Jason answers a few listener questions. Naturally, his response to some is to simply buy properties now. He discusses why getting started is the most challenging aspect for real estate investors and gives reason to break through the challenge. He talks about the 14 million individual investor-owned single family homes. In the second half of the show, he talks about protecting your real estate assets.
This show is produced by the Hartman media company. For more information and links to all our great podcasts visit Hartman media.com. Welcome to this week’s edition of flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present, and propel you into the future. Enjoy.
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 This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:15
Welcome to the creating wealth show, Episode Number 616 616, the first show of the New Year. Thank you so much for joining us listeners from 164 countries worldwide. I’m your host, Jason Hartman. And I so appreciate you being here with us. For Gosh, what are we into now? This is 2016. This is about 10 years now we’ve been doing this. So it is a long, long time. And I know many of you listeners have been with us from the very, very beginning and we really appreciate that we appreciate you telling your friends, family, coworkers, enemies, cats, dogs, everything about the show. My dog listens to the show religiously, not by choice but because She’s just usually sitting here in the room as I’m recording, talking to you. So anyway, we are glad to have you here and wishing you all a very, very happy new year. We want to make the new year a great new year for you. So we’re going to start off with a little bit of q&a today questions and answers. Oliver who is with us, Oliver, say hello, how are you?
Hey, everyone. Glad to be on the show. Thank you for having me. Jason. Yeah.
Jason Hartman 2:23
And this is your first time. So who is Oliver? Okay, so Oliver is one of our investment counselors. And he started working with us. Well, he originally was a client several years ago, and his wife was also a client. Now were you both clients before you were married Oliver this I do not know.
Yes, we were both clients. I actually funny enough that you mentioned this, because I actually somewhat sold her her property before even becoming an investment counselor with you.
Jason Hartman 2:52
Well see, that’s why you should have been working with them because then you would have made some money off yeah. Good. So why don’t you share with the listeners a little bit of your background? I mean, you’ve appeared at several of our events and introduced yourself there. But you know, the broader audience probably doesn’t know who you are. So I finally got you on the show. Sometimes people I have to tell you listeners, sometimes I have to twist the arms of our people to get them on the show. There’s still a couple that have not been on the air yet. And Carrie, I’m kind of talking to you. So we look forward to having you on the show soon to over share a little bit of your interesting background. It’s sort of all involves real estate in one way or another.
Yeah, definitely does in in one way or another. My background is I essentially started out in geology, if you can imagine that. So I started out in geology, I went to school in Canada, and I worked for mining exploration programs all over the country, sort of all over the world too. So that’s sort of entailed going out into the middle of nowhere and finding precious commodities. like gold, copper, silver. And alongside of that, I also spent a lot of time traveling around the world and climbing volcanoes. So that essentially sort of sums it up. And Funny enough, Jason while I was up in these camps in the middle of nowhere, looking for some of this gold and these potential new deposits. I used to listen to your podcast, and this was about eight years ago now.
Jason Hartman 4:21
Well, that is amazing. You know if any of you listeners have ever climbed a volcano while listening to my podcast, please let me know. And I am going to give you some kind of prize I don’t know maybe a mini volcano or something. But that’s amazing. So you were wearing some kind of hazmat suit or protective heat suit or something climbing a volcano and what do you have your earbuds in listening to me?
Well, Funny enough, you actually don’t even need a hazmat suit to be climbing volcanoes. The most important thing is the Air and Air Quality. So I’d have these big massive essentially covered your entire face. Make sure you’re breathing in some good health. oxygen and you’re not breathing in all those sulfur fumes that are coming up and could probably kill you if you just spent a few minutes actually breathing them in. So, essentially be climbing, you know, and when you’re on the flanks of these volcanoes, the gases aren’t nearly as bad. So I’d be listening to you know, to your show, having the earbuds in there but once you start getting up there, you have to be a little more careful and I would definitely take them out because otherwise I mean, you don’t know if there’s sometimes a some sort of rocks rock avalanche or some sort of flows coming down. You just got to be on high alert.
Jason Hartman 5:32
So So in other words, I would be a distraction then is that what you’re saying?
Maybe a bit and also listening to some of the great deals that were out there. were definitely a little distracting.
