On April 20th Jason Hartman had a radio interview on KABC Los Angeles 790 AM radio show. Enjoy the Interview. Happy Investing.
Announcer: Welcome to Creating Wealth with Jason Hartman, President of Platinum Properties Investor Network in Newport Beach, California. During this weekly program, Jason is going to tell you some really exciting things that you probably haven’t thought of before, or a new slant on real estate, fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible.
Jason is a genuine self-made multimillionaire, who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in nine states. This program will help you follow in Jason’s footsteps on the road to financial freedom through real estate. You really can do it. And now, here’s your host, Jason Hartman.
Jason Hartman: This is Jason Hartman with Platinum Properties Investor Network, the complete solution for real estate investors. Please enjoy this interview, which recently aired on KABC 790 AM in the Los Angeles market. If you’d like to get more information on our company and our unique complete solution for real estate investors, visit us online at jasonhartman.com or call our Newport Beach office at (714) 820-4200. Happy investing.
Al Rantel:Hey, we’re back tonight from 6:00 – 9:00 p.m. We’ve got our British simulcast tonight and much, much more beginning at 6:00 p.m. on Talk Radio 790 KABC. My friend, the man I trust when you want the right financial answers, Jason Hartman – you hear me talk about him all the time. I asked him to come on and answer a couple questions for me on this Friday because we had so many news events that overshadowed a couple of financial stories I wanted to find out about. One in particular relates to California, and whenever I have those questions, I call Jason, as I recommend everybody else does. Hi, Jason.
Jason Hartman: Hey, Al, how are you?
Al Rantel:Good to talk to you. How’s it going?
Jason Hartman: Good, good, fantastic.
Al Rantel:All right, well, fantastic’s a good answer. All right.
Jason Hartman: Good answer.
Al Rantel:Let me ask you this. The number of mortgage default notices sent to California homeowners last quarter rose to its highest in nearly ten years as home prices stagnated and rates on adjustable loans pushed higher. Many analysts say a surge of foreclosures is in the making and that it will weigh on already sluggish housing market and may slow the broader economy. Can you give me a little comment on that story?
Jason Hartman: Well, Al, you’re absolutely right. In the last quarter, almost 47,000 notices of default have been filed against California homeowners in just that three months, and that’s up 23 percent from the previous quarter and almost 150 percent increase from the first quarter of 2006. So when you look at it a year back, highest level in almost a decade, and certainly a real issue for California. No question about it.
Al Rantel:So where does this leave the market in general? Where does this leave people who are looking at investment? Of course, you and I have talked investing. You don’t believe in investment properties in California and I guess partly because of this reason, right?
Jason Hartman: Well, not at the moment. I don’t wanna say that I never believe in it. It’s just a matter of timing. You know, there are other markets around the country that are performing quite well right now, but the overinflated bubble market’s definitely in for some shock. This morning, in the Orange County Register, there’s an article about 771 more job cuts related to subprime mortgages, and the ripple effect of this, Al, is very significant. You just look at the commercial real estate market, okay, the office space market. In Orange County, for example, there’s about 100 million square feet of office space and almost 7 million of that, I think, is devoted to some sort of mortgage or mortgage-related company. So that’s going to come home to roost over the next few months as well, and landlords will be feeling the pinch, and I think it will be a good time to lease office space.
But it takes a while for all of this to play out. Nothing happens instantly. You see the –
Al Rantel:But are we – are we at the bottom yet now in California?
Jason Hartman: No, no, no, we’re not at the bottom yet.
Al Rantel:No, okay.
Jason Hartman: I mean I think we’ll see a generalized softening in most segments of the market, but not all, over the next two and a half to three years, and that’ll really be the time to be moving back into California as an investment market.
Al Rantel:Gotcha. Well, I’ll be there to ask you the questions in two years, but let me – before that – but let me ask you this before we run out of time.
Jason Hartman: Sure.
Al Rantel:Oh, and by the way, I’m not here this weekend or next weekend you know because I’m in London doing the show as of Monday, but I’d like to go to another seminar with you when I get back because I know you’ve got a couple of big ones coming up. I won’t be in town, but I will go when I come back, okay? So let’s –
Jason Hartman: Absolutely, we’d love to have you. We’ve got one tomorrow in Torrance if any of you would like to join.
Al Rantel:Right, right. Oh, I thought – is it Torrance or Carson?
Jason Hartman: Well, Torrance, actually. It’s close enough.
Al Rantel:Oh, okay. All right. Yeah, you know those cities all run together after a while. But yeah, we’ve been talking about that and I’m just sorry I’m not here because I wanted to ask you about this, but I’ll ask you while I have you on the radio. It’s even better. The government keeps saying that inflation is not a big problem, but I gotta tell you something. I go out there, and I’m not just talking about what’s going on at the gas pump, which is pretty tragic, and we haven’t even hit summer yet. But I go out there and I’m at the grocery store. I go myself to the market and all this stuff. I do whatever everybody else does, buy clothes and shoes and everything else, and I gotta tell you something. It looks to me like prices are going up.
