Today’s episode of the AIPIS show is a bit of a reverse style to normal. Rather than being the interview, Jason Hartman takes a turn to answer Kevin Bupp’s questions. They talk about the ideas and motives that led Jason to get involved in real estate in the first place, and then move on to some of the wider issues affecting real estate for investors. He also gives a few of his personal favorite quotes to live by and considers what he would tell his younger self to do.
Key Takeaways
06.23 – Find role models you can look to and embrace the influence they have on your life.
11.10 – So much of creating success is about doing something that nobody else has done.
13.30 – Jason Hartman’s investment teachings work with specific markets. What makes a good market?
19.00 – When working on inflation-based strategies, you have to know what will have the most effect.
25.40 – Demography always plays a huge part and when you bring in a group as large as Generation Y, you can’t help but notice the effects.
31.56 – Rent to value ratio should always be on your mind, whether you’re an investor, owner or renter.
36.25 – In a moment of nostalgic advice, Jason talks about the things he’s learned over the years.
41.05 – If you do nothing, you will gain nothing. No doubt about it.
Tweetables
If you invest for nothing else, invest for cash-flow.
With government sticking its nose in everywhere, clearly the study of economics was introduced to make astronomy look acceptable.
There is a certain wisdom in action alone. Do something and watch for the results.
Transcript
Introduction:
This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit www.HartmanMedia.com
Welcome to the AIPIS Show, for Accredited Income Property Investment Specialists, and those who aspire to be. If you’re a real estate, mortgage or financial professional, this is the place for you. We’ll explore innovative investment analysis, sales, marketing and income generating strategies for the most historically proven wealth creator: income property. Learn from the experts as they show you how to build a better business and a better life.
Jason Hartman:
Welcome to the AIPIS Show for Accredited Income Property Investment Specialists and those who desire to be. This is your host, Jason Hartman, where we talk about increasing your income, your productivity and just generally having a better life while serving your clients better, with America’s most historically-proven asset class, income property.
We have a great interview for you today and we will be back with that in less than 60 seconds.
Announcer:
What’s great about the shows you’ll find on www.JasonHartman.com is that if you want to learn how to finance your next big real estate deal, there’s a show for that. If you want to learn more about food storage and the best way to keep those onions from smelling up everything else, there’s a show for that. If you honestly want to know more about business ethics, there’s a show for that. And if you just want to get away from it all and need to know something about world travel, there’s even a show for that. Yup, there’s a show for just about anything. Only from www.JasonHartman.com, or type in ‘Jason Hartman’ in the iTunes store.
Kevin Bupp:
Aright, ladies and gentlemen. Today on the show, we’re super excited to be joined by real estate expert, avid investor, published author, public speaker, podcasting mogul, world traveler, charitable role model and entrepreneur extraordinaire – Jason Hartman. Jason’s been involved in thousands of real estate transactions and currently owns income-producing real estate in 11 different states. He got started at the early age of 19 on the brokerage side of the business and quickly joined the top 1% of realtors in the US. He’s the founder and CEO of Platinum Properties Investors Network, the Hartman Media Company and the Jason Hartman Foundation. Jason, welcome to the show, how’re you doing today?
Jason:
Hey, thank you, Kevin. With that kind of intro, you’d think I would get more dates!
Kevin:
That’s awesome. Hey, hey, just keep pushing forward, buddy. You’re almost there! You know what it is? You’re too busy.
Jason:
That’s true.
Kevin:
You do so much, you don’t have time to date, that’s what it is.
Jason:
You know what one of my problems is? I really like business. I actually like it. It’s like a hobby, almost. I don’t know, am I nuts? Maybe I’m crazy. I’d better have someone evaluate me.
Kevin:
No, it’s a lot of fun but you’ve got to have some free time too. I mean, dating, come on, we’re both young guys. I’m married, so there’s no dating in my future, but you’ve gotta get out there, bud.
Jason:
No, I go out and I have a lot of fun. I’m not a complete worker bee, and I travel a lot. Hey, I’ve been to 74 countries, and some I’ve been to many times so that’s not bad, right?
Kevin:
Wow, well, way ahead of me. Good for you! I’m envious.
Jason:
You’ve got to travel, it’s important to travel for your mindset and growth and just seeing the world. I think it’s a good thing.
Kevin:
I agree with you. Jason, what I’d like to do is I’d like to give a little background on you so we can fill in the gaps a little bit from our introduction there and tell our listeners a little bit more about yourself – how you got started on real estate and how you transitioned into where you are today. You’ve got quite a significant portfolio, you do coaching, you have educational seminars that you teach across the country. Why don’t you give us a little background on yourself?
