This Flash Back Friday episode continues a two-part series of a live Q&A session from a Creating Wealth Seminar. Jason Hartman lines up a panel of investment counselors to discuss client and listener questions. He goes on to describe why single-family income properties are the most historically proven asset class. Later he discusses other seminars and mastermind groups he has.
Jason Hartman 0:00
Welcome to this week’s edition of flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason is hand picked to help you today in the present, and propel you into the future. Enjoy.
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. Here’s your host Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:06
Welcome to the creating wealth Show episode number 803 803. This is your host, Jason Hartman, thank you so much for joining me today, as we are going to go into about 20 ish minutes of a clip from a live event that I did, where I’m doing some q&a with the audience. And this is just happening after I explain and talk again about my big discovery, my risk evaluator, which I have covered on prior episodes, so I’m not going to replay that again. So just know that if you’re not familiar with the risk evaluator It is one of my great discoveries that I have never heard any other real estate expert talk about. It is solely my idea and it took me 19 years in the real estate business to discover it. is based on what I call the LTI ratio, the land to improvement ratio. And I had just before you come in on this clip, explain that to our live audience, and then took some of their questions. Also remember, when you need tax, legal or other professional advice, that you seek out the appropriate professional, I will always want to remind you that I am not qualified to advise on tax or legal matters, they are complicated. I will give you basic ideas, I will give you my understanding, I will give you my experience, but tax situations and legal situations and really any situation of course, is individual. So it requires individualized advice from professionals in those particular fields. So please seek that out. Just use what I talked about on the show and at our live events and what you might talk to our investment counselors about as a guideline as a way to initiate a conversation with the professional who can go deep into your situation and give you their vast experience and wealth of knowledge. So I was want to say that to you, boy this weekend it is now Sunday evening. And I am just coming off a wonderful weekend with our venture Alliance mastermind. We do these quarterly meetings and this one was here in Las Vegas and we just had an awesome, awesome weekend. I must say I’m, I’m very tired. It was a great, great time. We had a we had pre meetings starting Friday morning. And then the actual formal venture Alliance meeting started Friday evening at seven where we we played, we had some fun and partied and played golf at Top Golf here in Las Vegas. If you have not done Top Golf before, it’s really fun. You know, I’m not like any big golf or anything, but this is this is kind of a fun, new fangled form of golf. If you’re not familiar with it. It’s called Top Golf and very seemingly It’s a successful company that is got centers all around the country. And then we were at the Wynn and encore hotel, just beautiful venue in this gorgeous boardroom. We started Saturday morning with our business meeting, did a little masterminding breakfast together. We had the former governor of Nevada, the longest serving governor of the great state of Nevada, speak to us, Bob Miller. And he spoke for about an hour and took q&a from the audience and taught us a lot about the history of the state of Nevada and Las Vegas and how people get business deals done in Nevada and you know about the the mafia and the casinos and then how Wall Street came in and how Steve when of course, we were at Steve Wynn’s hotel, the Wynn hotel and encore hotel and how he financed his first property and became this, you know, mega mega successful hotelier and, and real estate developer and he talks about his burn rate in his first big project finance with really high yield well, otherwise known as junk bonds, and how his burn rate in that property, his expenses were get this a million dollars. Now, not a million dollars a month, not a million dollars a year. Not a million dollars a week. A million dollars a day. Yes, the million dollars a day. And it was just really interesting having the governor speak to our small group we had about oh, I think we had 22 people in the room. We were in this gorgeous boardroom in the Wynn encore hotel. And then we had Jason Hanson, come in and speak after that. And He is a former CIA operative that teaches a class called spy escape and evasion. He demonstrated on himself how to break out of duct tape, zip ties, handcuffs, all kinds of things and some interesting self defense stuff. You know how to know if you’re being followed how to evade people following you whether by foot or Car whatever. And it was just really fascinating. It was like James Bond came to give us a seminar and and that was super cool. And then we do our skill shares our hot seats, and then we broke for the afternoon we went ziplining and Las Vegas. Oddly, you may not know this has a couple of the world’s best zip lines really. The one we did was where we flew like superheroes. You know, like Superman flies right on on our Well, you know, in a harness, you know, on our stomach like laying down flat and you know, you put your arms out in front and we started it. It’s seven stories up and flew down this awesome zip line and that was just a lot of fun. We got a lot of great pictures of that and really fun time, had a great lunch before that and then had some drinks afterwards and walked around the crazy Fremont Street experience the FSC in Las