Reuters Dateline Amsterdam, no dollars here. Jason’s comments on the Fed fueling inflation and the conference call.
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. Welcome to another edition of Creating Wealth. Thank you for listening. We are approaching our 50th show, so that is great news and we appreciate you listening and all your support and all your comments. By the way, we love to get your comments, so shoot us an email; post a comment on the website at www.jasonhartman.com. We just really like to hear from you and make sure also, that you go and request the free CD on our website. I think you’ll really, really like that.
We are in our new office, as you know, and getting out of boxes and trying to get settled here. We’ve got our big Grand Opening party on Thursday evening. By the time you listen to this podcast, that may have already occurred or be just about to be occurring. And then we’ve got our Master’s Weekend this weekend, which is the big event where we fly in people from all over the country to talk about a variety of topics. We have experts on everything from taxation, multiple parts of taxation, to 1031 exchanges to managing your managers, to property tracking and evaluating and analysis, and just a bunch of great stuff coming up. So it is a busy week.
But I’m getting over a little laryngitis so I will not be talking so much on this podcast because what we have for you after a few comments is a conference call that we did at the end of January, January 2008, this year, and want to share that with you because we’ve got some very good feedback on that conference call. So we have several people from all over the country on the call talking about different markets, property managers, agents, etc, so I think you’ll like that.
But just before we start into the conference call, a couple of comments here. No. 1, I’ve been talking about how we are in the midst of a perfect storm, to use the cliché from the movie. The perfect storm is where we have just got such tremendous opportunity as real estate investors who play our cards right. Now, it’s, of course, important that we’re using the right plan based on the market we’re in, and I tell you, pretty much all of my predictions have come true. Over the last five years or so, I’ve been really, really making it a point to get on record with my predictions about the market and what I think will happen. I predicted the California downturn way before it started, when everybody was criticizing me about it. That was really the same downturn I thought would happen in all of the overvalued bubble markets, South Florida, the Northeastern United States, etc, etc. Many markets, really, not just California.
But let me tell you one area where I was wrong, okay? Everything I predicted came true so far, knock on wood. The rents have strengthened in many of our markets. I predicted that would happen. I predicted there would be a mortgage meltdown due to irresponsible lending. I predicted the bubble markets popping. Many people got upset with me for predicting that.
Here’s what I was wrong about. I thought you should know. You’ve gotta admit when you’re wrong. I did not think that the Fed would loosen the money supply as much as they have and I thought, by now, interest rates would be quite a bit higher than they are. That is actually very good for us as investors and in an article dated March 20, this is a newsletter that I get, and this one was written by Jennifer Yousfi. She writes an article entitled, “Is the Fed Fueling the Inflation Fire,” and it talks about, “With six rate cuts in the past seven months, the U.S. Federal Reserve has focused its efforts on a slowing economy, while placing inflationary worries on the back burner.”
This is really part of that perfect storm. I did not think rates would still be this low, but you are lucky and I am lucky as real estate investors that they are this low. Of course, it is tougher to qualify for loans, but again, that’s helping us because that is strengthening our rental markets in so many areas.
Also, what else is this doing? Well, if you’re a regular listener, I don’t have to tell you. It’s reducing our loan balances by causing more and more inflation. There’s a lag time in this whole process, so just fast forward two, three, four, five, six, ten years and I tell you, folks, this is another one of my predictions and very few people right now really are willing to admit it or wanting to agree with me on it. I mean some say they concur with this belief. Inflation is going to hit you and me and everybody right between the eyes really, really hard in the coming years.
We have seen a lot of things that are suppressing inflation, but they are pumping liquidity into the market and I tell you. Inflation is going to be massive. Just fast-forward ten years. What’s it going to be like in 2018? Well, they say by summer, gasoline will be $4.00 a gallon. What will gas be in 2018, in ten years? Maybe $7.25 a gallon? I have no idea. What will the price of gold be? Gold has gone up so much. All the precious metals have. The past week, though, they’ve gone down, but again, we don’t care about those little micro trends. We care about broader macroeconomic trends.
Turning on CNBC every morning, as I do, watching the financial markets, it’s like being in a casino. I think people really are addicted to it because they like the ups and downs and the excitement and the thrill of it. It’s like riding a rollercoaster.
But we wanna take the strong, steady approach and look at the macro trends, the trends that we are very assured will occur. So ask yourself, what will the price of gold be? Many say that the price of gold, if it were at the peak, as it was back in – oh, what was it – 1989 or so, it would be over $2,200.00 today, adjusted for inflation. And remember, that’s an inflation adjustment based on the untrue, lower-than-reality rate of inflation that the government would have us believe.
Now, any sensible person knows inflation is much higher than the government is telling us. So what would the price of gold be in 2018? Will it be $3,600.00 an ounce? Will it be $5,400.00 an ounce? Will it be $900.00 an ounce? Will it be $400.00? I’m kind of of the belief that it’s going to be higher, but again, the problem with gold or any precious metals is they don’t work that well as an investment.
Let me make this clear, by the way. I’ve made some money investing in these precious metals and I think they’re okay. I do think they’re very speculative. They could easily go down in value just as much as they go up in value. No one has been very good at predicting the prices of any of them. But I tell you. They’re, in my opinion, a good way to keep cash. So if you have cash, if I were you, I would rather have my cash denominated in precious metals than I would in U.S. dollars because dollars are a sure loser in the future in my eyes.
What does that mean to us, as prudent real estate investors that use debt properly and make debt part of our asset? Well, it means really good things. Listen to this article. I’ll just excerpt a couple parts. Our podcast editor, Andrew, emailed this to me. Thank you, Andrew, and I thought this was very telling. He’s the one person that really has to listen to everything in all the podcasts because he edits them, and therefore, you have a better listening experience.
But this is a Reuter’s article. It’s dated Wednesday, March 19. It’s just last week. It says, “Dollars Tough to Sell.” Amsterdam. “The U.S. dollar’s value is dropping so fast against the euro that small currency outlets in Amsterdam are turning away tourists seeking to sell their dollars for local money while on vacation in the Netherlands.
“‘Our dollar may be worth zero over here,” says Mary Kelly, an American tourist from Indianapolis, Indiana,” – by the way, that’s one of our markets – “in front of the Anne Frank house.”
Hey, I was there. I toured that when I went to Amsterdam. It was a great tour. If you ever get there, make sure you see the Anne Frank house.
“‘It’s hard to find a place to exchange. We have to go downtown to the central station or post office.’
“That’s because the smaller currency exchanges – despite buy/sell spreads that make it easier for them to make money by exchanging small amounts of currency – don’t want to get caught holding dollars that could be worth less and less by the time they can sell them.
“The dollar hovered near record lows on Monday, with one euro worth around $1.58 versus $1.47 just a month ago.”
Well, we live in a global economy, right? What does that mean to us? The purchasing power of the dollar continues to decline, and in many cases, depending on what exact timeframe you look at it, this decline is dramatic, okay? It is dramatic.
