Rich Dad Advisor Ken McElroy On Property Management, Top Investors Mistakes, And Economic Optimism, Part 1

Jason Hartman begins the show with some optimism about the economy under Donald Trump. In the interview segment, he starts a two part conversation with Rich Dad Advisor Ken McElroy. Ken is one of this year’s speakers at Meet the Masters. He begins by outlining some of the most common mistakes real estate investors make. Later he gives tips on how to do property management the right way. He looks at different class properties and encourages investors to look for higher-quality properties with better quality tenants.

Announcer 0:00
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Announcer 0:13
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 1:03
Welcome to episode number 927, nine to seven. This is Jason Hartman, thank you so much for joining me today, as we are nearing Christmas time, happy holidays and Merry Christmas to all. We are in a period of really unprecedented economic optimism. There are many people who hate President Trump out there. And you know, I don’t blame some of them. I mean, he’s a he’s a controversial guy. I mean, he says some stuff that is like, wow, why did you say that Trump? That’s just crazy. And, you know, some say it’s because when he says those wacky things, he says he gets to control the media cycle. Maybe it’s a stroke of brilliance. I really don’t know why am I still got a question mark after a year. Right. Well, almost a year of his administration. Regardless, love or hate Trump. For those who think I’m some big Trump promoter and are trolling me on the internet and writing bad reviews, because they’re the people who can’t hold two opposing thoughts in their mind at the same time, which is a sign of low intelligence, by the way, yes, thank you. I’m sure I’ll get some hate mail on that one. So, you know, here’s the thing, get it, okay, please get it. The guy can be great for the economy. At the same time, you can hate his guts. And at the same time, you could not even vote for him, he can still be good for the economy. And that is what I predicted. Thank you to one of our actual celebrity clients who texted me last night saying you predicted that over a year ago and and I did. So another one of my many predictions coming true. Now. Hey, I get many of them wrong to one again, I will remind you that I’ve been fabulously wrong on for a decade is interest rates. terribly wrong, Jason. You are so wrong on anything. rates? Yes, I thought they’d be much higher by now. But they’ve been artificially low. What can I say wrong wrong wrong, but right on so many other things, including rental rates, prices, zillion other predictions that I’ve made over the last 926 episodes. So go back and listen and hold me accountable. And that’s one of the reasons we do flashback Fridays, so you can hold me accountable and see what I was thinking 10 years ago, five years ago, 12 years ago, you know, this is one of the oldest longest running real estate investing podcasts on the internet. We started back in the days when nobody knew what a podcast was. So here we are continuing continuing, as we near episode number 1000. So thank you to my loyal listeners in 164 countries around the world. We appreciate you. But listen back to the thing. We are at a time of unprecedented economic optimism. Okay. And the GOP tax bill The Trump tax bill, call it whatever you call it, it’s gonna pass it looks like it’s sailing right through, and it’s going to happen and hate. It’s not going to be great for everybody. I completely get it. But it’s going to be great for the vast majority of people listening to me right now, most of you will benefit from this. Now, those of you who own high end homes in those expensive real estate markets with high income tax or high while income taxes and property taxes, both you are going to suffer on just those parts of the tip. Well, not I don’t want to say that’s the only one because the tax bills complicated, it’s complicated, but those are some major areas where you will suffer. Okay, if you live in these high tax, high real estate price and you own a home, on an expensive home, if you live in those jurisdictions and own an expensive home in those jurisdictions that will hurt you. But so many other things about this bill will help you if you own a lot of real estate, and you’ve been following my plan, you know, look at income property is the most tax favored asset class in America. It’s the most historically proven asset class in the entire world. You’re gonna benefit I mean, this is this is a good plan and you know, where everybody’s going to benefit. Here’s something that happened to me recently, I was at one of my several storage units, I pay a lot of money in storage fees, you know, try owning several businesses and they have you know, stuff and files and equipment and you know, this that and the other thing, when we do seminars and things like that, and then I got, you know, I’ve moved so many times, I’m gonna move again, by the way, I’m gonna move to another city because I really like moving a little bit and trying some different places you know, when I lived in Southern California Beautiful place, by the way, in Orange County, California in Irvine Newport Beach. You know, I felt kind of trapped for many years. Because my, in the traditional real estate business, it was a very localized business. I couldn’t move, you know, and now I can live some different places. So I’m thinking about the most financially friendly jurisdictions. I moved