Jason Hartman talks about a shift in the preference of renting versus owning. He uses information from CoreLogic to discuss which is a better deal. Later on the show he brings on Yaza, CEO and Co-Founder, Peter Sisson. They talk about key features of a new smartphone app. You will learn about how to optimize your time and energy with this handy smartphone tool.
Investor 0:00
So so we got the 26 properties. The last time we were at the meet the Masters, we were introduced to more of the self directed IRA, which was something that we were both interested in looking into. We both were corporate rats. But I walked away from my corporate job in February of this year. So it gave me the opportunity to take all of my 401k earnings and put them into a self directed IRA. So I was able to pick up a property in Dayton, Ohio and cash with and then we bought a single family, three bedroom, two bath, home in Ocala, Florida, that we got to go walk through yesterday. And it’s really exciting. So I’ve got 13 years before I can get into that IRA, but I’m pretty excited to have a lot more properties in that by the time I get there. 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 1:31
Welcome to Episode 1394 1394. Thank you for joining me today. Yesterday, we talked about how a record number of people who are renting not owning renters think that renting is a better deal than owning and from an article by Julia Falcon. It’s pretty interesting. And let’s figure out if they are right or wrong. Let’s talk about that. Let’s talk about that are these renters right in believing that they have a better deal than if they were homeowners? Okay, so it says 42% of renters pay more than a third of their household income on rent. Now, remember, I’ve talked to you about how slavery is illegal, okay? It’s illegal. But as an income property investor, you can essentially own the rights to someone’s productivity for one third, to even up to 50% of their entire productive effort at their job or business for every single month of the year. That’s because if they are renting from you, they’re paying a third and even as much as 50% of their income in rent. That goes to you to pay down the principal on your mortgage, to provide some positive cash flow to you. And to give you all the other multi dimensional benefits of income property, which are truly incredible, the most historically proven asset class in the entire world. Okay, so this is based on a recent report by core logic, that’s the big data company, you’ve certainly heard of them. And it said that home prices now remember this, you know, this is all the nationwide stuff right includes the linear cyclical and hybrid markets. The cyclical markets that have been having trouble lately, but you know, they’ve been bullied a little bit in recent months. But overall, they had a rough year in those cyclical markets. And, and still some of them, the higher end properties are really still suffering very significantly. They said home prices year over year, December to December increased 4%. And they projected this year, even with that said, with the linear markets doing well The hybrid markets doing pretty well. But the cyclical markets overall still hurting even though better than before. They say that they expect home prices to increase by 5.2% by December 2020. Okay, so that’s basically this year. Now.
Jason Hartman 4:18
They say that it’s little wonder that Freddie Mac’s latest profile of today’s renter and owner found that the majority of current renters believe renting is more affordable than owning. Now, remember, most of this stuff whenever you see data like this is skewed toward the high flying, overpriced, bad l t i ratio. Remember that’s the term I coined land to improvement ratio. Okay, not to be confused with LTV or loan to value ratio. Those markets those cyclical markets that make no sense for investors. Most of it is heavy. There we go. Cuz that’s the biggest population centers, right? I mean, there’s a lot of people in Los Angeles, in the Bay Area in New York and Boston, compared to the amount of people in Little Rock, Memphis and Indianapolis, right. Make sense? Those are the big population centers, right? So, anytime you hear these national statistics, you know that they’re going to be skewed that way. You also know, thanks to my teaching, that the Case Shiller index is comprised of while the primary Case Shiller index, the one that’s most commonly cited, is only 20 markets, 75% of which are cyclical, and you know, we’re going to use a synonym for cyclical markets. Non sensical markets, the cyclical markets don’t make any sense, right? So it’s always heavy on that whenever you see these nationwide statistics, just understand that so that you’re not looking at the stats with rose colored glasses. Because you will misinterpret them if you’re not understanding that. Okay, so they say that a whopping 84% of renters said that they believe