Teaching Kids about Investing and Deal Evaluating Software with Anton Ivanov

Teaching Kids about Investing and Deal Evaluating Software with Anton Ivanov

Jason Hartman and Adam, one of our investment counselors discuss teaching your kids how to invest. They go into how to give children the life skill of successful investing. Later in the show, Jason chats with Anton Ivan, founder of DealCheck.io about his journey in real estate and the creation of his deal evaluating software. They discuss metrics investors should you when evaluating deals.

Jason Hartman 1:24
Welcome to Episode 1169 1169. Thank you so much for joining me today. This is Jason Hartman. I’ve got Adam here with me and Adam,

Adam 1:34
how are you today? I’m having a great Wednesday. How are you? Well, that’s good. Good. So you’ve

Jason Hartman 1:39
got four children. Yep. And we had a question like down if you had last time you counted. Right. And we had a question come in from one of our brilliant listeners. That brings up a good topic before we get to our guest today. First off,

Adam 1:54
who’s our guest today, Adam. Our guest today is Anton ivanoff, who created a real estate investment analysis software that he uses that you can use as well. It’s a pretty cool little piece of software from the looks of it and stuff.

Jason Hartman 2:06
So before we get to that, let’s talk about this question because it’s a good question. And it is one that is near and dear to my heart. I was a Junior Achievement instructor for three years as a volunteer and really enjoyed that. But it was very enlightening to me in a kind of a sad way. Because financial literacy is something that just is not taught in schools. And we actually talked about that on a recent episode. I remember because of that article about making it law, which would be great. But what is the question and who’s a Trump?

Adam 2:40
The question came from Steve Tomita, who went to Jason hartman.com slash ask which everybody should do, because I’m sure you all have questions. There were some questions that meet the masters and I’m sure there are more that people didn’t ask. And he was he know what steps should a person take to prepare their children to be successful investors?

Jason Hartman 2:58
Well, I will Say first thing is conceptually investing. The idea of investing really requires one to sacrifice something of value currently, whether it be time or money, the two major values, you could argue that time is money As the old saying goes, and sacrifice something they have today for a larger future payoff for a brighter future. And what that requires people to do is create capital capital formation, which for an individual, or a society is the thing that is required to create wealth. So teaching children to delay gratification is a very important thing. Because by nature, and you can speak to this more than I can add them as a dad, kids want it and they want it now, don’t they?

Adam 3:53
Yeah, they do. And I think a really important part of teaching them to delay gratification and important thing about teaching them to invest is setting out a strategy beforehand, we have made very clear to our kids, that when they get money from their birthday or Christmas, or when they make money, they get to keep 70% of it, they have to save 20% of it. And they have to give away 10%. And they can pick where they give away 10%. That’s the famous Richest Man in Babylon formula. I love it. And when I was a kid, my parents requirement was when I made money, I could keep 50% to use, however I wanted, and 50% had to go into my savings account. And I usually put about 80 to 90% because I just never spent money. And that put me through college. It wouldn’t these days, but it did then. And so I think there’s two things to answer in this about becoming a successful investor as a kid is number one, setting out a plan and making them follow it and the second one is actually teaching your kids how to be an investor because I don’t know about anybody else. But when We purchase real estate properties. We tell our kids about it. I never knew growing up how my parents were investing their money. They we just didn’t talk about it. But with our kids, we tell them, Hey, we’re buying this home, and there’s a family or people who need a place to live. And we rent it to them, and they pay us money. And that’s how we’re able to save up and, you know, go on vacations and do the things we want to do. And we don’t hide that from our kids, we tell them and my goal, I don’t remember if I’ve said this on the podcast before, my goal in investing is when my kids grow up and get married or reach a certain age. I want for Aaron, my wife and I to just give them a home to give them an investment property, not a home and I’m to give them an investment property and say, Here you go, you’re started on your journey, go do what you need to do to

