Jason Hartman starts the show by talking about renting or owning a property. He also gives a city by city comparison for rent to own from the Smart Asset calculator. Afterward, Jason hosts an Orlando Market Specialist. He shares that Orlando offers asset protection, has no income tax for its residents, and is pro-business and pro-landlord. They also discuss the market basics for achieving cash flow and appreciation, judicial foreclosure states, and non-judicial foreclosure states.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
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 1000s 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 1:03
Welcome to the creating wealth show, this is your host Jason Hartman, Episode Number 629 629. And today, we will be talking about the Orlando Florida market. As you know, a few months ago, we had a property tour there. Now we have quite a bit more data, as clients have entered that market and they’ve been investing there, you know, things have overall been going pretty well. We’ve had some good experiences. So we wanted to share those with you. And have you considered this market as well. Orlando is one of those markets that I would almost consider to be a hybrid market. You know, it’s it’s mostly linear as you as you regular listeners, of course know, there are three basic markets, hybrid, linear, and cyclical. I put Orlando in kind of a hybrid ish category. So we’ll explore that. But first, I want to talk about lol, gosh, there’s so much to talk about here. rents, rents, rents rents what we live for, as landlord we live for and we love rent, we love to receive rent. There are many new surveys out and things talking about, you know, rent and so forth, especially when it’s the new year. And, you know, you have a lot of this kind of stuff come out. But what is really quite interesting is, first of all, one study, which is closely aligned with the rent concept. This was a calculator created by a group called Smart asset, smart asset calm, comparing a rent versus buy in many cities around the US. And there’s going to be some interesting things here. You know, what I’ve always said, I’ve said, If you know, if the property in which you live is worth less than $250,000, it’s probably a very good idea to buy that property. And to own it, if it’s worth more than 250,000, you’re probably better off at least from a financial perspective, renting it, then you are owning it. And as you know, myself and many other self proclaimed real estate gurus are actually renters, they may own even a lot of other investment property, but they have chosen on purpose, as have I for the last four and a half years to be a renter.
And I remember all of the beautiful homes that I owned, and in Irvine, Newport coast, Newport Beach, you know, in all of these high end, Southern California markets, I own many, many homes. And what you realize is that there’s a lot of hidden costs in there that you usually don’t consider. And in looking around the country, here’s another way to address my ideology on this. And it is I originally saw this as an is a Business Insider article, but really the sources from smart asset. And what they did is they looked at, I believe, 29 cities around the US. And this, you know, the reason why I’m talking about this listeners is not just from a perspective of what you should do for the home in which you live, but I’m talking about it from a investor perspective, because, you know, whatever we talk about, you know, in terms of what this kind of survey might tell us, whether someone should own or rent the home in which they live. The corollary is true for whether or not you should invest in that market. Now, this survey though, so far as I can tell, the methodology did not include appreciation. But wait, we will get to that because that can be deceiving as well. This was simply the cost. And when you look at the overall cost of being a renter versus being an owner, you All of these different cities and what I’m going to share with you might amaze you, okay? In these 29 major cities and you know, I won’t go through them all, you’ll get the idea after I go through several of them, it will amaze you. It’s it’s the number of years to the break even point.
In other words, the number of years you would have to own this model home or condo versus rent it to make it make sense to be a buyer for 29 major cities. Okay. So what this tells us is that basically the opposite of this, it tells us whether or not or it gives us a lead as to whether or not that’s a good investment market. Okay, so here you go. Drumroll, please. Okay, my sound effects don’t pay just suck. Yeah, they do. Okay, so in Seattle, yes, the home of $15 crazy, ridiculous minimum wage, it would take you 14.9 years of ownership, you better be ready to settle down and Seattle and be Sleepless in Seattle. While you own for a long, long time, it is a much better deal to be a renter in Seattle than to be an owner, okay, in this concept, and you can go to smart asset.com. And you can run the calculator yourself and put in your own variables, they just use their sort of model property, you know, for people earning $100,000 a year and what they could buy and what their mortgage payment would be versus their rent, and many other costs associated with homeownership or renting. Okay, Phoenix, Arizona, my new again, home, Phoenix is now renascent to me, because I move back. Well, I moved here in 2011. And then I moved away to get to capture my tax break in the Socialist Republic of California, lived in La Jolla for nearly seven months to qualify for my tax write-off, and then I came back just last week. And in Phoenix, you would only have to own for 5.7 years, to make it make sense to be an owner versus a renter, if you’re gonna, if you’re gonna live there for less than 5.7 years or 14.9. In Seattle, it’s better to be a renter.