Now, wake up and pay attention to this! Please, pay attention to it! Because, think about it, your home equity – do you have equity in your house? Do you own your house? Do you have a savings account? Do you have a mutual fund? Do you own anything denominated in dollars? That is devaluing all the time, except when it comes to real estate because real estate is traditionally a great inflation hedge and now, let’s take that one step better. Let’s pile a lot of debt on our real estate, as much prudent, high-grade, investment-grade debt, fixed rate loans, as we can, and let the renter pay for the debt and then let inflation occur and let inflation devalue that debt. I love that magic, that magical combination.
Now, let’s listen to the conference call and I hope you’ll join us for the Master’s Weekend coming up or one of our coming events. And be sure to go online to www.jasonhartman.com, post your comments on our podcasts. We love to hear from you. Shoot us an email through the Contact Us section or request the free CD and let’s listen in to the call.
Conference Call
Jason Hartman: Okay, everybody, welcome to the conference call. My name is Jason Hartman with Platinum Properties Investor Network. We are a real estate firm that is celebrating our 11-year anniversary and we are based in Newport Beach, California. And we are moving next month, we’re glad to say, to a big, beautiful new office in Costa Mesa, and that is a reflection of the good real estate market that we’re in, believe it or not. I know you hear a lot of stuff in the media about the real estate market, and there’s an old saying in real estate that all real estate is local, and I would definitely agree that that’s true.
We are in 36 markets all around the U.S. and we are experiencing some very, very good investment opportunities. In fact, what we are seeing right now is kind of like that movie you may have seen, The Perfect Storm. And there’s a confluence of factors that is making things really, really interesting right now in terms of investment opportunities.
The first one is that we are seeing a lot of pressure that these builders, especially the large national homebuilders have. They are very, very motivated sellers right now because they are experiencing tons of pressure from Wall Street and a lot of national pressure. But the interesting thing about it is that they are in some very good markets as well, and some of these markets around the country are markets that we deal in. And this pressure is sort of put upon these builders from a national level and they’re in some bad markets that are really hurting them, and the bad markets, the bubble markets like California, Arizona, Nevada, Oregon, a lot of the markets in the Northeastern United States, Hawaii, Chicago area. That’s most of them. There are a few more – oh, a lot of Florida. I’m sorry. Don’t forget Florida.
They’re experiencing a lot of pressure from these markets and they’ve become very, very motivated sellers. I would say in many cases, the national builders are more motivated than the banks and you’re hearing a lot now about REO properties and bank foreclosures and short sales, and certainly, banks are also what they call “Don’t Want-er Sellers” or motivated sellers. But the builders also have vacant properties that they need to sell because on a national basis, they overbuilt. But in many local markets, we’re still seeing a lot of strength and there are a lot of terrific opportunities out there.
Now, we’ve got several people that will be on this call tonight to talk with you, but I’d like to introduce Senior Area Manager Karam, and Karam, can you share maybe some of your experience about the builders’ national pressure and how they’re negotiating deals and giving big discounts and rental incentives and things like that?
Karam: Absolutely, Jason. It’s not just the national builders. National builders, for sure, because they’re getting the pressure, they’re feeling the pressure from their corporate headquarters because of these appreciating markets are not doing good. So the markets that are also doing well, like Mobile, Alabama, and Austin, Texas, Houston, Texas, Indianapolis, Columbus, Ohio, all these markets are really great markets, but because of the pressure from other areas, they want to stay ahead of the game and they will discount their properties that they have in inventory.
And what they’re doing is, by doing so, they accelerated their sales in all these areas and that balances out with the overpriced markets.
Jason Hartman: Well, one thing that I would like to do is I think you have Angela, one of our builder sales reps, on the phone, and Angela, I think you’re there and I’ll ask Karen, our operations manager, to unmute you if you just wanna comment on that before we move on to the next big factor. And then we’ll have you back on a little later in the call to give specific property examples. Angela, are you there?
Angela: Yes, I am here.
Jason Hartman: Okay, and you are our Indianapolis agent, right?
Angela: Yes, I am.
Jason Hartman: Excellent. Well, I just wanted to have you maybe address how your builder’s position is on this and see if you had any thoughts or comments on that before we move on to the next part of that subject.
Angela: You are exactly right in what you said and that I used to work for a builder and now being out on my own, the pressure of the builders, the Midwest markets right now are carrying the rest of the country. They’re counting on the Midwest to get their sales and their numbers up because builders have to meet specific closings. So therefore, the discount’s huge. I’ve never seen anything like it. We’re seeing tens of thousands of dollars in discounts on properties that – I mean you just never see it. It’s a once-in-a-lifetime thing and every time I see it, I’m amazed and I’ve shown Karam some deals and we’re just like it’s unbelievable what they’re willing to do right now, just because they have to get these closings. And they’re willing to take some hits in their margins to do so. So for anyone willing to invest right now, it’s just an incredible opportunity.
Jason Hartman: You know Angela, what we’ve noticed is that this pressure is an uneven thing and we say, of course, as an investor, people need to be conscientious about the real estate market and the investment market, but also be conscientious about the builder’s business cycle and the builder’s business pressures. And we’re seeing in healthy markets, in good markets, builders that are cutting deals to make up for their inventory they’ve got in bad markets, which is really creating some terrific opportunities for investors. And that’s kind of what I wanted to comment on. If you or Karam, do you have anything else to mention on that?
Karam: What is happening is when builders start doing that and investors see the deals coming to them, they just grab it and some areas, I’ll tell you, the builders are running out of inventory and they can’t keep up with the sales. And the sales are going up and builders are not taking chances. They’re not raising the prices. They’re cutting back and even the regional builders who are doing well, they cut their prices because they want to stay ahead of the game. They don’t want to be in the position where they have a whole bunch of inventory, so they are cutting their inventory, selling it by discounting, and investors see the great opportunity in buying it. In the area that we are dealing with, it’s buying spree going on.
Angela: In talking with the builders, they have said that for every month that a home sits on the market that they pay anywhere from $1,500.00 to thousands of dollars on monies that they owe for that property. So that’s why they’re so willing to cut them as well.
Jason Hartman: Yeah, you know, what’s interesting about this, Angela and Karam and everybody else on the call, is that so many people are focusing on these repossessed properties and foreclosures and short sales, and certainly, we’ve considered offering them through our network, but we’ve just found the new homes to still be a better deal.
And it’s nice because you can start out with a nice, clean, fresh slate with a warranty, with a brand new property, where you don’t need any fix-up work. You’re not gonna get ripped off by contractors and you’re not gonna be in any complications where you’re managing a remodel job from 1,000 miles a way. And so you can invest nationwide and start nice and fresh with a clean slate from a very motivated seller, where these builders are just cutting some incredible, incredible deals.
The other part of this perfect storm, if you will, is the Federal Reserve and how they are just cutting interest rates and loosening the money supply. Now, this has, of course, multiple ripple effects throughout the economy, but one of the major effects it has, of course, is it makes the mortgage asset – and we say that the mortgage is a big asset as part of the investment – it makes it much cheaper to borrow. I don’t know how much people have considered this, but if you can lock in your cost of borrowing for the next three decades, and if you think about it, you look back, other than a few points after the post-911 terrorist attack, interest rates really could possibly never be this low again in our lifetimes. I mean it is a historic opportunity in my opinion.