Jason Hartman 5:51
be successful. What a great wedding gift versus an overpriced wedding. Last for a day, you know, so absolutely, very Good point. So teaching them how to invest. You know, I remember my mother grew up poor. She lived on a dirt road and upstate New York and in bliss, New York. And, you know, I was there many times as a kid. It is not a very nice place, but not a place of bliss. No, no, the name is misleading, for sure. And then I grew up a little better than she did, arguably, but we were still definitely struggling, right. But I remember she took me to the bank. I opened a savings account and I don’t know exactly how old I was. I know we lived in Fox hills, which is an area in Culver City, California. I know we lived on Green Valley circle. That was the name of the street. And it was quite a nice area back then. But it made sense went downhill. You know, we had a nice apartment there on the fourth floor. My best friend was the kid across the hall named forest David. I remember she took me to the little bank. I don’t remember what that bank was called. And I opened up a savings account and this was back in the When the bank actually gave you a gift for opening an account, can anyone imagine that?

Adam 7:07
customer service? What is that?

Jason Hartman 7:08
Yeah, what is that? Right. And so I had this passbook and it was white. It was a white passbook and you don’t have the pages that you flip over. And I would go there regularly and deposit money, part of my allowance and I would do chores. And I remember when I got a little older I would mow lawns and I had a couple of paper routes, delivering the Santa Monica evening outlook would do all this stuff, right to earn money. I really, you know, was an industrious kid I worked and I liked working and I remember when I turned 14 and was eligible for work permit, you know, I remember going around to the various stores near my house and asking for a job and I couldn’t get a job. They didn’t want to hire me. So lots of rejection. But ultimately, you know, it all worked out. But the idea of saving money, I mean, I remember I had Had a decent amount of money saved when I was a teenager, you know, and I don’t remember how much obviously it varied throughout time, but I had money in the bank, I had real savings, and back to what you’re teaching your kids to do, Adam, that formula of saving 20 and giving 10% away and living on 70%, right is a pretty good formula for sure. Now, it all depends on your income, right what you have to live on. I mean, if you make a very high income, you don’t need 70% to live on, you only need 30 or 40%. So don’t be silly and blow your money just because you’re earning it. The Richest Man in Babylon formula would be invest 10%, save 10% give 10%. Now you’re just telling your kids to save money because they’re too young to really have access to investments. But ultimately, as they get a little older, you know, see if you can help them actually invest and personally Rather than just save the 20 right?

Adam 9:02
You’ll get a kick out of this when I first started saving money with my first job. I don’t think I’ve ever told you this my very first job that aren’t made money was working for my mom’s dad who had a lawn mowing business. And my first job was running the leaf blower for the company. Oh,

Jason Hartman 9:21
shame on you. leaf blowers. leaf blowers are the anti christ. Okay, leaf blowers need to be so illegal.

Adam 9:30
But I think it’s important when it comes to one thing we do teach our kids is very much they tell us they want to buy something and we asked them, Do you really want that and if you buy that, you can’t do this. Like you know if you buy that you also talked about buying this.

Jason Hartman 9:48
make them understand there are trade off there are trade offs. And so we tell

Adam 9:51
them like my kid right now. One of them the oldest, he got a watch for Christmas and he wants a Lego imet watch like from The Lego Movie. And I just asked him, I said, How many watches do you need? And he said, One, and I said, Well, why don’t you think about that? Because there are other things you want to buy, and see if you really need to buy a second watch. And so far the answer has been no, but he’s thinking it over, I believe. Right,

Jason Hartman 10:16
right. Well, that’s good. And you know, I gotta tell you something else, folks, when I was younger, and your kids are definitely being just, it is just unbelievable how they’re being brainwashed. This whole massive, ridiculous consumerism society. It’s just absurd. I mean, it’s like, we’ve all heard the expression retail therapy, right. And you know, and it’s kind of funny, but it’s also not funny at the same time, because people buy things for sports. It’s ridiculous the way Madison Avenue and now it’s not Madison Avenue anymore, it’s more Silicon Valley. And then all their advertisers are turning us all into these ridiculous TELUS consumers, we don’t need anywhere near the amount of things that somehow we’re talking to buying, we just don’t need them. And this is coming from someone who, you know, I’m a, I’m a consumer, okay? I mean, I definitely buy stuff. You know, I’m just saying guard against that, to whatever extent you can. And of course, it’s all relative in terms of how much money you’re making, but just question things. Just wait a day before you buy something, right. Just think about it a little bit first, and, you know, ask yourself, do I really need it? Or is it just going to become something that clutters the garage later, or whatever? I remember reading this book A while back. And it talked about the number of items, they actually did some studies on this, the number of things right and the thing is, whatever, it’s a gadget, it’s a thing in the typical American living room, and that the number of things in that living room today versus back in 1950 or 19. 60 or 1970, like each by the decade, right? And the number of things is mind boggling. I mean, it is mind boggling the number of things we all have. It’s crazy. This is one of the reasons I’m really not that keen on buying another big house, because I just know accumulate more things. And you know, it just, it’s like the old saying the job expands to fill the time allotted. Well, the amount of stuff expands to fill the space available. And if you give yourself too much space, you’re going to you’re gonna feel it. It’s just human nature, right? Yeah. So so good. All right, Adam. Well, hey, we I think we covered the subject anything else on teaching kids to invest before we get to our guest just