Jason:
Sure, sure. People ask me that question frequently and I’m just going to try to condense this a little. I want people to understand the story of the start of real estate. I don’t know if anyone remembers the old Saturday Night Live skit where the guy used to say “Baseball been berry berry good to me”. Remember that guy on Saturday Night Live?
Kevin:
I sure do.
Jason:
Well, I say “Real estate’s been berry berry good to me”. Basically what happened is I grew up as a kid on Los Angeles and I grew up kind of poor. I didn’t have much money, and by 9th Grade I noticed that all the kids who had money had all the prettiest girls around them. I thought ‘Hey, this is a pretty good idea, I think money’s kind of an important thing’. Once I figured that out, a few years had passed by and I was 16 years old and of course, I couldn’t get a nice first car or anything like that. My first car was this old jalopy that cost $700 cash, which I’d saved for. I saw this infomercial for a real estate guru and I went out and I got his book. I read 3 chapters of it, I put it down – I was only 16, so at that age you don’t finish much!, but I started a lot of things. I still do that to some extent, actually, it’s a bad habit.
Kevin:
Me too.
Jason:
But I put the book down and my Mom picked it up, and my Mom got very interested in the whole subject of real estate. Two years had passed, I was 18, I was getting ready to graduate from High School and my Mom says to me ‘You know, Jason, you got me interested in this real estate stuff and there’s this seminar in Anaheim this weekend by Disneyland, why don’t you go, it’s free?’ It was one of those weekend pitch-fest seminars where all the speakers are selling their books and tapes – yes, they were audio cassette tapes, if anybody even remembers those nowadays!
I went to the seminar and I gathered up 9 of my buddies from High School, because at that age you can’t do anything alone. I got 9 of my buddies to go to the seminar and on Friday night, I remember the first speaker was a guy named Hal Morris and he was up on stage and there were hundreds and hundreds of people there, it was huge. He was talking about points, and I didn’t know what points were. One of my mentors that I discovered about a year before that, at age 17, was Earl Nightingale. Between Earl Nightingale, Denis Waitley, Zig Ziglar and Jim Rohn, they had a hugely positive influence on my life. Those are the greats I will be forever grateful to.
I was honored to interview Denis Waitley on one of my shows, on episode 150 of the Creating Wealth Show. Earl Nightingale said ‘If you want to get rich in real estate, learn the business first’. I thought, you know, I should just get my real estate license so I can understand what the basics are. I enrolled in Century 21 real estate school for $99, I got my license, I was in my first year of college and it was 2 weeks before my 20th birthday when my license came in the mail. I just started selling real estate part time while I was in college at Century 21. I started working with investors, I would put these little ads in the Orange County register because I lived in Orange County, California by then. They would be for HUD and VA repo properties. I used to have investors call and leave messages on my phone machine and I would take them out in my Volkswagen Jetta and I would show them properties. By golly, they actually bought them from this kid. I couldn’t believe it. My first month in the business when I’d just turned 20, I earned $43,000.
Kevin:
Wow!
Jason:
I always worked. When I was much younger, I had little businesses. I used to sell patches to my fellow students – anything to earn money. I was always kind of entrepreneurial. Then I had a couple of paper routes and all this kind of stuff. I had managed a couple of small businesses my mother owned when I was in High School, and I always only earned minimum wage. At 20 years old, making $43,000, I thought that was incredible. What happened is that as my career progressed, I was about 6 months into my career, and I had sold a property to a client – his name was Jim. Jim had purchased this property, it was on Coventry Lane in Huntington Beach, and about 6 months after he bought it, he came back to me and said ‘You know, Jason, I don’t like this property, I want to sell it, why don’t you list it for me?’
I thought ‘You know, instead of taking the listing, why don’t I just buy it from him?’ And I did. I was 20 years old and that was my first income property on Coventry Lane in Huntington Beach. It was a little one-bedroom condo and I’m sure it’s still there. I wish I knew the exact address because I’d like to go visit it – I’d probably find it somewhere. I bought this property, and my first property, Kevin, I had a bad experience. I collected rent for a little while and then I had to evict tenants because they stopped paying. That was my first income property experience, but I put it on the market feeling really discouraged about the whole thing. I put it on the market and another broker came along and bought it for me, and I earned myself a nice profit on that property. I thought maybe it wasn’t so bad after all! Then I started buying more properties over the years and I went to work for RE/MAX. I became one of their top agents in the world and I did very well as a real estate agent working for clients, but I was always buying my own properties as well, and I always believed in real estate investing. I look at them as dual careers, if you will. Both of those did very well for me.
Kevin:
Are you still brokering today or are you strictly an investor?
Jason:
Well, the answer is: sort of.
Kevin:
Okay..