Now, the other things that means, besides the fact that you can lock in on great mortgages, and we believe in getting 30-year, fixed rate mortgages – our investment philosophy is very conservative in that way – and locking in that cost of borrowing for a long, long time, but the other thing that’s great about this loosening of the money supply is that it is the predecessor to a whole lot of inflation that is coming our way.
And inflation is caused by the loosening of the money supply and the whole mortgage meltdown mess that Alan Greenspan’s Federal Reserve basically got us into, and that inflation benefits us as real estate investors because what we’re so interested in is buying really, really cheap land in areas where most of what you’re buying is the structure. It’s the house sitting on the land or the four-plex sitting on the land or the apartment complex sitting on the land or whatever, because, when you do that, all of the ingredients of that house, the lumber, the energy costs, the copper wire, the glass, the steel, all of that stuff is really pressured to go up in value because of the inflationary factors going on and the consumption factors going on around the world, namely the 2.5 billion people in China and India.
So we’re kind of like commodities investors, but we get the real estate label on these commodities because that gives us the really advantageous tax benefits and the really advantageous financing opportunity, and it also lets us rent the properties out to somebody else who will pay the debts for us.
And that’s why real estate trumps any other investment, whether it be stocks, precious metals, regular commodities, because someone else pays the debt and that’s why we love real estate so much. But we really don’t like real estate in terms of high land cost. We like something that is commodities with a real estate label on it.
Now, the other factor in this perfect storm – so we went over the builder’s business cycle and the builder’s pressure, the Federal Reserve, and the cutting of rates and how much money you can save, I mean think about it. Just in the past two months, the cost of a mortgage has gone down by about 14 percent and you can lock that in for the next three decades. That is a huge, huge advantage. The other thing is, of course, the general soft market in the media, but not all markets are soft. But a lot of these builders are acting like the nationwide market is soft because of their business pressures.
And the other part of that perfect storm is we’re seeing massive strength in the rental market, and I thought if we could unmute and have Nancy and Gia talk a little bit about this and Karam, you may have something to add to this as well. Let’s talk about the rental market issue because the rental market is really, really good in these markets around the country because it’s harder to qualify for loans. So are you there? I think everybody can talk now. Nancy, are you there?
Nancy: Yes, I’m here.
Jason Hartman: Okay, I’d like to introduce our newest team member, Nancy. She’s an investment counselor here, and Nancy, if you can just speak up a little bit louder and give us any of your perspective on that one.
Nancy: Sure. Jason calls it the perfect storm. The way I think about it these days is all the planets are aligned for real estate investors. We talked about a couple of those things. We said home prices in the areas that we recommend are being discounted, which to me means we’re getting a good deal on those prices. We’re buying these houses brand new, single-family homes, from the builders at near construction costs. I mean it’s not gonna get any cheaper than near construction costs for these kind of opportunities.
Jason Hartman: And Nancy, that’s a very good point. I just wanna elaborate on that a little bit. That means that you’re basically eliminated any downside risk on your investment because if you buy it at or very close to actual cost of construction, there’s almost no chance that you could really have any significant loss on the investment. So you really eliminate the downside risk with what Nancy is pointing out. And by the way, for those of you who want more detail on any of these concepts, you can go to www.jasonhartman.com and listen to our podcasts where we’ve got free audio recordings where we go into detail on these subjects. But go ahead, Nancy. I just wanted to mention that.
Nancy: Sure. Another reason I think the planets are aligned for us as well is the areas that we recommend have very low land costs versus structure costs, and what that means to you from a tax perspective, as you know, is greater depreciation on your taxes. So that’s another item in our favor.
Jason Hartman: Good point. And you know real estate is America’s most tax-favored investment and taxes are the largest expense any human being has in their life. And for those who qualify, and we’ve got podcasts on this subject – it’s a long discussion – what Nancy’s saying is these low, low land values give you a much bigger tax benefit, so you can go online and listen to some of the audio about that where we interview CPAs and so forth.
Nancy: Another reason that I think it’s the perfect time, too, is we talked about how interest rates are low and when money’s on sale, as Jason says, you stock up. And that’s perfect for the real estate investor who has good credit and money to invest. Now, what that means, however, is the interest rates may be low, but it’s still tough to get that credit out there. The banks are really scrutinizing who they’re giving loans to, so for those folks who don’t have really good credit, they need to rent because they can’t buy. So consequently, there’s another reason why it’s the perfect time for real estate investors to be buying these properties. All of the factors are lining up in our favor at this point and, in my opinion, there couldn’t be a better time to buy with all of these things lined up.
Jason Hartman: You know, Nancy, that’s a very good point and to talk about the financing side of it, why don’t we bring one of our affiliated lenders online and it is Tony with Wells Fargo. And Tony, are you there?
Tony: Yes, I’m here.
Jason Hartman: Okay, great. Can you just give us a little perspective? I mean we just talked about how interest rates for investors have come down by about 14 percent in the last two months. I mean this is just hugely significant. The loosening of the money supply, it’s sort of there are two points. One point is the ability to borrow, but the second point is when you do borrow, assuming you’re able to, the cost of the borrowing, and the cost of the borrowing has gone down so much, but the ability to borrow has actually tightened a little bit, which as the effect of strengthening the rental market like Nancy was saying. So if you can lend us your perspective on both of those, that would be great.
Tony: Sure thing. Well, just to touch on the rates, right, rates have been going down here in the past two or three months. I mean we see a decrease in rates by almost a full percentage point in some of the areas that you are buying these homes. I was actually pricing someone in Ohio and I was able to pull price around 5.875 on an investment property of all things, with maybe 10 percent down. So it’s very advantageous now. The rates are going to continue to go down with the way the Fed is looking on the spur of the market, get more money out in the market, get more people to spend. They’re going to continue to cut these rates, so it’s gonna get better and better.
Jason Hartman: Yeah, I think that over the next couple of months here, you’re going to see a really opportune low point, so if someone were to start looking at investments today, purchase something in the next couple of weeks, and then close on it in the next 45 days or so, I think they’re just gonna hit the mark perfectly because remember the other dimension of this whole thing is the rental dimension and we’re moving into a very good time of year to be renting your properties. Going up for rent in the spring is just fantastic, unlike doing it in the dead of winter where it’s much harder to rent your properties. So that’s a good part of the dimension, too. But go ahead, Tony.
Tony: Well, I’m glad you – that was going to be the second point. It’s a great time to buy a house, get a renter in here. Everyone’s looking between March and the beginning of summer to get people moved in. That’s typically when leases are up and people are looking to buy or rent. It is a little bit harder to get lending out there, but once you get the loan in place and you have someone move in, it’s a great time to go ahead and buy and lock in.