Adam 12:47
start them young,

Jason Hartman 12:48
starting young? Yeah, very, very good point. Get them exposed to the idea of delaying gratification, and not so much that they don’t enjoy life, but Do they really need that thing they want? Or have they just been brainwashed by a commercial or an ad. And then the idea of Look, if you delay gratification, you can get something a lot better later. The idea of investing capital formation, the thing that helps individuals and societies get ahead and join us in Savannah, Georgia coming up may 17. We have an awesome venture Alliance mastermind trip coming up. It’s going to be focused on tax lien and tax deed investing. And I’m very excited about that. It looks like we will not only just have one speaker, but we will have two speakers, I believe on that topic. So this is going to be a great venture lions mastermind retreat, and you can check that out at venture Alliance mastermind.com will look forward to seeing you there and let’s go to our guests.

It’s my pleasure to welcome Anton ivanoff he is a full time real estate investor. Now he’s got a software app he developed will hear about got a military background, and he’s developed a great portfolio of about 35 units. So we’ll kind of go into the case study. And he’s done a few different things in the real estate investment industry. So it’s great to have him. Welcome. How are you? I’m doing great. Jason, thanks for inviting me. Good to have you and Anton, you’re in San Diego, right?

Anton Ivanov 14:23
I am now

Jason Hartman 14:24
fantastic. How did you become interested in real estate investing?

Anton Ivanov 14:27
So actually, I basically got thrust into real estate sort of against my will, under some unfortunate circumstances. I joined the US military, the Navy specifically, right after high school and I was serving in Japan overseas. And right around that time, both of my parents passed away. And they happen to own a condo that they lived in and in San Diego, California. And I basically became an accidental landlord. So I inherited that property from them back then, you know, I was early 20s I didn’t know much and definitely did not know really anything about real estate. I almost ended up selling the property at the time just because I was overwhelmed with everything that was going on but thankfully spoke with a few of my mentors, older folks, they can miss me, Hey, why don’t you just not make any rash decisions, rent this property out, and then when you get back stateside, when you leave the military, just see how it goes and decide to sell it down or so

Jason Hartman 15:27
you You are the real story of the accidental landlord, the landlord by default, yeah,

Anton Ivanov 15:31
okay, looking back, I’m very happy that I kept the property. It didn’t, you know, kind of changed my life financially, by itself. You know, it’s kind of was trickling a little bit of cash flow every month, but what it did is really open up my eyes to what real estate can do for you specifically as a passive income source. You know, I was, I was working in the military, I started reading books about personal finance, and I really got on the idea of early retirement, that that kind of really struck to me, I just, I could not see myself working for, you know, 2030 years and then some corporate office desk. So I really was interested in that. And obviously real estate is is a very unique and powerful investment vehicle, in my opinion, that can help you both, you know, increase your wealth through capital appreciation, debt paid down, and then obviously generate passive income. And you know, it all started with that one property that I heard,

Jason Hartman 16:29
well, yes, unfortunate circumstances, but you turned it into something great. So that was in about 2008. Right. So about 11 years ago.