Jason:
So, to continue that story a little bit more, and I won’t bore everybody with it too long. I worked for RE/MAX for several years, I did very well there, and then there was this failing real estate company and I bought that company. That was about the hardest entrepreneurial venture of my life – it was very difficult, I experienced a lot of challenges and almost gave up many times. That one finally kind of worked out okay too, because in 2005 I sold it to Coldwell Banker. I got a decent check for that, and that deal took about a year to negotiate and bring together. I thought ‘What am I going to do? Am I just going to retire? I’m too young to retire and I really have zero interest in retirement anyway, because I like to work’. I thought ‘I’m going to have this big capital gain, what am I going to do with this money from the sale of the company?’ Of course I was going to invest in real estate, and I looked all around and looked at where to invest, and I remember being in the California market in the Nineties and owning properties there and working with clients there.
California experienced a pretty bad downturn in the Nineties – especially Southern California because there was a lot of defense industry and as we all know, Reagan, through his very good business plan, bankrupted the Soviet Union. That had a ripple effect of really reducing defense spending for quite a while. A lot of people got laid off and the economy was tough and I thought ‘Why have all my eggs in one basket? I want to diversify. I want to take the most historically-proven asset class – income property – but diversify geographically, because all real estate is local’. I tried to do this and I remember I was calling realtors in all these different cities that I thought were good places to invest and it was just a joke. The whole thing was really difficult. I thought ‘No-one is serving this market. If someone wants to build a nation-wide portfolio of properties, there’s just no easy way to do it. Why isn’t there a financial services firm for real estate investors? Where is the Merrill Lynch for real estate? Where is the Ameriprise for real estate?’ And there wasn’t one so I created it.
Basically what we do now, to answer your question, is we act as an education referral and, what I call, leverage network. This is what my company does, where we help people build portfolios of income property nationwide and our clients are 100% investors. If someone’s looking for a house, don’t come to us because that’s not what we do. We help people buy single-family homes and apartment buildings in markets that we like and select from providers that we like and select nationwide. Then I’m, of course, doing my own investing from my own account as well.
Kevin:
Okay, well gosh, it sounds like you’re a busy man – even busier than what I thought.
Jason:
I’m overly busy, probably.
Kevin:
So let’s talk a little bit about how you guys choose these markets. I think that’s a very interesting concept. What do you look for? What kind of drivers do you look for in particular markets to determine whether it’s a good market to invest in or a good market for your client to invest in?
Jason:
That’s a great question, of course. There are really three types of markets, of course, and you know this already. There’s a linear market, and that’s the sort of market that just chugs along in terms of price appreciation, and will typically, on average over the years, yield about 6% price appreciation. Then there are the cyclical markets, the markets that have the big, glorious highs and the really ugly lows. Those markets would be Miami, virtually the whole state of California, the North-Eastern markets that are expensive – New York, Connecticut, Massachusetts, Boston, things like that. We don’t like those types of markets at all because as I have gotten older, I have become more conservative and I like cash-flow. I just have never really met, Kevin, anybody who can reliably predict appreciation or depreciation for that matter. Invest for cash-flow. That’s the first criteria: we like cash-flow.
Of course, we’re constantly reading about and researching these markets. We used to have to do a lot of this research by reading and Internet surfing and looking at reports. There are reports from movers and U-Haul that show in-and-out migration trends, trends of inmigration – (people moving into an area), outmigration (people leaving). Areas like Detroit, we don’t like those at all because too many people are leaving – although I am seeing some signs of light there.
Kevin:
Yeah, I was going to say, isn’t life coming back to Detroit?
Jason:
Well, I remain skeptical.
Kevin:
Me too.
Jason:
I just think look: maybe if that were the last place to invest.. We don’t need to look there, we’ve got much better markets in places like Atlanta, in places like Memphis, Dallas, Houston, San Antonio, Indianapolis. Little Rock, Arkansas is very good. There are some really good places around the country that are very solid and very landlord-friendly. We like markets with low cost of living, good transportation, employment and job growth, a business-friendly regulatory climate, good education, decent weather, low crime, culture and arts, healthcare. A lot of those things that we all look at, right?
Kevin:
Sure. So both you and I live in markets where we’re starting to see somewhat of an internal bubble happening again. I know you and I talked about this the other week, but the markets that you invest with and your clients, they’re a little bit more stable, a little bit more of a consistent approach. What do you forecast for the future in the markets that you’re currently invested in? Do you see that appreciation’s going to cap out at some point in time or do you see that it’s going to stay consistent over the next couple of years? What do things look like?
Jason:
Well, predictions are always difficult and frankly, they really wouldn’t be that difficult if the government would get the heck out of the way.
