Jason Hartman hosts fellow real estate podcasters, The Real Estate Guys, Robert Helms and Russ Gray. They discuss how technology continues to change the landscape of real estate investing. While there is a growing amount of tools investors can use, there is still a need for the human touch. They end the discussion with predictions of the future of real estate investing.
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 is 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 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 1:16
Hey, happy new year and welcome to the creating wealth show. This is your host Jason Hartman with episode number 617 617. Some of you listeners have been with me since episode one. I know that and I thank you, I appreciate you so much. For those who haven’t. I want to mention something about our archives, which you’ve probably all noticed and I’ve mentioned it before, I believe. But on iTunes, if you listen through iTunes, we have to split the archives up. Because iTunes does not hold enough episodes. We’ve got so much free content for you that we had to divide them up and we did so by 100 episodes each. So If you run out of episodes, remember there are now separate feeds in iTunes, and separate RSS feeds for each 100 episodes. So I just want you to know that I honestly do not know the way that works on other platforms and I have not had time to check. So if you’re listening on Stitcher Radio, or SoundCloud, or any of the other zillions of podcast platforms out there, just know that the feed has been segmented because we’ve got too many episodes too much great free content for you. Make sure you look for it that way. There are 617 episodes as of today. And today our guests will be those guys. Yep, the real estate guys, Russell gray and Robert Helms. They will be up with us in a few minutes and I actually interviewed them when I was speaking at a recent conference about a month ago in Scottsdale, Arizona. And that was the I am in residential. What the heck did they call it at was such a complicated name. These sophisticated people like to use these really sophisticated names. It was like the residential aggregation conference or some some crazy name like that. But I am n is a conference company that does conferences and it stands for Information Management network. They do conferences on a variety of subjects, but I think about half of their portfolios in the real estate world in some way or another. And I was grateful to have the opportunity to speak to their audience and present some of my thoughts on holding for the long term, versus flipping out and selling I you know, as I’ve said, for many, many years, I have seen you know, I’ve done thousands and thousands and thousands of real estate transactions now. I wish I actually knew the number and I thought about Wouldn’t it be nice to really know that number? What it is, you know, when I was a traditional real estate agent I remember at age 24, ripe old age of 24. You know, that was just a couple of years ago, right? I sold 78 homes when I was working at REMAX. I remember how jealous some of these older people that had been very successful for many years, were they, they thought I was somehow cheating the system. They used to have big powers about me and how I was cutting my commission to get business and that wasn’t true. You know? I mean, occasionally i’d i’d take a lower Commission on a deal, but not that often, you know, was was pretty rare. But they were convinced that the only way some young whippersnapper like myself could be successful is he must be doing something unethical or something anti competitive in their eyes. Actually, that’s more competitive is what it is, you know, it’s illegal to fix commissions. It’s a violation of the antitrust laws and aren’t we glad those are around, even though I would say That, in one form or another, big companies engage in a form of price fixing, you know, a lot of this is very subtle, right? There are software systems that, you know, scan the internet and find out what your competitors are charging for their product or service and, you know, you charge just a penny less. And, you know, it’s basically isn’t that a form of price fixing? Isn’t that anti competitive in a way or, you know, some would argue that it’s more competitive, but none of this stuff is perfect. Capitalism isn’t perfect. It’s just better than everything else. And speaking of which, another one of my predictions are coming true. Yes, they are coming true. I’ve made some wrong predictions in my day. But this is another one that has come true. Yes, pardon me while I pat myself on the back here. Arrogant little our host No this prediction seriously, I saw a news article the other day, and it says, Many find life cheaper without Obamacare. What a surprise. For some the article says the subtitle it says for some fines are cheaper than health insurance Now, we all know because we’re thinking people, we don’t just take it as the gospel. And we don’t even take the Supreme Court decision as the gospel. And we don’t take what people consider to be sciences, the gospel, you know, one of my friends by my dear friend, Danny, it’s great guy, really, really super great guy. He was debating with me recently, a message about global warming, or now they’ve conveniently changed the word to climate change, because, you know, global warming argument is so darn questionable. Okay, whether that’s true or not. And I’m not saying I have the answer. By the way, I’m just saying I have the question. First of all, is it happening? Second? Is it a problem? And here’s what I actually mean by that, you know, if the earth is warming, by the way, this is a tangent alert, but it won’t take me long. If the earth is actually warming, then doesn’t that make all sorts of new places on earth, open to new habitable places for various species and people and crops and agriculture? Of course it does. So, you know, is it real, which is very questionable, by the way? Is it bad is another question. And then a third question I would ask is, well, what is the cause? And the climate alarmists will tell you that the cause is carbon dioxide. Now, when I was less than formed years ago, I used to think that their argument was about carbon monoxide and it is about greenhouse gases. As they call them in general, but if it’s carbon dioxide, you know, the stuff you exhale, then aren’t these people just making the earth a terrible place with every time they exhale? And I haven’t seen any of them voluntarily stop exhaling. I just I just haven’t seen a movement about that. So you know, herein lies the mass of hypocrisy. It’s the it’s the do what I say not as I do movement, it’s Arianna Huffington, saying nobody should be allowed to drive an SUV. It’s it’s a Hillary Clinton saying, This is not an environmental thing. It’s a gun control thing. Another bunch of idiotic arguments that you hear all the time, saying, well, guns won’t keep you safe. She says And, fortunately, Donald Trump, love them or hate him. He did call her out on this just the other day. He said, Well, if guns don’t keep you safe, then disarm your bodyguards.