Anton Ivanov 16:37
That’s correct. Yeah. So I was kind of midway through my naval career at the time and then fast forward a few years, I moved back stateside back to San Diego got out of the military got a more normal job in the software development field, still had the property and that’s when my wife and I actually decided, hey, you know, real estate is really the way to go if you want to build your passive income stream, and we set an initial goal to buy 50 units in total, you know, we didn’t really have specific like single family or multifamily, we just wanted 50 units, the doors, okay 50 doors, and we figured it around, you know, two $300 of cash flow per unit per month. That would be about 150 200,000 in yearly cash flow. And we kind of had modest goals, I guess we would need like millions. But we felt that that level of income would allow us to retire early. And that kind of became the goal that the rest of our journey followed to.

Jason Hartman 17:38
So you had some frustrations, I’m guessing with real estate investing, and that led to some technology that can help you analyze deals, right.

Anton Ivanov 17:49
Absolutely. So then actually have some years into my real estate investing career. You know, obviously, before you buy any property, you need to analyze the cash flow. projections. It’s, it’s kind of if you’re not doing that, and I hope everybody who’s listening is your it’s akin to gambling at that point. So obviously, we all need to do it. And like many other investors, I started with using Excel spreadsheet that I kind of quickly put together to ran some numbers. I was a software developer and I was thinking that there’s got to be something better that I maybe I can use on my phone or my computer to help me quickly run analysis, get my returns, make a quick decision and didn’t find anything. So I ended up building the first prototype of the deal check mobile app myself and that progressed through the years and happy to see now it one of the most popular property analysis platforms on the market with over 75,000 users. Wow,

Jason Hartman 18:45
that’s fantastic. Yeah. Tell us about analyzing a deal. One of the things I did when I got into this business back in 2004, I mean, I was in the real estate business before that, but strictly the investment side of the real estate business starting in 2000. For one of the things I did is I standardize the data. And I think that was a really good decision because I found it so frustrating. Here I am. I’m researching like crazy. I’m researching all these different markets around the country. I’m flying to these markets, I’m meeting with people, I couldn’t get any help. It was just the people you deal with in real estate, or it’s just a totally mixed bag. I’m sure you know that. Yes. And, you know, most real estate, people that don’t know anything about investing, they just sell houses, right. And so I found a software called property tracker back in 2004. And I started using that and I loved it and I just standardized the data, you gotta have a benchmark, you got to standardize the way you analyze things, so that you don’t have to be a detective on every property, you know. So tell us about analyzing properties and what investors should look for and you know, what, what they should watch out for you.

Anton Ivanov 19:54
Yeah, I’ll kind of keep this you know, obviously there’s a lot of different deals and different investors be that multifamily Single Family, renters, those who want to buy rental properties or flippers, we’ll look at different numbers. But there’s a few kind of common factors that I see over and over again that I love to point out. The first one is, you know, no matter what tool or calculator or Excel spreadsheet you’re ultimately using, it’s only as good as the actual input numbers that you provide. And, you know, a lot of times, especially out of state investors, they use very kind of crude or basically unresearched estimates, in my opinion, to plug into their calculator and in my experience, garbage in garbage out, so to speak. If you use an accurate projections, extremely rough projections, or numbers to input into your calculations, you’re going to get very, very rough or inaccurate projections

Jason Hartman 20:50
out so and a lot of it is just wishful thinking,

Anton Ivanov 20:53
you know, absolutely. I mean, at that point, you’re kind of guessing you know, if you can’t justify why I’m putting 10% for vacancy or You know 12% for maintenance, the numbers you get are really just guesses and and that to me is the key you know and the only really sure way I found to start putting accurate numbers in your cash flow or profit projections for flips is to really know the local area either personally or by knowing other investors who you know live there who invest there, you know, maybe property brokers or agents like you said, although they can be hit and miss but that’s really comes as a key you know, every time I go in the new market, a new property type a new area, I first spent a considerable amount of time learning the area, you know, looking at dozens of properties speaking with other investors in the area to get more accurate idea of Okay, what are my typical vacancies are going to be what is my typical rent going to be? What ages are the properties there, you know, and kind of derived the potential maintenance or capital expenditure costs from that so, you know, that’s kind of always been my biggest pet peeve is you Know that you hear a lot of investors use, like the 50% rule, for example, to quick list and made expenses. And, you know, maybe it’s great for for doing a very rough analysis, but in my opinion, it falls very short if you’re actually serious about buying a property. So you absolutely have to, you know, look up rent comps to get accurate rent, you have to look at other properties, maybe another investors own to look up vacancy and so forth. So really, you need to use, you know, as accurate as estimates or projections or actual numbers that you can there’s two sides of this, then there’s the input data, the data I’m putting, you know, but like the old saying, in the computer world, right, gigo garbage in, garbage out, right? So you got to get the right input data, but then using the tool and knowing what to look at what to value and what not to value so much, right? For example, I’m not a big fan of cap rate. I don’t think that’s a very good metric.

