Jason Hartman chats with two of the networks’ investment counselors, Adam and Doug. He starts with Adam as they talk about a popular real estate investment model, BRRR which stands for Buy, Renovate, Rent, and Refinance. In the second half of the show he discusses managing expectations with Doug.
Investor 0:00
Do your research. There are some providers out there. I mean, this is true not just in real estate, but in general and sales that just wants you to get information from them. Do your research, and you’ll come to see, I think, at least for me that Jason, you, you look out for your clients, you I mean, I with my investment advisor, there were things that I was looking at initially, and there was absolutely no pressure there was okay, yeah, keep asking questions, do that research it. And not only is it better sales, because you have a competent client, but also you become more knowledgeable. So I do the due diligence, constantly investigate, ask questions, and also just look at the big picture. I think about that all the time. You know that they’re going to be hiccups. I’ve already experienced some hiccups, and I haven’t been investing that long. But overall, even with those hiccups, it’s still profitable.
Announcer 0:45
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 1:35
Welcome to Episode 1258 1258. Thanks for joining me, we’re going to be talking about future pricing and real estate price to earnings ratios. P ratios will compare this to the stock market of course, and we’ve got Doug joining us for that in a two part series for today and tomorrow. But first, we have Adam here with me. And Adam. It’s a little cold outside. Oh, no, wait, it’s not cold. It’s the middle of summer. But burger.
Adam 2:11
Very nice. Nicely done. It’s pleasure to be here. Pleasure to be here to listen to all your jokes. Yes, yes.
Jason Hartman 2:17
I’m occasionally funny. Maybe that wasn’t one of the times. So burn is this acronym you may have heard about in the real estate investing world. People say it differently. But generally speaking, it’s buy renovate rent, and refi. Right burger. And a lot of people are seduced by this, I think wrongly. So I think burger is good for the professionals, the big kids who do it as a full time thing. I want you all to know, I have done burb before, but you’ll notice that I don’t do it now.
Adam 2:54
Why not?
Jason Hartman 2:54
Why not? Adam, you’re doing a little burn your own home right now, aren’t you?
Adam 2:58
Yeah, we’re doing a little bit of that. The first are the renovate because we had a shockingly, we had a contractor five or six years ago who came in and did a whole lot of work for us and took out a wall and added railing instead. And turns out they did a terrible job. It was good. couple months.
Jason Hartman 3:16
Stop, stop, stop. You’re not saying that contractors don’t do their job. Right. Are you? I
Adam 3:21
mean, I would hate to start that rumor. Yeah. Most people nobody’s ever said that before. And oh, yeah, start that now. Right. I’ve heard I’ve heard whispers that some of them don’t
Jason Hartman 3:35
tell you. Yeah. You mean, you mean the ones that it’s hard enough to get them to show up? Much less do their job right and do it in a timely manner without making a huge mess and without causing a domino effect that causes other problems, and then overcharging you and filing a mechanic’s lien on your property? Right? Oh, yes, yes. And that’s hard enough just in your own market. Yeah, when you’re right there and it’s your own house. Right. Try it from a distance. Yeah, try it from a distance. Oh, gosh.
Adam 4:06
So the numbers, the numbers can look really good. Whenever you look at the the bird numbers that a lot of people show out there. Yeah, they look
Jason Hartman 4:12
seductive. But what you know what those bird people never tell you is they never tell you about their tax liability either. They might show you that, hey, you know, I bought this property. And somehow after a huge hunt for the property, I bought it 20% below market and or maybe 30%? Well, I mean, below market. What does that mean after repair value or before repair value? I don’t know what that means. Better get specific about that. But they bought it, they got a good deal on it. Let’s give them the hat. And then they started the construction work. And then they rent it out. And then they even refinanced it. And that’s better because they didn’t pay the capital gains tax. So hopefully they’re keeping it to get over the the capital gains and turn it into an ultimate 1031 exchange, maybe somewhere down the road. But the ones that flipped them never tell you about their tax bill. That’s what I was alluding to. It’s not a complete bird
Adam 5:10
that when you when you talk about being taxed at ordinary income levels your that can start hurting real quick. Oh, yeah,
Jason Hartman 5:17
yeah. Ouch. Yikes. Yeah. So the contractor now, I said to you, when you were talking about your job, you know, why didn’t you just call the old guy back and make them do the job? Right?