Okay. And this, again, is not very surprising, versus what we’ve talked about on so many other episodes. Okay, San Diego, you know, La Jolla, that’s where I just moved from San Diego 8.6 years. So you got to settle down for 8.6 years of ownership. And, you know, go dig in for a while there before it makes sense. You versus what you can rent in Orange County, my old home 10.8 years, Orange County’s pretty expensive in the Oh see Orange County, Los Angeles, where I grew up as a kid my my childhood was in La 8.8 years. And by the way, the inland area in Southern California, Riverside, California 5.8 years, you see how you get the feeling of this yet. The lower priced markets are the markets where you don’t have to stay as long you don’t have to own as long to get to the break even point. So that tells us as investors that those would be better markets in which to invest. Okay, so let’s just let’s go 1600 or so miles away, and let’s go to Dallas, Texas, a market we’ve done a lot of business in our Houston, Texas, another one or Austin or San Antonio, Dallas, 3.2 years. Okay. Austin 3.7, San Antonio 4.2 and Houston four point you tied with San Antonio. Okay, Atlanta, another one of our big markets. We’ve done tons of business 4.1 years, and Charlotte, North Carolina a couple 100 transactions we’ve done there probably over the years. 4.1 years. Now we’ve got we’ve got a bunch of wonderful clients in Hawaii. Yes, you know who you are listening. Thank you for listening and being our clients. 8.6 years if you want to be in Honolulu, you better buckle down and stick around for 8.6 What about Chicago, one of our other big markets 4.2 years, okay to break even your break even point. Now the worst of the worst? And you probably already know what it is. It’s New York City, the Socialist Republic of New York City. Okay. 18.3 years Whoa. Whoa, whoa, that’s terrible.
It would be better now James, all teacher who’s been on the show, who is a, you know, a successful author, writer, former hedge fund manager. He was on the show a while back, he famously came out with this article that said, and it was circulated quite widely saying, I’m just going to be a renter. He lives in New York City. And he says being a renter is a much better deal. And I agree with him completely. So, you know, it’s just interesting how help most people, they just don’t get it. They first of all, don’t understand that all real estate is local, you can see how these numbers vary so much geographically. St. Louis? Well, a lot of our investors made a small fortune in St. Louis, it was a problem for a while, but turned out to be pretty good. Okay, you people that stuck with it. I know, our, our, our local market specialists there, we kind of overwhelmed them with business, because so many of you bought up cheap properties there. And they took a long time, there were a lot of delays, a lot of construction delays there. But they actually benefited all of our investors, ultimately, because those delays were in a rising market, where they were just making money on a house they didn’t even own yet. They just put down a little deposit. So many times. You see most people in real estate, a lot of them they think well, not most people, but a lot of people not most, that’s the wrong word. A lot of people, a lot of people in real estate, feel like they’re losing when they’re actually winning, because they just don’t know how to really keep score, or they don’t stick around long enough to have that windfall.
Okay. And you know, that’s a good example of it. So 3.6 years is the number in St. Louis, by the way in Chicago did I met I think I mentioned Chicago, 4.2 years. Okay. So obviously, those markets with a shorter breakeven point, the fewer the years, the breakeven point, are the better investment markets. Now, what about I hope you’re asking, well, Jason, what about appreciation? You gotta tell us about appreciation. If you rent, you don’t get in on any appreciation. Right. So what happens with the appreciation issue? Of course, that’s a very logical question right. Now, interestingly, I don’t have Orlando in here, by the way, unfortunately, because that wasn’t part of their survey. And that’s what we’re talking about. today. We’re talking about the Orlando market. So we’ll get to that with our guests in just a moment. But Tampa, nearby not far from Orlando, 4.1 years, the same as Atlanta, the same as Charlotte, to the break even point. So what about appreciation? Well, if you’re a renter, you don’t participate in appreciation. Obviously, we all understand that right? But, but remember how I’ve compared the cyclical and linear market, I compare Orange County, California, to Kansas City, Missouri, and also, interestingly, especially now, Flint, Michigan, big government disaster, don’t drink the water. Okay. It’s awful what’s happening there. I mean, it’s just tragic. And hopefully these scumbags in the government, who by the way, did you know had their own water supply? Yes, of course, the elite class doesn’t participate in what the little citizens have just just remember always. The bigger the government, the smaller the citizen. In fact, that’s a really good one to remember. The bigger the government, the smaller the citizen. So another big government disaster, Flint, Michigan, another great example of that, okay, they’ve destroyed the water supply. Flint, Michigan compared to Orange County, California, Kansas City, Missouri, compared to Orange County, California, over the course of 16 years, you would think Orange County, the high flying high end market compared to these two lower end markets that are linear and boring and don’t do much. They both appreciated better than Orange County, oddly, because they didn’t give it back in the downturn as much as Orange County did.