Jason Hartman 5:42
What were you looking for in a volcano? I mean, there was gold and silver or what what were you looking for in a volcano oil is not
oil right. Now it definitely not oil. What I was doing around the volcanoes was the volcano thing was a little more research oriented and research geared More or less when I was looking, although volcanoes are indicative of, of some gold deposits and other types of copper and sulphide deposits around the world, but they leave little clues here and there. And suddenly, things may be incredibly ancient. I don’t wanna go into too much of the the science here. But a lot of what I actually did for searching for these commodities was mainly the drilling programs. So it’s more of the drilling compared to the research and the research was more volcano oriented, and the drilling was more for the precious metals. And that was more or less like out in the bush in the great Canadian north, where you’d be, you know, in temperatures of minus 40 degrees Fahrenheit, scheduling all over the place, traveling around in helicopters doing that type of thing.
Jason Hartman 6:47
That’s amazing. So and you I mean, you were out in the middle of nowhere for long periods of time, are you?
Yeah, definitely. Sometimes I’d be out there for in on the low end, maybe For 30 to 45 days, but then on the higher end, sometimes be out there for maybe 90 to 120 days straight. And I mean, this is, you know, this is not like you’re, you’re driving to work and you’re driving back. I mean, you’re literally there every single day because I was managing all these programs I’m on call 24 hours a day. So if there’s something that happens something crazy, I mean, if a bear runs in a camp, or if a drill breaks down, or any one of those things, you know, I was the guy that they came and spoke to, and I got alert and had to alert everybody.
Jason Hartman 7:29
Why real estate for you? I’m just curious, you know, when you became a client, and I never asked you this question years ago, but what attracted you to real estate investing?
What the main thing was the the cash flow, but I think more than that, the precursor to that is, when I did a lot of this work for these companies. I was always a contractor. I meant that, you know, I go out and work two, three months, four months in a row, and then I take off for maybe two weeks or four weeks and I go traveling and just Just relax. And during that time I never got paid. Because I was always a contractor. And for, you know, the other entrepreneurs out there, you know what I’m talking about. There’s no you know, paid leave, there’s no vacation days, there’s none of that. And I didn’t really like that. So I spent a while thereafter researching, what are the best ways that I can still create income while being on vacation? Mm hmm. And then real estate came up to be the number one thing. And then I started listening to your show and one thing snowballed into another. Yeah, fantastic.
Jason Hartman 8:28
Well, it definitely is. I mean, income property, like I always say, is the most historically proven asset class in the world. It is the most secure, reliable path to financial freedom that is available out there. And the second best one is your own business, you know, and if you don’t have your, I mean, you kind of do have your own business really, because you know, you’re, you’re all independent contractors. You can leverage your time and with real estate, you can leverage your money. That’s just a fantastic thing about it. No matter what, you’ve got to find ways to gain leverage. I always like to quote, Archimedes, the ancient physicist who said, Give me a lever long enough and a prop strong enough, and I will move the entire world. You know, so just just, you know, that point about leverage, and that’s what income property offers so much. Well, Oliver, take it wherever you want. But I know we’ve got a list of questions to cover. But was there something else that you want to mention about income property or anything? Just jump in with questions? Yeah, sure.
One of the things that I’ve definitely noticed, is just how a lot of people don’t really know about I mean, income property, and I still find that somewhat baffling. And that’s sometimes but you know, I tell my friends, I tell other people, I mean, and sometimes they think that it’s definitely too good to be true. And then you know, I just tell them that it really does exist is really can happen. And then I mentioned some of the pros of it and eventually they you know, they come on board but you know sometimes you You’ve got your skeptics out there just like you will anything else. But, you know, just to let people know that, you know, this really can happen. And it really kind of happened for you. And you could start out as a listener just like I did. And then eventually, you know, build up a portfolio and build up your properties and learn along the way, start coming to events, and start learning and start meeting new people.