Vegas in downtown old Las Vegas. And that was a lot of fun. And then we got together For a beautiful formal dinner at the top of the world restaurant that literally is at the top of the world, it’s at the top of the stratosphere. And you know, a lot of times those kind of places aren’t that great, the food’s not great and they’re kind of touristy but this one is really good. It got great reviews on Yelp and and we had a group of 24 people at dinner and just had a wonderful time and had drinks afterwards in the nightclub there and I wasn’t at this part but some of the group have worked. They were having more drinks at the Wynn and encore hotel and, and there’s just so much masterminding and so many great ideas being exchanged, you know, and then this morning, Sunday morning, we met back in the boardroom at at the Wynn and just masterminded, we went around and everybody shared all the great books and newsletters they’re reading and the podcasts they’re listening to and what they learn from them and I just thought I thought what what a stimulating conversation What a brilliant group of people. We did some skill shares and hot seats and one of our local market specialists that was there, he shared, how he uses creative visualization, to increase his productivity and get what he wants in life and for his family and his business and, and he talked about his productivity hacks, and his bio hacks that he’s using to hack his biology and hack his productivity and manage about 300 employees and all of his businesses. So that was just phenomenal. And people went around the room shared skills, one of our hard money lenders in the room, Mike, he got up and he talked about some new funds that he’s starting to do hard money lending and I invest in properties and you know, how yields are compressing and what’s going on in that market, what’s going on in the lending market and financing properties and deals and Wow, it was just an amazing weekend. People did hot seats they brought to the group challenges they’re having and, you know, opportunities they’re having and you know, what should I do? How should I deal with it and and you know, for five minutes they explained the problem or the opportunity or the challenge or whatever it was and then the group went around and and gave suggestions and asked questions that drew them out and illuminated the situation and helped them better handle that opportunity or that problem. It’s you know, could be good could be bad. Whatever it is the mastermind group, that’s the power of the mastermind and and we had lunch at a beautiful new Benihana restaurant here and you know, we were all around the, the the grill as they were cooking and you know, if you’ve been to Benihana you probably have and you’ve done the what is it the sash, one grill or the tap on grill or the bachi grill I don’t know what it’s called Anyway, you know, they throw the knives around and do all kinds of cool things. But, but you know, I looked to the side of me and there was a my friend Pat, talking to Jeff and and, you know, they’re they’re part of the venture lions mastermind and they’re talking about, you know, saving money on taxes and making money on deals and, and then I look to the other side of me and there’s Gary and Fernando and you know, they’re they’re talking about stuff they’re doing along with john and, and his wife and how’s such a great stimulating, bright, engaged group of people, I just absolutely love the mastermind concept. So, our next venture Alliance mastermind event will be in Chicago, and it’ll be in about three months. So look for more information about that if you’d like to join us and right now, of course, in just about three weeks, we’ve got another Memphis property tour coming up. I think you’ll really like that we’ve got we’re going to focus this time in Memphis on brand new construction, brand new investment properties. So check that out. That’ll be the major focus of this property tour. And Of course, I’m doing my creating wealth seminar there where I talk about what I talked to this audience about where you’re going to hear this live clip in a moment, the risk evaluator inflation and do step destruction, what Trump means to all of us in terms of our investments, and a whole bunch of other things, how to select markets. Gosh, you know, and by the way, today, I have to tell you, is the anniversary, March 12. By the way, the anniversary of the first time I did the creating wealth seminar, my creating wealth seminar, that and the first one was in Newport Beach, California. And it was in 2004. Today, back in 2004. So what 13 years ago, and I remember that day well, so I’ve got that coming up again, in just about what really, I guess two and a half weeks in Memphis, we’ll be doing it there. So I hope you join us for that. Go to Jason hartman.com. Click on the events section. Get your tickets for that event. And check out the properties while you’re on our website as well. And make sure you’re talking to our investment counselors if you’re interested in buying because not all properties are on the website. I hate to say that but the inventory is moving so quickly nowadays, it’s hard to keep up with and you’ve just got to, you’ve got to be talking with our investment counselors. Don’t just use the website only work with your investment counselor at my company that will help you get the good deals, you know, in right when they come up, boom, boom, boom, because they’re, they’re just gone fast. We are bringing a couple new providers online. So we’ve got more inventory, one of those new providers was with us all weekend. And, you know, we use that as a way also for the venture Alliance group that mastermind group to bring value to you. Even if you’re not in the group. They are kind of this. Well, I hate to use a bet Midler phrase but the Wind Beneath My Wings right here.