Jason Hartman 8:58
Ah, wait guess she’s not going to do that is she and Dianne Feinstein the same kind of lefty hypocrite, our senator here from the Socialist Republic of California, you know, she has carried a pistol in her purse for a couple of decades now. Okay, you know, but gun control for everybody else but not for the elites not for the kings and the Queens they need to have bodyguards and guns and armor the rest of us little people you know we don’t get that. So anyway, science that was I’m bringing it back here folks parks. I apologize for my tangent yet. I know some of you people enjoy this, you’re probably just making fun of me as what you’re doing right? But science, science, okay. And this is back to my friend Danny about the climate change global warming thing, right. Science used to think that the Earth was flat. Science used to think that the sun revolved around the Earth. Science used to think that the entire universe revolved around the Earth okay. Science used to believe in putting leeches on people. They used to believe that bloodletting was good. Okay. Science used to believe in front of the bottom ease. Science now believes in all sorts of absolutely horrendous, disgusting prescription drugs that literally, quite literally kill people. Just watch a movie called Ark, I believe it’s called RX nation. I’ve done several shows on this on my holistic survival show these pharmaceutical companies. I mean, they are, they got lots of blood on their hands. Okay. And that’s all about science. Okay. So science is not like some monolithic thing that is this immovable thing, but it’s not a poll either. You know, it’s not about saying, Oh, well, some scientists say this and some scientists say that, you know, there is the science we know at the time and then we will know of other signs. at another time. So look at all the dietary and nutritional things that we used to believe that we don’t believe now, right? There. I mean, the list is so long, I just, you know, couldn’t even go into that. And I interview a lot of these scientists of the day on my longevity and biohacking show, okay. And they’re only speaking of what they know today. And believe me, in one year, in five years and 10 years, in 50 years, in 100 years, the science will say something different. I promise you that. So, my friend Danny, who believes he is this very logical scientist, he’s in medical school, by the way, he says, Well, I don’t debate climate change anymore, because I just look at the science. But yeah, lots of scientists disagree with this pseudo science many would say of climate change. So, you know, the climate has always changed. I mean, there’s a lot of debate for this stuff. It’s not a cut and dry subject back to Obamacare and the impending Obamacare disaster. A good number of Americans are opting to forego health insurance all together and pay a federal fine rather than buy Obamacare. The New York Times, well, there’s a lefty organization. The New York Times reports this the reason insurance policies may cost more than the fine and the deductibles can be high and people make too much money to get federal subsidies. Quote, I don’t see the logic behind that and I’m just going to do it on quote says Texas resident Clint Murphy, who prefers to face an 1800 dollar fine in 2016. Then buy insurance for at least 20 $900 the fine is still going to be cheaper and So I predicted this, I said this would happen. I said this years ago when they pass the bill, so that we could see what’s in it, according to Nancy Pelosi at midnight, Pacific time, and about three in the morning, East Coast time, when all of those people were cheering, you know, all of those elites, all of the people in the ivory tower who just know so much better than all of us dummies, right. So, there you go. Another prediction has come true. Thank you very much. Okay. So, Carl Icahn, you know, Carl Icahn, he’s the corporate raider, some would call him he’s the, you know, the incredibly successful businessman. I you know, I don’t know how to describe these guys. They do so many things. It’s, you know, like to say Warren Buffett is an investor is a joke. Okay. Warren Buffett is way more than an investor. Okay. So if you’re thinking you can duplicate those types of returns that Buffett gets by Investing, as a non Insider, someone from the outside who is, you know, not involved in the modern version of organized crime known as Wall Street, you’re just probably not going to be able to do that. And in fact, you will probably be losing money to people like Warren Buffett because you’re on the other end of the trade. You know, we’ve heard from Michael Lewis Did you see the movie The Big Short yet? Oh, my gosh, you’ve got to see this movie. It’s so good. The Big Short, it’s in theaters. folks do not miss this. In fact, you know, if you don’t want to see it, and you want to call in, and you know, call into voxer and if you don’t have the money to go see The Big Short the 10 bucks for a ticket, and you have a PayPal account. Heck, first 10 listeners call into voxer with a comment. I will send you 10 bucks to go see the movie, okay. I’ll even send you 15 bucks you can get some popcorn to well actually with inflation. Yes, there is inflation, that popcorn might cost you a little more. Maybe I’ll have to send you 16 bucks. Okay. So, yeah, you know, I’ll do that 10 people call in with a question or comment on the show. I mean calling on voxer j Hart 88 j h AR t 88. And if you have a PayPal account, and you send