that they’re getting a better deal renting than they are owning. Okay? And for comparison, that number is up by 17 percentage points from February of 2018. So that’s a very significant increase. In other words, not as many renters thought they were getting the better end of the deal back in February of 2018, but 17% more of them, well, 17 percentage points better on the overall scale. Okay. Be careful. And be sure you read the book, how to lie with statistics because statistics can lie. They’re easily okay. There’s a difference in those two things that I just said. Okay, make sure you understand that one is a relative number one is an overall number. Okay. But anyway, the point is, it’s 17 percentage point increase in renters think they’re getting the better end of the day. They’re better off renting than they are owning. Okay. The survey found that affordability while we talked about the 42% pay more than a third of their income toward rent. Okay, this is compared to only 24% of homeowners who spend that amount on mortgage payments. So in other words, the homeowners are spending less from a percentage of income standpoint than renters. Now, that’s an interesting thing to look at. Why would that be? Well, it would be because, first of all, and we’ve talked about this many times on prior episodes, homeowners aren’t moving. They’re staying put. Why are they staying put? Well, one reason certainly is that they’ve got such good mortgages, that they don’t want to leave those mortgages. You never want to be unfaithful to a beautiful wife or a beautiful mortgage. Right? Either one. You want to be faithful to that because it’s a great deal. So you see that they also have a decent amount of equity in their property. And maybe the mentality of the homeowner is more conservative and more prudent, I would venture to guess that it is the renter will tend to be the more instant gratification type mentality. They will be the type of person that is more interested in the appearance of wealth rather than real wealth. I remember when I was just beginning selling real estate at age 19 and age 20 when I was going to college and selling real estate part time for century 21 Academy on Beach Boulevard in Anaheim, California. And when I was doing that, and I’d work with a lot of investors selling them these really ugly, terrible disgusting government repo properties, HUD and VA repos. I would work with investors and first time homebuyers and the first time buyers always had a very difficult time taking One step back. In other words, becoming a homeowner taking that one step back to take two steps forward, because they were usually renting a nicer place than they can afford to buy. So when they become a homeowner, it’s always from that perspective, it was always like a fix up project. They had to visualize how the house could look. They had to do some work, get some sweat equity, and make that house a really beautiful home in which to live. And the apartment they lived in, or the single family home rental they lived in, was all fixed up by the landlord, right? They didn’t have to do anything. They could just move in, and they’d have everything instant gratification, right. So that was always the thing. It was very hard for them to rationalize taking one step back to take two steps forward becoming a homeowner getting into the game right now. Of course. I think when you rent a higher price property, you are getting a better deal for Sure, it’s a much better deal to rent that property then tone it. But these were cheap properties. These were inexpensive properties. And it would have been much better to own them than rent them. But it was always one step back for two steps forward. And most renters having that instant gratification mindset, couldn’t do it. They wanted to just move in and have a nice, clean place that was all fixed up and painted and everything for them. So it’s an interesting thing. So the question we started with, do you think these renters are correct? Do you think they’re right? That you know basically 84% of them think they’re getting a better deal owning than renting. So it looks like this time the tenants are right. In most cases in the heavily weighted cyclical markets, the tenants are getting a better deal by renting and maybe you should join them. If you are a homeowner have an expensive home. Maybe you should consider moving and renting a home And property, but I will say it’s a little harder was hard for me when I moved to Florida, I could not really find a good luxury rental for myself. And I attribute that because so many of those big luxury homes have been converted to Airbnb rentals. So the short term rental market has distorted the market and suck some of the supply out of the marketplace for high end rental properties. So, anyway, we’ll see, as I always say, Airbnb has yet to go through a recession. So we’ll see how it all goes. Okay, we’ve talked about