Jason Hartman 13:01
That’s a great song, by the way, the wind beneath my wings and the wind beneath your wings because they were with a couple of our local market specialists this weekend and it prior venture Alliance weekends and, and they were vetting them and learning about their business and you know, kind of vetting it out and, and hanging out with them and, and, you know, I mean, for better or worse I’m not a huge drinker. But alcohol is a bit of a truth serum. You know, you can kind of tell a lot about people’s character because alcohol it magnifies it right, just like money does. You know, Earl Nightingale, the late Earl Nightingale one of my early mentors at age 17. He used to say, money is like alcohol, it makes a good person better and bad person worse. So, you know, when you’re hanging out in these casual environments at the venture Alliance weekends and you know, having a couple drinks with people, you know, you you Really get a flavor for what they’re like, what their business is, like, what their attitudes toward customers is like, and, you know, where’s it rather, you know, what, what are they? Are they the, the quick buck? Turn them and burn them type of person? Or are they the person that, you know really has a long term vision for their company, their business, their life, their contribution to society? You know, these are all things that you just learned by hanging out with people in casual environments. And so that’s just so critically important. And that’s, that’s what the venture Alliance did for you this weekend. By the way, dear listeners, of course, we have many, many thousands of listeners. And we only had a couple dozen people here in Las Vegas this weekend, vetting some of our local market specialist for you. So they are the wind beneath their wings. So I thank you to the venture Alliance for helping me do that because I can’t do it myself. You know, it’s Only one person’s intuition. It’s only one person’s opinion. It’s only one person’s perspective. But, you know, you get another two dozen people there to help you think things through and that things and just a lot more perceptions. And so that’s super valuable to me. It’s super valuable to you, and we’ll continue to provide that value to you. So hey, without further ado, let’s get to this live clip. But do be sure to go to Jason Hartman, calm the Memphis property tour and creating wealth seminar is almost sold out. I don’t have the exact headcount on that lately, but I know we’re we’re only a very small number of tickets away from calling that sold out. So do get your ticket quickly. So you can join us in Memphis, and check out the properties and all the other great stuff at Jason Hartman calm. Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday. And of course, if you’re not an actual subscriber, be sure you subscribe to the podcast, so you don’t miss any episodes. We also appreciate your reviews and your ratings of the show. So, thank you for that. And let’s go to this little live clip. Okay, so Kerry, I just wanted to ask you a little more about markets and, you know, different local market specialists and some of the vetting that you do, maybe just talk about that a little bit. And, you know, you guys might have stuff to add to that. What else do you want to say about that? Maybe
Investment Counselor 16:35
I could talk about the process. So we get, you know, we find the market so we’re all we all collaborate. Hey, what about this market? What’s this market looking like? There’s new projects coming in Orlando and Memphis. You know, maybe we should look at this neighborhood or see who’s out there. Or we’re getting referrals from someone. So we’ll set up you know, phone interviews, screen them, ask them all their different questions, get them through their property manager. You know, see how legit they are. We Google you guys don’t worry and make sure we check you out. And then we slowly start them will upload their properties on our site. But we won’t give it to the whole public yet, because we want to work through the kinks and make sure things are going to run smooth and, and some of those that we’ve put up on our site that you don’t see, but we have on the back end, they haven’t worked out, which is good, because we didn’t, you know, open it up to everyone. We wanted to see who could handle who could handle the waters out there with them. So those are some of the back end things that we do that you may not know until we might be working with someone for six months. And now they’re just on the podcast, and now they’re new. And you’re thinking where’d they come from? Well, we’ve been with them and running the numbers and they got to work with us to you know, not just their system has to work, but they got to know how our structure works. And so those that come on board, we have a good good momentum with them and good relationships.
Jason Hartman 18:00
Yep, so what she’s pointing out is a lot of times, we don’t put them on the podcast right away, because we want to kind of test it first. And some client has got to go first. Okay? always right. And they’ve got to buy in that market first. And we’re really judging a lot their communication skills. And, you know, are they responsive, if they can’t even some of them can’t even communicate, it’s mind boggling. And then some don’t like to pay us either for the referral, which isn’t a good sign, because usually, they’re not gonna be around to handle warranty items, either if they don’t pay, you know, these are all things that we’ve just learned to deal with over and over throughout the years. It’s kind of amazing how they come and they go and some come back around, then, you know, later like Dan in Kansas City, you know, he wants to get in again, but he didn’t do it right the first time six years ago, so I don’t know if he’s gonna be back in right.
Investment Counselor 18:56
So that’s not even right. acceptance from me on LinkedIn.
Jason Hartman 19:02
Oh, not Facebook. Um, that’s a connection on LinkedIn. Right? Yeah. Right. A Twitter follower. Yeah. That’s for Twitter.
Jason Hartman 19:12
Okay, cool. So Other questions? Yes. Aaron? And who’s got the mic?
Investment Counselor 19:17
Pretty good. What’s the overall philosophy when building a portfolio with having a blend of the appropriate you know, a properties B, C’s and DS, having that right striking the right balance? I have my sort of philosophy but I would love to know yours personal actually, all four of you guys. philosophy on that?
Jason Hartman 19:34
Well, first of all, I think it just that’s sort of your decision. If you want all A’s or B’s or C properties, you know,
Investment Counselor 19:41
yeah. Well, you know, what I started to ask, you know, what’s your goal? What do you want to get out of it? Do you want to get the the cash flow, right now, what are you looking to gain? Because, you know, if you go in the in class A, you’re not going to get you’re going to barely hit that 1% Rv ratio with that cash flow. And then you have your B’s which is kind of a steadier when you’re going to have some cash flow but not as much appreciation and then C’s, you’re going to have higher maintenance but then Class C you have higher maintenance but more cash flow so you leverage them out and then it’s like you said it’s all up to you, you know, do you want to go I would say if you’re going to go to right now get two B’s and and then you can up it to two A’s and then two C’s and diversify with the classes but also in markets, you know, make it a follow all around blend of, of what you can expect to you know, if What if you buy those two bees, you don’t like them, you know, you don’t want to straight up then do 10 bees right away. You want to kind of gradually see
Investment Counselor 20:44
your feet in the water.
Investment Counselor 20:45
Yeah, what’s gonna work for you and in which management company’s gonna, you know, take you to the next step of, Okay, I see you do have bees, I’m gonna go to your A’s or vice versa.