Okay. So the, the, it’s the tortoise and the hare, you know, the old parable of the tortoise and the hare, the slow, consistent thing wins the race A lot of times, not always, because it depends how long the race is, right? If the race is 100 yard dash, well, you know, the hare is gonna win over the tortoise, okay? But if it’s a marathon, you know, the hare will get tired and the tortoise will just keep on chugging along really boring, right? That that is how that goes, right? I didn’t have much of a childhood so I may not have that, right. But that’s how I understand that. Okay, so, you know, there There you go. You know, you just see that Over time, in the these linear markets, they just make more sense than the cyclical markets. And all those cyclical markets are the ones that took the longest to get to the break even point where it was better to be a renter. Okay. And in the other markets, the linear markets, the break even point was slower, it would be better or was shorter, it would be better to be an owner. And so you might be thinking, Well, why doesn’t everybody buy in those markets? Well, there’s a whole myriad of reasons we’ve discussed many times. But of course, we all know most, the biggest reason of all is what I call financial immaturity. People just will not save, they will not delay gratification, they will not plan for the future. They will not make sacrifices today for long term gain. And that’s, that sums up most of it. Yes, you could talk about the foreclosure crisis and bad credit and lending and all these other things that, you know, have happened over the years, blah, blah, blah. We’ve all heard of that stuff. But that is the main reason financial immaturity.
Okay, I want to talk to you about some interesting tech stuff. The robot revolution got an interesting article, CNBC here, it says it could wipe out 5.1 million jobs in four years, by 2020. Now, is that scary? Or is that good news? I don’t know. But once again, I am going along because no one ever accused me of being short winded, right. So let’s get to our guest today. Let’s talk about Orlando. We’ve got some other good markets coming online. We’ve got our jgu live Jason Hartman University live event in Salt Lake City, coming up in March. Join us for that go to Jason hartman.com. That is not a property tour. That’s just a Jq live, but you know, probably going to go skiing on Thursday or Friday before the event if you’d like to come out and join me. And we made it a one day event. So if you only have the weekend off, and you want to hit the slopes and do some skiing or snowboarding, Utah has the best snow in the world. Make a little vacation out of it. You can do that on Sunday. Okay, so we’ll learn a lot on Saturday. And then Sunday is yours to hit the slopes enjoy the beautiful nature in Salt Lake City and surrounding areas like Park City. Okay, that’s it. Let’s get to our guest. And let’s talk about the Orlando market. Here we go.
Hey, I wanted to talk today about Orlando, Florida, this area has really been one of the ground zero areas for the real estate collapse the the boom, the bubble, the bust, and then you know, repeating the cycle. But we’ve done business here over the years in in kind of a spotty fashion. I can’t say we’ve found really good teams in Orlando maybe until now. And that’s why I wanted to just reintroduce this market to you. Of course, we’ve talked about it on the show before, but kind of reintroduce it to you and have our local market specialist talk to you today. So let’s dive in and talk about it. What is so great about Orlando, in this timeframe. Tell us more.