California and its attempts to commit state suicide. We see further evidence of this. So last year, California, of course, passed three very serious laws that will handicap its economy and cause productive people to leave the state. They’ve been incentivizing productive people to leave for nearly two decades now. Free if not more, Uber, the ride sharing giant, of course, they are shutting down or they have shut down their Los Angeles office. They laid off about 80 employees there. Now, you know that California basically said, Look, if you want to have ride sharing companies, all those drivers need to be employees. They can’t be 1099 independent contractors, they can’t be freelancers. And this is the heavy hand of a ridiculously intrusive government. If a person wants to work, and a person wants to hire or company wants to hire, what business is it of the government to get in the middle of that transaction? It is none of their business. But we see the absolutely stupid decisions repeated by politicians. And you know, of course, California also enacted statewide rent control last year. absolutely ridiculous. So we’ll see where it goes. Alright. So today, our guest is going to talk about a very handy app. For your smartphone that you can use with your property managers, or with your contractors, and repair and maintenance people in with your tenants. So if you are self managing, this is a fantastic tool for you. And we are going to go into that in the interview here in just a moment. I want to mention for new listeners, if you want to gather some of the fundamentals of real estate investing, and learn how to create wealth and the most historically proven asset class in the world, or if you’re a regular listener, and you just want to review and you want to get back to the basics once in a while on the fundamentals on whatever podcast platform you use, be sure to check out my quickstart podcast, just type Jason Hartman quickstart on iTunes or any podcast platform, and the show will come up for you and that show has hand picked episodes covering some of the fundamentals of investing. Where is on this show, we talked about that, but we also talked about a lot of other stuff. So if you want to just work View the fundamentals, like Vince Lombardi said, talking to his team, at the beginning of every season, he would hold up football. And he’d say, gentlemen, this is a football. Because if they didn’t know that, but but that’s the fundamentals, and it shows you the importance of the fundamentals. Right. So Jason Hartman quickstart podcast, reach out to us at Jason hartman.com or call us at one 800 Hartman and our investment counselors will be happy to help you with whatever you need regarding income property. And let’s go to our guest and talk about this handy application to help you be a better manager of your managers or a better manager of your properties. If you are self managing, here we go.
Jason Hartman 14:45
I’m always trying to show you new technology that will help you better manage your properties and be a better investor. And today we’ve got a treat. We’ve got Peter Sisson, he is the founder I believe is the founder of yahzee.io This is a great little app. It’s currently free. And it can really help you keep people honest vendors, property managers, etc. tenancy them. So let’s dive in Peter. Welcome. How are you? I’m great, Jason. Thanks for having me. My pleasure. You’re coming to us from San Francisco area, I guess
Peter Sisson 15:16
I am indeed and it’s a beautiful sunny day out here. I don’t want to make anyone feel jealous, but we’re having some good weather. It’s normally our rainy season.
Jason Hartman 15:24
Hey, it’s pretty nice in Palm Beach, Florida, too. So in the cost of living in the state taxes are zero. Anyway, hey, I found this app. I wanted to get you on the show. Thanks for coming on. It’s a great tool. You know, we teach people how to manage their property managers. We also teach them how to self manage and when someone sends you a video or a photo of say something on your property that needs to be repaired. The problem is, you know, people give an error of living legitimacy to a little video clip they were sent. But the reality is, they don’t know when or where that video was taken. And you solve that problem, right?
Peter Sisson 16:11
That is correct, fantastic problem and a growing problem not just for realtors or investors, but anyone who wants to be sure that something happened at a certain time at a certain place. And how we do that is basically think of yahzee as a messenger where you can share and exchange videos, accept every video that’s on yassa is recorded in Gaza. And at the time it’s recorded, we force the user to identify the location that actually guesses it, and then they can adjust it and timestamps it and uploads it and encrypts it. It can’t be altered, it can’t be edited. There’s no way that you can have fake videos on Piazza.
