Jason Hartman and Investment Counselor Sara gives us an overview of the Orlando market. They discuss the city’s potential and then go into some of the network’s properties in the area. They go over some pro formats and then talk bout new construction.
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Hey, I just saw the email from Sarah. Congratulations on 1000 episodes of the podcast the creating wealth podcast.
Announcer 0:08
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. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:59
Welcome to Episode 1367 1367 thanks for joining us today. Investment counselor Sarah is here with me. She has a bit of a cold, but I think she sounds just fine. Sarah, welcome. How you doing?
Sara 1:11
Hey, Jason, thanks for having me. I’m great.
Jason Hartman 1:14
No one believes you have a cold. I think you’re just trying to ditch school today. Jordan ditch school today. Jordan is Sarah’s son just so for the record for those who don’t know. All right. Hey, we want to talk a little bit about well about a variety of things today. for investors. We want to talk about the Orlando market, the greater Orlando market, I should say. Of course, as you regular listeners know, when we mentioned a city, we’re really talking about the greater, you know, metro area, so not, you know, these cities are big, some of them and we talk about it as though it’s a market not real specifically, but we do get more specific as you talked to our investment counselors and a little bit on the show, too. So we’ll talk about that. But I think you want Have to congratulate a couple of clients. Right?
Sara 2:03
Yeah. Well, I would like to start by congratulating Eric and melody. They closed with us in Orlando in the points IANA Kissimmee area on a brand new construction property. And they were actually with us in profits in paradise when we did our Orlando conference. So yeah, congrats to them. Yeah, they got a beautiful brand new construction home.
Jason Hartman 2:24
Excellent, excellent. And congratulations to dozens of others to who are not being mentioned. We appreciate all of you. But since we’re talking particularly about this market, we just want to mention the last closing in that market. Let’s stop. Sarah, why do you like this market? And why do you like our team there?
Sara 2:43
Yeah, well, of course, you know, it’s close proximity to Disney World and all the Disney parks. So we know that there are jobs being created and that there was going to be demand for rentals there. Right. You know, it’s a good economy. price point, you know, 196 nine up into about 225. Nine is the price range. It’s tough to get a nice new construction home for under 200,000. These days, prices are inching up little by little and good strong rent. This is a three bedroom, two bath 1500 a month in rent on a 196 nine purchase price, which is great for new construction.
Jason Hartman 3:24
Yeah, no, that’s definitely a good market. And I want to play just a clip here. And this is from Orlando 2030. Okay. Orlando economic partnership, talking about the growth in this city. So many good Florida markets. Of course, of course, we have many other markets around the country. But this market is definitely pretty hot. There’s a lot of growth, of course, you’ve got tons of entertainment, universal Disney, you know, many, many others and a lot of growth. So let’s talk about this. But if you want to get a perspective to which is quite interesting Remember that movie that I mentioned years ago, as we were coming out of the Great Recession, and talking about how Orlando was kind of ground zero for a lot of the foreclosure market, and I think it was called 99 homes or 99 houses, something like that. It was really quite fascinating about some of the stuff that went on there. But it’s not like it went on just there. It went on all over the country and many, many places. So more on that, if you want to see that movie, but let me play you this clip. Just consider this rather amazing growth projected over the next 10 years,
Sara 4:38
five year 2013. The Orlando region will be transformed.
Sara 4:44
Our growth will impact everything.
Sara 4:47
industries, infrastructure, and institutions will change. By 20 35.2 million residents 20% more than today. Coming from all around around the globe, were estimated to add 500,000 new jobs. That’s enough employed people to fill the Amway center 25 times. Our fastest growing industry will be home and healthcare services will outpace the rest of the nation and computer systems design, air transportation, and engineering services employment. And by 2030, how we get to those jobs to change. At least 600,000 more cars will be on our roads, I for ultimate will be complete sunrail will live expand and self driving cars may be everywhere.
Jason Hartman 5:38
Which by the way, something interesting about that, you know, the self driving cars may mean there are fewer cars on the road. It may mean they’re more we don’t know yet. You know, it really kind of remains to be seen. So that’s an interesting prediction. We’ll see if that one comes true. But certainly I love the industries right, you know, health care home services. Tons of entertainment, fantastic airport with just, you know, incredible amount of direct flights. So very, very good metrics in terms of Orlando,
Sara 6:12
Orlando could be an epicenter of autonomous vehicle technology and Smart Sensor tech, leading innovative companies to the area. But our growth also brings great challenges and opportunities to address the annual average wages likely will not significantly increase. And if costs continue to rise, many won’t be able to find affordable housing.
Jason Hartman 6:36
This is the same affordable housing problem that is just a nationwide problem. It is incredibly significant. And what that means for investors is that you are going to as you know, I predicted this 15 years ago, okay. And the same exact trend is going to happen throughout the next 10 years. So really, it was a 25 year in advance prediction is Continue to be correct about it. And that is that you will see the standard of living decline for renters, and even homeowners both, you will see that decline in less technology somehow is able to make materials a lot less expensive, and construction a lot less expensive. There will continue to be a major housing affordability crisis. And as bad as that is, it benefits investors because it means more rental demand. And if you’re investing in the sweet spot in the market that we’ve always recommended, you will be in that spot where you catch people either moving up into their first housing experiences moving out from home, moving out of apartments, or you will catch them moving down the economic ladder, depending on where we are in the cycle. So remember, if you get a mortgage today, you will make the last payment on that mortgage potentially, in 2015. Three decades from now. Can you imagine how much will change throughout that time? And how much inflation we’re likely to have? That will be a huge benefit to you as an investor? Sarah, any comments on that, by the way?