Jason Hartman 10:19
Yeah, fantastic, fantastic advice. And you know, the reason people don’t know about it and you know, I know everybody listening knows about income property, but it’s even though it may seem to us like Oh, the whole world knows about it. Not really, because, you know, it doesn’t have this giant organization like FINRA, or you know, all of these advertising pools that advertise Wall Street investments. It doesn’t have a channel like CNBC or Bloomberg, or Fox Business, or all of the news media with even a section if not their own channel with a section they’re always talking about the stock market. Yep. The stock market. It only works for the insiders. It doesn’t work for the the regular investor, it doesn’t work for the outsiders. And so if you want to become an insider Become an insider in your own real estate Empire, you know, that’s what I say. That’s what you’ve got to do. So yeah, it’s, we’re trying to help people catch on and understand it. It’s it’s definitely grown, compared to Wall Street and so forth. It’s still a very small number of people participate in it, very small number of people do it with that software company that we recently acquired. You know, we view the market size in the United States, of course, it’s much larger around the world, but I don’t have stats on that, but just in the United States of 14 million investor owned single family homes, and then when you go to plexes you know, duplexes, triplexes for plexus, and then multi units and other types of investment property, obviously, you know, millions more right, but just single family homes, 14 million individuals owned, you know, individual investors owning single family homes in the United States. So that is amazing. And you look around the world, that’s a huge number. So it is a, it is a big but very fragmented. I don’t even know if I can call it an industry. It’s not really an industry. It’s just like a little cottage industry. So so you know, we’re trying to change that here and bring it into the mainstream. Let’s go over some of these questions that you’ve been getting a lot from clients. And I know some will be review, some will be new. But let’s kind of dive into that all over.
Yeah, sure. So just want to comment on that last one. I think that’s great advice, Jason. become your own Insider. That is fantastic.
Jason Hartman 12:38
If you’re if you’re envious, you know if you’re envious of anything in life, the way to stop being envious about it is to just be one yourself. You know, the best revenge is living well, if you’re envious, that you know, your friend always gets the girl well then learn how to be the guy that gets the girl right. And, boy, you know, we could tell some stories about that all over again. By the way, because you thought your wife and I’m sure she’s gonna listen to this. So Suzanne, listen, but you got her to come a long distance to meet you on like a first date, didn’t you? That was amazing to me. Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday.
Jason Hartman 13:29
story now that I am on.
Yeah, that’s definitely a bit more of a personal story. But yeah, you are right. I mean, my wife and I have quite the story we met in, in Thailand. We met in Bangkok. She was there volunteering for this elephant reserve. And I was there just traveling around backpacking around enjoying myself. And she was from San Diego, California at the time, I was living in Toronto, Canada. And and yeah, that’s the thing was so we met there. We kept in touch and then a few weeks after our first rendezvous At, by the way, one of the swingers hotels in Thailand, it was this was up on the 82nd floor, this the tallest opener bar in the world overlooking the lights of Bangkok. It was amazing. And then two weeks later, we met in Niagara Falls, and had our first official date there overlay some balls. That’s amazing. Wow,
Jason Hartman 14:17
what time of year was it? Was it freezing up there at Niagara Falls or not?
You know, it wasn’t freezing yet. It was the start of December. That’d be pretty cool. So I guess compared to California standards, it was freezing.
Jason Hartman 14:31
Right? Right. Yeah. Very interesting. So you know, be your own Insider, okay. And as a direct investor, you get to be an insider in your investments, you know, be the guy that gets the girl like, you know, learn something from all of her. If you’re single, you know, hopefully not if you’re married, but be the insider, you know, instead of, instead of having all this mental energy devoted to being envious of somebody else, and we all have this, and so Just part of our programming as humans, certainly I’m sure there was a survival reason for that. But just do it yourself. And then you know, they say, sometimes they say there’s that old quote, you know, the best revenge is living well, the best revenge is living well. So, you know, if, if your neighbors got more than you and the grass is always greener, then make your own grass greener, get your own portfolio developed. And, you know, it doesn’t take much time, you know, in just a few to several short years. You will be amazed if you do this right, how well it can work. All right, what are some of those questions?
All right. One of the questions I get asked most often is, should I create an LLC for my real estate investment property or real estate income property? Or should I just keep it under my own name?