me your PayPal email address, I’ll just send you the money. You go see the movie on me. Okay, how’s that sound? Okay, I want to remind you of an article I discussed last year right about this time. And this is so important folks. You know, we are investing for the future, we are delaying gratification. We as investors are doing the right things, but you know what, we have got to, we have got to get some payoff out of that. Okay, we’ve got to get some payoff out of that. So this article that I had talked to you about Well, you just um, yeah, like a year ago, you know, it says, exercise. I’m just gonna read you the title because I don’t need to go into the detail just the concept New Year’s resolution time, right? Exercise basically prevents treats. What does it say? It says, exercise prevents treats or cures basically everything. It’s an it’s a Business Insider article, and it says exercise prevents treats or cures basically everything. Okay? If there were a drug that treated and prevented chronic diseases that afflict Americans, and we didn’t give it to everyone, we’d be withholding a magic pill if the drug was free in a country that spends more than 350 billion dollars annually on prescription drugs. We just talked about that. Where the average 18 year old takes eight medications. We’d be foolish not to encourage this cheaper and safer alternative as first line treatment. And the alternative this other treatment, this magic pill. It’s simply exercise. And you know what, people? This is so easy. It is so easy. I bought my mom a Fitbit for Christmas. I’m wearing one myself right now if you see me driving around my self driving Tesla in those videos that are out there on YouTube, if you’ve seen me, you see that I’m wearing a watch and I’m wearing this black thing around my wrist. That’s my Fitbit. And you know what if you can just get 10,000 or more steps a day, like our wonderful venture Alliance member, Elizabeth, who I believe will be at meet the Masters this weekend. She’s a huge Fitbit fan and Elizabeth is doing it right. She’s taken. I don’t know a lot more than 10,000 steps a day. So she’s she’s just awesomeness there. If you can do that, you know, you don’t need to do much else. Cut down the carbs, cut down the sugar and get your 10,000 steps in everything beyond that. icing on the cake, go to the gym, do yoga allottees lift some weights, whatever do some running. That’s all great but you don’t have to be a fitness freak. And you know what? We’ll help you with this. 10,000 steps a day. Get a dog. Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday. A dog go rescue a dog do not get one from a breeder, go rescue dog from the animal shelter. I’m on my fifth one. For those of you coming to meet the Masters this weekend, and maybe you haven’t met Coco. She will be there. And she will be there talking about real estate investing. You know, she’s very knowledgeable because she listens to virtually every podcast. I do. She’s here listening now. She hears the bloopers that the editor hopefully takes out. So yeah, enough of that. I got a run and I’ve got an interview Chris martenson. We’ve had him on the show a few times. He’s not on this episode. Today. We’ve Russell and Robert on, but we’ve got to interview him for a future episode. And he is always the most interesting guest he’s a Malthusian end of the world guy. We’re running out of everything with climate change and, you know, species extinction and peak oil and it’s all a disaster. But you know what, he’s so darn knowledgeable. This is why I get these opposing viewpoints on my show. I learned so much from them. He’s a really interesting guy. And so he’s been on a few times, I’m gonna have him on again coming up. And we always relate this back to the economy. What I like is that Chris goes into the whole scam known as the Federal Reserve and the money creation concept and it’s, it’s just super interesting stuff. Okay. interested in coming to Dubai with us. The venture Alliance is doing the Dubai trip, just a little over a month away, go to venture Alliance mastermind.com you can come as a guest it’s only $2,000. And if you want to join then you’re getting fee will be applied toward your membership if you join right away. What else? Meet the Masters this weekend? We got a bigger room if you’re a last minute guest Come on in. We’d love to have you. We actually have space. We will not be cramped this time. And we are doing an awesome event. Oh, by the way. In addition to Garrett Sutton, we just booked Tom wheelwright, who is an author of another Rich Dad book on taxation. We just booked his partner, he can’t come, but he’s sending his lead person. That’s Casey Myers, who is another CPA and partner in his firm. He will be speaking on Sunday about taxation as it applies to real estate investors. Of course, your real estate investors are holding the most tax favored asset in America and the most historically proven asset in the world. We’re just going to have an awesome meet the Masters event. So we’re looking forward to it and we are kicking it off. With a invite only private VIP dinner Friday evening, if you’re coming to that, look in your email for details, make sure you check your spam folder for Saturday morning. We are starting at 930 at the hotel, so come down and have coffee with us at 9am. But the actual event will be on at 930. So I know a lot of you like to get there so early. No need to this is not the Beatles or just not that interesting. It’s not Taylor Swift. more contemporary