Jason Hartman 16:52
Great, okay, so, you know, when you receive a video clip, you know where that video is. clip is from it will allow minor adjustments though because the GPS, of course is not perfect, right is
Peter Sisson 17:06
that that and that was a lot of work for us. So it actually we do a really good job at guessing your location and it will fill it out for you. But it’s just, you know, you record the video release. And then your next step is simply to accept the location it suggested or you slide the map around until it gets it, and then you post it, okay, and you don’t put an aspect of this too is that when you then want to share it, let’s say it’s a contractor who’s like, I don’t want I can’t send you a video, it’s gonna use up all my data plan. Well, that’s not how it works. We store the videos on our servers in HD, and they stay in HD, and they’re shared only with links. And that means that these videos can be shared instantly without using any bandwidth. And it also allows us to authenticate them because if you see a video that doesn’t have the link, then you know it’s no longer linked to the master and could have been all
Jason Hartman 18:00
Okay interested that’s I get the I get what you’re saying I hope the listeners get that too, because it’s coming from your server. And so that link is what tells you that there was no foul play in between. If it was a, if it was a video, let me let me give the other example and correct me anywhere I might be wrong here. Someone takes a video with their phone, and then they stick it into or they don’t need to, they can do it right on their phone, they edit it on the phone, and then they upload it to Google Drive or Dropbox. Or maybe they just send it to you via text or email. it’s small enough, and you never know where that video was taken. You never know when that video was taken. It could have been a hole in the wall that was caused by the tenant from two years ago. And now they’re showing you a picture of it today and saying, Oh, you got to repair this. Send me you know, $400 and the you know, it’s fake. So this is a good Great way to have fraud prevention. So it’s a wonderful thing
Peter Sisson 19:04
now, and not just that it’s sorry to cut in. But what is really exciting is that everything, once you’ve got everything identified with location, our interface is map based. So all of the videos get organized around the property. So if you’re an investor with multiple properties, automatically those videos appear at those properties off the map. So you can you know, if everything is coming from Dropbox or Google, you don’t know which property belongs to you don’t know exactly what you said, you know, where it comes from, whether it’s authentic or not. And with yahzee that’s never a problem. And then one other thing that I think people will like, is that the videos are searchable for content. So we run them through what’s called an image classifier, which is artificial intelligence. It goes through identifies every object it recognizes in the video, search for the videos awesome based on those objects,
Jason Hartman 19:57
okay? So in other words, if you remember Gosh, you saw this video, and you can’t remember what property was it? I think that tenant had a red sofa. And so you can literally search that. I don’t know if it’ll pick out red sofa specifically, but I’m just giving an example. And then you can find what you think that’s how our memory works. You know, our brains do these funny associations, and now the AI can help you find something. So it really keeps your filing system organized over the years also, right? All those videos get organized. They’re all in HD. They don’t use any memory on your phone or anybody else’s phones. We handle all that for you. Okay, fantastic. Now, what was the real genesis of Yaga? Was it really meant to be like a social networking tool or sort of a WhatsApp? Or it’s a great question, what was the intent of it? Sometimes things have alternate uses as we know that You know, turn out to be the the ultimate use the alternate use yet becomes the
Peter Sisson 21:05
end and that’s, that’s exactly what what’s happening here is I like to say that good products are not invented, they’re discovered. And you know the trick is you have to get your product out there quickly as you can so that customers can start to give you ideas and feedback. And what happened is we put it out and realtors found it and suddenly saw the bees top realtor from California she did 82 million last year is posting house tours at all her properties then you can put yahzee you can do you know 32nd video then do another 45 seconds. So one for each room. They all get organized in the property and they play in order. And so it’s ideal for realtors and we had thought about that use case but we didn’t realize how quickly they were onboarding so we have Coldwell Banker, Douglas Elliman, other firms are starting to get word. So they’re using it to basically do house tours narrated how tours on the app so most people buyers can look at the properties through those tours without having to physically visit them and then narrow down which houses they actually want to tour it just saves both people both sides a ton of time and then along the lines of what you’re talking about, then they’re saying I could use this to have my house in spec you know the house inspections be validated. I could use this to manage my contractors remotely have had them show you know when something was completed and they sent a little video video conveys so much more information than a photo because photos at the right angle can make things look different than they are
Jason Hartman 22:39
right and not just the right angle the right lens can can change things or the right you know adjustment on the phone you know, you can widen the shot and and all kinds of things. You can do that on video but it’s not as easy to fool someone when you when the picture is moving. And what I always say is the old saying is a picture says 1000 words Say a video says a million words. So
Peter Sisson 23:02
I say that to
Jason Hartman 23:04
you stole my quote. That’s my famous quote. I’ve had that for years.
Peter Sisson 23:09
Did you said it before? I did.