Jason Hartman: And on that point, Tony, that’s a very good thing you mentioned because it is harder to qualify, but historically, compared to years ago, and I’ve been in the business now over 20 years, money is still pretty darn easy to borrow and I’m just looking at an article here about how gold futures are rising and the dollar is declining in value even more and platinum, our namesake – but here we’re talking about the metal – is surging in price, too. And all of that means that when you borrow money, it’s getting cheaper to pay back because that dollar is becoming less and less valuable over time. And that is what we call the Great Inflation Payoff, where inflation essentially pays off your debt for you, as well as your tenant paying off your debt for you.
Gia, did you have anything to mention on the rental market?
Gia: Yes, absolutely. You were talking about renting through the winter, and last summer and last fall, when everything was falling apart with the mortgage meltdown, we saw a tremendous strengthening in the rental market and we kind of thought we’ll hold our breath through the winter months to see what’s gonna happen in some of these markets, and not a slow down in our best rental markets. For instance, we had a house in Austin – I’m not sure if a lot of you are familiar with our rent-to-value ratio, so our target number is .7 rent to value, so for every $100,000.00 you spend on the house, we wanna see that $700.00 back in rent. So a $200,000.00 home will rent for about $1,400.00 and that’s our ideal number and that’s what we’re getting in a lot of these markets.
Austin has been about .6, .65; it’s been a phenomenal market. The appreciation has been there, so you know that’s acceptable to us. But this is a house that closed – actually, it leased in less than 30 days. It just closed in January. She paid $159,000.00 and it got leased in two weeks for $1,250.00, and that’s a .78 RV ratio.
Jason Hartman: That is fantastic. I mean don’t try that in California or any of these overpriced markets around the country, like most of Florida and California and Arizona and Nevada. These are markets you wanna avoid. We’ve got markets with terrific cash flow. You’re buying very, very inexpensively and you’re buying with almost no land value component. So the land is costing almost nothing here and the commodities that build the house are the things that you’re going to see continue to go up in value. So that’s a very good RV ratio, Gia, or rent-to-value ratio.
Gia: Right, so Austin remains very strong. We have zero vacant properties from our network there and part of that goes to the neighborhoods we pick. We pick neighborhoods where people actually want to live, so they’re easy to rent. But our other market, Indianapolis, has also been very strong and this is another one of those where when the builder discounts those properties, they still base their rent on the square footage of the home, so the rents that you’re getting just make these investments sing.
And we’re getting close to 1 percent RV in some of these properties. In fact, one closed December 28, so right after Christmas. This client paid $129,000.00. It rented for $1,195.00. It was leased in two weeks, so the tenant moved in in the middle of January. Now, this is the dead of winter in Indianapolis where they’re moving in the snow.
Jason Hartman: Gia, wait, wait, let me just go over that to make sure I heard that correctly. You’re saying they paid $129,000.00?
Gia: Yes.
Jason Hartman: And it rented for $1,195.00?
Gia: $1,195.00, exactly.
Jason Hartman: That is almost 1 percent RV ratio or rent-to-value ratio. That is phenomenal. So the rate of return now, everybody listening, this is what you compare to your savings accounts, your bond funds, and God, I hope you don’t own any bonds. That’s about the worst investment going, if you ask me, your savings accounts or your bonds or your mutual funds, or your individual stocks. You know, typically, that kind of RV ratio will generate a return on investment of about 40 percent annually, if you follow all of our other rules.
And by the way, we’re not going through all those tonight, but we have something called the Ten Commandments of Successful Investing where we really outline a prudent, conservative strategy that really works in today’s market, and it’s on our website at www.jasonhartman.com. So please feel free to listen to that. All of this content is completely free, by the way.
Okay, well, Gia, those are some great stories. Now, one thing I wanted to just have you mention, Gia, and we may need another comment from Tony here if he’s still on the line with us, and we’re gonna talk about specific properties and specific opportunities in a minute. And we are in 36 markets all around the United States, but one of the things, Gia, that you’ve talked about on our podcast a lot is the difference between the macro markets and the micro markets, and I want all of the listeners to be really, really careful when they’re hearing advice from real estate people.
It’s not just about running over to Austin, Texas, or Columbus, Ohio, or Indianapolis, Indiana, or Mobile, Alabama, which, by the way, these are all very good markets right now. But it’s not just about running over there and buying property. You can make huge mistakes doing that and I ask you to just consider wherever you live around the country, any of you listeners on the line, and consider how much a city varies in terms of its different neighborhoods.
You know, here in Orange County, California, where we are, you can go from one city, Irvine, and right next door to it is another city called Santa Ana, but completely different real estate markets, completely different housing stock, completely different school districts, for better or worse, and it’s just a whole different world. So you’ve gotta pay really close attention to the micro markets within the cities. Gia, Karam, any comments on that?
Gia: Yeah, I just wanna say we depend heavily on our agents on the ground there and our property managers, and Angela, we call her all the time. She has, I believe, lived in Indianapolis her whole life, so she handpicks those neighborhoods. All of our agents do. They look for the best school districts. They look for where people actually want to live, where the crime rate’s low, all those sorts of things that where you would actually wanna live if you were living in that city. And so, it’s – we really want our clients to have a good experience. We want you to come back and purchase more. We want you to refer people to us. This is not a one-time transaction for us. It’s a long-term relationship, so we have every intention of making it work for investors.
Jason Hartman: And let me just mention something about what we don’t do. We are incredibly picky and I know that all of our brokers on the ground in each of our local markets will tell you this and collaborate it. We are incredibly picky about our property selection. I don’t want to say completely “never” because there may be an exception occasionally, but I’m gonna say pretty much never ever recommend a condo conversion. We don’t really like condos very much at all, although there are a few exceptions from time to time.
We mostly like the sort of non-sexy, single-family homes that are in nice yuppie neighborhoods that are master planned communities. Of course, they’re all brand spanking new. They come with warranties and we recommend very conservative financing. No adjustable rate loans.
We always impute a vacancy factor into all of our pro formas and projections, and we just think this investment works. I’ve made millions of dollars investing in real estate over the years and it doesn’t require hype. There’s good product out there and our job for you, our client, is to be really picky about the product we accept. And we can be picky because we’re not attached to any one market, any one builder, any one agent, any one property. We are totally area agnostic and opportunistic about where we go.
So with that, do you want to talk about maybe a profile of some specific properties? Karam, do you wanna talk about Franklin Township?
Karam: Yes, Franklin Township is in Indianapolis and of course, Angela is our agent over there. She sent us today, this morning, we got some new inventory and I will give you an example in a moment, but what it is is all these properties, like Gia said, are preselected, handpicked, brand new, single-family houses, and they come with – most of them – come with the rent-ready package, meaning washer, dryer, refrigerator, blinds, garage door opener, front and back yard sodded. In some cases, front yards are sodded; back yards are seeded. So all these things are there for the tenant to move in. It’s a turnkey operation.
And just to give you an example of what we got today in one of the houses, for example, in Franklin Township, and that is 1,559 square feet, three bedroom, two bath, for $131,900.00 only; $131,900.00. And there are, of course, different size houses available and I’ll give you some of the larger ones.