Jason Hartman 20:56
And so in addition to what Carrie is saying, It’s How much involvement do you want? You know, ROI means return on investment. But we in the venture Alliance mastermind group, we came up with a new one, we also think it means return on involvement. So if you’re willing to be more involved, you can probably get a higher return in those seed properties. But you’re it’s gonna take more attention to a properties generally these are of course, generalizations, they’re going to be less than that. I say a less Yeah, less involvement. Okay. See properties, you might be in the doghouse or you go over
Investment Counselor 21:32
anything that maybe you don’t know. So I don’t it’s ultimately how easy Do you want it and if you if you’re okay with being more involved in focusing 100% of your time on real estate and your ultimate goal is maximum return on investment and you don’t have a full time job, you know, whatnot, if that’s what your goal is, and that’s what you’re gonna focus on. I mean, you probably want to maybe go into the the stuff that’s going to be a higher return on on investment. And if you’re someone that has a full time job that you’re like, Listen, I only have a couple have hours a week to maybe look at this, you know, I definitely steer you away towards the the BB plus a properties because those are typically speaking, you know, generally the ones that will be a little less headache.
Investment Counselor 22:11
Yeah, keep in mind when when you buy properties in the higher rent range, I think the the rents tend to go up accordingly they they go up a little bit more when you buy
Investment Counselor 22:20
tenant quality goes up with higher rent you mean right, the
Investment Counselor 22:23
tenant quality but over time, I think the rents increase faster. Oh, yeah. Okay. And then sometimes, and again, there’s no guarantee it depends on the market, and we don’t have the crystal ball. But sometimes those nicer properties and nicer areas appreciate better over time. So it’s like Oliver said, or Carrie or one of them said, you know, do you want your cash flow now? Or, you know, do you want a little cash flow now and maybe a better potential for rent in Greece and appreciation later? And I think I think the ultimate answer is, you know, one diversify geographically but also in the types of properties that you get. So maybe you start with you know, get a few solid a areas properties and, you know, then you add from there, depending on your comfort level.
Jason Hartman 23:05
Good, good. Gosh, I had kind of a question based on that, but go ahead Messiah, who by the way, he’s going to be on the podcast soon. We recorded last week. That was a rant that I think I was ranting about you. Anyway, I just
Investment Counselor 23:21
wanted to mention to everyone about a different kind of leverage that that has not been spoken about. And that is, you know, I’ve
Investment Counselor 23:29
had a fair number of
Investment Counselor 23:32
exchanges with property managers by email and,
Investment Counselor 23:37
and lenders. And I think that it’s important to point out there’s an intangible benefit that comes from letting these people know that you’re working with the Jason Hartman investment team and I always copy carry on all the emails that I sent out and I think it gets a little bit more attention because they know that someone is watching from the other side and I think It’s important to know that you, your questions will be answered. They’ll take a little more seriously. And if they screw up often enough, they’re not going to be on their network anymore. So I just wanted to point that out.
Jason Hartman 24:12
Yeah. Carrie is like the principal. It’s like taking, you know, copying the principal on the email,
Investment Counselor 24:18
Jason Hartman 24:20
Be careful what you say.
Investment Counselor 24:23
So, I’m really new at this. I really don’t know what I’m doing yet. But I was wondering how,
Investment Counselor 24:29
like, in 15 years after you purchase the property, if you have, like a really major
Jason Hartman 24:36
that microphone keeps going in and out. I don’t know what’s wrong.
Investment Counselor 24:41
and stuff like that, how that can affect your
Jason Hartman 24:44
so her question because it kept cutting out is if you own the property, 15 years, and then you have to replace a roof, right? How can that affect your ROI? Well, obviously negatively, because it’s a cost, right? And it’s a it’s a expensive one, you know, it’s a cap, that’s a cap x a capital improvement cost, rather than a maintenance costs, you know, if you patch the roof that’s maintenance, if you replace it, that’s a capital improvement. So that is definitely negative, you know, you can kind of amortize do some charts on this, you know, typical life of various components of the property and budget for those expenses in advance. This is what, you know, homeowners associations, for example, are supposed to do is that they have reserve accounts for capital and large expenses like that. And so they know that in 20 years, you’re going to have to repave all the streets in the common areas, right? Or you’re going to have to redo the pool. And so they have reserve accounts, they just accumulate over time for that purpose. Okay, so, yeah, you do have big expenses like that and be prepared for them, if not financially, mentally. Know that hey, how old is that roof getting on my house? Right? That’s, that’s
Investment Counselor 26:04
one of the things I love about new construction, they don’t always pencil out very well on paper, the day you buy them, they don’t look like they’re going to cash flow very well. But you have a lot less maintenance. And hopefully by the time you know the house needs a new roof, you may be able to just maybe appreciate it and you could 1031 exchange, you know, you sell it to a homeowner and maybe the homeowner is willing to overpay come in and you know, they want to be in that school district and they’ll put the new roof on and you can pass that expense to somebody else, you know,
Jason Hartman 26:34
and and the roofs on new homes will you know a lot of those are pretty sturdy roofing materials. So they last a long time.
Investment Counselor 26:41
One of the things to bear in mind with that is, remember, I was telling my class remember the initial performance sheet, we had allocated roughly five, maybe six 7% towards maintenance.