Jason Hartman 15:51
Oh, God, do I have to answer this question again? Really? Okay, our sound effect machine here. Okay. Here’s the deal, folks. Look, I am not an attorney. I’m not an accountant. So I can’t give legal advice. But I just see so many investors putting the cart before the horse, As the old saying goes with this. First of all, if you’re going to get traditional Fannie Mae, Freddie Mac type of financing, you’re not going to get it with an LLC. Okay, so that’s I know, another part of your question is, should I transfer my property to an LLC after I purchase it? Most of this stuff, investors are far too worried about risk, okay. They can insure around this risk very easily. Income property insurance is very good. We’re going to have a great speaker on that this weekend upcoming it meet the Masters that does nationwide real estate insurance where you can have a single point of contact. I’m really looking forward to this presentation this weekend. You know, it just blows my mind that everybody’s all you know, they’re worried about protecting assets. When they should be worried about building assets, okay, I say, I’ve said this before, but you know, like you spend the first part of your career, building assets and building a net worth and building a nest egg for yourself. And the second part of your career protecting it from, you know, lawyers and lust and all the things that destroy wealth, right. And, and so, people spend way too much time on this. They’ve been listening to way too many attorneys who are just salesman trying to sell you a bunch of stuff that usually they’re over selling, you’re usually you don’t need all these things. And it is complicated. The single family home up to four Plex market is not really designed. The lending community for that is not really designed for using entities with your investments. So you can certainly do that later. It could trigger a due on sale clause. It’s unlikely I think I have never heard of that actually happening. But I do have to say that technically could happen because it’s a transfer of the The title of the property, but if it’s a single member LLC, and you know, for all intents and purposes, you’re the owner of that LLC. And, you know, I think that would be pretty easy to probably fight that if the lender tried to do that. But look, don’t overcomplicate this stuff, buy some properties, build some assets, Phase One is the building stage. Phase Two is the protection stage. Okay, you can do that at any point along the way. Don’t get hung up on it. Okay. Of course, we do have Garrett Sutton, multiple best selling author of several of the rich dad books and other books speaking at meet the Masters this weekend, he can tell you all about that. I just think way too many people wait, and they get all freaked out and they want to agonize over this subject before actually buying some property, buy some properties and get started on your journey here. And if you’ve got a couple of properties now and you can afford more, get some more, then you can talk about protection strategies. Otherwise it all is like hypothetical before that. Right,
exactly. So, number one, just just go for, you know, go for it. And instead of being paralyzed with should I do this should I do that should protect myself all, you know, obviously protect yourself but should I get the LLC or not, I mean, these are things that I’ve seen with some clients just be in that mode for months on it and there’s a seat, I see the deals roll by over and over and over again. And they’re just, you know, not not moving forward on some of
Jason Hartman 19:25
this whole idea of you’re gonna get sued and lose your property because the tenant slips and falls, you know, in in the decades literally decades and the thousands and thousands of clients I’ve had over the years, I have never once heard of that happening to anybody. Okay. insurance for income property is good. You can insure around these risks. The risk just is not that big. It’s highly overplayed by the promoters of this stuff. Anyway, but you know, of course, I’ll say this, and then it’ll happen and someone will come back and say, Hartman, you massive jerk. No, I lost my whole fortune. Because you told me to just buy stuff and not protect it. I didn’t say that. I said insure it. Okay. have insurance of course be smart. Okay, go ahead. Next question. All right. Next question is what happens when there’s an eviction? What’s the turnaround time? Who takes care of dealing with all this? And how much does it cost? Oh, good question. First of all, this question is impossible to clearly answer. Because, like that funny relationship status on Facebook, it’s complicated. That one, so here’s the thing about that. First of all, if you’re self managing your property, and we teach people how to self manage, but most people don’t do it, most people have a property manager. your property manager will handle that for you. Many times they will do it in house many times they will outsource it to an eviction attorney who specializes in evictions and just runs them as a kind of an assembly line like a mill. Where that’s all they do. They just do evictions and There are many attorneys like that around the country. Now. What will it cost? And what’s the turnaround time? Well, this varies by jurisdiction. This is one of the reasons that we try to invest in landlord friendly markets, markets that are friendly to our cause as landlords if you invest in markets like California, or New York, or any of these more liberal places, these left wing places you will be perceived to be the big evil land Baron. Granted Of course, you probably only have three houses and you know, you’re just a struggling investor who is looking to build a big portfolio eventually over time and you’ve worked hard but you know that the the system in the in many of these left wing places looks at you as the big evil landlord, right? You know, why don’t you pay your tenants at least $15 an hour minimum wage, you should pay them to be your tenant right? joking here in plain Seattle of course. But this is the first thing is invest in landlord friendly areas. Okay. So the evictions will happen faster the turnaround time. It varies by jurisdiction, and it varies by what happens? Does the tenant contest the eviction? Do they not contest it, that will determine speed, okay. If you self manage, you can just hire an eviction attorney to handle all of this for you. The cost will typically be between 400 and $650. somewhere around there, you know, it varies by area and by which attorney service you use. Again, these are the things that happens somewhat rarely, in fact, it is other than my first property. That was a disaster when I was 20 years old. Okay. And that was, you know, my first property that little property that little one bedroom condo on Coventry lane, my first property ever, I did have to evict the tenant them, but it took me like, I don’t know, probably close to 20 or maybe even more than 20 years to get my second eviction. Okay. I mean, it took A long time. So this stuff again, is mostly overplayed. You know, not too many investors at a cocktail party or at the coffee shop will tell you, oh, yeah, I owned a bunch of rental properties and all my tenants were awesome. Nobody says that they only they we only notice as humans, we only notice the problems, and we talk about the problems. But every month when they pay, and everything’s fine, you never think oh, let’s go celebrate. We got the rent this month. You know, nobody talks about that. They just that’s expected. Right? You know, again, this is this is a rare problem. Okay. It’s a very small percentage of cases. Next question.