there, right. So just show up at 9am and network Have some coffee hanging out and we will start at 930 on Saturday morning. And it looks like we’re gonna go until 9pm on Saturday night. Yes 11 and a half hours of hardcore content, but we’ll have some good breaks in there for lunch and dinner and you know, maybe even a bathroom break here or there and and we got a bunch of great speakers. lined up for you. And then Sunday, our plan is to go from nine to 6pm. And if you’ve registered for meet the masters at Jason Hartman calm and the events section, you’ve got the location hopefully you’ve got your hotel room booked. And we can’t wait to see you there this weekend and we thank you so much for coming. It’s gonna be our best one ever. I just signed the contract with our audio visual company and man, we’re spending some money to make these events really good. By the way. One more thing on that. Anybody attending the event? who dances? Yes, I actually I’m serious about this. Any dancers listening? We would love to talk to you if you want to reach out to me on voxer or through your investment counselor. voxer is Jay Hart 88 reach out to me just download the free voxer Vo x er app in your app store. Reach out to me if you dance because we got a little job for you. Okay. Enough said I actually am serious about that a, you know, distinguished corporate job, this is not some hokey thing. Let’s get to the real estate guys and hear what they have to say about investing and what is coming next some predictions for the new year. So here we go. Hey, it’s my pleasure to welcome the real estate guys to the show, Russell gray and Robert Helms, you probably know these guys, and we are at the I am in residential. Well, this conference has a couple of names Actually, I’ve heard it called the single family aggregation conference, what a name or the rental investment conference. They’re here recording. So I just thought I’d love to get them on the show, and talk about some predictions for the new year. Guys. How you doing?
‘Real Estate Guys’ 23:44
Good. Thanks for having us, Jason. Good. My pleasure. My pleasure.
Jason Hartman 23:48
So you know, a big question has been asked over the years of are we really in a recovery? Of course, the powers that be the Obama administration, they want us to think we’re in a recovery. I question that a lot and I think You guys do too? What are your thoughts? Because we have to start with where we are in order to talk about the future, right? Yeah, such a
‘Real Estate Guys’ 24:06
good point. Everybody wants to know what’s going to happen in the future. And there is the law of expectancy, right? If I expect things to be pretty good, then guess what, I’m gonna arrange my life in such a way that gonna be pretty good. So, you know, in real estate, you can make money in an up market and the down markets, sideways markets, but you’ve got to change your strategy and your thinking, when we layer on that the bigger economic picture, that’s where it gets fuzzy, because a lot of the market and a lot of the data we get, let’s face it, it’s manipulated information. Oh, yeah. The what we’re hearing about say here at the conference yesterday morning, we heard about unemployment, unemployment is down. Well, is it really yeah, how do they figure what numbers do they use? If they’re only counting factual numbers? They’re leaving out all kinds of people in the unemployment. So there’s a lot fewer people with jobs today than there have been in the past, right? And the kinds of jobs they have are very different. So that’s great for real estate investors because guess what, we have more today tenants. Yeah, more tenants than owners. Well, if I’m in business selling houses to owners as real estate, then I’m not as happy if I’m in the business of long term rental property that is going to create cash flow and appreciate over time in the right markets, then that’s good news for me. Yeah. Right. So where are we is always an interesting an interesting question.
Jason Hartman 25:14
Well, that was, you know, you, you lead into exactly what I’m always talking about how income property is a multi dimensional asset class? Yes. And you can make money up down sideways does not matter, you just need to adjust your strategy. So the two things that really hurt real estate investors is that they don’t adjust. So you know, you talk about, you know, we have this mass market of tenants. Right. And that’s great for rental incomes and upward pressure on rents and demand. Yep. But, you know, maybe overall, the sales market isn’t as robust as it otherwise would be if people had real corporate jobs that pay 70 grand a year versus, you know, they’re like yoga teachers and bartenders, right.
‘Real Estate Guys’ 25:54
Those folks are hard to finance. So right the traditional real estate single family real estate conferences, About your borrowers. A person who gets up goes to work or earns the money can qualify for a mortgage harder and harder to get mortgages. I don’t know if that’s really true. It’s been hard to get mortgage in the last few years, we’re starting to see that change. We’re starting to see players come back into the market who are looking through different lenses, recognizing that today’s knowledge worker doesn’t necessarily have a W two income and their assets may be different than it folks in the past. So I think there is the light at that end of that tunnel. And the big picture. population is increasing. housing stock is getting older. We need more units.