Jason Hartman 26:52
Well, it depends on the age of the project depends
Investment Counselor 26:54
on the size of the property, so it really ranges but sometimes you may go you know, four or five years Without using that full percentage range, but then 10 years comes down the road, you’re like, oh, man, I’ve got to spend two $3,000. Now to replace this, just bear in mind that essentially, if you didn’t have to use it during that time, you essentially saved it up and you will use it at one point. So try not to freak out too much. Yeah,
Jason Hartman 27:16
kind of be ready for that stuff. Hey, by the way, I didn’t say this before, but I should have just say your first name and the city you’re from, if you weren’t so Aaron, from Aaron from Irvine. All right. Yeah, that means now you can ask a question, one bank account for all the properties or a separate bank account for each property. Good question. I wonder what Fernando does. And I don’t know the answer, but I do one bank account for all the properties in that entity. So if I entered in my personal name, that’s just, you know, a bank account in my name, right? If it’s in an LLC, and there are several single families in that LLC, one bank account for all those properties. I don’t think that’s that hard. Some people say one way Count per property. I think that’s your plan. I think it’s overkill. Yeah.
Investment Counselor 28:04
unless those wells fargo they’ll do it for you.
Jason Hartman 28:08
Yeah, if you read that article yesterday or the day before, did you hear about Wells Fargo? Oh yeah. Ross I think you’re the one that gave me that link originally, Wells Fargo has basically been found guilty of opening up ghost accounts for people and they fired 5300 employees and paid like 180 $4 million fine to the government so that’s Yeah, you might have accounts you don’t even know you have to so you know, it Wells Fargo. But then for the larger properties like the apartments I own and mobile home park those have one account for that whole property. Okay, but for single family, one account all the properties for me, what do you do?
Investment Counselor 28:44
I do the same thing as he does. Yeah, per LLC. Mainly, yeah. And then one catch all, which is for the personal stuff that I started out with?
Jason Hartman 28:54
Yeah. Okay, good. So question back there, Fernando. Did you guys have anything to add to that? By the
Investment Counselor 29:01
If you the only thing to add to that is well, Emily, I know that this is something that Fernando does is if you want to have it per state, if you have a bunch of different properties in different states for now, if you want to elaborate on that, but essentially, if you have a bunch of properties in Georgia or you know, Tennessee, just have them per state.
Investment Counselor 29:20
Is this an LLC question? Because that was actually my question is how do you with many, many properties like that? How do you structure your entity management to reduce your risk?
Investment Counselor 29:29
I do it Oliver said it’s broken up per state. Now, that doesn’t mean that that’s the recommendation that it depends on who you ask, they’ll give you a different answer. If you ask a lawyer that makes money off of creating LLCs he’ll tell you to create one per property and one bank account per property and, you know, you have to be comfortable with what you do. Obviously, you might not want to go on either extreme where you have one big LLC that contains all properties, but honestly the answer can vary so much Really depending on who you ask that it becomes hilarious at some point. So, in my case, it was more organic, you know, as I was building a portfolio, and just turns out that I was, you know, buying properties in this state, it made sense to, to me to have an LLC for that state. When I was working with a particular bank, when I purchased a set of properties for a particular bank, they wanted a single purpose LLC for those properties and fine, you know, that’s made sense. And it turns out that that’s what I kept. So you know, it really it’s up to you on what you’re you’re comfortable with, at the end of the day. There’s many different ways of doing it.
Jason Hartman 30:39
Just to speak to that a little bit. Last week, we had our venture Alliance mastermind that’s like my mastermind mastermind group, right. And I’ve talked about on the podcast, so we had our meeting in Seattle last week. And I gave all of the attendees, the Garrett Sutton book loopholes of real estate, which is very good. There’s a couple things I disagree with him on that sort of old school. thinking a little bit, I think but Garrett has formed some entities for me. I think he’s, he’s great. And his prices are very reasonable too. But just when you start forming all these entities, life gets complicated quickly. Okay, I’m just gonna warn you, because the problems come up when you. First of all, if you live in the Socialist Republic of California, you’re pretty much screwed. Okay? because what they do is they essentially want you to domesticate every entity you have in their state, even if the property is in a whole nother state. And literally and Fernando, you and I talked about this, if you have a mailing address in the Socialist Republic of California, like I do, they could try to do, they could try to make that your tax Nexus just because you have a peel box there. Even if you don’t live there. It’s insane. Like the property’s not in California, the person’s not in California. And you literally just have a mail service in California that receives your mail. Boom, you might be in that tax Nexus They charge you $800 per year per entity. Okay? And, you know, a lot like Garrett will say, you know, put your entity your LLC in Wyoming. But then the problem is, depending on the state where you own the property, you’ve got to domesticate it in that state, maybe? Maybe not. It’s complicated. Okay. But his book is great, I’d highly recommend it. There are a few things I disagree with him on. One is, you know, like Fernando said, he, you know, to anybody selling something is going to tell you form as many policies as you possibly can, right? Because another way that the attorneys make money off stuff is by being your registered agent, and you have to pay annual dues for that, and all of that stuff. Also, he says, just one sec, I just want to finish my thoughts on that Garrett book. He’ll say, Don’t buy properties in your IRA. And Tom wheelwright, who’s like another Rich Dad advisor on tax stuff. I don’t think the IRA thing is that great. I think it’s better than stocks for sure. But they’re really kind of like down on it. And I think they overreact to that it’s not that bad either. Oh, and then he’ll say don’t buy properties, you know, far away from home. And that’s just old school thinking, you know, because the problem is, it requires you number one to live in the best market in which to invest, which probably you don’t. Okay. So if you live anywhere in California, it’s not going to be a good place to invest from a cash flow perspective. If you live there, no matter where you live in the state, or if you live in South Florida, or Northeastern markets that are any expensive market is not going to make any sense from a cash flow perspective. You’re not an investor, you’re speculate, speculator, you’re a gambler. And then the other thing is, even if you live in the best market in which to invest, say, you all lived in Memphis, okay, or Orlando. And, you know, we think we’re Indianapolis, and those are all great markets to invest, right? But if you do that, and you want to buy all your properties close to home, you’re still not going to be diversified and you should diversify into at least three markets. So, you know, this is like old school thinking back in the day when you didn’t have any tools when there weren’t companies like ours that help you do this. Yeah, I agree. I would only buy locally. But nowadays, it’s just a different world. You didn’t have Google Earth back then. You didn’t have Zillow. You didn’t have us. You know, you didn’t have these different business models and tools that have been created
Investment Counselor 34:22
around that to do I agree 100% It always amazes me. Every so often every week or sometimes two. I see companies popping up that do Pease do a piece of the property management or the real estate, the income property, investment, philosophy, and because you have all these resources that didn’t exist 10 years ago, it’s easier than ever to be able to manage properties from anywhere. I travel all over the world and there’s there’s no issue whatsoever. As long as you have internet connection. You need that. Yeah, but that’s about it.