All right now, just as a follow up to the investing in landlord friendly states, yeah. What is the best market to invest in everyone wants to invest in the best, the best, the best, and not just that, but they also want to know, how do we identify these markets?
Jason Hartman 23:57
Yeah, okay. So first of all, that is an impossible question to answer. So that’s where I’m going to start with that one. The best is like asking, you know, a parent to pick their favorite kid. Now, they probably all have a favorite, but nobody’s going to tell you who their favorite is right? You know, whether it be Orlando, Houston, Memphis, Chicago, Little Rock, Atlanta, Birmingham, Indianapolis, or a host of other markets that we recommend you know, it, there isn’t really a best nothing is that clear that I could tell you there is a best. And it’s not just about the market. It’s about the team, the team we have. And I’ve many times Oliver said on the show, I’d rather have a B market with an A team than an a market with a B team. And what I mean by team is our local market specialists, our property managers in that market, because a good team can make up for a not so good market, but a great market rate. He makes up for a bad team. And this is one of the reasons that I am warning you. And I’ve heard so many horror stories. And I know the statement will sound self serving, but I’m going to say it anyway because I’m not being self serving. When I say this, do not do this yourself, you must gain leverage. And when you go through our referral network, we provide a lot of that leverage for you, because we have thousands of clients. And we are giving huge volumes of business to these local market specialists, these property managers, these providers in these markets. And you know, if you just have one or two or three properties, you know, you’re a pretty small client to them, and you don’t have much leverage. But if you have a problem with that local market specialist, just talk to our investment counselors. Talk to carrier Oliver, Sarah, you know, or Fernando or Or Terry or anybody, you know, working with us and tell them you’re having a problem. And when we call or we email them, and we say jump, they better say how high? That’s how we want the answer to be right? Because exactly, they’re getting a big volume of business. So you know, use our leverage, use our weight, throw our weight around, and I, you know, I just had this happen the other day, by the way, one of our clients, Kyle, who’s been a client with us for many, many years now, he purchased one of his properties that he purchased, I believe, yeah, that was in the Atlanta market. I can’t remember where else he’s purchased now, but he’s probably listening to the show. Hi, Kyle. He was having a problem with the property manager. They just, you know, had been okay, I think for quite a few years and then became kind of non responsive. And he copied me on the email to the manager and said, you know, hey, Tammy, why haven’t you responded to me and I reply at all to that email, and I copied a few other important key players. And I said, hey, can anybody help Kyle because Tammy is non responsive. And boom, right away, she gets her. She responds, okay. So, you know, that’s, that’s the kind of thing that you can really benefit and this is free. It’s the same price to you as the client. You don’t you don’t pay us anything for this. You know, the way we get paid, is we get a referral fee from the local market specialist. And the way that benefits them. You know, like remember with the Watergate scandal with Richard Nixon said, so famously, he said, You know, my wife Pat has a conservative wool coat, not not a fur coat, you know. So funny is, Richard Nixon was funny guy, and the one of the people that really knew what happened in the Watergate scandal. Deep Throat was his nickname. He said, Follow them. Money. So follow the money. How does it benefit our local market specialists to work with us? Well, it’s huge to them. Because number one, they don’t need to spend any money on marketing and advertising, they can redirect those dollars. And number two, they can increase the velocity of their machine. And this is giant for them. Because think about it, if you’re buying properties, fixing them up. And if you don’t turn those properties quickly, and you’re paying 12% interest to carry those properties plus the capital, you’ve got into fix up and downpayment on those properties. And you don’t sell them quickly and you don’t turn them over fast. You know, like a restaurant. The whole goal in a restaurant is you’ve got to turn the tables quickly. That’s why they have uncomfortable chairs and too much air conditioning so you won’t stay long, right? So you got to you got to turn those properties quickly. And we can increase the speed of their machine by giving them a wading pool of investors. So it’s a win win win deal all the way around. The clients win, because they get our experience our vetting our screening and our leverage. And, and so the investors are much better off the providers, the local market specialists, they when they’ve reduced their carrying costs, redirect marketing dollars or save on marketing dollars, increase the velocity of their machine, so it just everybody wins. It’s a great system and, and that’s why the business works. So
well. Yeah. And now that we’re speaking about some of our local markets specialist, this is, I guess, with the advent of their game, Zillow, and all these other websites out there, that’ll give you a lot of information on the property that you’re about to buy. Some of my investors you know, they’ll go on Zillow, they’ll look at the pictures and then they’ll also see what the purchase price was for the LMS.