Jason Hartman 22:56
Yet in commercial real estate, you talk to any commercial person and You know, they’re just they live and die by cap rates, but it leaves a lot out that is very attractive for residential income properties. That’s the thing, you know, when people miss a lot of stuff in the income property world, because what I’ve said for a long time is some people are winning, but they think they’re losing just because they simply don’t know how to keep score properly, you know, and you have these multi dimensional aspects to a real estate deal, where, you know, it’s kind of like the old metaphor of the iceberg. A lot of its under the water and you don’t really see it, you see the cash flow or the negative cash flow of water, hopefully you don’t have fat, you don’t really see some of the things that are really adding to your return and making your investment a lot better than you think. You know. So yeah, what what to value what, how would they input data? Talk to

Anton Ivanov 23:48
us about that a little bit? Absolutely. So after the input data is accurate, like you said, you need to figure out what metrics to focus on and it can be overwhelming for a new investor. You know, you go to a typical calculator on Line people talk about probably at least a dozen common metrics, you know, we’re talking cap rate cash on cash return, are we, you know, return on equity return on investment, annualized return on investment. So, ultimately, I very much agree with you, Jason, you have to pick a few metrics to focus on but not because they’re popular, you know, I fully actually agree with you about cap rates, especially in residential real estate. It’s a very popular metric. In my opinion, it’s, it’s somewhat misleading. It’s really not very useful. So, you know, there’s two things in my opinion to that. One is really understanding what the metrics are, and how they’re calculated, you know, you can look that up online in a few seconds or read a few articles, at least understand what a cap rate is, what is a cash on cash return? What are the underlying numbers? And two is look at your goals. You know, what are the goals of you have purchasing the property and find the metrics that align with those goals. So My, you know, in my view, my primary goal is cash flow. So for any deal, actually, the first two metrics that I focus on is cash flow per unit per month, and cash on cash return. So the reason I focus on those two is first, obviously, you know my goal of 50 units with about two $300 monthly cash flow. To me that takes me to about 150 200,000 in yearly cash flow and that’s really my ultimate goal. You know, my primary goal for real estate is to replace my w two income allow me to retire early. So naturally, that’s the first metric I focus on. The reason I focus on cash on cash return because cash flow by itself can be misleading you know, I can spend $500,000 on a property and get $200 a month cash flow or I can spend $50,000 on the property and get the same cash flow per month which one is the better deal obviously the one I spent less money on because and the cash or even better the one you prefer

Jason Hartman 25:59
less money into, you’ve got more leverage, which increases your cash on cash return. Right,

Anton Ivanov 26:05
exactly. And that’s my second metric the cash on cash return, like you said, the way you structure the deal, you know, the price of the property and your ability to bring as little cash to it as possible will increase that return and really allow your money to work for you in the greatest possible sense. And then the final, you know, if I had to pick my top three metrics, I actually focus on annualized ROI. So this is sometimes internal rate of return. And this is, in my opinion, the most all encompassing metric. That is correct.

Jason Hartman 26:38
That’s that’s the holy grail of metrics internal rate of return. And it’s hard to calculate. But now we’ve got all these tools that make it easy, you know, years ago, I learned to calculate IRR by hand.

Anton Ivanov 26:51
I want to wish that on anyway, it’s complicated,

Jason Hartman 26:53
but the computer will just do it like that. You know, it’s always

Anton Ivanov 26:56
go ahead. Yeah, and that one really allows you so now, not only Cash Flow but take into effect, projected price appreciation and debt pay down and basically give you a total rate of return on your invested capital that you’re getting. And that’s really the only metric You can also compare to say, you know, the stock market or other investment types, because it’s all encompassing and and, you know, it’s, you know, it does take into account some assumptions like, obviously appreciation, which is very hard to predict. And that’s one of the reasons why I don’t focus on that primarily, but it kind of was a third metric to give me Hey, you know, cash on this property, cash flow is great cash on cash return is great. Let’s look at IRR, my total return on investment and you know, that can be used to compare for example, different properties between each other, or even real estate to other investment sources and really decide, hey, am I putting my money to the best use term?