Local Market Specialist 18:22
So Jason, first want to thank you for having me be a part of this. It’s amazing to be a part of somebody who really does a great job of providing great education to people. It is definitely the time to invest in real estate. And even though we all know it is the right time to real estate, invest in real estate, where do we invest in that real estate. And I think that what we’re seeing is we’re seeing a lot of people buy properties all over the country, it’s a great time to buy. What we primarily look at is we’re looking at where’s the greatest opportunity exist? in today’s market, what we found was that we have what we call linear markets across the United States, we have appreciation markets, and then like you said, Really Ground Zero, you have a ton of fluctuation and foreclosures in a market like Orlando, Florida. And it’s really caused what we believe to be the greatest opportunity that exists because you can cash flow positive in a market that’s highly desirable. That’s really not supposed to cash flow positive. Because prices are usually too high. And now you have the opportunity to buy at a low price. You have a strong rent, and then you get to watch that market appreciate over the next several years as the population growth is one of its main drivers as the business growth happens in this market. And we’re really seeing a lot of this now. fully take take on the recovery that everybody’s been talking about across the states in real estate. I was just gonna mention some some basic facts about RMR And I think, again, anytime you want to buy cash flow property, I think one of the very basics to keep in mind is you want to be in a market that has a lot of demand and desirability, because that demand and desirability is always going to make sure that that property is rented that you have an exit strategy for that property. And that the value of that property is slowly climbing at a at a reasonable rate, so that you can get what we like to call a mixed return or an interim internal rate of return where you’re getting both cash flow, and appreciation. Not all markets in in the United States, right now, will give you that.
Jason Hartman 20:37
That’s true. You know, so you know, that sort of the hybrid between linear and cyclical, that is nice to capitalize on when you can. And the great thing you know, about your perspective, is that you’ve done and really are doing business in several markets, I’m finding this to be more and more prevalent, that really good players in the real estate industry will actually change their whole life and move to different markets based on some timing, although I’ve never been one to, you know, totally buy into the theory of market timing. I always like to say, and maybe it’s kind of a disclaimer, I’m not sure, but, you know, I’m definitely a cash flow investor, I used to be a speculator, you know, had mixed results with that some very good, you know, gamblers get lucky too. And you can definitely hit some home runs if you’re in the right place at the right time. But you know, I always like to say that I’ve never been a I’ve never met anybody who can really, really reliably predict appreciation or depreciation. That said, though, I think if you’re, if you’re looking at it from a sort of a moderate perspective, and you know, you’re just wanting to do you know, maybe four to 8% appreciation, maybe even you’ll get lucky and get 10%. You know, that’s not that’s not the hitting it out of the park mentality at all, you know, like, where I live, right, La Jolla, California, San Diego area, you know, where all these people around here who call themselves investors think, Oh, well, yeah, I just bought this property, and I paid a million dollars for a condo. And I think it’s going to go up 15% next year? Well, you know, but in the meantime, I’m getting terrible cash flow. And if it goes the other way, I have an unsustainable investment. That’s really, really risky. But that sort of hybrid mentality. I think it’s legitimate. Can you speak to that a little bit?
Local Market Specialist 22:30
Yeah, you know, first, Jason, I don’t think you know this about me. But it’s, I want to share a really funny story that that speaks to this. I actually did three and a half years ago, overnight, pick up all of my stuff and move to Orlando, Florida, for these reasons.
Jason Hartman 22:48
Oh, no, no, I knew you moved. Because you’ve been in the Las Vegas and the Tucson market, too.
Local Market Specialist 22:53
And, you know, it’s really interesting, because the market that I moved from, which was Las Vegas, Nevada, because of a small smidge of a difference in how the state of Nevada and how the state of Florida operate. One being judicial one being nonjudicial,
Jason Hartman 23:11
Now. What you’re referring to is the foreclosure process, meaning, and folks, of course, we’ve talked about this on the show before and I hope you’re gonna speak to this. And this is the concept of market clearing. And what I want, you know, what’s known to economists is price discovery. And in these judicial foreclosure states, where it’s such a slow process, like we do business in Illinois, as much as I hate the politics, you know, but the Chicagoland area has got a lot of attractive features that don’t have anything to do with Obama, Rahm Emanuel, high taxes, and and poorly managed government. But it’s got a lot of other very attractive things. Okay. You know, it’s a world class city. So there are multiple reasons to consider things. But you know, there we’ve got the same thing you’ve got in Florida, the market hasn’t cleared yet. And it’s mind boggling that this many years after the Great Recession, we’re still talking about a foreclosure market. So three and a half years ago, you moved on?