Adam 5:27
Why would I trust them and do it right. The second time? He paid him? Well, I did pay him. I will agree to that. And it was several years ago, and he came back out because we had a couple of little things go wrong. And I just, I don’t trust them at this point. And so so you’re just paying
Jason Hartman 5:43
again?
Adam 5:44
Yep. Why pay once when you can pay twice? You know,
Jason Hartman 5:46
yeah, right. What a deal. What a deal. So So what happened and how, how is it that you waited all these years for the problem to appear, or what happened?
Adam 5:56
Essentially, we had a wall we had a half wall. Upstairs painting. It’s called sometimes. Yep. And we had that while it closed off the house a lot. And so we decided to do this my errand decided my wife, and we knocked out the half wall and we put in railing okay. And when it was first put in it was nice and sturdy. And just over the years, it’s gotten a little more wobbly and a little more wobbly. And it turns out that all they did was they took the corner posts and set them down and screwed it into the end of the wood, the top flooring the one inch piece of wood, but then the way they connected that would have the subflooring was finishing nails. That’s it
Jason Hartman 6:41
rather than a bolt
Adam 6:43
rather than a bolt or a screw, right?
Jason Hartman 6:45
Yeah, it was just a bunch of finishing nails. So over the years as people who have touched the rail and move that at all, they’ve just gotten wobbly or and wobbly or and so we finally just had somebody come out to look at it and see how much it would cost to fix and get it fixed. So you know a lot of the stuff, especially I mean, if you’re doing something like bird from a distance, you can get a contractor who comes out and makes it lipstick on a pig and makes it look good, right? Who knows what’s going to happen in 510 years, you’re you’re going to be saddled with future maintenance problems that you don’t even know are coming your way. You know what’s interesting is, I went on a little bit of a rant about this, when someone interviewed me on their show last week, I can’t remember what show it was. But for the shows where I’m interviewed, if you kind of want to hear my often repeated rags to riches story, you can go to the Jason Hartman in the hot seat show, where I’m constantly being interviewed on other people’s, you know, podcast, sometimes radio or TV, but mostly podcasts nowadays. I play some of those interviews on my Jason Hartman in the hot seat podcast. So if you want to hear some of that stuff, there’s some content there for you if you’re interested, one on this kind of this rant about how I don’t know why we Really view with distain manufactured homes. I think that is that is wrong. I think it’s an improper perception. I think that homes should be largely, not necessarily completely but largely manufactured in a factory and assembled on a construction site. The idea that people are still framing houses and laying bricks on a construction site is extremely costly and inefficient, and prone to all sorts of quality control problems that could largely be eliminated if they were done in a factory. I can’t believe we’re not there yet. And you know, there are inklings of it. There have been for decades of course, but still, the vast majority of houses are just constructed the old fashioned way. Construction is one of the industry’s with the least innovation of potential Any industry I don’t know, I can’t even think of a comparison that has maybe less innovation than construction. Maybe you can add them, but it really surprises me.
Adam 9:09
And not off the top of my head. I can’t think man, it’s pretty. Take some wood, put it together either screws us your nails pretty much the way it was done hundreds of years
Jason Hartman 9:17
ago.
Adam 9:19
I mean, I guess the big innovation was screws instead of just, you know, notching them together. Big innovation and construction.
Jason Hartman 9:25
Yeah, I bought a new home when I moved to Florida here. And you know, as I said many times, I wish I didn’t have to buy something, but I just could not find a good high end rental. So I bought, you know, there’s some building going on in my area. And the only thing I see them bring to the construction site assembled, are the trusses for the roofline. Like they’ll bring, you know, some of these big triangular shaped trusses, you know, they’re all put together, they’re assembled and then they’ll just with a crane, lay them on top of the brick, you know, that they built the house out of, but then it’s like, put down Wall inside. It’s just crazy and efficient. It’s so expensive. And let me speak to that for just a minute. We got to get to our part one with Doug today, here, but people keep talking about and the media keeps writing about. And it’s totally misleading. And I mentioned this a couple of months ago, because I really checked it out because I was impressed. You know, the $20,000 house, you can go on Amazon and buy. I encourage you to call those companies up and talk to them on the phone. It is completely misleading. They’re selling kits that are just the shell. By the time you construct that house and get the land do the foundation, do the engineering, which is incredibly expensive. It does not include the electrical runs, it does not include the plumbing. It doesn’t include any of this stuff. By the time you do all that your house She kept saying to me on the phone the last one I called. She kept saying, well, it’s comparable to the prices of any new home construction. And I said, Stop saying that and tell me how much that is per square foot. And she says not including land. It’ll usually come to about $200 per square foot.