to Las Vegas just over a year ago, about a year and a half ago, almost to finally live in a no income tax state. But I don’t love Las Vegas by any means. So I’m gonna try another one. And I don’t know which one it’s gonna be at. Will it be Washington? Will it be Texas? I don’t know. We’ll see. Will it be Florida? Will it be Tennessee? I don’t know. I just don’t know. But one of the criterias no income tax state. I would encourage you to start planning your life in a way that you can do that low cost of living state, no income tax or low income tax state and a low property tax. state if you’re going to be a homeowner there, okay, so those are some things. So recently I was at one of my storage units, I found a big giant box of old photos. And I bought a photo scanner for 550 bucks kind of expensive, but very good scanner and I started scanning them myself, you know, I was gonna send them away to one of those services. I’ve done that before for these old paper photos, right, and scan them, but I just thought this time I just do it myself. And so I did it. I scanned all my old photos. They’re all mounted digital preserve for posterity. Okay, so hopefully someday I’ll have children, and then they’ll have children, and so on, and so on and so on. And the legacy will continue. Someday, maybe my kid will be doing this podcast, who knows? Maybe there won’t be any such thing as a podcast by the time I get around to it. I’m awfully slow with this. But anyway, here’s the thing. I saw this old picture that I found when I got to meet Arthur Laffer, the famous economist who worked in Reagan White House, Arthur Laffer. Now of course, he is the one who invented the Laffer curve. And I want to get Arthur Laffer on the show. I sent the picture to our guest Booker. And I said, Hey, here is my photo with Arthur Laffer. Right? I got to meet him before. So let’s get him on the show to talk about the Laffer curve. And this is what the GOP tax plan is going to do another one of my predictions, I could be wrong. It’s just a theory. It’s just theory. But it is going to take advantage of the Laffer curve. That basically tells us that there is a certain sort of optimum spot, a sweet spot, if you will, right. Where the economy is doing really well. And you have incentivized all of the players all of the actors in the economy, that’s you and me and everybody we know because We’re all actors, all the the economy, you could apply the economy to Shakespeare or rush, the band rush, okay? They have that great song. It’s called limelight. All the world’s indeed a stage and we all are merely prelate, players, performers and portray errs each another’s audience. Okay. And so that is true in the economy. We’re all actors in the economy, and we’re all making all these decisions based on our own self interest, right? That’s the way capitalism works. And it’s not all bad. Okay. It’s a really good thing. It’s the so far the best system going. And so this GOP tax plan or Trump tax plan, and you know, it’s been watered down, it’s not the Trump plan anymore. I guess. It’s more the GOP plan. It is going to make the economy boom, even more than it already is. And what that is going to mean is that is going to mean increased revenue for the government. Ultimately, even though The projection is that it will increase the deficit, right and ultimately a debt because one influences the other. But, you know, those things are so hard to predict. And you know what, as much as I’m against all of that, and you know, when you hear ron paul speak at our upcoming meet the Masters event, you’ll hear him talk about sound money and ridiculous government spending and all of this stuff. And, you know, I agree with him, certainly, okay. And he was on the show recently, but this house of cards game that our government and other governments around the world play, when they can can create their own money out of thin air. You know, who knows how long it can go on, it can go on for a long, long, long time. I’ve been on a little bit of a binge lately. I have to tell you, an interview binge, where I have been interviewing every expert in the cryptocurrency world. Oh my god. I have talked to all of them. I did one this morning another interview. I did another one yesterday. I mean, really, really bright people. And I’m telling you now their prediction is I don’t think this Bitcoin thing is going to work out that well. I don’t think this crypto thing is going to work out that well, until and unless there is a cryptocurrency that is backed, if you will. Yes, it’s not backed by anything. The dollar right, I can hear him now. Backed by our government and our Federal Reserve, and other big governments around the world and their central banks. Those are the cryptocurrencies that will be the success stories. So we’re still very early in on this game. We will see how it all pans out. Now. Our guest today is Ken McElroy. We’re probably like we did with the last interview. We’re probably gonna go a little long so we’ll probably do this one in two parts. We are really trying although I’ve never been accused of being short winded. We are working Really trying to get these episodes down to a half hour each. Okay? And so we’ll probably publish part two of this tomorrow or the, you know, tomorrow The next day, right? And so we’ll have it on both because I got to play an important video for you. This is with Steve leasman. He’s a senior economics reporter with CNBC all probably know who he is. Listen to this. Listen to this. It’s it’s really quite amazing. Here we go.