Local Market Specialist 24:10
Yeah, and you’re absolutely right, that is exactly what occurred. And the Las Vegas market on top of it being a non-judicial state, and as its has its ability to clear faster. There was also a bill that was written right before elections in 2012. In November of 2011, there was a bill that stopped the foreclosure process and said you cannot Robo stamp documents. Now that bill was also applied to the Florida market. But the real difference is I remember sitting there and I’m buying properties at auctions on the market, etc. And I remember the amount of homes on the market went from about 20,000 homes down to about 1500 homes overnight. So when you take away all that supply right away, what happens is it drives that price rapidly upward. So when that price drove upward, rapidly, it took away the ability to buy cash flow property in that market. So as we’re looking at the Las Vegas market and seeing all the benefits to it, we’re saying where else can we go that mimics Las Vegas. And we know that we can’t predict the price or the appreciation. But if we just experienced and saw what happened in Las Vegas, if we find another market, it’s very similar but has a difference in the way that it’s managed. Maybe we can go in there and do a more conservative return, like you mentioned. And so that’s exactly what we did. Now, all of the investors that purchased properties and us and we bought properties in Las Vegas, we did really well because of the timing in the market. But we did not buy with the idea of appreciation. And the dream moment that you mentioned that sometimes people buy we bought because it was a sound investment from a cash flow perspective. And it was in a desirable place that if the market did turn, that we would also get those benefits of appreciation. So when we came to the Orlando, Florida market, there were some very important things that we can mention. We, we saw that the replacement cost of these homes every time we buy one of these properties. And let’s say we buy a house for $100,000, the insurance is then insuring that property for $165,000. Because that’s what it would cost to replace that property. That’s what it costs to originally construct that property. And so anytime that you’re buying below replacement costs, that’s a good thing,
Jason Hartman 26:38
No question about it. And I just want to remind my listeners, that I actually make a distinction between the concept known as appreciation, and a different concept that I call I got a little trademark term for this, I call it regression to replacement costs. And I really think those things are different. I’m still working on this theory a little bit. But you know, appreciation is what happens when you’re at par when you’ve got the land value and the improvement value at replacement cost. And then you get appreciation on top of that. That’s appreciation, regression to replacement costs, is really just a matter of, you know, using a gauge for when a price of wood cost, what a price of wood is worth, you know, if you will. So that’s a good market. But I you know, I just want to ask you something, of course, we’re talking about Orlando, but because of your experience in Tucson and Las Vegas, Las Vegas, you would probably say is a little frothy now a little overvalued, I would assume or what do you think about that market?
Local Market Specialist 27:44
I’m not sure I would call it overvalued.
Jason Hartman 27:47
I mean, that’s one of those massively over speculated markets, right? It felt like, you know, in, say, 2000 to 2003, even 2004 and five, certainly, that it felt like everybody in Southern California had two rental properties in either Vegas or Phoenix. And that that made those markets go nuts, right?
Local Market Specialist 28:08
Absolutely. There’s definitely something to be said about a market that its natural growth is ready to occur. And it needs time to grow naturally. So if you take California, for example that you’re referencing, and you look at anywhere between the 1960s 70s 80s and 90s, and all Southern California, that was its natural growth that needed to occur, it had a lot of population, it had to build neighborhoods, etc, job growth had to happen. So I believe there’s always a natural growth in the economy that needs to happen in certain places. So when you take a look at Las Vegas, or Florida, there was a natural growth that needed to occur there between the 1990s and the early 2000s. But what happened was in combination with many things, the entire economy was just growing too rapidly. And the loans that existed for people to buy as their own personal property, just drove that price. And you’re absolutely right, Jason just drove it to where it’s an overvalued environment where the jobs just do not support. Now, what’s interesting is I see that changing quite a bit and it’s because there’s a whole different kind of movement going back to Orlando, Florida and one of the benefits to Orlando, Florida is we have so many large companies that are coming to this market. When you when you’re when you’re looking at you know Walt Disney is just someone who spearheads this and then you have a lot of your medical city that’s being built. And you have all the doctors and you have all the tech You know, they’re really trying to make Orlando be like the like the what’s the place I’m thinking of in San Francisco that everybody’s all tech, Silicon Valley, they really wanting it to be the Silicon Valley of the southeast. And it makes sense because there are basics to Florida that make it an environment where you want to invest in. When you think of the the fact the state’s business friendly when you think of that there’s no state income tax. When you think of all the low property taxes, the landlord friendliness of it all that is our basics that create an environment for growth and job growth. And so we’re seeing that happen. And we do believe that it happening at a more reasonable conservative place instead of Las Vegas where you’re absolutely right. Recently, the values have jumped up just because there was a great deal to buy there, not because the markets recovering and it’s very safe manner like it is in Orlando.