Doug 11:23
I thought
Jason Hartman 11:23
this is no deal at all. It’s a terrible deal. What’s that either this is just completely misleading. They’re uninformed people out there. And admittedly I was one of them until I researched this because it just sounded so great. I thought, I’m going to start buying little lots and put a bunch of these prefab houses on them. And boom, boom, boom, I’m going to build an empire with that. It seems so cheap. It’s just not. It’s totally misleading. Now, why they can’t do it. I mean, I don’t know. Go shop double wide mobile home prices. I mean, look, I own a mobile home park with one of our Clients go shop those and you know, see how much they cost. And, you know, that does not qualify as a single family pre fab home, you know, that’s a different class in and of itself. So all this innovation and construction I keep seeing on the internet is just not here yet. Where are all the 3d printed houses? Look at if something were real, you’d see it in real life, you’d see it in the marketplace. It’s all just hype so far. And again, this is one of those many things I would love to be wrong about. I would love to see these cheap little prefab houses and just pour the foundation, stick the house on it and rent it out. Man, I’d be doing that all day long. And I’d be doing birds all day long, too. If it worked. If you want to do bird, you better be in the business of bird. Okay, because it’ll drive you nuts. If you’re not. It’s so much more difficult than it looks. That’s why I’m not spending my time doing it. I like profit as much as that Next guy, guess what, I’m buying a couple more properties now out of my 1031 exchange from our provider. I just buy from our own providers for my own properties. So there you go, Hey, listen, if I could get better deal, I definitely would. But haven’t found it yet. So if you find it, let me know folks. Go to Jason hartman.com. Slash ask and share your experience and tell me how you get the great ultimate bird deal. I’d love to hear more Adam show we’ll get to our guest today. Let’s
Doug 13:30
do it. All right, let’s talk
Jason Hartman 13:32
to Doug about future pricing and real estate p ratios. Part One today and part two tomorrow. Here we go. So future expectations. What do they mean to the real estate market? What do they mean to the stock market? What do they mean to the overall economy both nationally and globally or actually even locally in your state or city they need means a lot future expectations determine a lot of things. And I’m here with one of our investment counselors. You’ve heard him on the show before. And that is Doug. And Doug, let’s talk about future expectations. First, let’s kind of start off. Well, before we talk about the stock market and PE ratios, and then tie that into real estate, you are self managing. And you just took one of your properties, and started using the cozy rent collection or payment form. And we’ve had the cozy people on the show before. Tell us how you like it and how that experience has been so far. I know you’re new at it.
Doug 14:38
It was really just a couple of days ago, I was reconciling some of my stuff. And I said, I thought to myself, you know what, I’m just going to jump in. I’m just going to give it a shot. I have an existing tenant. Worst case, I’ll figure out my way through finding somebody new doing keys, all that stuff. And I just sent a note to the property manager and said, Hey, want to let you know I’ve decided to self manage according to the terms after provide 30 day, notice here The 30 day notice, please send me their deposit, you know, I already have a copy of their their lease actually put that up on cozy so they were able to see it. And then you know, SM, please send me their contact information they did I got their name, phone number email. So send me an email said, Hey, I’m going to be setting you up for cozy just wanted to say I’m looking forward to working with you directly and that you broke this is to turn 10 Yeah, she said, Hey, that sounds great. You know, I’ll look for the email and get signed up on the platform. And so then I set up the profile, set up the property profile, tenant profile, all that which was really easy, and then just send it on out. And then what we’ll be able to do is to be able to set up the rent scheduled collection for cozy to be able to upload documents, and then when the property goes vacant to be able to list it for setting a new tenant in and then they can also send a maintenance request. Well, you know, there’s a couple of good advantages you can have here, you know, because one of the ways that cozy makes money is that you know, you can either get expedited rent collection or you can buy a rent profile. Well, once I have this tenant and I’m talking with them directly I’ll be able to put a rent for fall together, I haven’t raised the rent for a couple of years, chances are, they’re going to be under the market. And so then I’ll just share this with them directly and say, Hey, I did a rent comparison. And it looks like we’re priced under the market. But I don’t want to create a big rent shock. So maybe we can put something together where it’s like, you know, if we can walk up the rent, and I’d like to do some fix up to the property, you know, so that you’re getting some fair value. Now, I don’t know now, what the tenant doesn’t know is that I want to do those steps anyway. But if they