Jason Hartman 29:54
Yes, and they will become envious exactly when they will want to become their own Insider.
Yes. Exactly and you know, sometimes they get upset to say, you know, how come the LMS purchased this, you know, at such a discounted rate and why am I purchasing it at market value? Right, you know and why. So I guess the overall explanation of the the acquisition costs from the LMS and then the overall And just
Jason Hartman 30:19
a reminder, LMS means local market specialist. Yeah,
go ahead. Exactly. And how that translates itself over to the eventual investor.
Jason Hartman 30:29
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday Okay, so look, in every every product you buy every service you buy out there in the world, anything we all do, there are always there’s always a supply chain. There are always middlemen in that in that thing, and everybody’s getting a little cut, you know, try buying a cup of coffee without a zillion middlemen being the The biggest middleman problem in anything is the damn government. Okay, that’s the one who needs to reduce its impact, right? So the local market specialist has a profit margin. They have a business to run. They are out there to make money. They are evil capitalist. Just like all of us. Okay, you know, I hope people understand my sarcasm. I just hope you do. But yeah, so they’re making a profit no question about it. If you are bothered by the fact that they are making a profit then you have every right to do it yourself and be your own insider look. You can go buy properties at foreclosure auctions you can go have people that patrol neighborhoods looking for the house with the grass that’s three feet high with a you know hermit in there who’s been hoarding things forever and you know this I got tell you, I think I told the story. This one house this guy had like he was hoarding like pornography. And you know, you had all these magazines forever. Probably Decades ago, and, and a friend of mine bought the property really cheap and I think, you know, it was just he was like this hoarder and you know, he got a really good deal on the property because you couldn’t put that property on the market and sell it with this in this kind of condition you know, it’s like a disease hoarding is a disease right? You know, there have been reality shows about this right? My my friends that started one 800 got junk, you know, they were on Oprah and talking about hoarding as a as a disease. If you’re bothered by the fact that the local market specialist is making a profit than Hey, by all means you have every right to do it yourself. Our clients just aren’t do it yourselfers that’s not our ideal client. There are many gurus out there who will teach you how to buy properties at foreclosure auctions, how to search neighborhoods for properties with overgrown weeds and, you know, hoarders and people that you know, are desperate to sell their home and you can go negotiate with them and you know, you’re gonna have to make this your full time job. I mean, that’s what are local market specialists that’s their full time job. So exactly
and as you mentioned, in terms of leverage, you know, that’s they’re leveraging their time you know, to go out and do their endeavors and you know, make the money that they do and in turn, you know, we use our time and our network to actually be able to actually find these deals for them and find all these markets that actually cash flow and that actually makes sense to invest in
Jason Hartman 33:18
right but I want to I want to I want to give a huge caveat here. Just because a property is presented on Jason hartman.com does not mean it’s necessarily the best deal you’re going to get. Okay? There are properties on our website that do not and will not sell, and we are happy as a clam with that. And you know, clams are very happy they’ve got a big smile perpetually. So but But seriously, you know, when you are looking at at our website in the property section of Jason hartman.com be picky pick and choose and Oliver that’s one of your roles and obviously you I don’t have to tell you that But all of our investment counselors will help you pick and choose, and some of the properties will not actually sell. And that gives feedback to our local market specialist that says, look, our clients are smart, they’re sophisticated people, they’re not going to overpay. You know, if you’ve got a property that isn’t a good deal, you’re not going to be selling it through our network. So take it elsewhere and let somebody else sell it for you. But you know, we’re not going to do it. Okay. That is just fine with us. It leads to another question that people have once in a while is, you know, can I negotiate? Okay, can I can I bargain with them? Yes, you can. Mostly they won’t bargain very much, if at all, they kind of do that, you know, new version of automobile sales, which is the no haggle pricing most of them, but you know, you can try Sure, I mean, go for it. It’s not going to be like a typical, you know, overpriced house. In the multiple listing service though. You know, these properties are cookie cutter type properties. They sell very quickly if they’re a good Deal. I mean, you know, the bad ones sometimes if you don’t sell at all, you’re welcome to, to negotiate. I will warn you that many times while you’re negotiating, someone’s gonna buy that property right out from under you. Okay. So that, you know, it’s it’s a marketplace, that’s all it is, is we offer a marketplace. If some of the products in our marketplace aren’t up to par, they should not sell. And I think that is absolutely wonderful. That’s exactly by design, how I want it to be.