Jason Hartman 34:59
See it really The key turning point was when al gore invented the internet. That’s a joke. Some of you did not laugh. Anyway, Al Gore is a joke. Okay, what were you gonna say?
Investment Counselor 35:14
Just about saving some of you some money. This is a bit of a code hack. I’ve been able to save a lot of my clients money just by doing this. For those of you that have registered agents, just do a quick search in the area, find the cheapest one and then go back to your registered agent and see if they’ll match it price. Yeah, the clients, my class will save hundreds of dollars on this every year. So just do that make note.
Jason Hartman 35:37
Just ask them to match the price. Yeah, one firm that I used to use, and they’ve been on the podcast, I do not use them anymore. Definitely not ever again. They were just I was paying outrageous fees for registered agent and entity maintenance where they’ll do your minutes every year and your filings and stuff and it was just such a ripoff. So I moved a lot of that over to Garrett Sutton’s office much, much better deal
Investment Counselor 36:00
You should do the same thing with your property insurance or your homeowners insurance or property management companies. You just shot them against each other.
Jason Hartman 36:10
That’s the way free market capitalism works. It’s a good thing. Tell Bernie Sanders. Okay, any other questions? Yes, over here.
Investment Counselor 36:18
As a new investor, why would someone use an investment counselor? I don’t I’m not extremely clear on what it is that you actually provide or why it is that I as a new investor would want to use you.
Jason Hartman 36:30
Yeah, good question. So first of all, it doesn’t cost anything. It’s free. We make our money because we get referral fees from the local market specialist in that market. If you were to find the property yourself directly, you’re still going to have all that in there. Okay, you’re still going to have a broker or an agent in there, probably okay, most of the time. But secondly, and this is really what my vision of getting into this business was back in 2004 is when I was when I was selling my company that I talked about earlier. And I went to these financial services firms, I thought, the great thing about the Wall Street stuff is they make it so easy. They’ll let you just walk in and give them money. And they can put you into variety of investments. Well, why Couldn’t there be a real estate company, we have the best asset class, but really, in this industry, a really bad sales force. Because it’s all local realtors, they don’t think like investors. They’re not area agnostic. They’re totally attached to their one market. And we’re not attached to any one market. We’re area agnostic. So is if you buy in any of our markets, from any of our local market specialists, we’re going to make money. Okay, we’re area agnostic. So any of the markets you buy in, we’re still gonna make money, right? So they’ll be impersonal with you in terms of what market you should invest in. When you talk to our local market specialists. They’re going to be motivated to sell you their market only Okay, so just a reminder, you’re listening to flashback Friday, our new episodes are published every Monday and every Wednesday.
Investment Counselor 38:14
Yeah, and, you know, we’re working with several investors at any given time. So we’re getting constant client feedback on property management, lenders, you know, the market specialists, you know, who communicates well, who goes the extra mile to repair a refrigerator that was broken 30 days after close versus one that, you know, Fred over here had an experience with
Investment Counselor 38:41
one of our market specialists that we fired and this was the straw that broke the camel’s back is Oh, hey, she got the same, right,
Investment Counselor 38:47
cuz we’re all that broke the camel’s back.
Investment Counselor 38:52
So, you know, we had, you know, a few complaints over the year and this was on the property management side and this was one of our Birmingham providers. And, you know, Fred came to me and said, geez, you know, I just closed it had been, I don’t know, 30 days or within 30 days, and there was like a little hole in his door, maybe the back door. And there was one other thing with the property. What was the other thing? The hot and cold? Oh, yeah, the toilet was producing hot water which never heard before. And so I, I said to Fred, well, those are two really easy fixes. I’m sure we can call this provider and you know, get those fixed. And they didn’t do it. I mean, that’s like, the only provider that I’ve ever heard of that I can think of in nine years that would not you know what he said? He said, Well, a squirrel probably chewed through the corner of that door. And I just about last night, you know, you know what I was upset, marbles. marbles. I was gonna say something.