Jason Hartman 26:33
Oh, yeah. Yeah, no question about it. And that’s, that’s the other great thing about real estate is that, you know, there’s just some hard issues there, population increase, and housing stock, which is hard to create, you know, it’s not like creating a little widget and making it come off an assembly line. You’ve got land entitlement issues, you’ve got cities to deal with, you’ve got you know, it’s complicated, right.
‘Real Estate Guys’ 26:54
And, and with technology, I mean, look at the very fact that today we’re able to both have podcasts that are heard by people in different states in different countries, is all about technology. Right? Traditional radio, it didn’t work like that. Technology is changing a lot in the way real estate gets articulated. But here’s what technology doesn’t do. No technology is going to change the need for a human being to live under a roof. No question about it. So housing and then the single family housing in this conference. And of course, you know, you’re obviously very involved with that, and multifamily how those are needs that are going to be here. I don’t know about the latest app, that’s going to be a need. I’m always going to have How did I live before Facebook? What happens if Facebook changes? I don’t know. But we know people are going to have to live somewhere. conduct business somewhere vacation somewhere like real needs. That’s one of the absolute beauties of our industry is that it’s just a hard need. And every human being on Earth has that in common. They need the three basic things food, clothing, shelter,
Jason Hartman 27:47
right. Let them rent that shelter from you investors. Yeah, absolutely. Russell, you know, you were talking about one of the panelists that you were listening to yesterday. I think someone from one of the Federal Reserve branches They were talking about this employment unemployment issue and the labor participation rate. Any thoughts or comments on that?
‘Real Estate Guys’ 28:06
Well, I think big picture you said, What state are we in? I think we’re in a state of confusion, actually. Because a lot of the data is, you know, manipulated, and you have people, as you mentioned, that have an agenda behind the data that they put out there. And you can say, well, oh, they have evil intent. I don’t know I not inside their heart and mind I, I don’t really know that. But what I do know is these are people who have their hands on the levers of major economic controls, and they are trying to move certain numbers. And sometimes I think they get it backwards, right. Sometimes people Oh, housing drives economy. No, housing is a reflection of a healthy economy. You don’t go buy a house, and then get a job. You got a job, and then you buy a house. And so you know, you say, Well, if we could just move the housing number, that’s like saying, Okay, well, you know, what, 98.6 degrees is a healthy human being this body’s dead. Let’s put it in the oven and warm it up. And then we’ll have it great. But it isn’t. It’s great zombie, actually. Economics is what I call it. So the guy was talking about the labor participation rate being low, which means there’s, there’s less people in the population are actually participating in being employed, right. That’s what a low labor participation rate is. And it’s the lowest it’s been in for decades. And so they’re blaming that on the baby boomers. And so that’s completely inaccurate. Because if you look underneath the labor participation rate and where the jobs are being created, the jobs are being created in the age 55. And over group, the baby boomers are actually having to come out of retirement because they’re not getting a yield on their savings, and they’re having to earn more money. And so it’s the younger the millennials that are not getting the jobs, right. They’re burdened with student debt. There’s 40 plus percent of them living at home, you know that
Jason Hartman 29:44
insane, but you know, what that represents for us pent up demand huge pent up huge pent up demand. I mean, because you know, those kids do not want to live with their parents forever. Now, I’ve heard Gen Y, you know, representatives in the news media talk about how you know, we actually like our parents, this generation, right versus ever Other wanting to get away from home? Right? So that’s interesting, but they don’t want to be living at home.
‘Real Estate Guys’ 30:04
Well, I mean, ultimately, these kids and I have a bunch of them, you know, and some of them have already gotten married, others are going to many do you have six, six kids, and yeah, six kids and nine grandkids and probably adding to that eventually. And we all get along. And it’s great. And you know that we have the boomerang kids, like a lot of people, they come and then they leave, and then they come back and, you know, just depends on their life cycle. You know, we did a little bit of that as we were growing up. So you know, you have families help each other. And that’s kind of a normal, natural thing. But eventually, as a young person, you get to a season in life where you settle down, and at whatever point that happens, housing is going to be high on their priority ladder, probably higher than anything else. And I you know, I gotta believe that you are not going to keep the United States of America down for long, you know, even if we do have some economic distress. People figure it out, right. People always figure it out. Robert and I were what we call it petroleum transfer agents. Yes. Yes. We were petroleum. Transfer agents, one of our early jobs
Jason Hartman 31:01
you pump the gas.
‘Real Estate Guys’ 31:03
I love it. We were pumping gas in, in San Jose, California. We didn’t know each other back then I
Jason Hartman 31:08
can see you meeting your wives at the time. You know what? So what do you do for a living? I’m a petroleum transfer agent.
‘Real Estate Guys’ 31:15
That’s a big title, petroleum transfer agent.