Jason Hartman 23:12
But But yeah, it’s really great. That’s a great thing. So just to be clear, though, we’re curious what was the genesis so so the Genesis he
Peter Sisson 23:21
said, I read I didn’t even answer your question. I go right into talking about the app. Initially, we thought it would be a social app, but the drivers initially were okay. We’re watching everyone’s using video. 80% of the internet is video. These video files are getting bigger and bigger because cameras are getting more and more megapixels and phones are just ridiculous now that are built into cameras in terms of what they can do. And we have all of these factors happening and and then we have this sort of issue where deep fakes is is happening so people are getting really good now at creating fake videos that make people say things they never said. Those are those are scary and
Jason Hartman 24:02
amazing. Just explain if you would be for you know, some people don’t know what what is a deep fake? I’ve seen some with like, you know, presidents heads on them saying things they didn’t actually say but they explain a little more of what that is
Peter Sisson 24:16
people that it’s a great question. So really, these are very sophisticated photo editors and video editors who can go in there. And they can change the audio, they can sample the voice and create using machine learning, they can create a voice that will say words the way that person says them. And then they can also use tricks of editing to make the mouth movements match and there’s even software that will automatically make an artificial mouth move to the words you give it. So there’s all sorts of And
Jason Hartman 24:50
not only that, it will make the body language consistent with everything. It’s really scary. You know, I mean, years ago, I was saying a backup Like in the late 90s, that, you know, literally taking a video into a courtroom, a video of someone robbing a bank does not necessarily mean they actually robbed that bank.
Peter Sisson 25:11
You know, that could be a fake. Yeah, exactly. And that’s the problem and and it will get bigger and bigger. And so we thought, you know, we’re not trying to replace any of these social networks, but we thought there needs to be at least one place where people can share these massive files without hogging their phone memory without burning through their data plans, and with the assurance that what they’re seeing is actually true and happened. And that’s those are the problems we tried to solve.
Jason Hartman 25:39
So just out of curiosity, is there a limit to like, the length of the videos or any any constraints we should know about?
Peter Sisson 25:45
Nope, that’s what’s amazing about it. You could send a full length and HD movie with the aza.
Jason Hartman 25:51
Okay, so you can make an hour and a half documentary.
Peter Sisson 25:54
You really could.
Peter Sisson 25:57
That’s a long time to hold down the record button right? But you really could, because the camera has tricks where you can change while you’re recording. You can change front camera to back camera
Jason Hartman 26:09
feature, by the way, that’s a great feature.
Peter Sisson 26:11
Yeah, there’s a lot of cool little nuggets in the app and more to come.
Jason Hartman 26:15
What is the zoom Do you were?
Peter Sisson 26:17
So the zoom you slide once you’re holding it down to the recorder works similar to snap and some of your younger members will you know about that, but records as long as you hold and while you’re holding, you can slide your finger up to zoom, you can slide it over to a switch camera sing button, then I’ll switch the camera all while you’re recording and it does it so it almost looks like an edited video, but it’s all one take.
Jason Hartman 26:41
Yeah. And what I like about flipping the cameras is this. You know, I can just envision you’ve got the air conditioning repairman over at one of your rental properties. And he pulls out Yeah, so you require him to use that you say look, if you want the job. You’ve got to give me videos. Song this through this app. And so just download the free app to your phone. And it’s kind of sometimes when you require someone to use a little app or a piece of technology, it’s sort of a test anyway, which is a basic thing. It’s a good screening tool sometimes. Absolutely. And so you say do that, and he takes a video and says, look, here’s the problem, you’ve got this broken thing or whatever. And then he can flip the camera to his face, and he can explain it to you. And then he can flip it back to a piece of paper that says, you know, here’s the quote, with what we need, he can flip it to here’s the parts we need. So that’s a really great feature. I like that a lot. Yeah,
Peter Sisson 27:46
yeah. Cool. I’m glad you like it. Yeah, that was a bit of a trick to to get it work to work without interrupting the video. Right? Right.
Jason Hartman 27:52
I’m good stuff. Okay, great. Anything else you’d like people to know, Peter.
Peter Sisson 27:57
Well, we are available on iOS now. Yeah, one challenge will be that many contractors may be on Android. Right? And you know, that app will be coming later this year. But it’s still for people who are on iPhone and have people they work with. We’re also on iPhone. They can get started right away that you just go to the App Store, search on the word yassa ya ACA. You’ll find the app, install it for free and you’re on your way.
Jason Hartman 28:24
Fantastic Peter system. Thanks so much for joining us.
Peter Sisson 28:27
That was a pleasure. Thanks for having me.
Jason Hartman 28:33
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