Jason Hartman 27:51
Yeah, yeah, very good. Here. I’d like to ask you about your thoughts, you know, appreciation. You know, it’s the icing on the cake. If he asked me, I have a feeling we share that view. And, and feel the same way about it. But I’d like to ask you about your view of the future and the economy and the real estate market in general and especially the renter market. It seems to me like, landlords have a very good decade coming up with a lot of renters. It seems as though the stigma from being a renter has been removed largely. So people are happy to rent. It’s not a big deal. And we’ve got, you know, the millennial generation that is saddled with student loan debt like crazy. I like to say they have a mortgage, they just didn’t get a house included with it. They’re likely to be renters, they love their mobility. So, you know, being a renter makes you much more mobile, you can go to where the jobs are. It’s, it’s you know, I always say the best thing to have on a resume is mobility, be able to move to where the jobs are. So, you know, it seems as though the there’s a real shift going on in the culture when it comes to renting where It’s okay to be a renter, you know, interestingly too, and this is an amazing component of it, baby boomers that are now empty nesters where their kids have moved out, and they’ve got money. You know, these are not poor people, they’re selling their house and renting like in higher numbers than ever before. It’s it’s kind of amazing thing. You know, I think people have just discovered there are some real benefits and conveniences to renting. And many of them are building big investment portfolios. So it’s not like they don’t love real estate, they just rent their own home that they live in. Right. So you know, it’s just an interesting dynamic and how it’s changed. So what’s your view of the future the real estate market, the renter market, etc.

Anton Ivanov 29:41
Honestly, I am very much on the same page as you you know, I’m not kind of that old to kind of comment on a lot of older generations but I have seen a trend where, you know, if you kind of look at the ideal, maybe family or or ideal lifestyle 10 2030 years ago, probably the top three, if not the top one was homeownership. it you know, it was it was I have a family you know, I we bought we buy a house with that white picket fence or, or whatever and and kind of settled down I felt that kind of the older books that I read and and when I went to school that that was almost a no brainer. It was the homeownership and everybody kind of strove to it. And like you mentioned, a lot of the younger people or even people my age, you know, in the 30s that I meet now, it’s just not really that big of a deal to them. I mean, they keep it on the back of their mind and some of them do buy houses but it’s just not sometimes not in the top three, maybe not even the top five. So I feel you know, as a society it has progressed and and maybe the homeownership just got you know, D prioritize compared to to other trades may be more focused on your job and income or mobility. Like you mentioned, all of this is perfect news for real estate investors. I mean, hands down, obviously I keep buying rental properties, and I’m very bullish on on being a landlord. I don’t think demand for rental properties will decrease. It’s probably We’re gonna keep going up. And that puts, you know, landlords like us and other people listening in a very favorable position and kind of promotes long term wealth building and long term security with the passive income.

Jason Hartman 31:12
So the renter market, we both agree the renter, the future of the renter market is good, it’s solid may be growing. That’s good news. What about the real estate market in terms of price appreciation or depreciation? you’re investing in the linear markets. And that’s been my approach for the last 15 years. Before that, I was a Southern California guy was a speculator, you know, I would lie in these high end areas, Irvine, Newport Beach, you know, these are very expensive areas. The cash flow doesn’t make any sense. I thought I was an investor. I just didn’t know any better. Yeah, and I did make some money, but that was more by luck than design. Yeah. Now, you know, I really like these prudent linear markets that cash flow. What are your thoughts on overall real estate market?

Anton Ivanov 31:58
You know, five years ago, I met this guy. Who funny to say but Southern California he owned 100 doors down here in Southern California. He had a business partner business was, you know, booming, you know, they were overpaying by 1500 thousand for each property, negative cash flow but you know, in a year they would make 100 200,000 on each building it was, you know, the way he described that it was just absolute craziness. This folks is what I have called many times the greater fool theory.

