters, regained something, they lost, leverage. Leverage, vacancies are up. So they have more choice, and some negotiating power. The median price of a one bedroom apartment in San Francisco, is 20 $800. And that is encouraging news. According to some, okay, now, we’ve had part apartment list and I think we’ve had zumper on the show before, but certainly apartment list has been on and I think they’re booked again, I think we’ve got another interview with them coming up. So they provided this data and they save the pandemic has caused many residents of the city to depart by by San Francisco. Same is true in LA, New York, Philadelphia, Boston, etc, etc. Yes, it is happening, the mass migration is underway. And this article goes on to say that the year over year rents in San Francisco have decreased. Yes, rents are down. And that sound effect was a bomb being dropped from a plane. Right? That’s what it is. rents are down 20.7% year over year. Wow. And vacancy rates are up. You ready for this one? They are up more than 100% over last year. So the tenants have a lot of power. in a state where you shouldn’t have been investing. I hope none of you are investing in the Socialist Republic of San Francisco, or the Socialist Republic of California to think of it more broadly. Because that is a a jurisdiction on both counts. That is extremely tenant friendly, and unfriendly to evil landlords, your evil landlords you How dare you expect tenants to actually pay your rent? Yeah, so there you go. rents are down in San Francisco in New York and all the others. So it’s, it’s really no big surprise, no big surprise. Okay, so I did an interview today that we will probably air for you next week. And I just wanted to share with you something the guest shared with me off air before we started the interview. Now, he commented on this during the actual interview that we’ll probably have up for you next week. But he said that a friend of his owns an excavating business, right. So they are the ones that get in on a development project of a housing tract. Early on, early on, they’re in there, they’re pushing the dirt around. And after they excavate, what do they do? Well, maybe they bring in streets and streetlights, or maybe they bring in the utilities, right? So this is early on in the game. And this person sees what is happening in the real estate market early, early. And he said that his friend has been in that business for 20 years, not as long as I’ve been in real estate. I’ve been doing it longer. But I’m not an excavator, as you know, hopefully, you know that I’m, I’m on the I’m on the brokerage side and the education side, right. So for 20 years, he said he has never seen the land development business at such a fever pitch, where developers who hire him are buying up every piece of land they can possibly buy. And they are building every house they can possibly get entitled and approved to build. He says it’s absolutely just crazy. Crazy, crazy, crazy. Yep, the market is in fuego on fire. So I don’t know that that necessarily comes as a big surprise to a lot of you. But it is, it is pretty amazing what’s going on out there. And one of our clients, who is in our content group, Marc Anthony, he posted an article and said, q the U haul trucks, nearly half of all Americans 46% are considering moving within the next year. According to a recent lending tree survey, the online financial services marketplace based the report on a survey of more than 2000 participants in September, but certain groups of people are much more likely to consider relocating than others, as they have some pretty compelling reasons to do so. So folks, I think this market is going to be pretty solid for a while. pretty solid for a while. Also, I talked about him on the show before. But many of you know that I had when I lived in Las Vegas. I went to brunch several times at the very interesting homes, two different ones of Zappos founder and the iconic developer of redeveloper of downtown Las Vegas, Tony Shea, and you probably heard by now he passed away at age 46. Sadly, apparently he died of injuries in a house fire in in Connecticut, and I don’t know what he was doing there or what but he was such an interesting CEO. He sold Zappos to Amazon for hundreds of millions of dollars. his net worth was about 800 and $50 million, I believe, and going to those brunches at his very interesting homes. I talked about them on the podcast before but but one of them was a combo hotel that he bought a little sort of old fashioned 50 style Hotel in downtown Las Vegas. And he turned the parking lot into a trailer park and brought in a bunch of Airstream trailers and not big ones, small ones, and tiny houses. And people would rent them from him and live there but he would only you know rent them to really cool people that he thought was doing interesting things and he had to be the most unassuming billionaire or near billionaire that I’ve ever met. And I’ve met several billionaires in my life. And Tony Shea Wow, what an amazing success story. And sadly, he has passed away and you’ve probably heard that in the news but I just thought I should mention that on the show because I talked about going to brunch at his He has places several times over the time I lived