Jason Hartman: Karam, by the way, just mention, if you would, on some of your properties when you talk about them tonight, the cost per square foot. So on that one you just mentioned, do you have the cost per square foot handy?
Karam: Yes, uh, huh. The cost per square foot, of course, this is a 1,559 square foot, it comes to $85.00 per square foot.
Jason Hartman: Okay, everybody, I just want you to give that some consideration. $85.00 a square foot. Now, most of the people on this call probably live in more expensive markets than that. I know here in Orange County, California, you’re looking at many properties that are $500.00, $600.00, $700.00, $800.00 a square foot, if not more than that many times. This is so inexpensive and what that means is like Nancy alluded to, you’re eliminating any downside risk because if the market just went down the tubes completely, the builder couldn’t supply that house again for that price.
And you’re already getting kind of an arbitrage, if you will, of making money on these construction materials, and I’m sure Angela will collaborate this, because these builders order these materials 8, 10, 12 months in advance. And so it’s just incredible when you can buy really close to the cost of actual construction. It’s a very important thing to do that.
Karam: Here’s another good one. Four bedroom, two and a half bath, and remember, this comes with the 30-year builder warranty in this particular builder’s case. Most of the builders are 10-year warranty, but this builder is 30-year warranty. 2,321 square feet for $159,900.00, so per square foot price, $69.00 only.
Jason Hartman: $69.00 a square foot? Now, is that actually –?
Karam: A beautiful, beautiful house.
Jason Hartman: Does that include the land? That’s amazing.
Karam: If anybody is interested, give me a call after this conference call and I will send you one page pro forma, what we call a first-year projection, and that has the picture also. And you’ll be really amazed to see what kind of house that you’re getting; huge house, 2,321 square feet for $159,900.00.
Jason Hartman: And Karam, what is the projected return on investment on that property? Do you have that handy?
Karam: That’s a good question. The full return on – before the tax benefit is considered – is 31 percent.
Jason Hartman: Thirty-one percent projected return on investment. Now, what goes into those projections, everybody listening, that’s very conservative. We’re only projecting very modest 6 percent appreciation. The historical averages since 1968 are about 6.4 percent. We have them from 1926 to 1992 at 11.1 percent, according to the Wall Street Journal. The last ten years have been at about 7.29 percent. We’re going below all of these averages. We’re also assuming the property will be vacant one month per year and based on all of these conservative assumptions, and we’re even adding in maintenance costs there, which you won’t have for your first few years, you would still get a projected return of 31 percent annually.
Now, compare that to stocks, bonds, mutual funds, and I tell you, in the stock market this year, it is going to be a volatile year in my opinion. So we’ll see how it plays out, but there’s a lot of weird stuff going on out there.
Karam: Here’s the thing. If you compare with the stock market, $159,900.00, $160,000.00 stock, you would pay at least half if you buy on margin, if not full price. But here, with 10 percent down, which majority of 99 percent of our clients, customers, they do qualify for 10 percent down and approximately 3.5 percent closing costs, you’re looking at $21,000.00 total investment to buy this brand new house that is turnkey, everything included.
Jason Hartman: So most of our properties, you can purchase them for about $20,000.00 to $23,000.00 with closing costs and down payment. And then you put a renter in there and we help you do that. We prescreen and recommend property managers in every one of our markets and we also exert leverage over the property managers to make sure they’re doing a good job for you. And the tenant pays for your mortgage costs and your caring costs on your properties.
You buy your stocks on margin and the most you’re gonna get is 50 percent versus 90 with the real estate and the stocks don’t give you any tax benefits. The real estate gives you tax benefits. And you can’t rent the stocks out to pay for the cost of borrowing on margin, so that is the unique characteristic of real estate.
Anything else on the Franklin Township area, Karam?
Karam: We have about five or six houses that we approved and they are all really good deals that you get, so anybody interested, give us a call. Our main line is 949-640-0505. You can call Gia at her direct line.
Gia: My direct line is 949-999-0514.
Karam: And my direct line is 949-262-9833.
Jason Hartman: Okay, and Nancy, what is your direct line number?
Nancy: Mine is 949-999-0543.
Jason Hartman: Okay, excellent. Okay, why don’t we go on? Do you want to have Angela say anything about the Franklin Township, Karam?
Karam: Angela?
Jason Hartman: Angela, are you online now?
Angela: I’m here. The area is absolutely incredible. We’ve talked a lot about it in the past and the one thing I do wanna say is that I don’t work for Platinum Properties, but anyone interested in investing through them, their agents have actually come to the state, they’ve checked out the areas. They truly wanna believe in the areas that they are getting you to purchase in. And see, we’ve seen other investment groups come to this town, but this is a solid and sound group that truly wants to make good decisions with you. And I just want to make sure that everyone knows that. I mean we have been amazed at the way you guys treat your customers. But as far as we’re concerned –
Jason Hartman: Thank you, Angela, if I may. I didn’t know that. I appreciate the kind words. One of the things that we require and we’ve been in business for 11 years now, okay, so we’re not some fly-by-night company; we’re really a real company with a big office and a real physical presence in our market and a reputation, and one of the things that our area managers are required to do is they must purchase a property in the same area that they’re recommending you buy in. So Karam, for example, is not allowed to promote this area unless he owns there and owns his own rental property. He’s got to have at least one there himself before he can recommend it to you investors. So we are practicing what we preach. Anyway, you just kind of reminded me of that, Angela, so go ahead.
Angela: It’s okay. The one thing I do want to say is there’s a lot of big companies coming to this area. We, of course, are the crossroads of America. We have Honda, Toyota. We’ve got the big [Inaudible] coming in. Toyota’s now building a forklift plant. And all of these are very close to the communities that we picked. I mean not close like right next to them, but within 20 minutes. Cummins just added 500 high paying jobs.
The one thing that Karam has made sure is that we’re putting these properties in areas where there are going to be renters and because of that, and Gia is very good at this as well, they’ve made sure that the areas are going to be solid investments. We’ve not had issues with renters. Nothing is really sitting. You guys know. There are people coming to me saying, hey, do you have anyone who can buy this property? We want to rent it out. So I mean it’s a good situation to be in.
Jason Hartman: That’s a good point, Angela, and you know, one of the things we really like about heavy industry, everybody, is that it’s hard to move and if you look at all of our markets around the country, we are almost exclusively setting up shop – in other words, recommending the markets – with big, heavy, immobile industry. For example, Angela mentioned Cummins and she mentioned – that’s the engine, the diesel engine company – and big, big companies that can’t just pick up and leave. In a place like Orange County and most of California, you’ve got a lot of high tech information type businesses, consulting, small entrepreneurs, and those people are great because a lot of them earn high incomes, but the problem is they’re very mobile and it’s easy for them to just pick up and move.
So if you look at one of our markets that we won’t profile this evening, but it’s one of our markets that is a great place, is Mobile, Alabama, it’s got a new steel plant. Air Bus is setting up shop there, so these are companies that just don’t move easily. They’re gonna be there for the duration, so that’s a good point, Angela. Thanks for mentioning that.