Kevin:
Yeah.
Jason:
The government and their manipulation of markets through Central Banking policy and other government policy like tax policy and so forth, of course, really makes it hard. If it were just a matter of predicting economics, that’s not impossible to do. It’s not easy by any means, but it’s doable, right, to some extent. They always joke and say ‘The study of economics was created to make astronomy look respectable’.
Kevin:
I don’t know where you get these quotes from, but I love ’em!
Jason:
They’re good, I love them. Actually, I heard Harry Dent say that, so that’s where that one comes from, though he probably got it somewhere else too. It’s a good one.
Basically, that makes it hard to predict because I’ve been right on most of my predictions, but one I have been famously wrong on that I freely admit. No-one’s even asked me if I was wrong. It was about interest rates. Interest rates should not be this low.
Kevin:
I was going to say, you didn’t think they would stay as low as long as they have.
Jason:
No.
Kevin:
I know, it’s crazy.
Jason:
I thought they’d be much higher by now.
Kevin:
We’re printing away, we’re printing away.
Jason:
We just keep creating money out of thin air and we don’t have much inflation. We really did have some decent inflation until about a year or a year and a half ago, but inflation seems to have subsided quite a bit. I would have predicted that would be higher, too. One of the reasons I think it is as low as it is is because the money just isn’t hitting the streets. There’s a lot of money that’s been created and it is trickling down a bit to the street, but a lot of it is held by the banking sector. Until that money trickles out or credit trickles out in greater quantities, we’re not likely to see much inflation.
A lot of my strategy of investing is based around inflation and I think it ultimately has to come in a pretty significant way. You think there’s three sort of basic economic scenarios: inflation, deflation and stagnation. Of those three scenarios, in an inflationary environment that we’re probably ultimately going to have, income property is a home-run. It is a huge grand slam home-run compared to anything else.
In a deflationary environment, it’s okay. It’s definitely not as great as it would be in an inflationary environment, but there’s lot of good multi-dimensional aspects to income property that make it like the all-weather investment.
In a stagnation environment, it’s pretty decent. What happens in a deflationary environment is that everybody, Kevin, is just dying for yield. They can’t get yield on anything. They might get it temporarily in a little stock-market uptick or bubble that’s nonsensical, or whatever, but overall, in a deflationary environment, yield is the problem. With income property, the rents don’t adjust very quickly. They don’t really respond to inflationary or deflationary forces very quickly because in the housing market, you’re almost always set up on one-year leases and frankly, the tenants aren’t that savvy. The rental market is very imperfect and very fragmented. Unlike the multiple listing system when it comes to property values, when it comes to rents (especially on the housing and residential side) there’s no central repository of ‘this is what rent should be and this is what my neighbor’s paying down the street’; it’s very fragmented. They don’t really adjust very perfectly in alignment with any of these economic scenarios I mentioned.
Kevin:
Right. I heard an interesting interview earlier today about some of the commercial notes that were originated back in 2005 and 2008 that were about the onslaught of default and notes in the commercial sector in the form of $1.4 trillion. Have you heard anything about that? What are your thoughts on that? You’ve got these 10-year terms that are coming due – the majority of them are upside down, some of them may not be but the majority of them are upside down and they’re not going to be able to get in. A lot of these are held by smaller regional sized banks that are probably not going to be able to support that kind of failure.
Jason:
That’s a very good point. I don’t know the stats on commercial. I’ve been hearing that for several years – really since early 2008, I’ve been hearing about the commercial mortgage-backed securities market and how that’s in trouble. It’s not just the Subprime and the residential stuff. It may well be, and I’ll tell you something – the FDIC could become insolvent very quickly.
Kevin:
It’s scary.
Jason:
From what I’ve read and what I understand about it, compared to a normal insurance company, the FDIC is massively underfunded compared to the amount of assets it’s insuring. If you look at every bank account – they ensure up to $250,000 – one individual or one company can have accounts at many different banks. This could be a major concern, but ultimately, I think the government would just bail them out. They would just print more fake money, more fiat money out of thin air and just bail them out. That’s probably what they’re going to ultimately have to do for the state of California – or I should say the Socialist Republic of California, my home state. I don’t like there now, but I used to 3 years ago.
Kevin:
That’s hilarious. Well, I want to change direction a little bit, Jason, and I want to talk a little bit more about your properties in general and kind of how you oversee the acquisition and the management of these properties. You’ve build quite a portfolio for yourself and you’ve also built quite large portfolios for your clients as well. The market’s changing now. Obviously the markets you invest in, you do your research and you find markets where there are still opportunities to be had. How are you guys seeking out opportunities? What do you see? Are there still a lot of opportunities available for investors? I know you guys do single-family investments as well as apartment buildings. Tell me what you’re seeing out there and how you’re finding these opportunities.