Jason Hartman 39:57
I don’t know if everybody knows the inside joke. So I was teased Sarah Because she always gets the saying a little bit different than, you know,
Investment Counselor 40:04
things are better.
Jason Hartman 40:05
Yeah. shoot yourself in the foot or shoot yourself in the shoe
Investment Counselor 40:10
in the summertime, shoot yourself in the sandal. Yeah. Okay, so anyways, we did go to bat for Fred. And we were not successful. And so we stopped working with that provider all we removed the properties from our website,
Jason Hartman 40:25
and we got in a big argument with him. We
Investment Counselor 40:27
got in a big argument with him and on boxer and I think you were on that thread. Yeah, it was. I mean, it was just it was kind of embarrassing. You know, I felt impatient playing the boxer thread
Jason Hartman 40:37
on the podcast, make
Investment Counselor 40:40
another lawsuit. Oh, great. So what I need
Investment Counselor 40:43
and that doesn’t mean that Fred has a property that’s not going to perform, you know, he may switch to another property manager. And in fact, he did. And, you know, we helped him we gave him some contacts in the marketplace. And so sometimes you fire the local market specialist or you fire a property manager
Jason Hartman 40:59
and occasionally With the client,
Investment Counselor 41:01
we have fire clients.
Investment Counselor 41:04
You might be looking at a property all this is going on. And you might have been looking at those properties through that provider. In fact, we did have clients that were, you know, inquiring, and you you may have already, maybe we took them off the website, and you didn’t notice, but maybe you were already communicating with them, or maybe you purchased two years ago, and you went back to them directly to buy another one, which this just happened with that provider. And you happen to call me and say, Hey, can I, you know, just want to get an extra set of eyes and ears on, you know, how is this provider doing? And I might say, Wait, you know, this is what’s going on, maybe you should look at another market or another seller in that market. So that’s we lead provide value as a network, I think, I mean, you help us as much as we help you guys because we’re getting that feedback. And we can make decisions based upon your
Investment Counselor 41:50
Jason Hartman 41:51
And hopefully, we can observe exert some real leverage over them. And that’s what the fire was mentioning earlier. You know, we hopefully that local markets special list views it as Look, there’s a carrot out here. And there’s a lot of business coming. So I really care about this relationship. Okay, some of our local market specialists, they’re probably making a million dollars or more a year off of our referrals. Well, they definitely are making over a million bucks a year. And so they’re not going to screw that app. I mean, they’re just, they’d be crazy to mess that up, right? versus doing a one off deal. That’s why when I tried to do this myself back in 2004, I had no leverage, I couldn’t get anybody to do anything. Even returning a phone call seemed like a chore sometimes, right? Because I go to this market. I’m like, hey, I want to buy two houses, or like, I don’t care.
Investment Counselor 42:38
Just Lindsay, just to elaborate on that. We’re ultimately here to really help you help all of you, the investors. And really without you guys, this would really be happening. The other thing too is there are other companies out there that will charge 510 50 I’ve also even seen up to $100,000 to coach you for maybe six months or a year on how to do exactly what we’re doing and then when they find out about us what Like what you guys actually helped me for free? Yeah, free. Like, yes. There Josh sort of drop and, you know, they’re very happy because now they can use that money to buy more properties. Yeah,
Jason Hartman 43:11
education nowadays is almost free. Okay. Someone had asked about coming to one of our events and, you know, said, Well, why do I have to pay to come to your event? what you’re paying to come to our events is like nothing, we lose money on these events, okay? Where we make the money is because we’re a real estate company, right? That’s just a huge difference because we’re tied to the actual property, right, in the sense that what we say at the seminar has to come true in real life. Well, you know, at least has to come through with the time you buy, right? admittedly things have bumps in the road, or you’re not gonna buy properties and we’re not gonna stay in business. And that’s, that’s the key distinction. I have had so many people and you remember, like many of these over the years that have come they bet In one of our seminars and, you know, buy lunch, they they walk up and they say, you know, I just spent $43,000 on this guy’s guru coaching program, and I just finished it and I felt like I got nothing, I learned more for lunch from you for free, or for cheap, you know, 200 bucks or whatever it was, you know, it’s just you just don’t have to pay a lot for education, use your money to buy actual properties. You know, for $43,000 you can buy two properties,
Investment Counselor 44:28
and you should thank Jason for charging for his events because otherwise anybody could come and all those people that are next door, selling juices. they’d all be here.
Jason Hartman 44:38
Armando. montelongo people would be here. Yeah. Yeah. So. Okay, any other questions? Maybe one more. Okay. Or two more. We got two more and then we’ll wrap this up this panel.
Investment Counselor 44:51
All right from Carrie from Irvine. So I just curious between among Sarah Carey and Oliver. What is the difference? between working with any of you, do you specialize in specific type of markets? Are you a specialist? Or do you specialize in certain types of investors?
Investment Counselor 45:10
Where are your areas of expertise? And,
Investment Counselor 45:13
you know, who is the best person to go to?
Investment Counselor 45:16
That’s a tough one.