‘Real Estate Guys’ 31:17
Well, we watch gasoline back in the day when I was in high school go from, you know, 40 cents a gallon all the way up to 8090 cents. Remember when it crossed over $1 all that happened in high school, the dollar lost 50% of its value in the 70s. Yeah, some people think, oh, that couldn’t happen in the United States. It already has right. And other people think well, if it happens, it’s the end of the world. No, it’s not. It’s not at all so you know, yes, things are changing. And you said this at the top of the show the the concept that you know, sometimes real estate investors don’t change. That’s one of the big mistakes they make. I would agree with that. And I think by their nature, real estate investors are kind of Mavericks their independent thinkers, their nose to the grindstone lost in the weeds, handling stuff on a daily basis. What they miss some of these big mega trends that are moving both economically demographically and even in some cases geographically, you just busy with your nose to the grindstone, you don’t realize that a market is changing Dallas Fort Worth for example. For the longest time, Dallas Fort Worth could just expand as far as the eye could see, you could add housing units as long as the day was long. Los Angeles used to be like that too. And at one point it crossed it crossed over in one city ran into the next city and pretty soon there was just a blur of construction. Dallas is moving down that path. And because of it, its housing market is changing. As those numbers begin to change, it becomes less of the market than it used to be that attracted so much debt used to be a great cash flow market. It is still a good market, but it isn’t the great strong cash flow market that it once was right.
Jason Hartman 32:52
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday. Because and the reason is, is that, you know, the rents have increased a little bit in Dallas, for example. And this is true in a lot of cities. Of course, Phoenix is the same way. And we, you know, we know all the markets that this is true, but the prices go up always much faster than rents. And so rents always have to catch up, they always lag the price curve. And so that’s why it doesn’t have the cash flow that used to have you know, you could buy that same house in Dallas a few years back for 80 grand that now you’re gonna pay 124. So and you know, and 120 is kind of the entry level for a quality investment property in Dallas, you know, and then it goes up from there. Yeah, of course, you can get C and D class anywhere and pay you know, a lot less but but if you’re collecting that
‘Real Estate Guys’ 33:44
very house that at 80,000, rented $300 at 120 isn’t renting for 1200 for any for 900 or 950 exam so hard to make the numbers work and that’s back to that strategy you change as a real estate investor based on what the market gives you right? There were times when flipping property was a no brainer because of the value of the of the market. You don’t have to do that much today, you have to be strategic in that business and we’re not in the flipping business and you’re not really in that business either. Right? But there are folks that that’s what they do. Right? So when we talk about real estate, there’s so many different ways to Oh,
Jason Hartman 34:13
of course there are there of course there are. Okay, so I want to ask you one more thing about where we are now, because you mentioned technology and this just begs that question, then let’s talk about where you think we’re going. Okay. Because everybody wants a prediction. So dust off your crystal ball, and and let us know. But um, when it comes to technology, there is there are there are some things going on in the real estate world. You know, we deal with a low tech product, which is great because it can’t be disrupted easily. But you know, I keep reading about and seeing videos online about 3d printed houses. Of course, you’ve seen this stuff. Now, the thing people have to realize is even though you can 3d print a house and barely anybody is doing it. There’s like a couple of experimental cases. If this is not an impact thing in the market, at least not yet. Maybe it will be someday. But those 3d printed houses still use actual commodities and materials. Okay, even if the construction is a little bit easier, and maybe you save labor costs, possibly making downward price pressure, right, there’s still built from commodities, whether they be plastic or lumber or, you know, while they don’t build 3d with lumber, but but you know, mostly petroleum oriented products, right? And so and concrete oriented products, so, what do you think about that? Is there any disruption possible? I mean, I don’t think there’s any big disruption coming our way until we actually like live in a forcefield. Something really futuristic.
‘Real Estate Guys’ 35:36
You know, back when the restaurant were petroleum transfer agents, cars had carburetors, yeah. And today they have fuel injectors, right, so the technology is completely different,
Jason Hartman 35:43
or they had electric motors
‘Real Estate Guys’ 35:44
or electric motors. And in all those cases, the car sale does what the car does. So houses will be built and construction methodology will hopefully continue to improve. That’s great for pricing that’s great for value
Jason Hartman 35:57
and it might be better quality.
‘Real Estate Guys’ 35:58
If I made last longer.