feel like they’re getting something for their increasing rent, that’s going to make them feel a lot better about the process. You know, because I think one of the things the least that I like about the self management ideas, but that direct contact, you can have good customer service with your tenants to be able to cultivate a meaningful relationship. I was reading through my my contract with the with the property manager. And yeah, there’s all these little exclusions and weasel clauses, you know, this is you know, the, the late fee will be $50 plus $10 per day, plus, whatever will be collected and this much will be deducted, this flesh will go here there and I was like, Oh my God, that’s just so complicated. You know. And so I like the fact that if you’re going with self management, you can really just simplify things for your tenant because, you know, they don’t want their lives to be complicated any more than I do. You know,
Jason Hartman 17:17
you know, a confused mind always says no, and I attribute this is to a major part of the success of the most valuable company in the world. Well, most of the time, I don’t know today, maybe I’m off today, but Apple, right Apple Computer, takes a complex product and makes it really quite simple. Okay, even you know, making a decision which one to buy, they, they make that really easy, you don’t have to, it’s not to overcomplicate it. And the same is true here. You know, make it simple for your tenants. We’ve got to always remember our tenants are our customers. Heck, they’re paying our mortgages off for us. And they’re paying a little extra each month in most cases, too. So it’s a pretty good Deal. And when you get the property manager out of the way, and you use the apprentice line by some guy named Donald Trump, I think he was the star of that show, you know, you’re fired, right? And you get direct with these tenants, it just goes better. It’s actually the funny thing is some people, like I’ve said before, they think, Oh, you know, I don’t have time to self manage. It sounds good to me, but it takes too much time. And then, you know, you heard our client drew Baker on the show several times talking about it, you know, he’s, he’s a little more of like an extreme self manager, right. And he’s doing things that are actually really improving his properties. But to just be a you know, sort of a stay the course self manager takes very little effort. And I would argue, in many cases, many, many, maybe even most cases, it takes less effort than having a property manager because when you get that third party out of the way and you’ve removed That conflict of interest that is just naturally there. And you have a simple buyer seller, you know, landlord tenant relationship,
Doug 19:10
it’s, it’s really quite easy. And I think there’s another benefit to which is that what you do is you generate value by doing something that’s useful. And a lot of modes of passive investing, like for example said plunk 10,000 bucks in the s&p 500, and just go away for 20 years, and it’ll have appreciated, hey, that’s great. But the thing is, you know, if I need to repeat that, or if I lose all my money, and I don’t have 20 years to wait for the market to go up, I’m out of luck. But on the other hand, if I’ve learned how to create value and gotten good at doing things that are valuable for other people, then that’s actually an economically viable skill that I can use in the future if I want to need to or half
Jason Hartman 19:54
do it, right. So you could always get a job in property management
Doug 20:00
The other thing is that is that like, for example, you know, I could say, hey, if I start getting good at virtually managing properties, maybe I could just virtually manage properties for other people and continue to do it from my house. Yeah,
Jason Hartman 20:09
that’s a good point. Yeah, there’s all kinds of things. Look, life is about improving our skills all along the way. Never stop learning, always improving. And this is a great way to just improve your skills. You know, we have several different tech people that work for us. They take these projects and work on them. And you know, it’s usually takes longer and cost more than they say, well, but and that’s just disappointing. But, you know, whenever possible and practical. And I know I’m going to hear it from the people who are going to delegate everything. You know what, you can over delegate stuff, some stuff, it’s better to do some things yourself, because technology has made it so easy to do these things for ourselves in many ways, that it’s actually more effort to delegate it. Now. Listen, I believe delegation. I’ve had lots of employees in my life, and lots of people I’ve delegated to. But sometimes it’s actually easier not to delegate it. And you know, that’s a fine line, we all got to figure out where that is. But whenever I have these tech people working on a project for me, and we’ll be on a screenshare call on Skype or whatever, you know, I’ll say, hey, show me how to do it. You know, I want to learn something. And what comes out of that learning is so much more than just learning how to do that thing. I gain even if it’s gradual, a deeper and deeper understanding of how these things work. And we want to just be constantly improving our skills. So hey, hats off to you on that one. I think that’s a great side benefit. you’re gaining a new skill, right self managing.