Anything else on Franklin Township?
Karam: And what Indianapolis has is their cost of living is 16 percent below national average. That’s what is attracting all these big industries to come in and set up their establishments.
Jason Hartman: In other words, you can employ people. If you’re an employer there, you can employ people at very reasonable prices because your staff can afford a place to live, and so that is very attractive to large companies to set up shop there. So that’s a good point.
You know, there is a real flight to quality going on in the investment world and I’d highly recommend everybody listening have at least 30 percent of your portfolio in rental properties, in real estate that is rentable. Don’t buy vacant land. We don’t like that. We don’t like anything that you can’t rent out and get somebody else to pay for. But if someone’s listening to this call and you have $300,000.00 that is invested, $100,000.00 of that should be in real estate. But the beauty is that $100,000.00 will buy you five or six properties in diverse markets around the U.S. So we want you to diversify into many different markets so that you don’t have all your eggs in any one basket. They’re nicely diversified.
Do you want to talk about Round Rock now? And Karam, I don’t know if we have an agent on the line from Round Rock.
Karam: No, the agent is not on the line, but our latest report, as of this morning, or yesterday rather, one of my clients sent me and my property manager also sent me this report.
Jason Hartman: Now this is Round Rock, Texas, which is a suburb of Austin.
Karam: Austin.
Jason Hartman: So again, this is a micro market within the metropolitan statistical area of Austin, Texas. So go ahead about Round Rock.
Karam: And that is also another market that we did lots of business and Round Rock is No. 1 now in terms of the safety to raise families in a very safe city, and very, very growing city, so this report from yesterday is saying Round Rock is one of the top markets where investors are buying real estate. So just like Indianapolis, Round Rock, this is a suburb of Austin again, and very, very growing. Prices are very reasonable and like Gia alluded to earlier, we don’t have any vacant properties.
Austin and Indianapolis are two markets that impacted big time from this mortgage meltdown. In other words, people who were buying their primary residence, they got disqualified because of their credit score or not enough down payment or one reason or the other. They are in the renter pool and so houses are getting rented in two weeks or less. We normally tell our clients 30 – 60 days, but even during wintertime, November, December, January, houses are getting rented in less than 30 days. Most times, less than two weeks.
Jason Hartman: Yeah, and what you can really attribute that to, largely, is the mortgage meltdown, as it’s referred to sometimes, where it’s just much harder for these potential buyers to qualify to buy a home of their own, so they’re forced into the rental pool. And that’s a good thing for landlords. Let them rent from you. These people need housing and you can provide it for them, so do them a favor and do yourself a favor because it has really strengthened the rental market.
Karam, now, how many properties do we have in Austin? We’ve probably got well over 200 there now, right?
Karam: Yeah. It’s between 150 and 200.
Jason Hartman: Okay, so and not a single vacancy.
Karam: No, no vacant properties at all.
Jason Hartman: Yeah, because I think the thing that people really are worried about when they’re thinking about investing in these properties is what if my house doesn’t get rented or what if it doesn’t get rented quickly? And the rental problem is almost nil in our markets, in the markets we recommend because if the rental market wasn’t good, we wouldn’t recommend that market, would we? We’re not attached to any one market.
Karam: Same thing with Indianapolis. We sold more than 100 houses last year and we have only three vacant houses that closed less than two weeks ago.
Jason Hartman: So good.
Karam: They got the application, rental application, and they are in process, so another two or three days, they will be gone, too. So it’s very strong.
Jason Hartman: Yeah, okay, you know what? Why don’t we just take a break from the call for a minute as we may have some questions and any of our listeners, if you’d like to ask a question, I think it’s 5* or *5, if you just push that on your phone, your hand will go up here and Karen can go ahead and unmute your line. And I believe it’s *5. Just try it on your phone if you like, Karen.
Karam: One thing I would like to add about Round Rock is Round Rock in Austin has seen incredible job growth and very stable home prices, despite the downturn nationwide and jobs are continuing to grow there and that’s a factor that is keeping inventory low and prices very stable.
Jason Hartman: Yeah, it’s 5* everybody if you wanna raise your hands. Okay, we’ve got a couple hands went up. So we’ll go ahead and take – Rob has a question and we’ll unmute you, Rob. Yes, Rob, how are you?
Rob: Hello, how are you?
Jason Hartman: Good. Thanks for being on the call. What’s your question?
Rob: Absolutely. I’m pretty new to this whole thing and so I’ve been looking at the properties on your website and it seems like most of them cash flow negatively. So I’m trying to get my head around that.
Jason Hartman: Yeah, good question. I’m glad you brought that up. It’s a little bit of a long discussion, okay, for this call, but we do have a podcast on it that is called “The Deferred Down Payment.” And what we believe, and it is a little bit hard for some people to get their head around immediately, like you said, Rob, but it does make complete sense and the reason is when you buy a property, you have a choice. You know it does take money to invest. The only question is where do you allocate the money? So you can either put the money in the property or you can put it in the bank. And we say the property operates best by putting as little money as possible into it.
You can make any property break even or have positive cash flow by simply putting more money down, but we don’t want you to do that because when you put more down, it increases your risk – and I did say increases your risk – and it reduces your rate of return. So we want you to keep the property lean. We say running it lean is the best way to run it. And that will increase the performance of the property and just keep that extra money in reserve in the bank. And again, if you want the specific numbers on how that all pencils out, if you just wanna go online after the call and you go to www.jasonhartman.com, look for the podcast on Deferred Down Payment. You just click the play button and make sure your speakers are turned on, and we will explain that to you in total detail.
But you can put more down and it will eliminate any deferred down payment, but the property performs better with less down. You keep your money in the bank. You stay in control of your money and do it that way. Okay? And by the way, after the Q & A here for a moment, Karam will present an area that does positive cash flow, guaranteed rent with 10 percent down. So I think you’ll like hearing about that, okay?
Did that help, Rob? Oh, he may have been muted now. Yeah, sorry. Okay. Oh, there you are. Sorry. You’re unmuted. Go ahead.
Rob: Well, I guess I should listen to that podcast and understand it more.
Jason Hartman: Okay.
Rob: And can I ask one small – maybe not a small question, but –
Jason Hartman: Sure, okay.
Rob: When you talked about what it would yield – I don’t remember the exact terminology — you said for the first year, say 30 percent you had mentioned or something to that effect.
Jason Hartman: Yeah.
Rob: Can you just define that to me? So if I’m not actually getting cash flow in, what does that mean?
Jason Hartman: Well, it’s a combination of a great question, and by the way, Rob, you’re from New York, right?
Rob: I am.
Jason Hartman: Excellent. Well, it’s great to have you on the call from so far away. We had someone from Brooklyn fly out to one of our seminars. He just came out for three days and just to come to our seminar, so we’d love to have you come sometime. But what that means, that rate of return is calculated by how much money you put down on the property, which is always minimal, okay – so in most examples, it’s less than $20,000.00 or so to buy the property. And then the four things that go into it are your cash flow, your tax benefits, your principle reduction, and that creates – and then the appreciation – that creates your rate of return on investment.