Jason:
Well, it’s interesting that you say the market’s changing. When you say that do you mean the market is slowing down?
Kevin:
It’s slowing down – less distressed assets that are coming onto the market. Over the past couple of years, it just seemed like there was a slew of undervalued types of properties that could be had by investors. It was almost impossible to go wrong with some of the purchases.
Jason:
In other words, the deals are harder to come by, is that what you mean?
Kevin:
The deals are harder to come by, correct.
Jason:
Yeah, so there’s less of that distressed inventory coming onto the market. There’s a lot of debate about the real size of shadow inventory and the reality is very few people actually know. Only the insiders know, but it does seem like it’s drying up.
Just anecdotally, if you just look around a lot of these neighborhoods around the country, you can see that there aren’t a lot of houses with 3-foot grass anymore. The inventory’s definitely been gobbled up a lot by investors and a lot even by the institutional side. I still think the linear markets are pretty solid. Unless there’s just a massive economic catastrophe like the Great Recession that we just went through – arguably, maybe we’re still in it; I think the cyclical markets – if you look at most of California or just any high-priced market where land values are high, I think those markets are in danger of another adjustment. I think the linear markets are pretty low-risk, actually. The fact that that distressed inventory is drying up is a sign of healing. That’s a sign that the market is healed to a large extent.
Think about the demographics we’ve got right now. We’ve got Generation Y. Generation Y are the millennials, those who are generally in their 20s, give or take. That is the largest demographic cohort in US history. It’s larger than the baby boomers by about 4 million people. Baby boomers, most would agree, are about 76 million. Generation Y are the millennials and they’re at about 80 million. That’s a huge demographic cohort, and they are saddled with massive student loan debt which I think is disgusting and ridiculous, but that’s another discussion – not that I have an opinion on it or anything! I think it’s a conspiracy, actually, in a way. They are saddled with massive student loan debt, they’re putting off marriage – for the first time in US history, it is actually more popular to be single than it is to be married. I actually feel cool now for once in my life! I’m actually with the trend for once in my life! All these online dating services are probably making fortunes now, I assume.
Kevin:
Sure.
Jason:
They’re saddled with big student loan debt, they’re putting off family formation and they’re facing a rather anemic job market, to say the least. They’re going to be renting for a while, and to add to those 3 factors that I just mentioned, they also kind of came of age in the great recession when they saw their parents struggling with the homes they own and they saw lots of foreclosures.
Kevin:
I never thought of it that way, that’s interesting.
Jason:
Their mindset is different, they’re not really into that whole American Dream BS of ‘Let’s own a house with a white picket fence’ kind of thing. It’s an okay idea to them, I suppose, but I don’t think it’s as huge a driver as it was with Gen X and the baby boomers.
Kevin:
That’s a really good point. They want to follow the world of the AirBnBs and the Couch Surfing model and fooling around.
Jason:
That’s a very good point and to add to that AirBnB/Couch Surfing comment which is interesting, if you look at it, and it was really interesting – I think it was Time Magazine about 4 years ago, I’m sure you saw this article, it was a cover story about how the idea of home ownership was really just a dying idea because they did a study that showed that in neighborhoods with high home ownership rates, contrary to popular belief about it being good for the community and the concept of the ownership society and so forth, really what they noticed was that unemployment was higher in these communities and it was bad for the economy. Personally, I think the home ownership rate should be about 50%. I’m in real estate. Most people would think I’d be about George Bush and the Ownership Society, saying ‘Let’s get the home ownership rate up to 69-70%’.
No. There are some people that just shouldn’t own. If you think about it, if you’re a Gen Y person, or any person for that matter, but especially Generation Y who’s young and mobile, the best thing you can have on a resume is mobility; to be able to go to where the jobs are. That’s what makes you lean and agile and nimble – you can take a job in Dallas if that’s the place, and move out of Orlando or LA or wherever you live. Why be saddled with home ownership? It’s kind of a pain.
Kevin:
Absolutely. It breeds responsibility and at this point in time, it allows people to forget about that responsibility portion – they can travel, they can take jobs in different parts of the country. Now with technology how it is, it doesn’t matter where you live. There are so many tele-commuting job opportunities out there that you can live anywhere in the world. Why not take advantage of it and not be saddled down with that mortgage and monthly payment and responsibility of keeping up with maintenance and mowing the lawn and painting that white picket fence every 10 years like you mentioned.