Jason Hartman: Prices, the numbers quoted by the government are so doctored and so maligned, Al, in what’s called the Consumer Price Index. People should be up in arms about inflation. It is the most insidious type of tax there is. But I will say smart real estate investors can actually benefit from it because there are a lot of benefits to the real estate investor because of inflation. So it really hurts the poor and the elderly the most. Those are the people that are being devastated by –
Al Rantel:Right, anybody on a fixed income is stuck.
Jason Hartman: Fixed income or the savers. Ever since the 1970s, saving money has been the road to poverty. I know it sounds counter-intuitive, but it’s very true. Saving money is a very dangerous thing in an inflationary environment. Not a good strategy.
Al Rantel:Why is that? Because the money drops in –
Jason Hartman: The money drops in value. The best thing to do in an inflationary environment is borrow money because you pay back in cheaper dollars in the future.
Al Rantel:Oh, yeah, right, right. That’s true.
Jason Hartman: So, yeah, when you invest –
Al Rantel:See, that’s why you’re the smart one.
Jason Hartman: Yeah, when you invest – well, thank you. But when you invest in real estate, you take advantage of this through the debt and the debt actually becomes an asset to you. Very, very good strategy; very good thing to have happen.
Al Rantel:But you – it’s not my imagination that inflation is real. And it’s much bigger than the government says.
Jason Hartman: Oh, yeah. You know, the government says inflation is around 3 or 4 percent every year.
Al Rantel:I don’t believe it.
Jason Hartman: Neither do I. It’s completely bogus and I think it’s probably upwards of 8 – 12 percent a year.
Al Rantel:Now, the stock market today is at another record high. What does that mean?
Jason Hartman: Well, that just means the stock market’s at a record high, but stocks don’t offer the benefits real estate does. They don’t even come close. And when you adjust the Dow for inflation over the years, you find that it doesn’t work very well either because it’s not a good inflation hedge, whereas real estate, because of its unique characteristics, just performs so much better in an inflationary environment. The stock market is like a job. You’ve gotta watch it every day. That’s not an investment. That’s just an exciting –
Al Rantel:Yeah, and you know what we learned – well, I think we’ve always known this, but what this guy that everybody talks about, this Cramer guy on CNBC, admitted is that the insiders make most of the money.
Jason Hartman: Absolutely. We will have up on our website real soon, probably later today, jasonharman.com, we’re gonna post the Jim Cramer video –
Al Rantel:Oh, great! I’ve been wanting to see that and I couldn’t find it.
Jason Hartman: Al, he –
Al Rantel:Because I saw it a long time ago when he first said it and then I couldn’t find it again.
Jason Hartman: He not only admits, actually, he kind of brags about how when he made his hedge fund, he was manipulating the market. And it’s just unconscionable the way that game works. The people getting rich on Wall Street are the insiders –
Al Rantel:So you’re gonna have that at jasonhartman.com by today?
Jason Hartman: We will have it there and we can email it to anybody who wants to give us a call: 1-800-40JASON.
Al Rantel:All right. Hey, Jason, have good luck with the seminars this weekend and next weekend. I’m sure they’ll be packed and full of fun, and I will see you when I get back from London.
Jason Hartman: Thank you. Have a great trip, Al. Good talking to you.
Al Rantel: Yeah, you’re the best. Thanks for coming on and sharing the information. If you need help, call Jason. He’s a fun guy, smart guy. And I’m glad he verified what I thought about inflation because I am absolutely convinced that inflation is much worse, much worse than the government lets on. Like most things, the government doesn’t tell the story, or the whole story, the whole truth. We’ll see you tonight at 6:00 p.m. on The Al Rantel Show. Sean Hannity’s coming up next. Talk Radio 790 KABC.
Jason Hartman: Thanks for listening to this KABC interview. If you’d like more information, visit us online at jasonhartman.com or call (714) 820-4200. That’s jasonhartman.com or (714) 820-4200. Thanks for listening and happy investing.
I’m here with Senior Area Manager, Karam, and we wanted to talk to you quickly about his recent trip. He just returned yesterday from Jackson, Mississippi. Karam, what did you find there?
Karam: Well, Jason, it was a very interesting trip. Unlike other areas, this is a very unique area in the sense that we live here in California and we go to all these markets, and every market is different. Jackson, Mississippi, on the other hand, the way it is different from the other areas is they don’t have the apartment complexes like we have in most of our metro areas.
Jason Hartman: Yeah, so you don’t have that high density attached housing, huh?