in Las Vegas. And you know what he would do is he’d have these Sunday brunches, and he had a couple of llamas. Yes, the animal llamas. I would bring my dog and my dog would actually freak out. She thought she thought, What is this Martian? creature, this llama and, you know, you’d go up and talk to the llamas, and sometimes they’d sort of spit in your face. It’s pretty gross. But yeah, the llamas would be roaming around. And the setting of Tony Shay’s place was like, Burning Man. And I’ve never been to Burning Man. But I’ve certainly seen the pictures, and many of my friends have been to it. And that’s where they they auditioned, the former CEO of Google, who got the job at Burning Man, you know, Sergey Brin and Larry Page, said, you know, for your job interview, we’re gonna invite you to Burning Man and you’ve spent several days with us or a week and we’ll see how you cope at Burning Man. And it’s pretty, pretty funny way to do a job interview, right? But that’s that’s the way the evil Google operated, right. And anyway, Tony Shay’s place was decorated, like Burning Man, sort of, and he had a stage. And sometimes he had some musicians up there performing and you know, there was a fire pit, and then he’d have a brunch. And there was all sorts of different odd food. Sometimes it was like a potluck, or he had some caterers and this and that, and it was it was just interesting. I was glad to have that experience. And, you know, go hang out at Tony Shay’s place, it was pretty cool. And, and he was just the most unassuming guy and by the way, he lived in one of the little Airstream trailers. There’s a, I believe it was CNBC did an interview with him. And they, you know, interviewed him inside his little 200 square foot Airstream trailer that he lived in. And you know, he could afford anything. So, and he said on that interview, he said, You know, I really want to spend my money. Yeah, you know, having experiences more than things and doing things. And boy, he sure did stuff. I mean, he redeveloped downtown Las Vegas and had big, big plans. I remember the first time I met him was actually as part of a mastermind group I was in. But then, you know, I went to his house for brunch several times and, and met him again. And the first time he showed us his plans for redeveloping downtown Las Vegas, and they were just amazing. And he finished a lot of it. But you know, I hope that someone picks up the slack where we were Shay left off and, and finishes Tony Shay’s vision for downtown Las Vegas, because it certainly was pretty creative and pretty unique. And, and pretty awesome. So sad to see Tony Shea go. So I just wanted to mention that. And now let’s get to part 201. more thing I want to mention, yeah, I always do that. I want to thank everybody who joined us last night. For our empowered investor, inner circle, we had such a great call so much participation, I want to especially thank our team members, our internal team, and then our client, moonfire, who shared a little bit and we did that podcast with him a couple of years ago, he has to come on the podcast and talk about property management agreements, you can go find that old episode at Jason hartman.com. And we reviewed them last night, we got on zoom, I shared my screen, we looked at maybe four or five different property management contracts and agreements and pick them apart and said, Hey, this is ridiculous. This is normal. And anyway, it was just a great time, we have these monthly zoom meetings with all our empowered investor inner circle members. And last night was just great. I really enjoyed it. So thanks to all of you who, who came and attended, we were on for about two hours. And it was just great to see everybody you know, we we don’t meet in person anymore. But it’s it’s nice to have the community of our social network and, and our monthly zoom meetings. So it’s really great to see all of you. Anyway, here is part two of Andrew Cushman talking about demographics, the rental housing market, and more. So here we go. 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. And by the way, Gen Z. Now the oldest Gen Z IR is 23 years old. And that’s the biggest of all 82 million people
Andrew Cushman 14:52
to they’re about to get out and start renting. So So yeah, so when we when we change this to when we change it over to domestic migration. Again, you know, Florida looks really good. Lots of markets in Texas, Tennessee, Carolinas, Arizona still as that migration, like, as you said, it might might be tougher to get the numbers to work. I don’t invest in Arizona just because I don’t want to be too spread out. So I don’t have as much depth and depth knowledge there. Utah, you can almost see where highway 15 runs up through the center of the state. There’s all kinds of growth there.
Jason Hartman 15:21
We love Utah, but again, too expensive. You know, we, many years ago, we were recommending properties and a lot of our clients purchased in Salt Lake City and around Salt Lake City. It’s awesome. But again, that’s a hybrid market. It’s just too expensive. You know, many years ago, we did a lot of business in Denver, great market. But again, now it’s people are priced out. So a lot of our clients made a lot of money in those markets, though.