So you don’t see that in cash and that’s why real estate is a very deceiving wealth builder for people. Many real estate investors think they’re losing the game when they’re really winning the game. And we have another podcast that kind of goes into this in more detail, called Refi Till You Die. And it shows you how, in seven years, you start extracting massive, massive wealth out of your properties.
So that rate of return is there, but it’s kind of happening behind the scenes until you do the refinance and pull that wealth out of the properties. But you will get tax write-offs along the way and increasing cash flow over the years as your rents increase.
And by the way, I should mention to everybody, we like to see you try and increase your rents by 4 percent every year. So if your rent is $1,000.00 a month now, try and get it to $1,040.00 next year, 4 percent annual increases in rent, okay?
So thank you, Rob, and you have another question here, Karen? And that is – we’re not sure what name it is, but it’s a 562 area code and you are unmuted. Yes?
David: Hi there. This is David in Southern California.
Jason Hartman: Hi, David.
David: And I’ve been listening for quite a while, really enjoy the podcasts, and one thing that I’ve been scratching my head a little bit about is when I look on the website of the property pro forma, it always seems to show it with a very small 30-year fixed and then I believe it’s like a 10-year or 15-year for the larger balance.
Jason Hartman: Yeah, what we do is when you buy the properties, everybody, you can either get one single loan for 90 percent of the value, but sometimes it’s better to do what’s called an 80/10 & 10 where you actually get two loans, one for 80 percent of the value, another for 10 percent of the value, and then 10 percent of your own cash down. But what was the question around that?
Karen: Jason, can you hear me?
David: Yeah, well, basically, you always profess that we should be using the 30-year lock-in on that low, low interest rate and so the numbers actually didn’t work out for me. I wasn’t able to see what I’d really be doing if I had a 30-year fixed loan at 90 percent.
Gia: David, it actually is a 30-year fixed, but it’s 10-year interest only, so that might be where the confusion is.
Jason Hartman: Oh, okay, that’s what he was talking about. Are you talking about the second loan or the first loan, David?
David: Well, it appeared to me that the 30-year loan was the smaller dollar amount and that the other one, whatever it is on the pro formas, it was a shorter time period at a higher interest rate.
Jason Hartman: Okay, without looking at that directly, let me just say this. Everybody, what we like, our favorite loan of all time, is to get a 30-year fixed rate loan, but the first 10 years is interest only, so you’re paying zero principle for the first 10 years because again, we don’t like equity in the property. We don’t want to pay down the loan. We get no tax benefits for paying it down and it takes away from our cash flow. Now, we don’t want adjustable rate loans, but we do like interest only loans. Interest only loans are very prudent and conservative and the rate does not change, but you don’t pay any principle for your first 10 years.
David: Okay, so on the website then, what I’m thinking is two loans, one long and one short, is actually two loans put together that will run the entire 30 years, the first one for 10 years, and then it converts to the full 30 years with principle and interest.
Gia: Exactly.
Jason Hartman: Yeah, and I’m not 100 percent positive which pro forma you’re looking at, so I will say it may be right what Gia’s saying, but some of the lenders won’t do the second loan for longer than 15 years.
David: Okay.
Jason Hartman: So it may have said 15 for that reason also. And that would be a shorter amortization that will be paid off in 15 years on that second loan. So you know what? If you wanna just give us a call afterwards, we’ll look at that sheet with you in detail and go over it to make sure we’ve clarified it.
David: Sure. And there’s something that may help Rob that took me a while to figure out with your explanations, and that’s that when you say that you’re lowering your risk by not putting the money as the down payment, I never understood that until I figured out that if it’s sitting in the house, you can lose it if the value goes down, but you still owe the same mortgage. However, if you have it in the bank, that lowers your risk because you can use that to pay the mortgage while it comes back.
Jason Hartman: You are absolutely right and I’m glad you said that. You know if you’ve ever loaned money to a friend or family member, you all know that the position of power is being the borrower, not the lender. So for every reason under the sun, and we’ve talked about this a lot in the podcasts, borrow as much money as you can. Just borrow it at prudent, low fixed rates because the people that are in trouble now are the people that got the instant gratification adjustable rate loans. But they’re not the borrowers. They bought properties that never made sense the day they bought them. They never should have bought them. They never should have been given the loan. So that’s a very good point. Thank you for making that.
We wanna talk about one more area now and I don’t know. Karen, do we have any more questions? No more questions right now? Okay. We’ll do questions afterwards, but before we get to our full hour here, and thank you for those questions, let’s talk about one last area where you can do 10 percent down, positive cash flow, and that is one of our newer markets – not totally new – but it’s Columbus, Ohio. And Karam, tell us more.
Karam: In Columbus, our builder – what the builder is doing is being very creative about it and this builder has been in business for 20 years and has seen the ups and downs in the market and wants to make sure they ride through these bad times. What they do is initially they – all these brand new houses, they put the tenant in there, pre-lease it, and then sell it to the investors and which we took advantage of it. The lease is anywhere from eight months to 11 months left on the lease. And you put 10 percent down and what they are doing is, this way you don’t have any vacancy. Your tenant is already in there. The day it closes, your rent starts.
And not only that, but the builder agreed to pay – we negotiated with them – but they pay homeowner’s association and the property management fee for two years, and on top of that, we get anywhere from $14,000.00 to $16,000.00 discount on the houses. So we quickly sold that inventory and they had to quickly again replenish it. They built these houses. Now this time they don’t have enough time to put the tenant in, so what they are doing is – because the houses are not quite ready yet. They will be ready in the next two weeks to four weeks time. So what we negotiated is we will buy those houses, market those houses to our clients, but the builder assured they come in and tell us that they will guarantee three months rent, meaning, again, tenant is not in there, but the day it closes, your rent starts. The builder’s going to pay you the rent.
But we countered that with a six-month rent being during the wintertime and I thought it would be better if we have a little longer time period, not that it will take that long. It’s getting leased between 30 to 60 days, but we have the six month guarantee on top of that two years worth of homeowner’s association and management fee, and a discount anywhere from $14,000.00 to $16,000.00. So if you put 10 percent down, you have anywhere to $100.00 to $200.00 in positive cash flow.
Just to give you an example, three bedroom, two and a half bath, a little more than 1,500 square feet, single-family, brand new house for $156,000.00.
Jason Hartman: That’s fantastic, yeah.
Karam: So if anybody’s interested in that, we have very few. Like I said, they are building it, trying to create the inventory, so at the time, we have two or three available only. And they get sold; we get one, two, or three at the most. In the beginning, we started this last summer, and at that time, we had like 10 or 15 properties at our fingertips, but not anymore.
Jason Hartman: Yeah, okay, good. So that’s positive cash flow with just 10 percent down. And what we want all of you to do, who are listening, is diversify. We don’t want you to invest in any one market. We want you to invest in diverse markets. So if you want to invest $60,000.00 in real estate, then buy in three different markets and if you want to invest $100,000.00 in real estate, buy in four or five different markets. And if you want to do $20,000.00 and you’re just starting out in your investing path, then you can just buy one property.