Sara 8:18
Yeah. Well, in talking to investors, you know, of course, they’re always focused on day one performance, what’s the cash flow today? What’s the cash on cash? And especially with new construction, I’m constantly having to remind people of that exact thing, that big picture perspective. Yeah, you know, you’re going to get the cash flow today, maybe on an older property, but what is the new construction property going to look like in the years to come and then on top of that, having a lot less maintenance in between a lot of these new construction homes are just really outperforming the performance over time. You know, I had that experience by my very first new construction in 2007. And it’s been phenomenal. I mean, I’m looking at infinite returns on that property, so just remember to keep that in perspective as you’re looking at numbers. Don’t agonize over 1% cash on cash difference in a property. Look at all these big picture things.
Jason Hartman 9:14
Good advice, you know, a lot of deals, promoted by various shady people out there look good on the performer, but will they come true in real life? That is a huge question mark a huge question mark.
Sara 9:28
Okay, yeah, let’s talk about some of the shady operators and
Jason Hartman 9:32
shady operators my favorite.
Sara 9:35
So much the operator but just some tips on you know what to watch out for some things that may be considered red flags. One of them. Let’s talk about the most recent two and one of them is the Performa and just missing numbers and the perform. I mean, to me, it seems so obvious, but we had a local market specialist recently. Send me a performance by the way, he has not responded to Might email demand but basically he’s covering taxes and insurance for the first year as you know closing costs incentive. And that should go under the closing costs incentive portion. He should not be leaving out property taxes altogether or insurance in the actual numbers in the meat of the Performa because that’s giving investors a false sense of return. So we’re constantly monitoring this checking performance making sure they’re putting in the taxes insurance, vacancy maintenance. So that’s that is one obvious red flag but another red flag just recently, well, actually, not recently over the years that I’ve noticed is rent guarantees. Everybody gets really excited about rent guarantees,
Jason Hartman 10:44
but when I use geez look at as we have said so many times over the years. Do not be compelled by these rent guarantees. Because a lot of them are just fake promises. They’re fake news. Okay? The property must make sense from a market supply and demand perspective number one, and number two, a lot of the rent guarantees, they just don’t keep the promise. You know, we’ve talked to in the past about how they set up a second entity, which is the one making the guarantee and then they default on that and what are you going to sue them over such a small amount of money? That doesn’t work? Even if you did? They just bankrupt that entity? You know, or they just flat out lie and don’t keep the promise? It’s absolutely ridiculous. So rank guarantees are totally overrated. Go ahead, Sarah.
Sara 11:35
Yeah, I mean, I don’t think every seller that offers a rent guarantee is bad per se. You know, some of them do it with the best intentions, but as investors, we have to do our own due diligence and really hone in and determine what the actual market rent is. Because one thing they could do with a rent guarantee besides default and not pay it, is they could hype up the rent, make it you know, hundred dollars a month higher, and they’re paying this guarantee and So we don’t notice it until a year later when you have to go and renew the lease. So there’s there’s different little problems and nuances with these rent guarantees. And so it’s really important as an investor, that you just make a few phone calls to local property managers or just do your research online and know what the rent range the true rent range. What is your neighbor renting their property for down the street? That’s what you need to know.
Jason Hartman 12:23
Yeah, absolutely. You’ve got to make sure that that rent guarantee reflects the real market place so that if it is not honored, you can fall back to the real market and get that same kind of income. So good advice. Good advice. All right. Sarah, what else would you like to cover?
Sara 12:43
Maybe we can mention some of the other markets we are seeing good new construction. And I mean, we have been spending so much time and energy this past year. working on new construction, we really think it’s a win win. The tenant gets a nice new property, the land landlord gets a nice new property that they’re not dealing with maintenance on. And we are sourcing new construction not only in Orlando, but also Jacksonville, Florida, Atlanta, some of the markets in Mississippi, just south of the Memphis borderline, the Tennessee line. So that’s Robinson Ville, Mississippi, Baton Rouge. These are leasing up very nicely performing very nicely. And so be on the lookout, we’re sending out our hot sheets and getting new inventory almost every week. And so the inventory is changing properties are selling quickly. So be sure to reach out to your investment counselor, just to get a pulse on on what’s becoming available in the weeks to come.
Jason Hartman 13:40
Yeah, good advice. Good stuff. All right. Well, thank you for joining us. We will have you back soon to discuss more markets and more properties and our clients have been really excited about the new construction stuff. So that’s great. Of course we can help people and and we do it all the time helping them with 1031 tax deferred exchanges. Also, we are going to be talking about a couple of other vehicles, of course that I’ve been investigating outside of the 1031 tax deferred exchange that offer similar in some ways better benefits and income properties, the most tax favored asset class in America. So, lots to talk about their Thanks for joining us, Sarah.
Sara 14:22
Thanks for having me.
Jason Hartman 14:25
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Sara 15:05
any episodes. We look forward to seeing you on the next episode.