All right. Well, that leads into I guess, another interesting question, which is multiplexes there. Obviously, they’re very attractive the majority of them anyways, because they’re usually higher in terms of cash flow, and the normal cash on cash return is usually a lot higher too. So is it better to invest in multiplexes or continue on and invest in single family houses?
Jason Hartman 35:52
Yeah, that is a question we get all the time. And I did an entire show on that. That people should really listen to and I don’t know what show number it is. But if you go to Jason Hartman calm use the search bar you can find it where I covered all the aspects. It was a pretty exhaustive list. I will say this though, when you’re considering single family homes versus apartments, remember apartments are far more complicated. Look, I own apartments. I own two complexes now. And I have owned, but three other ones that are I don’t own any longer. They can be well, no, actually I own more than that as a personal investor. Yeah, no more. More than that, actually. But now that I come to think about it, but apartments are complex things, they’re like running a business. There are a lot of complex issues with apartments. Those performers that you’re looking at from the promoters are usually pretty Pollyanna, like you’re looking through rose colored glasses, so be careful. You must be much more educated as an apartment investor. than as a single family home investor, there’s a lot more education required a lot more complexity, the returns are not as good as they look, a lot of times I will say that but you know, for a whole exhaustive explanation, just go to Jason Hartman calm and just type in the search bar, you know, single family homes versus apartments or something like that. You’ll find that episode, and I discuss it for about a half hour in depth. Okay. I will definitely say though, single family homes are the most historically proven asset class in the world as an investment as an income property investment. I just love them. They just work.
Yeah, they definitely do.
Jason Hartman 37:40
All right, so no, there’s actually I’ve got a couple more for you, Jason. We got to wrap it up. All right. So quickly here. Should I buy a home warranty? Yes. Next. All right. And why is it cash?
Jason Hartman 37:52
Short answer I’ve ever given bad Okay,
really fast. But so you actually think they should buy a home warranty?
Jason Hartman 37:59
Yeah, I do. Okay, I think it says it’s a it’s a fairly cheap form of insurance in order to cost you what, three 400 bucks. I think it’s, I think it’s pretty simple see if we can get the seller to buy it for you actually. But, you know, okay, the maybe the local market specialists will include that, okay, as a, an extra thing, sometimes they warranty and they do their own warranty. And, you know, so if they’re doing that, and you feel good that they’re going to fix stuff, and they most likely will make sure you have a home inspection. That is for sure. So you know, what you’re getting into, and the warranty, you either get it from the seller in writing, of course, or, you know, have them buy it from a third party company or you buy it from a third party company. Okay.
And from the third party company, should it usually be about half a percent or a percent for the from the purchase price, or what do you usually see?
Jason Hartman 38:50
No, it’ll be it should be about $400 or so.
Okay, so just
Jason Hartman 38:54
the reason I can’t answer that question is because it depends what it covers, you know, like, there are like any insurance policy, you can add things on to it. And so, you know, you can become very over insured, if you wish. And if you’re the kind of person who’s really risk averse, you know, remember, it goes into the purchase price. So you’re really financing it over 30 years. It’s, it’s like you’re not even gonna notice it. I would just get it.