Jason Hartman 36:00
Yeah, so maybe the thing there will be that, you know, people don’t pay less for the house, they just get a better house. You know, like, Look, this iPhone is much better than the first phone I bought, which was 30 $200. And I find it. Okay. So it’s, it’s not like, you know, it has to be a price thing, it might just be a better quality, better standard of living, you know,
‘Real Estate Guys’ 36:19
absolutely. Plus, there’s the technology overlay of you know, the smart house and the way that systems are changing within thermostats and all of that, which is great, all that’s great for progress. And it’s great for real estate investors, if I can have a more stable understanding of my expenses, they go down, but if they’re more stable, if I know, right, depending on where you buy, if you buy in California, there’s a very good chance that your roof will last through its entire life. If you buy in Texas, it’s impossible for a roof to last 40 years because there’s gonna be a hailstorm. So right. So if you knew the ocean, yeah, right, you have different maintenance. And so I think there’s a there’s a lot of exciting things happening in technology for construction. But for the from the investor standpoint, it’s just it’s all good. will do is increase our ability to rely on whatever the numbers are going to
Jason Hartman 37:05
be. I agree. I agree. And one thing that really struck me by the way, and I don’t want to get off on this tangent, but maybe another show is how mature this industry is getting, like being at this conference and hearing all you know, this is becoming a mature, less fragmented industry. Oh, with these guys owning 3000 homes, 1700 homes, I’ve heard a lot of speakers, you know, talking about 10,000 home, right? I mean, this is becoming a more mature and I think yields will compress ultimately as it matures.
‘Real Estate Guys’ 37:32
Like in any industry. Well, there’s your There’s your crystal ball, we’re already seeing it happening, right. As soon as the big money comes in, whether that are hedge funds, or Reed’s or Wall Street, whoever is coming in to buy up a single family asset, right. Traditionally, this has been a mom and pop asset. Yeah. If you saw that,
Jason Hartman 37:46
and it still is, and it still is a drop in the bucket when we talk about this but the direction
‘Real Estate Guys’ 37:50
Yeah, clear in, right. By being at this event, it’s clear that there is a change, there’s a shift and who the buyer is right. And there’s been that we’ve seen that shift since you know 2008 When the big companies came in and staffed up inventory today, I think though the groups that we’re talking you’re talking about who have 1500 homes, 3000 homes, 4500 homes, they are more nimble, they’re smarter. They’ve gotten the lesson.
Jason Hartman 38:13
They’re doing humble single family home they
‘Real Estate Guys’ 38:15
are in which again, I think bodes well for all of us in the single family homes phase. Right,
Jason Hartman 38:19
right. Well, it’ll push prices up and make rental. It’ll probably push rents up too because institutional investors really crank those rental yields. Just go to any nice institutional apartment complex. And man, they charge a lot, right? Yeah. Okay, so more crystal ball stuff. Anything?
‘Real Estate Guys’ 38:36
I don’t know about crystal ball stuff. But I mean, talking about the technology I you know, didn’t really think when you first asked the question that much about technology from the standpoint of construction, although that was a good point. I look at it more in terms of the impact on marketing, on finding deals on discovering bad markets sooner. Good market sooner. I think that the industry and the people in it are just a heck of a lot smarter.
Jason Hartman 39:00
And the tools we have are so much better tools,
‘Real Estate Guys’ 39:02
because the tools are there because you have the data and because you have access to the data because you have access to a lot of people’s opinions. And you can think faster, you can think through issues quicker and you don’t have to rely upon it a conference. Although conferences are great, you can listen to things like podcasts, yeah, radio shows, and you have access to all this information. And so it does make it harder if you are not keeping up. If you are not upgrading your education if you’re not paying attention to the data and thinking things through
Jason Hartman 39:33
‘Real Estate Guys’ 39:34
someone else is if you’re gonna you know, when someone realizes a market is turning, you know, markets and Roberts due diligence class, he, he taught me that, you know, markets go through these progressions, they start out and they go through a growth phase, and then they go through a stabilization phase and then they go through a decline phase. And then eventually they go through a revitalization stage. And of course, we’re as a country, we’re fairly mature. That’s what societies do. That’s what societies do. Exactly. That’s exactly what goes On. And so if you can recognize where you are at in the cycle, you know how to organize your portfolio and make your moves. And that goes back to the theme that kind of evolved out of this whole conversation about adapting to change. And so the information that we have available to us to be able to see the change coming, the people who respond quicker and either get out of the way of something bad or jump on the wave of something good, are going to be doing better faster, and there will be a divergence between the people who are lazy, and the people who are innovative because the amount of time and effort it takes to get the information you need to make better decisions is no longer cost prohibitive. It used to be only the big guys can do it. The world is flattening. Everybody has access to Zillow, you know, everybody has access to Google streetview enter Google Earth and, you know, all these great tools, the
Jason Hartman 40:49
subtext, you didn’t mention it but like I was hearing the subtext there have, it’s a great opportunity because now every investor can geo arbitrage They’re investing. You don’t have to think like this provincial local investor. You know, one of the speakers I’m sure you heard this panelist yesterday, who said that, gosh, it was like 80% of the single family homes owned by investors in the country are owned by people that live within 10 miles, right. I may have not got those numbers Exactly. But the theme was that still mom and pop invest close to home, but the more sophisticated investor listening to things like our podcast, you know, they get it, you don’t have to be stuck if you live in LA, which is completely overpriced, landlord unfriendly. I grew up there. I know what it’s like, okay, you know, you you don’t have to invest there anymore. I’ve got tools now that allow you to be geographically free. And so you can geo arbitrage pricing and rents and laws and regulatory environments. It’s a beautiful thing.