Jason:
I tell you, I left the Socialist Republic of California three years ago, and I’m glad I did, by the way. I moved to Arizona and I’ve been a renter for only the second time in my life – I was a renter for a short period. I always really owned in my adult life. When I was building a home in Newport Coast, California, I rented for a while while that house was being built, but otherwise I’ve pretty much always been a home-owner. I’ve got to tell you, I love being a renter. I own lots of rental properties.
Kevin:
Isn’t that ironic?
Jason:
It is kind of ironic, but when a lightbulb burns out, literally they come and change it for me. I live in an apartment complex so that’s what they do here, but it’s really nice. It’s really social, it’s really fun, it’s really easy. If I want to move, I just move.
I’ll give you an example: selling my house in California before I moved here, I had to deal with having it listed twice with realtors and the market was slow and I had to have people coming through, looking at the house and invading my privacy. It was annoying, it was a hassle. The amount of time you spend at Home Depot or working on your house, I don’t know, that’s just not for me. Frankly, I like renting. If you rent high-end property, it is an awesome deal. I’ll be glad to share a story about that, if you like, I don’t know if you want me to.
Kevin:
Go for it, I love your stories.
Jason:
Okay. When I moved to Arizona, the first place I rented was a 3,000 square foot penthouse in the tallest all-residential building in the state of Arizona at the time and it had 700 square feet of deck space in addition to the 3,000 square feet inside, 10-foot ceilings, brand new. I would guess, although I don’t know for sure, that property at the time was worth about $1.5 million. One of the rules that I try to impart to my clients and investors who want to build their real estate portfolios is – you’ve got to get somewhere in the neighborhood of 1% per month. If you invest $1.5 million and you buy 15 $100,000 single-family homes from us, I hope you’re going to get $15,000 a month for that.
If I bought a place like that for $1.5 million, which I could certainly afford, that would be no problem, I would be giving up the right, or the opportunity, I should say – I have the opportunity cost of not earning $15,000 a month from other rental properties I’d own.
Kevin:
Right.
Jason:
But instead, I just rented that place for $3400 per month.
Kevin:
A beautiful thing.
Jason:
I didn’t have any Homeowners’ Association fees, I didn’t pay any property taxes, nothing. Renting a high-end property is like robbing a bank. It’s an awesome deal. I was looking at this other really high-end property that was on one of these – well, I don’t really watch TV but it was on one of these million dollar listing type shows, I don’t know what they’re called nowadays, but it was on one of those – one of these glorious home shows that people watch on TV. It was in Scottsdale, and I seriously considered this house. It was for sale and I believe it was for sale for like $12 million. It was also available for rent for $20,000 a month, and I’m thinking ‘That is a steal’.
Kevin:
Absolutely.
Jason:
If I’m going to invest $12 million in something, I want to get $120,000 a month – 1%. If I can rent that for $20,000, I’m paying like one sixth of the price. I didn’t do it because it was too big and I’d probably feel weird in that big house with just my dog.
Kevin:
Yeah, what do you do with that much space when you’re a single guy with a dog?
Jason:
In the Middle East, you have a harem, but this isn’t the Middle East.
Kevin:
Right. Jesus.
Jason:
That’s what the Sultan of Brunei would do!
Kevin:
Oh my gosh, I can’t imagine. I actually don’t understand properties that large. At what point in time is it really viable?
Jason:
It’s ridiculous. I’ll give you an example. My mother leaves Los Angeles, and I mean talk about culture shock – she moves out of West Los Angeles where we lived when I was a kid in one of our places there and she moves to, of all places, Gulf Shores, Alabama. She decided at her age, I don’t know why she wanted to go through this huge headache, but she wanted to build her Southern mansion that she’d always dreamed of since she was a poor little girl growing up on a farm in upstate New York and saw the movie Gone With The Wind. She calls it Terra. She has a 9600 square foot mansion, and she made all her money in real estate by the way, just like I did! She lives there solo.
Kevin:
Jesus. Hey, to each their own.
Jason:
Yeah, it’s not for me but more power to her. She got her dream so good for her.
Kevin:
Right, right, exactly. Well, Jason, I need to ask you a question. This is going to be regarding your investing career and your experience. Like I say, you’ve built this huge portfolio, you’ve trained a lot of people to do the same thing. If you could go back in time, I want you to jump into your DeLorean that you’ve got parked outside of your penthouse right now and I want you to drive back in time and go back to your first year of when you got into real estate – whether you want to look at it as the first year you got into it as a broker or the first year that you actually started buying investment property. Knowing what you know now, what would you tell yourself if you could go back in time?
Jason:
Ooh, that’s a tough question. A few thing. Number 1: Buy more properties. I certainly wish I had purchased more properties.
Kevin:
Residential properties?