Andrew Cushman 15:45
Well, and so and this is this could apply. So let me ask you how you seem to be doing a really good job of getting ahead of these markets, I your agenda, what you’re doing is you’re identifying emerging markets, where you’re you’re getting you know, we’re looking at this data now and everybody knows Oh, wow, Denver has been hot. Nashville has been hot. Memphis is great. You’ve been there for a long time. Well, we
Jason Hartman 16:04
never got into Nashville, we just could never make Nashville work. But I love Nashville. It’s great town. That one never worked for us. But we did do Denver, Salt Lake City, Austin, if you can believe it, you can’t even touch Austin now for the prices you need to as an investor. And even Dallas has gotten too expensive. You know, even most of Atlanta. We do have Atlanta properties today. You know, if you go to Jason hartman.com, you know, one of our investment counselors, they can get your properties in Atlanta, amazingly. But it’s really hard to make Atlanta work.
Andrew Cushman 16:34
Yeah, yeah, a lot, especially a lot of the primary markets have gotten a lot of secondary have gotten much more expensive and difficult to get them to pencil out. Yeah,
Jason Hartman 16:43
yeah. Tell us more.
Andrew Cushman 16:45
Yeah, well, I’ll just say, so how did you know, maybe you just for the listeners, you’ve done a really good job of getting ahead of the curve. Right? If you you know, one of the biggest ways to make money in real estate is to find an emerging market where, you know, population growth, or is about to happen, or income growth is about to happen, jobs are about to move in. So, you know, what, I know what we do, but what of what did you use to identify these markets early so that your investors benefited so much, whereas it might be tough to get in now. But if they were investing with you five years ago, they already have a portfolio? Yeah, or 10 or 15 years ago? You know,
Jason Hartman 17:17
I can’t say there’s any one thing, there’s just a whole bunch of things. You know, we we interview people on the podcast all the time, you know, just constantly reading and research and it’s a bunch of fragmented stuff. There’s, it’s not like, I can give anybody one great website to go. Yeah, you know, and all the answers are there. I was just not that simple. You know, but, you know, over time, you you notice trends and chatter. And now,
Andrew Cushman 17:43
you know, another thing I would say is, you know, if you’re out looking at, okay, you know, do I buy a single family house in this market or a small apartment? Or do I do a syndication here, whatever the same principles apply, whether you’re looking at the whole country, or state or city or region. So like, for example, take a take Atlanta, you know, if you look at these, these charts that we’ve been, we’ve been sharing, most of Atlanta is dark green, right? population growth, incomes have been going up there as well. But there are some markets in Atlanta that I wouldn’t touch with a 5050 foot pole. Right? They’re declining. Yeah, very low income, very high crime, right. And so the same principles of positioning yourself where the right demographics are coming in, incomes are rising, you ideally have a business and landlord friendly environment, right? You want to position yourself in those markets. So you start big picture like, okay, Florida, Texas, Georgia. All right. Well, what markets do I want to maybe Atlanta, maybe Tampa was inside of Atlanta? Am I going to invest in East Point? Or am I going to go out to Duluth, right? Those are very, very different markets. And so you want to apply those principles to every property you’re looking at to help guarantee success, right? So if you’ve got a if you’re going to buy a single family house and Duluth versus East Point, you want to look at the income trends, you want to look at the population growth trends, you know, and if you can get the data on that level, who’s moving there, right. And that might take some digging, but you can find that out. And you’ll be I can tell you between those two, if I had a choice between East Point and Duluth, I’d be in Duluth, hands down. So the same principles apply. That’s a question I get a lot of times as a leader, how do I pick a market? So one of my mentor, you know, one of the questions I get asked a lot is well, Andrew, how do I decide what market to invest in? I live in San Francisco. It’s too expensive. And I want to go out of state. Well, how do I find one right? Well, one way like my when I mentors Tim road says a ski and somebody else’s way. Right? If you ever go waterskiing, you try to smooth behind the boat. So find a guy like Jason, who’s already really good at identifying markets and invest with him. The other way is to look at a map like this and say, Wow, Florida is looking really good. I’m gonna invest in Florida. Then you drill down to Florida and say, Okay, well, Tampa, the panhandle and Orlando look really good. Okay, I want to do those markets. Then you pull up Tampa and you say okay, you do Same analysis rates the same process just narrowing down Okay, well inside of Tampa, I like this market in this sub market, this one has population decline and low incomes, I’m going to stay out of that one, right? And you say, okay, so within these sub markets, that’s where I’m going to invest. So that’s how you determine where you’re going to invest. Number one, you can find a great operator like Jason, or if you’re gonna do it on your own, you get on you get onto a map like this, you understand the overall trends, and then you just start drilling down and apply the same principles that you apply that the larger macro level down to the micro level in the market level.