And whatever you need to do to get in the game, get in the game because the facts are that no matter what they say in the media, the population of the United States increased by over 3 million people just last year alone. Experts say that in the next 34 years, we’re going to be at 400 million people in this country. And by 2050, we’re gonna have 9 ½ billion people on this earth and all of those people consume resources, they consume building materials, and they all have one thing in common. They need a place to live, and so let them rent it from you.
Are there any more comments from any of our team members, Nancy, Gia? You haven’t talked in a while. Anything you want to say, Nancy, Gia?
Gia: No, no.
Jason Hartman: Okay, Gia. Nancy?
Nancy: No.
Jason Hartman: Okay, good. Well, thank you everybody so much for listening and thank you, Karam and Angela and Tony and all of our participants on the call. And we just wanna wish you all happy investing and to repeat Robert Allen’s old quote, he said don’t wait to buy real estate; buy real estate and then wait. Let time be on your side. We will stay here at the office for a while if you wanna just give us a call at 949-640-0505. Again, that’s 949-640-0505. We’ll be happy to answer any individual questions. And thank you all so much for listening and make 2000 a great year. It is the year of the perfect investor storm, so happy investing.
Karam: Thank you, everybody.
Gia: Thank you. Goodnight.
Jason Hartman: I’m here with Area Manager, Karam and if you’re looking for positive cash flow – yes, you can actually do that with only 10 percent down. Quite an amazing deal to do in today’s market and remember: the interest rates are getting a lot lower right now, so it’s a good time to be locking them in so that you lock in your cost of borrowing for the next three decades. Karam, tell us about positive cash flow and rent guarantees in Columbus, Ohio.
Karam: Well, Columbus, Ohio, we have a builder who is very, very creative. What he did was he went ahead on all these brand new single-family houses, townhouses, and condos. He’s guaranteeing six-month rent. Not only that, he is going to pay our investors the homeowners association fee and the management fee for two years. And what that does is, with 10 percent down, you get anywhere from $100.00 – $200.00 positive income before even the tax benefit is considered.
Jason Hartman: Wow, that is really phenomenal. That’s gotta be one of our very best markets in terms of cash flow, so excellent. Anything else you wanna say about Columbus, in general?
Karam: Well, the economy is booming there. There are several major corporations headquartered there. University is big, so a smart workforce, low cost of living. That attracts a lot of investors there.
Jason Hartman: Okay, Karam thanks for updating us on Columbus, Ohio. Great market.
Karam: You’re welcome, Jason.
Jason Hartman: 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.
Join us for our Grand Opening celebration, celebrating our 11th year in business at the grand opening of our new office at 555 Anton in Costa Mesa. That will be Thursday evening, March 27, from 5:00 – 9:00 p.m. and be sure to register. You must register for this party in advance. It’s free of charge, of course, but we need to know you’re coming so we can tell the caterers to provide for you. So go to www.jasonhartman.com and R.S.V.P. for the party on the website please.
We have a very special event coming up. It is our Master’s Weekend. It is on March 29 and 30, that’s a Saturday and Sunday, the Master’s Weekend. We only hold this event, so far, once every year, so it is a very, very special event. And last year, it was just exceptional. People loved it and we flew in 16 experts from all over the country on every topic under the sun regarding investments and finance and real estate, from property managers to area agents and brokers and builders, and asset protection techniques and tax savings techniques, and wealth creation techniques; and how to use the software to manage your properties and be organized in your real estate business, and just a whole bunch of great things.
I’ve got Karen and Karam here in the room with me to just comment on the Master’s Weekend. Karen, you want to say anything about it?
Karen Karanickolas: Yes, I’m very much looking forward to the Master’s Weekend. We’ll have some great food for everybody. We’ll provide you several meals throughout the weekend. And also, I’m looking forward to giving you a presentation on getting your business organized because once you start acquiring these properties, it does become a business, so I’m here to help you. And I’m looking forward to giving you an overview of getting your business organized.
Jason Hartman: All right, Karam, what do you have to say about the Master’s Weekend?
Karam: Well, last Master’s Weekend was a great success and this time, even it will be better. And for our clients who have already purchased the properties, investment properties nationwide, you will be meeting one on one with all these agents and property managers that you have been dealing with. Now, you can put a face to it. And for our clients who are going to be purchasing, there will be a lot of questions answered when you meet these people. They will have all the answers about the areas and it’s great to meet all these property managers and area agents who come with the flavor of their different areas.
Jason Hartman: That’s excellent. So that will be at our new office and Karen, another comment?
Karen Karanickolas: Yes, for all of you new investors, we will have some testimonials from our existing clients, from our previous clients who have purchased multiple properties. We will have a panel there available for you to hear their stories and ask them questions about your experiences as well.
Jason Hartman: Yeah, this is a great thing Karen’s talking about. We’ll have a panel of actual investors who have done it. They’ll show you the ups and downs and pitfalls, and how to avoid the pitfalls and make sure you maximize all of your investments. So join us for the Master’s Weekend. It’s at the end of March at our new office and register at www.jasonhartman.com, and we have experts flying in from all over the U.S. for this event. It’s really a big one-of-a-kind event.
Be sure to join us for our Advanced Creating Wealth 202, not 101; Creating Wealth 202 seminar on Saturday, April 12, here at our new office in Costa Mesa, California, right near South Coast Plaza.
So hopefully you can join us for some of those events.
I wanted to mention to you that we have a new offering, a free CD, a free audio CD, that you will really, really like. We’ve had so many people that have given us really good comments about them, and you can go to our website at www.jasonhartman.com and just fill out a little quick web form and you can either download it or you can have the physical CD mailed to you in the postal mail. But get the free CD, especially if you are a new listener. You need this. And if you are a regular listener and you’ve listened to all the other old shows, you don’t need the CD so much, but it will be a nice review for you either way. But if you’re a new listener, you definitely want to go to www.jasonhartman.com and request the free CD.
Just wanna remind everybody listening that we are moving to our new office and you can find all that information on our website at www.jasonhartman.com.
Also, we just uploaded another video podcast and I’d highly recommend that you subscribe to that. There’s some stuff that just lends itself better to video than audio. If you want to see what’s on that, subscribe to it, you can go to www.jasonhartman.com. If you use iTunes or an iPod and you’re an Apple person, then you can go to the iTunes Store, type in Jason Hartman, and two podcasts will come up, the video podcast and the audio podcast. And you’re probably already, if you’re listening, a subscriber to the audio podcast, so make sure you get yourself a free subscription to the video podcast as well.
And this particular one that we just loaded in the video podcast is about Naked Short Sales and what goes on with this short sale and manipulation of the stock market. It’s a very interesting report from Bloomberg News and I think you’ll really learn a lot from that. So be sure to tune in and watch that.
Be sure to see appropriate disclaimers and disclosures on our website at www.jasonhartman.com. Remember that we are not tax or legal advisors.
Anyway, we’ll talk to you next week. Thanks for listening.
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.
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Duration: 79 minutes