‘CNBC’ 12:26
I was here a quarter ago breathlessly talking about the rise and optimism. I don’t know what the next step up is above breathlessly because we have done it. Again. We’ve surpassed hyperventilate, I don’t want to hyperventilate. But folks, we have this surge in optimism, and it appears to be helping at least a little bit, the approval rating of President Trump. Take a look at the numbers for the first time in the history of the survey. And folks who’ve been doing this for more than 10 years now. 51% of the public says this the economy is good or excellent. We have not been at 51% You can see it rose steadily under President Obama. But it absolutely surged under President Trump.

‘CNBC’ 13:05
And anyway, this is the life of the survey. This is the life of a survey that we’re looking at. Absolutely. And then 41% of the public says that the economic outlook is good, or the economy will get better in the next year. You don’t see it here. 50% of the public says a good time to invest. They’re upbeat on the outlook for their wages are upbeat on the outlook for housing, and then take a look at the next set of screens. And we’ll show you how this may be affecting the approval rating of President Trump. You can see that his approval rating went up by four points. And his negatives came down by three points. This is the approval rating, by the way guys is in line with a recent trend you can see in some some some polls is 40%. Over above, getting rid of the three handle getting the four handle our not having half the country is approving numbers like that, but I think it’s more than even i think i think he’s underperforming relative to the economy. But then take a look at the next screen back which is his economic approval rates and those better. Yeah, he was already net positive in our poll 4341. Now he’s positive 4743. A little bit wider there. And you can see people approve of his economic handling of the economy. Well, less. So the overall. And I wanted to show you the trend here, which is the next screen guys is the net approval, we do approval minus disapproval. You can see he had a very bad summer. And then it’s come back to where it was. He’s minus seven and on the economy, he’s plus four right there, which you don’t see the question is what why is this happening? One thing we know for sure, Republicans have come back home they’ve they’ve dug in. They they had abandoned him a little bit. In other words, his numbers were republicans were not as high as they should have been. They’re back where they are independents, a touch more positive Democrats, a touch more positive, but it doesn’t seem to be the tax bill, because I will tell you, the textfield does not pull very well. Just 26% approval overall of the 800 Americans we pulled Nick nation Why’d and it’s even tepid among Republicans, just 56% approval among Republicans. But hold on, let me just tell you the other side of that. There’s a large don’t know, there’s a big 30% don’t know in the final details so I think that’s probably it. But I think what we what we’re seeing here is the economy really helping out the president and we’ll see what the upside here how far he can go. There are obviously other things that keep people from from backing the president they say people vote with their feet and in the stock market.

‘CNBC’ 15:36
Right. So I know you’ll global synchronous growth, but stock markets going up has to do with the tax bill. So people voting with the feet to control the money or voting in favor, you’ll never get a tax bill. Very high and then the as far as the approval rating for Trump, what do you think, Becky? The maximum approval rate, what do you think is solid negative number that will never change? 35 minimum 45 minute 45 mph and 45 would be about I don’t think 45 I think 45 at least just with the tweets and the you know, we I mean, if you took tweet, I’d love to see if you took Twitter out of this well or just in general.

‘CNBC’ 16:17
We asked that question a while ago, people want him to stop tweeting you saw that works for him.