Jason Hartman 32:28
Yeah, it states no matter what I pay some greater fool will come along and pay more.

Anton Ivanov 32:33
Yeah, it was it was just he said it was absolute insanity. 2008 2009 hit him and his business partner both went bankrupt within a period of about six months. And you know, he kind of you know, he kind of rebounded from that and, and recovered but you know, that story and others that I’ve heard similar to that really stuck with me. I could not agree with you more that, you know, I’ve met people who like these Kind of coastal cyclical markets, like California or upper east coast. I just the

Jason Hartman 33:09
South Florida south. Yeah. You know, they’re gamblers. That’s just gambling. Exactly. It’s just, it’s just not reliable. I mean, in all my years of doing this, I’ve never met anybody who can reliably predict the appreciation and depreciation cycles. So

Anton Ivanov 33:23
yeah, couldn’t grow it under they all do. Well, like you said, when the market is going up, everybody’s doing fantastic. As soon as we have a correction or a crash where those people now you know, you don’t see them around.

Jason Hartman 33:34
Everybody’s a genius in a bull market.

Anton Ivanov 33:38
Exactly. Yeah. Absolutely. Exactly. So I’m a big proponent of cash flow, but at the same time, I would say that, you know, there are a lot of kind of Midwestern and kind of heartland of the United States, so to speak bark is

Jason Hartman 33:52
that I won’t buy it. There’s definitely some junky stuff in blighted areas. You know, we were we were turned off in Ohio for a long time we started record mending it, we got a few failure. There’s some pockets that are good. For a long time. We wouldn’t do Memphis and since then we’ve done tons of business in Memphis, Indianapolis has been great for us for many years. That’s our longest running market. But you know, we have not been brave enough to touch Detroit. Some of my competitors do and I just don’t i don’t see it.

Anton Ivanov 34:20
Yeah, my my two senses. I really like markets that have good fundamental economics behind the city. So we’re talking about positive job population and economic growth. I feel like if a city you know has those that will continue drive, both to home prices, as well as the rents up because the last thing I want to have as a long term kind of buy and hold investor is stagnant rents, stagnant property values, right? Once you factor inflation into it, increasing expenses, I’m going to end up losing money on that deal in five to 10 years, even if it looks good on paper now, so I know and that’s the siren song. It’s the deceiving thing in real estate. You know, you’ll Look at an area like Detroit. And it’s so blighted, and it’s been blighted for decades. Right? Coming back a little bit there. Certainly, you know, pockets like, everything has pockets. And you know, you’ve got these super cheap houses, and everything looks like a great deal on paper. But it’s just a weird thing about blighted areas, they just if they come back, it’s a very long and arduous process.

Jason Hartman 35:25
They do. I mean, they turn some of them do but some, it just takes a long time.

Anton Ivanov 35:29
Absolutely. And I really feel you know, that long term, it’s better not to be kind of deceived or blinded by that high prospect of cash flow now, and really think about, okay, what is my exit strategy? Or even what are my returns going to look like in five years? You know, is, is my cash flow just going to be eaten away by inflation or expense creep? You know, is there going to be any rent growth? Is there gonna be any price appreciation, even though maybe that’s not your primary focus? Definitely want to have that you know as an investor that will drive your total IRR up over the long term.

Jason Hartman 36:04
Good stuff. Well, hey, thank you for joining us. The website is what?

Anton Ivanov 36:10
So if you want to check out deal check, analyze rental properties, flips multifamily commercial buildings, you can use it online at deal check.io. or download the deal check mobile app on your Android or iOS device, free to use check it out. See if you like it. If you want to upgrade to one of the more full feature plans, we have a special promo code just for you guys at CW to five off cw 25 off get 25% discount at a deal. check.io

Jason Hartman 36:40
final thoughts on real estate investing

Anton Ivanov 36:43
it is probably the number one way to build long term wealth and especially passive income. I have not seen a different, you know investment that needs it.

Jason Hartman 36:52
I couldn’t agree with you more. I always say it’s the most historically proven asset class in the entire world.

Anton Ivanov 36:58
Anton, thanks for joining us. Thank you, Jason. Great to be here.

Jason Hartman 37:03
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