Jason:
Yeah, residential properties. I like housing. I don’t like offices or retail, and I know a lot of people that do that stuff and I just don’t like it. Housing is the one thing they can’t outsource, Kevin. You can’t open up a call center overseas for housing. Housing cannot be outsourced; it’s not like manufacturing, it’s not like office space and office workers, and it’s not like even retail that can be outsourced to the Internet. Every time you buy something on Amazon, retail’s being outsourced to the Internet. I like housing, whether it be single-family homes, my number one favorite; apartment buildings, my number two; or things like mobile home parks, which I think are awesome too, and I know you’re in that. I think that’s good – much better than office, retail, industrial. I just think housing is the thing to do.
What I would tell myself is buy more properties, buy only properties that make sense and make sense means from an income and cash-flow perspective. You’ve got to get somewhere in the neighborhood, give or take, 1% of the value per month.
Kevin:
Okay.
Jason:
Don’t buy for appreciation and speculation because you’re just bound to get burned.
Number 2: You know, I sometimes ask myself ‘Where did all the money go?’ Don’t spend money on ridiculously overpriced cars that depreciate. I certainly believe in having some nice things and having nice clothing and going on nice trips and having a decent car, but just don’t overdo it. These guys that go out and buy Ferraris and all that kind of stuff. Some Ferraris I know you can make money on and they appreciate because they’re so rare and exotic, but I just think that’s just things that complicate your life. I used to own a big yacht and a big motor home and I bought a couple of airplanes and all of that stuff is just better to rent than buy.
Kevin:
That’s absolutely true. It makes your life easier. You can rent that stuff for so much cheaper.
Jason:
It’s such a hassle. It demands so much of your time, you have to pay attention to it, which is a giant obligation. One of my very wealthy friends, who’s a big real estate guy who used to build these gorgeous high-end homes in Emerald Bay, California – I remember asking him, I said to him one day, “Hey Bill, do you have a boat?” I was thinking he’d probably say yes. He said, “No, I’ve always believed it’s better to have a friend with a boat.”
Kevin:
Absolutely. So true.
Jason:
He’s right.
Kevin:
That’s it. It’s funny you mention that. I’ve always known boats and when we got married we were making transitions, we were moving different places. We said let’s just sell the boat, and we have a lot of friends that have boats and it’s like we were talking about last week, I said the one thing I have not thought of is buying another boat. Why should we? We get to go out with our friends whenever we want and we don’t have the maintenance, we don’t have the headaches of it. It’s an issue. It’s a pain in the ass to take care of and they’re just a waste of money, they really are.
Jason:
It really is. Look, if you have a place in Florida and it’s on the water and you’ve got a boat slip and you’re retired and you’re going to use it everyday, then it has utility. It’s going to pay for itself. I found it hard to really get enough friends together who even wanted to use the boat twice a month. I had this 48-foot yacht sitting there and it’s just depreciating and breaking all the time. Everything’s always breaking.
Kevin:
And you’ve got to beg people to come and have fun on it, right?
Jason:
I know, it’s silly. At first it was a novelty and everyone wanted a go, but after a while it was like no big deal.
Kevin:
Well, Jason, one last thing before we get off the air together, I want to put you on the spot real quick and this is what we call the gold nugget section. This is something we obviously didn’t talk about, so I hope you’re ready for it.
Jason:
I’m not ready but..
Kevin:
You’re always ready, come on.
Jason:
Throw it at me.
Kevin:
What I want you to do is I want you to leave our audience with one piece of wisdom that may inspire and help them on their paths to success in a real estate investment career. This could be a principle that you live by, this could be a motivational quote, it could be anything – some kind of actionable item. Just something, one piece of wisdom that you can leave them with that will better their lives.
Jason:
Well, gosh. A lot of stuff can be summed up in a great quote, and there are many great quotes out there. There are many that I just absolutely love, but one of them goes something like this, and I can’t remember even who said it. It goes to the importance of taking action and doing what I call cultivating rational recklessness. I just noticed over the years that the people who just do more things just somehow succeed. If anybody listening has seen that movie Yes Man with Jim Carey, there’s a really good lesson there. Just do more things. There’s a certain wisdom in action alone. Even if everything isn’t figured out – everything will never be perfectly figured out, so just do more stuff. That’s one big piece of advice. To that end, two great quotes.
Successful people make decisions quickly as soon as all the facts are available, and change them very slowly, if ever. Unsuccessful people, on the other hand, make decisions very slowly and change them often.
Kevin:
I love it.
Jason:
I think that really, really speaks to the difference. The other quote is just a very simple zen saying – really keep this in mind because a lot of people in life, and we may think this ourselves, think we know things and other people think they know things. This zen saying I think speaks to that very well and it goes like this. It says: To know and not to do is to not yet know.