Jason Hartman 16:25
So I hope you found that video interesting. We’ve got to get to our guests Ken McElroy. But before we do, I want to remind you we are wrapping up the five year plan contest. Go to Jason hartman.com slash contest, Jason hartman.com slash contest. Meet the Masters we got a new landing page. Make sure if you’re interested you upgrade your tickets so you can enjoy dinner and intimate dinner with Ron Paul. And you can meet him and get a photo op and get access to the green room and all of the rest of the good stuff. At our upcoming meet the Masters event in La Jolla. If you haven’t registered, of course you want to get your two For that ASAP, Jason hartman.com slash masters for that. Jason Hartman comm slash masters and remember income properties, the most historically proven asset class in the world. We’re going to go to Ken McElroy one thing during this interview with Ken McElroy, the rich dad advisor, great guy. He talks about how I spoke at his conference last week. It was great. It was his annual employee retreat. I was honored to be one of the speakers there. And during my keynote speech, I talked about something called the wheel of life. This is something that I learned about from one of my early mentors at age 17, who changed my life that was Denis waitley, along with Zig Ziglar, Jim Rohn, and Earl Nightingale, my four great mentors who really changed the course of my entire life. The Wheel of Life is about life balance, what some of the speakers that teach on this wheel of life concept where you sort of rate on a one to 10 scale, different areas and aspects of Life, they talk about making your wheel round. So roll through life really well. And I agree with that. That’s a that’s a good point. You know, there can be a Stephen Covey, another great mentor of mine talked about the late Stephen Covey talked about, you can have seasonal imbalance, it’s okay for things in your life to be imbalanced, just as long as they’re not permanently imbalanced. You know, if you’re engaged in a special project or a campaign, or whatever it is, you know, you may be imbalanced for a while, don’t beat yourself up about it, but try to ultimately correct that where you, you have more balance, okay. But the other thing that speakers don’t talk about when it comes to the wheel of life, is they don’t talk about the fact that your wheel should be large, okay? Because if you rate yourself and we’ll probably do an entire show on this or I’ll get the audio from Ken of my speech and I’ll just play it on the podcast for you. So all of you can hear it. But if if you rate yourself a one in every category of life. Well, your wheel will be round. Okay? But it won’t be very big. That won’t be much of a big life. Right? I think the goal is to have a kind of a big life where you’re doing a lot of things and engaging in life and having some adventures and a lot of satisfaction in every area of life. So hopefully, you get a 10 in all areas, or an eight or a nine, right and you have a big wheel, but also a fairly even wheel. Because remember, a small wheel, like maybe the wheels on your luggage or hate your skateboard if you skateboard, right, those get stuck in a rut very easily. The larger the wheel, the easier it can go over bumps in life and and get through ruts in life, right? If the wheel is small, it’s going to get stuck. So I just want to share that one little example. But let’s get to Ken McElroy, and we We’ll have part two of this interview tomorrow on the next episode. So this week Hey, we’re doing five episodes this week. I hope you’re excited. Anyway, here’s Ken McElroy Rich Dad advisor. It’s my pleasure to welcome back a returning guest and that is my friend Ken McElroy. He is the epitome of the word entrepreneur. For over two decades, he has experienced massive success in the real estate world from investment analysis and property management to acquisitions and property development. With over 700 million investment dollars in real estate. Ken offers a unique perspective on how to get the biggest return on investments. He is also of course, you know his name because he’s been on the show before but he’s the author of the best selling books and the rich dad advisor series the ABCs of real estate investing, the advanced guide to real estate investing the ABCs of property management. his newest book on entrepreneurship is the Sleeping Giant. He’s an advisor to Robert Kiyosaki of the rich dad company. And they have co authored several audio programs, including how to increase the income for your real estate investments, and how to get your banker to say yes, how to find and keep good tenants. He’s a chapter two contributor to the newly released the real book of real estate. Hey, Ken, welcome back. How are you?

Ken McElroy 21:25
Great, Jason. Great. appreciate being on the show. Again, I always appreciate the opportunity. It’s

Jason Hartman 21:30
good to have you back and it was great to see you last week. Thank you for having me as a speaker at your annual corporate retreat. What a great group of people you have. I just thoroughly enjoyed myself and I think they enjoyed my presentation too. I hope

Ken McElroy 21:44
they did. Yeah, you did a great job. You know that. We’ll elife It’s a hit everybody. I got lots of comments and people loved it. So thank you very, very much. We try to educate our our folks through personal development and it seems to be fitting offer, you know, we have a very, very low turnover rate in our company.