Doug 21:45
The thing to then is that when you’re no longer dependent on property managers, now you can really start Hawking for the good deals. Instead of needing to filter by the people who you’re really certain going to rip you off.
Jason Hartman 22:01
Yeah. Tell us what you mean about that a little more?
Doug 22:03
Sure. So like the
Jason Hartman 22:04
contractors and the handyman and stuff like that.
Doug 22:07
So for example, right, you know, there’s the advice that I give to a lot of my clients, you know, is that the person you partner with on a real estate deal is as important as the property if not more so, because they’re going to be your eyes and ears. Sure. And you know, they can’t turn a bad property into a good one, but they can turn a good property into a bad, bad experience. So that’s the truth. Yes, yeah, a good property manager that they can’t turn a turd into a bar of gold, but they can turn a bar of gold into a turd. And it can work one
Jason Hartman 22:37
way but not the
Doug 22:38
other. Good for Exactly, exactly. And so if you get to where you can effectively and efficiently self manage, you know, now what you can do is now you can say, Hey, I’m looking for things that are good deals, and if there is a competent manager associated with that deal, great. If not,
Doug 22:57
I’m not constrained by it.
Jason Hartman 22:59
Okay, so let’s go Talk about what that means in the real world. So, for example, our investment counselors, including you will try to match the client to some extent with the team that they think suits them. You know, some clients want like a real hands off experience. And they say, Hey, you know, I just don’t want to be bothered, just do it in certain managers, you know, please that kind of plant more often than not, whereas other clients, they want a real hands on experience, and other managers will cater to that more. Okay? But when you take the manager completely out of the equation, then you can just solely look at the property alone, not based on any degree of service consideration or anything like that. So yeah, I agree with you. I agree with you. But hey, let’s not belabor this because we really want to talk about future expectations. We want to talk about future expectations and what they mean multiples when you’re investing in real estate or investing in anything in general. So let’s just dive right into that now. And we were having a good conversation before we started a dialogue about Lehman Brothers, for example, and 10 years ago, when the great recession started, most people would mark that point is when the day that Lehman Brothers failed just over 10 years ago. And you said something that was pretty interesting. Now I just repeat what I say all the time, is that the day before the great recession began, and the day after it began, the amount of real assets in the world did not change. Okay, there was the same amount of gold, the same amount of oil, the same amount of real estate, the same number of companies, basically, except Lehman Brothers. You know, it was pretty much the same. There was a number of cars, houses, you know, widgets, they didn’t go away the The only way they go away is through war more destroys things, right? There wasn’t there wasn’t a war, it was simply a change in allocation in derivative value of these assets. And that’s why derivatives are so dangerous.
Doug 25:16
But also socialism destroys things, too, because there was there were all kinds of assets in the Soviet Union and down in Venezuela that were completely neglected and just basically left, because nobody, you know, take care.
Jason Hartman 25:32
Okay. Okay. But that’s kind of a bit tangential. Yeah, I agree, though. And interestingly, on that, if you look at communist countries, and you think about the environment, oh my gosh, like when the Soviet Union fell. I mean, I remember reading a Greenpeace magazine way back then profiling what they found. And it was just massive environmental destruction, because when nobody owns the land, why should anybody care about it, you know, Tangent, tangent alert. Okay, let’s go back on top, Doug. So what else changed in the world when Lehman failed? It was future expectations. Talk to us about that. Yeah,
Doug 26:11
yep. It’s because the way that any asset is priced is going to be right, it’ll have an intrinsic value, and then there will be a future expectation, performance or growth. And so for example, a stock is valued at what they call a price to earnings multiples. So in other words, there’s earnings per share a good old p ratio ratio, yep. If you own a share of a company, then you have a claim to a certain amount of earnings. And that is, in many cases expected to grow in the future. And so what will happen is the price of a stock will be bid up to a multiple of those earnings, which basically say, what are the expectations for the future of that stock? So in the case of the Great Recession, what changed between one day before Lehman collapse and one day after Lehman collapse was the future expectations. I think the reason why that reaction may be not have been rational but might have been more rational than some people think, is that when you’re talking about things like credit markets, and the markets going up, right, everything’s good, you know, you can buy it you can sell, you know, if you make it, he makes some money great if you lose a little money, it’s okay. But as soon as markets start going down and start going down fast, all of a sudden you run out of people to sell to, nobody wants to buy anymore because everybody’s afraid of trying to catch a falling knife. So that means that if you want to sell your credit derivatives or you want to sell your credit default swaps, or sell your CDs or wait or sell your condo in Manhattan, New York City, or, or or Miami or your your house in Los Angeles or Seattle or San Francisco, the reason people are buying properties that violate my commandment number five, which is Thou shalt not gamble is because of future expectations. And that’s the only reason