Kevin:
Hmm.
Jason:
To know and not to do is to not yet know.
Kevin:
Very powerful.
Jason:
Those are good.
Kevin:
I love it. You’re whole head’s full of quotes, I love it. I don’t know how you retain all these. Do you have a book in front of you right now that you’re reading from?
Jason:
No, I do not have a book, those are just in my head, but I did have coffee before this interview. Can you tell?
Kevin:
Gotcha, gotcha. I thought you were always this amped up – so it’s coffee? Okay.
Jason:
It’s coffee. Coffee’s my magic trick.
Kevin:
Is it bullet-proof coffee? Have you heard of that?
Jason:
Yes, of course. Dave Asprey’s got a huge podcast and I just finished his book. Gosh, he must be so happy we’re talking about him right now! This is like an ad for him. No, I’m a bachelor so I just bought this coffee on Amazon that I’ve been drinking for a while now. It’s called Instant Edge and it has the MCT oil, the Medium Chain Triglycerides, I think that stands for, in the coffee.
Kevin:
Right.
Jason:
It’s great because you can just go get your coffee mug out, put a spoon of it in there and I’ve got the water cooler that’s got the hot button in it. I just put hot water in it and stir it up and it’s great.
Kevin:
Oh wow, okay.
Jason:
You can tell I’m not exactly a coffee connoisseur, but I do notice the difference when I have really good coffee.
Kevin:
I tell you, I’m actually not a coffee drinker that much. I’ll drink it but it doesn’t really give me that edge like it does to a lot of people. I can tell you that I read an article about bullet-proof coffee on his website. I ran across it in his blog by accident a few months back and I actually tried it. I thought ‘Let’s give it a shot, through a big slice of butter in my coffee’, and I actually had some MCT oil. I put it in smoothies, actually. I tried it and it was actually very good.
It gave like this subtle smoothness.
Jason:
Some people hate it though. Some people really do not like that taste. To be fair, Asprey’s bullet-proof coffee – some people debunk it and say the claims aren’t true. I don’t really know.
Kevin:
Yeah, me either. Either way, Jason it’s been a pleasure speaking with you, man. Thanks for coming on the show, it’s been a lot of fun – you’ve shared a lot of great knowledge and insight with our listeners. How can our listeners that want to get a hold of you get in touch? How can they find out more about your work? Can they reach you at your website?
Jason:
Sure. It’s just my name www.JasonHartman.com. There’s a lot of great info there. Of course, my podcast is on iTunes, Stitcher Radio, SoundCloud. Just type ‘Jason Hartman’ and you’ll find it, along with my other shows as well. I’ve got shows on travel and a bunch of different topics that I just find interesting and have shows on.
Kevin:
And they’re fantastic, by the way.
Jason:
Oh, thank you.
Kevin:
I listen on a regular basis. I started listening just a couple of weeks ago; I didn’t know you had all these different shows and I started listening to Holistic Survival and Speaking of Wealth. Man, I’ve been extremely impressed and that’s why I ask – how do you even have time to be doing this interview right now? You put all these podcasts together; you’re just a busy man. I don’t think you sleep at all!
Jason:
Well, I do sleep. Actually, according to my sleep cycle app, I sleep an average of 6 hours and 33 minutes per night so there you go.
Kevin:
Okay, that’s good. There we go, that’s about what I sleep so that’s good. Well, Jason, it’s been a pleasure. Thanks again, bud and I look forward to keeping up with you and bringing you back on the show as a future guest. You take care and thanks for joining us.
Jason:
Thank you, Kevin, and happy investing to you and your listeners.
Kevin:
Take care.
Outro A:
You know, sometimes I think of Jason Hartman as a walking encyclopaedia on the subject of creating wealth.
Outro B:
Well you’re probably not far off from the truth, Penny, because Jason actually has a three-book set on creating wealth that comes with 60 digital download audios.
Outro A:
Yes, Jason has that unique ability to make you understand investing the way it should be. It’s a world where anything less than 26% annual return is disappointing.
Outro B:
I love how he actually shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.
Outro A:
We can pick local markets untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns safely and securely.
Outro B:
I also like how he teaches you to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.
Outro A:
And the entire set of advanced strategies for wealth creation is being offered at a savings of $94.
Outro B:
That’s right, and to get your Creating Wealth Encyclopaedia series, complete with over 60 hours of audio and three books, just go to www.JasonHartman.com/store.
Outro A:
If you want to be able to sit back and collect cheques every month, just like a banker, Jason’s Creating Wealth Encyclopaedia series is for you.
Outro:
This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com or email media@hartmanmedia.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own, and the host is acting on behalf of Platinum Properties Investor Network Inc. exclusively.