Jason Hartman 22:04
Yeah, yeah, that’s fantastic. Just to give a little overview of your company, you know, how many employees do you have you have, you know, you kind of have to sort of concentric circles of employees the way I would look at it. You have like your corporate people in your corporate office there in Scottsdale, and I’ve been to your office before. And then you have your big circle, which has all the different people on site at leasing offices, maintenance people, property management people, how many are there? It seemed like there were probably, I don’t know, 130 people, I’m guessing at the event.

Ken McElroy 22:34
Yeah, yeah. So we had, what we did is we flew in managers and maintenance supervisors from all our properties. So we have almost 10,000 units. We like to have them here in Scottsdale once a year and we study a book together. But all in all, I think we have just under 300 employees all together. Wow.

Jason Hartman 22:58
corporate office. Well Wow, that’s amazing. That’s a lot of employees to manage. And gosh, you know, 10,000 units, you know, can I think you’re upping my own personal goal now? I’m, I’m green with envy over here. That’s awesome.

Ken McElroy 23:17
Thank you. So as you know, it’s a overnight success.

Jason Hartman 23:20
Yeah, you’re you’re a 20 year overnight success. Exactly. Good stuff. Well, he can I want to talk about a few things with you. As I mentioned in the intro, you know, we’re going to talk about the economy in general, maybe we’ll talk about the homeownership rates and some best practices in property management because as any legitimate real estate investor knows, it lives or dies on property management, you can watch the late night infomercials, you can read the books go to the hypee seminars and the pitch fest. But you know, at the end of the day, this is kind of a mundane business. It’s just a do the right thing every day, and you’re gonna make a ton of money because it’s the most Historically proven asset class in the world. But you gotta be willing to set up the right practices and the right thing. So, you know, maybe since I kind of teed that one up more, maybe we’ll start with that. I don’t know, where do you want to start?

Ken McElroy 24:10
I think it’s a good start. I think a lot of times, Jason, there’s there’s two things that I see, as, you know, two common mistakes that I see, the first one is, people get caught up in the hype of flipping. And as you know, there’s a time and a place for that if you’re going to do it, but you do pay a lot of tax and then you gotta buy something again. So finding a good real estate deal, typically, for me has been the hardest thing. So I like to keep them I like to cashflow them. And so I think when people think of real estate, they think of, you know, timing a market, you know, buy low sell high colic stock. So I think that’s a common mistake. And that’s completely different than than what I do. As you know, we don’t we don’t sell hardly anything. Right.

Jason Hartman 24:55
And Ken, let me let me just before you go on, let me make a comment on that. I have definitely We noticed over my decades in this business, that the people who flip and who you know, do the the fix and flip type model, they have spending money, but the people who buy and hold they have real wealth. And you know, at the end of the day, I’d rather have real wealth and spending money. I mean, spending money is okay, I’ll take it. But, you know, you pay so much to the government when you flip these properties and, and, you know, it’s just like the good sustainable sort of value investing philosophy that is yours and mine and, and Warren Buffett’s, if you want to use a stock metaphor is to just buy it and hold it. You know, I completely agree with you.

Ken McElroy 25:38
It is Yeah, and then, you know, and I’m speaking from experience, you know, because I one of the things that I did in my career since going back 15 years is I did condos, I did condo deals and condo conversions and condo projects and a whole lot of effort to sell thousands of condos, you know, over like a four or five year period. We were very successful, our company made a lot of money, we, you know, we had a great, great organization. But once we were done, we didn’t have any real estate left, we’d all made a bunch of money. And you know, the company shrank down again, because there’s no revenue coming in because all the condos were sold. And so you’re always having to go out and buy things to keep things going. And unfortunately, or fortunately, Real Estate’s cyclical. So you can’t buy throughout your career, there has to be a time when you have to step back, and then come back in and then you know, buy and then step back and comment on

Jason Hartman 26:36
that. I have never met anybody who can really reliably predict the cycles. I mean, you can take some good educated guesses, but you know, it’s just hard to know. I mean, you know, you just value invest and you can just buy things that make sense and hang on to them. You know, it’s pretty simple.