Jason Hartman 28:01
someone is going to buy such a non sensical investment. Right,
Doug 28:05
exactly. And the thing is that that works until it doesn’t work. But then the problem is when it doesn’t work, it doesn’t work in a very spectacular and destructive way. Right? Because, you know, if you get that townhouse in San Francisco, that’s 3 million bucks. And now all of a sudden goes down to two and a half. How many people are going to say, Hey, this is a great bargain, I’m going to buy it. They’ll say No way. I’m not touching it unless they’ll drop it down to two. And then the thing is, that spiral will just keep going until you get a lot of people who say, Hey, you know what, this price actually makes sense. This is just the credit cycle, right? This is how things go. Is that you know, anytime that you have a credit based economy, which nowadays every economy is credit based, because you know, there’s big benefits to it, but the big downside is that credit makes it really easy to overvalue assets. And then as soon as the value of those assets start going down, all of a sudden everybody who borrowed money to buy Buy is in a pinch. And so they have to sell to avoid losing more money. But all that selling creates a downward spiral until eventually all the people who bought on credit have either been shut out of the game, or if they were smart have been able to just stay through and prices. restabilized
Jason Hartman 29:18
Yeah, absolutely. Okay. So the thinking that messes people up. I mean, there’s a lot of different thoughts that mess them up in this environment on both sides of it. But one of them is that hey, look at if I paid $3 million for this nonsensical place in whatever overvalued market it happens to be, could be Vancouver, two more San Diego doesn’t matter. If they do that. They think, Well, you know, what’s the worst that could happen? Here’s the rationalization and it’s wrong because of what you said, This rationalization does not work in real life. They think Well, hey, you know, the economy softens up a bit. And, you know, say there’s a recession, you know, Now if it goes down by 10%, so what? But that’s not really true, it doesn’t go down by 10%, usually because of that spiral when that credit dries up, and those future expectations evaporate, it’s got to come a long way down to where those expectations start to say, Hey, you know, maybe this is a good enough deal. And this is why we have cyclical markets versus linear markets. Because when that future expectation evaporates, the cyclical market, it really evaporates badly. Okay, and fast and, yeah, quickly, but not as fast as the stock market and the PE ratios there. That’ll go really fast because it’s so much more liquid than the real estate. But in the linear market, it doesn’t evaporate very quickly, because the property was never that out of sync with reality. I mean, you could argue that property that’s financed is out of sync with reality because its credit based asset. And that’s fair in concept. But the question is always compared to what it’s always compared to linear hybrid cyclical. Okay.
Doug 31:14
So Jason, I would actually take that idea even further. In a linear market where you have a property that’s rented out to a tenant for a sensible rent that’s at a sensible ratio. It actually doesn’t even really matter. If that market perception evaporates, because you’re still covering your costs, and you can wait for the market perception to come back to being rational. You can’t do that in California. You can’t do that in New York, you know, but if you’re sitting there and up with a property in Memphis, you’ve got to rent it out to somebody and you’re covering your mortgage plus maintenance and then some way even if the market value drops in half, you can just keep paying your mortgage until it comes back.
Jason Hartman 31:52
Yeah, absolutely. But you can still screw yourself up on that one, because your own psychology can get weak. And, you know, sadly, we saw some clients sell their properties during the Great Recession. And immediately after, and I’m thinking, what are you doing the things coming back right now. Now, granted, if the property’s really overvalued, and there’s a bad loan on the property. Well, one of the other wonderful things about income property is you have the nuclear option. The backdoor option is to just walk away like millions of people did. You know the the contract is simple. It says either pay the mortgage or give us back the collateral. Okay, here’s the collateral you can have it.
Doug 32:35
Yep, No, exactly. That’s exactly something you can do.
Jason Hartman 32:40
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