Jason Hartman 45:19
That’s a tough one. Okay. And and Fernando, by the way, do you have to include him in that? I mean, I can answer that one. They all do all the markets, there’s not enough markets that you need to specialize. Our specialist is the local market specialist at the back of the room, right in that various in those various markets. And we have many more of them besides the the few that are here. But they all handle all of the markets, okay. And they all handle a variety of different types of clients in different situations. So it would be sort of impossible to say you only work with certain type of client and you work with another type and you work with another type because the clients grow and change over the years. So,
Investment Counselor 46:01
yeah, and the way it works, I mean, to be honest, you guys go on a round robin through our system when you put your name and number in, and it just gets automatically assigned. But the one thing you should know is that we all bring something different to the table. And we collaborate. I mean, we do a team call every single month, we do our venture Alliance meetings. We had a team meeting yesterday. You know, so if you ever need access to anybody, I mean, we all work together. So all the way up to Jason. I mean, on that issue. Usually I can handle property management issues on my own. But on that issue, I was just so upset for the client that I mean, you can ask for it at the break. I got Luke, Jason and I did what he asked me to do. I started a boxer thread and got everybody involved. And so if we’re in our Birmingham guy hates boxer,
Jason Hartman 46:50
by the way, he says, I don’t want to talk on here because guess what it’s recorded. And everybody can hear it. I love it. He always wanted to just talk to me. You know, like, I’m gonna fall into the conspiracy of let’s just make money. No, I, you know, I want a business that last right, you know, so
Investment Counselor 47:07
But I mean, if there’s if there’s a question that I can’t answer all of our can answer, and we know Jason has the answer, we’ll go get the answer for you and refer you to the, to the right person.
Jason Hartman 47:16
But a lot of times you guys have the answer, you teach us a lot of stuff. And part of our job is to simulate the knowledge we learn from you that, you know, when you have a problem in a certain market with a certain provider, they’re all talking about this on our voxer thread every day, you know, carrier will say, Oh, you know, guess what I’m having a problem with so they’re not returning our call. And by the way, on our last deal, they didn’t pay us yet either. And then we start to get worried about, you know, their financial condition and so forth. And so all this stuff is
Investment Counselor 47:47
really helped actually, you know, I’ll say, hey, Sarah, who did you use in this market for an IRA or Hey, Oliver, how did it work out with your client in that situation, you know, because I’m kind of going through the same thing. So we we work together and It’s really nice because I think she left the building here. But yeah, and why to use an investment counselor? Well, because we’re working there to support you guys. I mean, we’re supporting each other. But we’re supporting you guys and, and there’s things that we can help you with that you wouldn’t know. You can’t Google that situation. You know, we’ve gone through it or someone’s gone through it up here already, so we know where we can help
Investment Counselor 48:24
guide you to the right steps to take it stuff. Okay, we have one more question.
Investment Counselor 48:28
Joe from Idaho. Idaho is not a city. Well, you just won’t know the 500 people that live.
Jason Hartman 48:37
You don’t really By the way, Joe from Idaho Canadian say that. I’ll meet him at conferences. Where are you from? Canada. Oh, really? There’s a there is a down and
Investment Counselor 48:49
it’s really that a lot of people in America have no idea where the majority the city
Jason Hartman 48:54
they don’t know the difference between Vancouver and Toronto.
Investment Counselor 48:56
They have no idea.
Investment Counselor 48:59
I mean, how many How many people here can tell me their capital? Canada? Ottawa, lift your hand? All right, seven. Okay.
Investment Counselor 49:08
80 of us here. Okay, Americans aren’t that smart. Damn Canadian snob.
Investment Counselor 49:14
So So when we say Canada like okay, cool Canada semies you’re probably friendly. Say I live in a poll a lot. Agree with something.
Jason Hartman 49:21
What do people buy from us? They buy
Investment Counselor 49:24
that they live in houses, not houses.
Investment Counselor 49:28
That’s maybe a Jason Hartman thing.
Jason Hartman 49:29
A boot house whose Canadian girlfriend she called it? I remember one time we’re eating dinner, and she says, Pastor
Investment Counselor 49:40
I never heard anybody say that before. It’s pasta Sherry. Anyway, yeah.
Investment Counselor 49:45
Anyway, okay. Joe from Idaho. Do you like
Investment Counselor 49:52
Do you like pasto or just Idaho potatoes
Investment Counselor 49:58
so I just being new Just Could you maybe walk us through the steps of how to utilize you guys the best and what that process would entail to, you know, pull the trigger and buy that first property there. Sure, I’ll go ahead and tackle that one, essentially, we’ll have our intro call, start out, see where you’re at financially, what your goals are, what your expectations are, and from there, we will then identify other certain market. But alongside of that tangent to that I want you to see one of our our preferred lenders get your pre qualified and then move forward from that point. See what that range is that you qualify for, you know, if it’s usually at 230 or so that’s where the majority of the houses tend to fall and, and almost everybody qualifies these days for for that. So, you know, from that point, we’ll then identify that home and then put you under contract, and then usually the expectation is 30 to 45 days. From there, we’ll close you’ll get a fully rehabbed house and fingers crossed materially time it will be tempted by the time that we close If not shortly thereafter, and we sort of help you along the whole process. That’s essentially like a, you know, six step breakdown. But there’s a lot that happens during all of those different steps. And then repeat that over and over and over again. Anybody else on that one?
Jason Hartman 51:16
We’ll wrap it up. Okay, thank you all get a little Beckham.
Jason Hartman 51:27
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