Karam: That’s correct. So what happens is all these houses have high demand of rental, and on the rental side, there is not too many houses available for rental, so there’s a quick rental and you get the high rents, so the cash flow is better. But you have to drill it down to the micro area, the communities that we want to invest in, buy the investment properties. The first thing we look at is the school system. Now, if you look at any particular city and suburb, it may have a good school system or it may not be in the good school system. Now, one particular city may be half in one county and the other half is in a different county.
Jason Hartman: So that was true of Hattiesburg, right?
Karam: That’s correct, yes.
Jason Hartman: So if you look at Hattiesburg, you can’t choose by just Hattiesburg. Some of the area is not so good –
Karam: Not so good.
Jason Hartman: And some is a desirable investment area.
Karam: Right.
Jason Hartman: You were telling me about how they gave you a list of 131 properties that the broker thought would be good for our investors and the process of you narrowing it down and what you narrowed it down to. Why don’t you tell everybody about that?
Karam: Well, I just narrowed it down to 21 properties.
Jason Hartman: Out of 131.
Karam: Out of 131, and that’s all I will sell from, 21 properties, and they are in a good school system, good quality product. Looking at the communities, the location of the communities, location of the properties, and that’s all I came up with.
Jason Hartman: Excellent. So Karam, talk to us about this specific property you’ve got in front of me. This one is $179, 760.00, so we’ll call it $180,000.00. It’s almost 1700 square feet. The projected rent is $1500.00 a month and return on investment, Karam?
Karam: Yes, 42 percent believe it or not.
Jason Hartman: Forty-two percent projected ROI and if you qualify for all that goes on tax benefits, projected first year ROI is 128 percent. Don’t try that in the stock market, huh?
Karam: That’s correct. The reason is these areas, not only the high rent, but the property tax is very, very low.
Jason Hartman: Only $195.00 a month on that property. Wow.
Karam: Right.
Jason Hartman: Good stuff. Okay, Karam, anything else you wanna talk to us about. Let’s – you’ve got one more property. Maybe this one in Indianapolis, that looks kinda interesting. There’s some big discounts on this.
Karam: Yes, Indianapolis really surprised us, that market, and we are getting great deals.
Jason Hartman: Yeah, we weren’t expecting this one to be so good.
Karam: Yes. Great deals and I’ll give you an example of the property that I saw yesterday. Twenty one hundred and one square feet, four bedroom, two and a half bath, brand new single family house, comes with a rent-ready package, meaning washer, dryer, refrigerator, blinds, garage door opener, front and back yard sodded, for only $127,000. You know what that means, Jason, per square feet price?
Jason Hartman: Yeah, that’s amazing. You’re buying like very close to the cost of actual construction here. How much?
Karam: $60.00 per square feet only.
Jason Hartman: $60.00 per square foot. That is unbelievable. It’s like the downside risk is almost nothing. Go back and listen to our podcast on risk evaluation.
Karam: And again, return on investment is 41 percent.
Jason Hartman: So 41 percent projected return on investment, and these are some good properties. Give us a call or check out our website for more properties and all the details are listed there. And we will look forward to talking to you on the next podcast. Thanks.
Hey, I just wanted to announce a couple of quick things for you. If you are able to come to one of our live events, we would love to see you and meet you in person. We’ve had people fly in from all over the U.S. for them. So hopefully, you can join us for some of those events. Also, remember our rental coordinator is here to help with your rental properties. If you need assistance with your rentals, your property managers, your advertising, remember we’re here to help and we stay with you through the life of the investment. So feel free to call our office anytime and ask for the rental coordinator for assistance on your rentals.
Also wanna remind you, listen to our old podcasts. At least go back to podcast No. 13 forward and listen to all the podcasts after that. You’re welcome to listen to all of them. The ones before No. 13 are older, but they’re also good, but the newer ones are No. 13 and forward, which are really good ones to listen to, so please take advantage of that and remember, the overall market commentary right now, due to the mortgage meltdown, the subprime issues that are going on out there in the market, is that rents are going up all across the nation. When people cannot qualify as easily to buy a property, they are forced to rent. So let that work in your favor by accumulating more rental property assets and don’t be afraid to ask for more rent and raise your rents. That’s a good thing to do.
Also, if you are interested in career opportunities with us, our company is growing quickly and we would love to talk with you about career opportunities. We’re in the process of getting approved for franchising. If you’re interested in The Platinum Properties Investor Network franchise, be happy to talk with you about that and get you set up there once we are finished with our approval process.
Be sure to see appropriate disclaimers and disclosures on our website at jasonhartman.com. Remember that we are not tax or legal advisors. So give us a call on any of these issues and remember we are here to help and we will look forward to talking to you on the next podcast.
This material is the copyrighted creative work of either Jason Hartman, the Hartman Media Company, Platinum Properties Investor Network, Incorporated or the J. Hartman Company, all rights reserved.
End of Audio
Duration: 17 minutes