Jason Hartman 30:32
Right. So Las Vegas, what people have to remember overall, is when you get away from the glitz and glamour and a couple of really high end gorgeous areas, by the way, Las Vegas is really kind of a poor city. You know, there’s, there’s a lot of a lot of people struggling there and a lot of people on, you know, in part of, you know, what’s known as the working poor. So it’s, uh, you know, anyway, we’re not talking about Las Vegas in this episode. It’s not what it’s about, but I just wanted to ask you some of that. So you know, Orlando has a population around a quarter million people, you know, that 77th in the US? What else would you say about it? Everybody knows Disney, everybody knows Disney World, of course, what else is going on there in terms of employment?
Local Market Specialist 31:17
You know, I started mentioned, there’s a lot of medical, there’s a lot of tech here, you know, some of some of the things that anybody can can go out there. And Google is the environment of, you know, Lockheed Martin being here, and Mitsubishi being here, and Darden restaurants, and Verizon Communications, a lot of these major players are in the market. But I think that, and this is something that you really got to get from a feel of being in an environment, and really understanding the growth. There are certain things that I’d like to say the mentality of the city, again, what is the environment doing here, they have teams that are driving business growth, driving software companies to the market, they have major Orlando city soccer teams that are coming into the market, they’re building brand new stadiums, you have the Orlando Magic, you have more of a well rounded city that has all the benefits for anybody to come live here and enjoy life. And I think that when people are enjoying life, and the population growth is in the top five over the last 20 years, it really speaks to a city that has not become a major city, but will be a major, major city. And when I say major city, everybody knows Orlando, Florida. But Orlando, Florida is not Los Angeles. And it’s not Miami, and it’s not New York, but I think it’s got all the basics of what it can be for its future, a New York, a Los Angeles. And what that means from an investor’s perspective is the direction of this market. And the mentality of its job growth, population growth and environment for lifestyle is what really is going to drive that appreciation and that cash flow in your investments. Take for example, there’s a huge expansion happening right now with our main Interstate, our four, the four freeway out here, take, for example, our surrounding communities around the Orlando market are now having light rail systems that have been implemented already and are up and running. These are some major things that are happening in our cities that are not occurring across the United States in other cities, and you’re able to buy these properties at a value where it’s below replacement costs. I loved your theory that you mentioned a few minutes ago, I would just add on to it that, you know, it’s really the correction in the market that we’re still going to seek as far as value. So what I mean by correction is if we’re buying a property for 100,000, it will not appreciate to 150, it has to correct itself to 150. And then you’ll start to appreciate keeping in mind that in the surrounding neighborhoods that we buy properties, people used to own these very same houses for two and three times what we’re paying for them now. So it’s like the theory if somebody paid $5 at the gas pump before and then it drops to $3. With the right financing and leverage would they buy that gas and at at the $3 mark. And so I think that’s what you’re gonna see in our general population here. And also this is what definitely separates us from many other markets where people are buying real estate as well. Yes, we have investors buying in Orlando right now, but I think our future shows the sales happening to families and people who are growing and living in Orlando. So when you exit the property here for X amount of dollars, you’re going to be selling it to somebody who Either lost their house previously, or they’ve moved into this market. And the financing is starting to exist across the board for everybody to go back into the market and own their own home again. And so I think it’s our cyclical evolution and uniqueness of Orlando, that really makes it a great opportunity to buy at a low value and exit at a reasonable value. And if it if you do a lighter conservative appreciation of it of six to 8%, you’re still in a market that’s extremely desirable. That’s going to give you great cash flow returns, and then great appreciation returns.
Jason Hartman 35:39
Yeah, okay. so looking back at that, well, before we look, I want to look back at a little bit of Orlando history if we can, too. But you know, and I’m just talking about sort of Great Recession era and kind of what went on there. And some of that stuff. That’s, that’s still working itself out of the system, because we talked about the slow foreclosures, but speak about the landlord friendliness issue. This is something we definitely look for in markets. We like markets that are friendly to our causes landlords, if you’ve got a deadbeat tenant, you got to get them out. I mean, society really depends on being able to enforce contracts. Otherwise, you know, it’s like trickle up. Poverty, it’s just a, you know, it’s a disaster if one if one party can’t keep their contract that, you know, it’s the domino effect onto another one. We need tenants and a regulatory climate that’s, that’s friendly to us as landlords.