Okay. All right. And my last question here is why is the cash on cash return less? on higher priced properties? For example, the A properties versus a B property? Oh, yeah,
Jason Hartman 39:30
good question. And pretty obvious answer. I think probably everybody listening already knows the answer to this. But of course, as the property price gets higher, the rent to value ratio or the income to value ratio, you could call it that to, it gets gets worse. And so that will diminish your cash on cash return. So, higher priced properties up to a point you know, in in our world, a higher price property is like $150,000 Okay. pits still pretty cheap. If you’re anywhere in California, South Florida or you know, the Northeast, right? In that world $150,000 property is not going to have as good a cash on cash return as a 60 or $70,000 property right. Ideally, that more expensive property will have a better tenant quality and be less hassle and ideally have less maintenance too. Okay. So, so there there are some of the considerations, and we’ve talked about those before ad nauseum on the show, too. Okay, Oliver, thank you for asking some of these questions. I hope they were helpful and we’re going to do some goal setting stuff as we roll into the new year here and help you set some of your real estate investing goals on future episodes and we just got a great year coming up so I’m so excited to have so much momentum going into the new year. Really just a lot of great stuff coming up certainly at the meet the Masters this weekend. It’s gonna be awesome as you probably No listeners, we were able to get a much larger ballroom. So we’ve got lots of space for this event, which is really a nice luxury. So if you want to come go to Jason hartman.com, click on events and get yourself a ticket. Also, several episodes ago, I talked about my asset matrix presentation slides, and I did not have a link so that you could get those slides. I do have that now. So write this down if you can, do not crash. If you have a self driving Tesla like I do, then you maybe can safely do this, but I you didn’t hear that from me. So it’s, it’s easy, you can probably just remember this Jason Hartman, calm slash matrix, Ma Te ri x, Jason hartman.com slash matrix, and you can just put in your name and get those slides emailed to you. And I think you’ll really enjoy them and they they’re a great visual aids. I think there are about five or six slides there that show what I was talking about. So you can see them visually, and it’ll really, really help you. Okay, Oliver. We got to run. I guess the last thing is Dubai. Yeah. And you’ve been helping planning that trip. Thank you for all your hard work on that. It’s gonna be an amazing trip. It is going to be totally amazing. That’s in February. It’s Presidents Day weekend. Dubai, the jewel of the Middle East, one of the jewels of the world now question. Come join us for that. Go to venture Alliance. mastermind.com. We got a new By the way, we got a new venture Alliance member, I want to welcome Patrick aboard who joined the venture Alliance hat is a great guy and he’s going to be a great addition to the team. We’re just going to have an awesome time in Dubai. So venture Alliance mastermind comm for more info on that, Oliver, thanks for joining us.
Thanks. It’s been a pleasure.
Jason Hartman 42:54
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes, be sure to check out This shows 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. Welcome to meet the masters of income property investing. I’m your host Jason Hartman.
Join us in beautiful La Jolla, California on January 12 through 15th This is your chance to meet the masters of income property investing. Learn from an amazing collection of experts all in One room, you’ll meet a ton of local market specialists, mortgage lenders, tax professionals and investment specialists such as Jeff wires of Myers research, and john Byrne’s real estate consultant. Learn from Robert Kiyosaki Rich Dad advisors Ken McElroy, his real estate investment expert, and Garrett Sutton is attorney who specializes in asset protection. Find out what leading economists are predicting for 2018 including Danielle DiMartino. Booth, founder of money strong LLC, and Andrew zachman. From Moneyball economics. here from leading entrepreneurs how to maximize your income streams. You’ll learn unique financial strategies from Patrick Donahoe of paradigm life, and how to give birth to a brand from Brian Smith, founder of Australia brand. This year also features a very special guest, Dr. Ron Paul, former congressman presidential candidate and staunch advocate Get a liberty. Right now you can upgrade your ticket to include VIP access and a dinner with Dr. Paul. Enjoy a fine dining experience and fascinating conversation. Seats are limited so upgrade your ticket today. Ask questions and learn why real estate is the most historically proven asset class. Armed with new information, you’ll have the confidence to take massive action. As the saying goes, don’t wait to buy real estate. buy real estate and wait. Surround yourself with like minded people and build friendships that will last a lifetime. share strategies and tips with other investors and hear about their successes and struggles. Make 2018 the year you decide to achieve your dreams. Real estate is a proven way to create true wealth within your lifetime and achieve long term financial independence. Don’t wait. Join us in La Jolla. Reserve your seat today.