Ken McElroy 26:57
It’s surprisingly simple. And so I just You know, Jason, as you know, I, that was a big, big lesson for me because 15 years ago, I had cash, you know, I had nice things, but I did not have wealth. And so the next time that was in 2001, I decided that the next my next run was going to be a buy hold cash flow model. And that’s what I’ve done. And so now we’re actually close to a billion dollars now and assets. And it’s been all through buying properties, well, making sure they cash flow, and then returning that cash flow to the investor. So you know, we had to dig deep and syndicate and go after, you know, money to, you know, raise capital to buy things, but it’s a much better model and I will tell you, we will, we will have a correction, occupancy rates will go down, there will be concessions, and there will be less cash flow. You’re going to experience that and so when you’re when you have well positioned assets, are not too highly leveraged that are cash flowing massively, then you’re going to last through those times just fine,

Jason Hartman 28:06
you know? Yeah, I agree. And if you’re not investing in the very, very cyclical markets also, you don’t invest in those, you’re pretty much in the hybrid markets. As far as I can tell. It used to be linear. So, you know, these are not like the high flying markets. I mean, you’re not you’re not buying stuff in Manhattan, New York, right? Or, you know, Miami and these super expensive, high rises or in, you know, in Los Angeles or San Francisco, you’re doing more prudent stuff than that, aren’t you?

Ken McElroy 28:39
Yeah, we are. We’re so our, our, our model has been kind of what we call, you know, the workforce. So, we want really nice, well maintained properties. And when I say that, I mean, they’re, they’re gated, they have clubhouses, you know, some of them have concierge. Yeah, some of them have gyms, some will have indoor pools. So these are nice properties that we bought, that might be 20 years old that you know needed a few million dollars. And of course we’re building to so we’re building brand new, but to your point, we’re building in markets like Phoenix and Scottsdale and you know, Plano, Texas or Carrollton or Dallas, you know, some of these markets that are really have great people great jobs, but really, people do have choices in those markets, too. And do they want to rent or do they buy a home? So there are, there are strategies on where you want to buy rentals in those markets? Unlike San Francisco or Chicago or Seattle or New York, where you might not? You just don’t have that kind of a downpayment.

Jason Hartman 29:42
Yeah, no, I couldn’t agree more. Those markets are just absolutely crazy. Okay, so talk to us about some best practices in property management just you know, just rattle off a few of them. Of course, you’re speaking and I’m super excited to have you speaking at our upcoming meet the masters of income property event. It’s gonna be awesome to have you speak You were kind enough to come and speak to my venture Alliance mastermind, my small group once last year, but this will be the big one. So you’ll be speaking to a much bigger audience this time, and we can’t wait to have you, you know, you will have a chance to go into this a little more depth maybe in person. But, you know, just a couple of thoughts here on property management, how to do it. Right.

Ken McElroy 30:20
Yeah. Well, I think there’s a few things. One, I don’t think that a lot of real estate investors, engage the property management folks early enough. In other words, I think that they should be part of the process. Part of the acquisition, I really do. I think that if you’re not going to manage it yourself, you really need to get the individual involved. Because what they’ll do is they’ll help you understand rants, I’ll help you understand expenses, they’ll help you understand markets. So you know, all those kinds of things. You know, property management is very local, local business. Yeah. There’s a few big big mistakes that are made and probably the biggest mistake is on You know who you let in? Actually, you know, obviously because there’s a whole series of mistakes