Local Market Specialist 36:33
You know, I think, again, with everybody knowing look, now’s the time to invest in real estate. So where should I invest, and you start comparing different states and markets, and then you figure out, okay, Orlando, is one of those great markets that we want to invest in, because a, it’s a good deal, be it’s landlord friendly, see, have the right team. So when we talk about it being landlord friendly, I think we can also start talking about our team and how we operate as a management company. You know, when you are managing properties in somewhere, for example, like California or New York, and you have to go through the eviction process, you’re likely to have to hire an attorney to do that, what we’re able to do is we really do our evictions in house, and an eviction in New York, California may cost you 1000s of dollars, were an eviction here in our Florida market might only cost you two $300, and a couple of recording or document fees to the county. So again, the benefit there is having our team in place that does that for you. And then having the kind of environment where the timing of the eviction is, it can can happen pretty quickly. So we can evict somebody in the Florida market, within the month. The benefit is that when you’re doing your projections and your numbers on your investment, you want to let’s suppose that you say that your property is going to be vacant for a month out of the year, if you weren’t able to evict somebody in a landlord friendly state like ours, then you would be going multiple months without that income. So those are one of the benefits. You know, I do want to continue to speak on our team. And just in general, how we operate. You know, our management company was really built for investors by investors. And we originally as a company only invested in real estate for ourselves for a long time. And we had been buying a lot of turnkey properties from 2008. Up until 2012, we’d bought several 1000 properties for ourselves. And it wasn’t until about three and a half years ago.
Jason Hartman 38:49
And you’ve got, by the way, I just think that’s a good spot for you to talk about your personal portfolio,
Local Market Specialist 38:54
You’ve got what about 100 properties in your personal portfolio? Now that’s correct, we have about 100 properties in our personal portfolio. And one of the things that we’ve really moved to do in our personal portfolio over the last year and a half is we’ve really moved to start to leverage and really employ the idea of leverage with rates being low and the market changing. You know, there’s a lot of portfolio, oil lenders that didn’t exist before that exist there now. So once you get to a stage where you have so many properties, you know, to really take your business to the next level and start doing other things like buying large commercial buildings or buying just more single family homes. I think leverage is one of those ways in today’s world that you can do that. And so we’ve been working hard at it and we, myself and my wife, we own a little over 100 properties. And we also own some commercial buildings and
Jason Hartman 39:53
Okay, so Orlando, yeah, like it. Landlord friendliness. How, tell us about the eviction process. You know, God forbid, I always say, plan for the best prepare for the worst. So hopefully no one’s going to have to do an eviction. But if they do, how does it work? How long does it take you do it in house, you’ve got the management company, as part of the offering. Right?
Local Market Specialist 40:17
Right. So it’s, it’s, I’m going to share a combination of things, I’m going to share how it works legally with you, and I’m gonna share how a good management company works with tenants. Ultimately, you don’t want to be Victor tenants, because every time somebody moves out of your property, it costs you money. So we’re a big believer in protecting ourselves legally, but working together with tenants, especially when you want to reap the benefits of being in a hot market like Orlando, Florida, you have to understand that over the last five to seven years, we’ve been in a very down economy. So it’s all part of managing properties through that process of the economy recovering, you know, when you take employment that used to be in double digits, and it’s down now to 4.9, you have to understand that there weren’t that many people that were doing a great job of paying their rent in 2012. But Fast Forward 2015, we have that same tenant, and now they’re doing better, they have better jobs. And so I guess what I’m trying to say is, you really have to understand the combination of managing these rental properties with what’s happening in the economy, you’ve got to have a lot of common sense, you’ve got to invest in these properties, and then treat them and manage them like an investor also. And I really think that’s our biggest difference in the way our style of management is, with your regular management out there on the street. So legally, what we do is we issue a five day pay or quit, we usually we’ll issue that five day pay or quit between the seventh and 10th of the month, depending if it falls on a weekend or not. Then after we issue that five day pay or quit, you’ll issue them a 24 hour notice. And after that 24 hour notice, then you’ll take all your court documents, and you’ll fill those out, you’ll take them down to the courthouse, at which point they’ll schedule you for an eviction or a hearing, or they’ll send paperwork out to the tenant and seeing if they want to contest. And then you’ll have a hearing and it’ll be pretty cut and dry. And I think this is where it becomes very landlord friendly. The judge is gonna stand there and say, Hey, have you paid rent? And then they’re gonna say, Well, no. And they’re gonna give a reason why. And the judge is gonna say, well, but you didn’t pay rent, did you? And he’s gonna pretty much order them in the next 24 hours to have all their belongings out of the property. So that whole process takes as little as two weeks as long as three or four weeks, depending on scheduling,
Jason Hartman 42:49
That’s really fast. So even with a tenant that knows how to play the system and contest the eviction, I mean, you get them out that quickly huh. That’s, that’s good.