‘Real Estate Guys’ 41:50
And the point is through technology, you can discover those markets, you can build relationships, and you can go get connected in ways that were completely Impossible before if you think about it, you know, I used to watch the old show you Jason you’re probably too young to remember this. Robert remember this called Big Valley.
Jason Hartman 42:07
I remember remember big ever watched it.
‘Real Estate Guys’ 42:10
When I was younger when I was when
‘Real Estate Guys’ 42:12
I was a little kid. I used to watch Big Valley and it was about this ranching family in Stockton, I believe they were in Stockton and central California was a foreclosure capital of
Jason Hartman 42:20
‘Real Estate Guys’ 42:21
Big deal when they wanted to go to you know, Sacramento to the state capitol, right. It was a big deal, right? They load up the horses, they’d load up the provisions, they would go and be a multi week track just to get to Sacramento. That’s an extreme example. But think how technology has changed people’s ability to access other markets today. I mean, you know, I get dental work done in Tijuana, Mexico. And because it’s cheaper and it’s better quality, how do your teeth look? Yeah, well, take Okay, get close to the radio. Can you see? My point is I discovered that online and I was able to get on an airplane
Jason Hartman 42:53
arbitrage medical I’m in medical tourism is a big deal.
‘Real Estate Guys’ 42:56
It’s another huge opportunity but again, I get on the plane in the morning. I fly down to San Diego I get out I rent a car drive over the border get my work done. And by that afternoon I’m back home and having dinner with my wife.
Jason Hartman 43:07
Yeah, right you couldn’t do that before
‘Real Estate Guys’ 43:09
that’s what technology has done and it’s done a lot for real estate investors Of course people who decide not to take advantage of it are stuck investing in their own backyard right it may not be the right yard it even
Jason Hartman 43:20
if it is cases it’s not an even if it is they won’t be diversified. Okay, so say they live in the best city in which to invest at that particular point in time, right? They still won’t be diversified and you know, I I don’t know what you guys say. But I say you got to be in three markets.
‘Real Estate Guys’ 43:34
I think three is a great number. I think 21 is too many you want to be diversified because one of
Jason Hartman 43:39
the mistakes I freely admit that I made, you know the old intro to my show, I changed it but it used to say you know owned properties in 11 states in 17 cities right. And now I over diversified so you can go
‘Real Estate Guys’ 43:51
well. It’s a great point because you wouldn’t necessarily think that if you’ve got white eyes as an investor, I want to own a lot of places. Yeah, how many relationships can you manage? So I think three is a great number four, right, two, three to five. But you know, there’s not been a market that has ever been the number one greatest single market for a long period of time market shift and yet as long term buy and hold investors, we get married to a market right? We’re going to be in a market for 510 20 years. So
Jason Hartman 44:20
hopefully 27.5 hopefully, you guys know what I’m talking about.
‘Real Estate Guys’ 44:24
Yeah. So you make the the adjustment market wise to you might today be in the perfect market to invest in but that is going to change? So I think even if you’re in a great market, look around.
Jason Hartman 44:34
Yeah, absolutely. Very good points. Well, give out your website and any final thoughts we got to wrap up? I got to be at lunch.
‘Real Estate Guys’ 44:40
Where easy to find what real estate guys radio.com still broadcasting on the radio after 19 years in podcasting, like you do, Jason and we’re big fans of your show. We appreciate the time today and encourage your listeners to continue to upgrade ideas in their mind and the education is what always pays the best returns.
Jason Hartman 44:58
Yeah, no question and likewise great. thoughts, any thoughts about predictions any any final wrap up on that though, the market
‘Real Estate Guys’ 45:04
will either go up or down, interest rates will either go up or down, the sun will come up and people will continue to need to live in houses. So there will always be opportunity. And if you want to bet on something, that’s a sure thing. Bet on yourself. Yes.
‘Real Estate Guys’ 45:16
There’s nothing you should doubt except your own limits.
Jason Hartman 45:19
Right. Good. points. good points. Well, hey, guys, thanks for being on. It was great talking to you again.
‘Real Estate Guys’ 45:24
Thanks for having us. Thanks, Jason.
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If you want to be able to sit back and collect checks every month, just like a banker, Jason’s creating wealth encyclopedia series is for you. This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.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.