Jason Hartman 31:04
can happen and screening is what your aggressive Yeah,

Ken McElroy 31:07
yeah, yeah, it’s there’s all kinds of ways to do that. But, you know, we run criminal credit, background checks and sex offender checks on every one of our tenants. So we do about four or 500 a month, you know, on our properties our portfolio is so it’s so crucial that you have no idea you know, like, I can honestly tell you, Jason, I don’t think that we evict very many people. You got a man we have 10,000 tenants, right? And when you find somebody that they just want to read, they’re good family, they’ve got good jobs. They are so good. You know, they they just want a nice, quiet, safe place to live. And the experience can be remarkable as compared to the opposite. You know, I have a bunch of stories around that because we’ve made a bunch of mistakes, you know, over the years. And that’s why we’ve gotten to where we’ve gotten as far as our criteria to get in. And so what I see what happens if there’s vacancy and somebody has a stress point over money, maybe their mortgages do and they go on to Craigslist, not that that’s necessarily a bad spot, and they end up renting and you start to see things like drug activity or, you know, who knows what, you know, they just don’t pay or, you know, damage and, you know, there’s just a million stories, right? That can come from putting that wrong tenant in there. And then it can be very expensive to get them out depending on the state as you know, Jerry’s use California and California. That’s a disaster.

Jason Hartman 32:41
Yeah, yes. The worst one ever. Well, New York’s probably worse than the California but they’re both pretty terrible.

Ken McElroy 32:48
People out so you know, you really want to, that’s probably the biggest single most problem and then everything stems from there. I mean, all your issues stem from that.

Jason Hartman 32:59
Okay. So let me let me back up one step from that even. And I think it’s sort of in what you’re saying, and kind of what you said before Ken, but you didn’t actually say it. So I want to make sure the listeners hear it, you know, we offer a, b, and c properties that people can buy through our network. And we offer the C stuff, but we really try not to sell it. It’s, it’s kind of like your discount line. And it’s just, those look great on paper man. But in real life, I mean, you know, they might do great in real life. Okay. But you know, in the law of large numbers, when you look at the averages, right, I think you’re just gonna do better with better quality properties. That brings you a certain type of tenant profile. Now, granted, there are exceptions. You know, you can have a property with a D tenant, or a D or a C property with a tenant, you know, you it’s all individual, but in the law of large numbers in the law of averages, it’s going to work out that you’re just going to have better experience. With better quality properties and better quality tenants, I say you agree with that?

Ken McElroy 34:05
I do. Yeah, you know, and I’ve managed all those kinds of properties. You know, I’ve managed personally over 30,000 apartments up and down the western US. And there’s several in Phoenix that we’ve, you know, back when we were doing fee management, I remember two particular properties or you know, one was it was so bad there was a police substation in our rental office you know, another one that literally would not they had this I can’t remember exactly what they call it, but they would not go in unless they were to So in other words, if there was a call to that address,

Jason Hartman 34:40
not not a single cop will not go with a single

Ken McElroy 34:43
cop would not go I remember walking in one of the units and there was an ak 47 leaned up next, you know, on the on the side of the road next to the front door. And so you know, birds of a feather flock together, man, there’s gang activity, drug activity, and and those are management issues. Don’t get me wrong, the property next door on both sides was just fine. You know, it’s who you let in is big and you know, it’s the craziest story and the one. There was literally a guy in a wheelchair. This is unbelievable to me, but he was a guy in a wheelchair. He was a drug dealer in a wheelchair. Right. So the cop for watching him Guess how he got in a wheelchair? How’s that got shot? Yeah, so here’s a guy in a wheelchair dealing drugs already been shot once. And he’s, you know, under surveillance and so, those are the those are real things. And and not everyone in that property is is a drug dealer, you know, but people are that are living in those environments. Move out good people move out. Yeah, no, you just really gotta be careful on who you let in. And you’re right about it’s not always in a C property. I’ve seen a properties be that way. I’ve seen B properties be that way and see properties be that way. But most of the time they land in the seas because they’re lower rent, you know, they’re they’re low. Read options on the outside of town somewhere.

Jason Hartman 36:02
Yeah, yeah. Yeah, that’s that’s true. So, so I think that’s an important thing. This will be continued on the next episode. Thank you for listening and happy investing. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

Jason Hartman 37:06
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 Myers 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. hear from leading entrepreneurs how to maximize your income streams. Learn unique financial strategies from Patrick Donahoe of paradigm life, and how to give birth to a brand from Brian Smith, founder of UK Australia brand. This year also features a very special guest, Dr. Ron Paul, former Congressman, presidential candidate, and staunch advocate of 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. 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.

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