Local Market Specialist 42:58
You know, I think the other reason we get them out even faster than that is that we, like I said, have a different mentality of managing our properties. When a tenant is late past five days, we will start on a commitment with them, or a payment plan. If they do not follow that commitment plan, their document they signed to have a payment plan releases their right to go through that eviction process, they actually have to just if they don’t, if they don’t follow that payment plan, we have the right to go file that document and then have the sheriff go evict them 24 hours later. So in house, we’ve really created an environment where they want to stay in the property, they’ll commit to it. If they don’t follow through, then we have a right to skip the whole eviction process. So we’re even faster at times.
Jason Hartman 43:57
Okay, what else do you want people to know, just in wrapping up here about real estate investing in general or the Orlando market?
Local Market Specialist 44:05
You know, I think that the greatest transfer of wealth is definitely happening over the last few years. And I think that there is always the desire to have a crystal ball to invest. And I think rather than have a crystal ball, I think a lot of great education and using a lot of our experience and your experience in real estate to really make the right choice on where you’re going to invest. I always asked myself, can I buy a property in Orlando for $100,000 10 years ago? The answer is no. Can I buy a property in Orlando 10 years from now? The answer is probably not. So is there an opportunity to buy something that’s truly unique in the real estate market now versus buying something somewhere else that you could buy for that same price 10 years ago or 10 years from now? And so I think that there is a lot of correction like you mentioned Jason that needs to happen in our market to get us to replacement cost. I think once we get to replacement costs, there’s a lot of lending and movement happening with the banks where the general public and all the high population and demand of Orlando, Florida is going to have the opportunity to buy a house again, I think that that’s going to continue to drive our prices up. I think as our prices drive up and together with inflation will definitely be a market that’s leading the charge to increase rent rates. And to increase the appreciation and value of these properties. I think that’s going to happen with a combination of our infrastructure, our business, our growth, and the the kind of mentality and environment that not only we have as a company, and how we invest in our properties and the places we invest, but also the mentality of the city and their aspirations for growth and, and the movement for Orlando and its future.
Jason Hartman 45:53
Yeah, good stuff. Good stuff. Well, thank you so much for joining us today. And listeners, I tell you, that was a great talk. And especially with the 10 years in either direction example, I think so good stuff, talk to your investment counselor, visit Jason hartman.com. Check out the properties on the website, I think you’ll like what you see, again, I’ve been to Orlando many times, we’ve certainly done business there over the years. You know, I think I think the opportunity is good. And as I always say, a big part of this equation is having a good team in the market. You’ve constantly heard me say over and over on the show, I’d rather have a B market and in a team than an A team or wait, sorry, yeah, that’s right. I got that wrong. I’d rather have a B market and an eight team than AI and a market and a B team. Because the team is so critically important. But in this case, you know, I really think we have both. I mean, certainly you would have been better off investing in Orlando or anywhere for that matter. Four years ago, no question. But four years ago, you know, very few people had much confidence in the market. And the opportunity is still there. And these linear, possibly about to go hybrid markets, I think is a really ideal opportunity. And so those markets, I believe are Orlando, I believe are Chicagoland areas like that, and a couple of other markets as well. And then the vast majority of the rest of them just hybrid, reliable, dependable cash flow markets. not sexy at all, but good, stable, great markets, too. So they’re all at Jason hartman.com. Go take a look, we look forward to helping you with your investments. Thanks again.
Local Market Specialist 47:33
Thank you.
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