Jason Hartman 20:33
Yeah, definitely. You know, here’s one thing I do want to say about that. And I agree with everything he said. But every property, not every property, but every property I’ve ever bought, looks like a great deal in the rearview mirror. Okay. And it’s sort of easy to look like a genius in the rearview mirror, you know, because we’ve had this market, you know, so that just goes back to the old saying, don’t wait to buy real estate, buy real estate, and then wait, you know, it, you know, it would be easy to try and take credit for everything you said, and I appreciate it, I’ll take the credit. But you know, look at I mean, the real estate’s just such a solid investment, with so many things going for it, that it’s just hard to lose, if you buy a property that makes sense the day you buy it, you know, if you do that, you’re going to be pretty good.
Andrew Cushman 21:25
It will kick in, can I give an example to illustrate what you just said. So let’s say you buy a house for $100,000. And you put a 15 year mortgage on it, and you rent it out right? In over 15 years, you picked the wrong market, you got you put 20% down, right, you put 20 grand into it $80,000 one, you pick the wrong market, and over 15 years, it does nothing is still worth 100 grand at the end. But guess what? a tenant, somebody else paid off that mortgage for him. Yeah. And you put in 20 grand now you have 100 grand, is that the best investment in the world? Is that a home run? No. But just not bad. You didn’t lose and your risk was minimal, right? So a lot of times even the worst case in
Jason Hartman 22:08
real estate isn’t all that bad. Yeah, it’s not, especially if you know how to do the math. And you really a lot of people in real estate, you know, they think they’re losing when they’re really winning, because they just don’t know how to keep score, you know, learn how to do the math. So that’s, that’s another important thing, because a lot of this return is below the below the surface of the water just like an iceberg.
Andrew Cushman 22:30
You’re absolutely right. You’ve got you know, appreciation, hopefully principle pay down depreciation, cash flow, and there’s all kinds of ways to win with real estate.
Jason Hartman 22:38
Yeah, definitely. All right, good. What else do you want people to know, Andrew? Anything else on the map? Anything else in general?
Andrew Cushman 22:46
You know, I think I think we covered it pretty well, I would just say I know it’s turbulent times I know a lot of folks are scared to invest. This will. This is short term in the in the scheme of real estate. This is short term, right? Even if this is a two or three year deal. If you’re if you’re going to buy and hold for 10 years, we are very likely to get into an In my opinion, very likely to get into an inflationary environment with all the worldwide money printing that is going on. One of the best ways to protect yourself against that are hard assets like real estate, those will appreciate in an inflationary environment. Those are a hedge against inflation. And I and I can’t think of a better way to not only earn a good return, but to protect investment from, like I said, the likely inflationary wave that’s coming in even if we don’t get inflation, we haven’t really even had it for Well, again, depends on how you parse it. But
Jason Hartman 23:43
it depends on whose stats you’re watching. Yeah.
Andrew Cushman 23:46
So we have many people would say we have not had the high general inflation over the last 10 years. And look how well real estate has done right now we have had asset inflation. So don’t be scared about the next 12 months or, you know, we’re if you buy something that makes sense today, again, repeating that and hold it long enough. It’s very difficult for that to not work out to be a good investment. Yeah,
Jason Hartman 24:10
definitely. Andrew, do you want to share a social media page or a website or anywhere where people can find out more about you? Yeah,
Andrew Cushman 24:19
easiest way to connect with me is my company is vantagepoint acquisitions. So the website for that is just the p a c q.com. Or if you just Google vantagepoint acquisitions, it’ll come up. There’s a little couple tabs on there. One, just contact us and reach out that comes to my inbox, email inbox. If you just want to have a conversation. There’s a tab on there for our multifamily accelerator mastermind and some additional information but yeah, that’s the that’s the best way to get in touch. Come on LinkedIn and all that but a real conversation best ways to reach out to the website. Good stuff.
Jason Hartman 24:55
Andrew, thanks for joining us and happy investing.
Andrew Cushman 24:58
Likewise. Take care, Jason, good talking to you.
Jason Hartman 25:05
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