Jason Hartman’s monologue on episode #268 covers a range of topics, including:
Some thoughts on 3-D Printing and how it may mean fewer U.S. manufacturing jobs in the near term, Paul and Wohlers say the growing number of factories that likely will relocate to the U.S. should yield a net increase in employment. (Read more at Arizona Central) The last show on “Abundance – The Future is Better Than You Think” and Jason’s desire to have Alvin Toffler and or Heidi Toffler on a future episode – American writer and futurist, known for works discussing the digital revolution, communication revolution, corporate revolution and technological singularity. Works include: Future Shock, The Third Wave, Power Shift, Revolutionary Wealth, Creating a new civilization, War and Anti-War.
Marcus and Millichap survey showing strong rental markets with limited rental housing supply and increasing rents in 39 markets nationwide.
The housing market has turned at last www.online.wsj.com
Multiple offers return as buyers are back www.rismedia.com
Yes, the U.S. housing bust is over www.online.wsj.com
New credit score system finds many borrowers less risky www.businessweek.com
U.S. home sales up 12% from last year www.dataquick.com and housingwire.com
Jason’s “Creating Wealth Boot Camp” and Atlanta distressed property tour will take place at The Grand Hyatt Buckhead, Atlanta the last weekend of September. The registration info will be available at: https://www.jasonhartman.com/events/ in a few days
Jason hosts his Local Market Specialist (LMS) from Indianapolis as they discuss new construction investment properties. Yes, NEW CONSTRUCTION, can you believe it?
As the crossroads of America, Indianapolis has a highly diversified economy that contains many attractive employment opportunities for prospective tenants. When combined with an attractive cost of land and strong rental cash flows, it represents a tremendous opportunity for prospective investors.
Indianapolis is the capital of the U.S. state of Indiana, and the county seat of Marion County, Indiana. It is Indiana’s largest city and is the 14th largest city in the U.S. Indianapolis has a diversified economy, contributing to the fields of manufacturing, distribution, education, health care, and finance. The city also plays host to numerous conventions and sporting events.
In addition to the opportunities available within the Indianapolis market, there are many other local real estate markets that have been identified by Platinum Properties Investor Network as attractive options for investors. Your investment counselor will be able to help you find the ideal opportunity for your specific situation, and is available for strategic coaching. By merging exceptional investments with intelligent advice, and a superior strategy there is no limit to what you can accomplish.
Indianapolis was selected as the site of the new state capital in 1820. While most American state capitals tend to be located in the central region of their respective states, Indianapolis is the only capital to be in the exact center of its state. Jeremiah Sullivan, a judge of the Indiana Supreme Court, invented the name Indianapolis by joining Indiana with polis, the Greek word for city; literally, Indianapolis means “Indiana City”.
At the center of the city sat Governor’s Circle, a large circular commons, which was to be the site of the governor’s mansion. Meridian and Market Streets converge at the Circle and continue north and south and east and west, respectively.
With roads leading out of the city in all directions, Indianapolis became a major hub of regional transport connecting to Chicago, Louisville, Cincinnati, Columbus, Detroit, Cleveland and St. Louis, befitting the capital of a state whose nickname is “The Crossroads of America.” Evidence of this assertion is found in the fact that 65% of the United States population lives within a 700 mile radius of Indianapolis.
Forbes Magazine ranked Indianapolis #10 in its survey of top US cities. This ranking is primarily driven by the strong employment, low cost of living, and attractive growth prospects of the area. Major employers such as Eli Lilly are planning future expansion in the Indianapolis area, and this will only serve to increase its viability as a location for investments. At Platinum, we target linear markets like Indianapolis that demonstrate strong employment fundamentals, which translate to consistent demand for rental housing.
In addition to Eli Lilly, Rolls-Royce is committing to expansion in Indianapolis. The Rolls-Royce Corporation is a leader in manufacturing, Research and development for gas turbine engines.
While Detroit is experiencing difficulties from the bankruptcies of General Motors and Chrysler, Indianapolis is emerging as an automobile manufacturing center. Its favorable business environment, abundant land, and vast freeway access makes it an ideal manufacturing hub for industries such as automobiles.
Indianapolis possesses many virtues that cannot be expressed by statistics. Expansion magazine ranked Indianapolis as a 4-star metropolitan area for its quality of life in 2006. Furthermore, Indianapolis was ranked the #1 Pro-Sports city in North America, of Multiple sports franchises and the “Indy 500” Formula One race. In addition to these characteristics, Indianapolis possesses a strong growth undercurrent, being rated as the #5 hottest large city for entrepreneurs, and the #10 city for producing fast-growth companies.
Indianapolis is also a haven of affordable housing, possessing the best affordability in the nation for three consecutive corners, and is now being acclaimed for its stability relative to the bubble markets that are now experiencing so much market turbulence. At Platinum, we recommend investment in stable markets like Indianapolis because if it’s strong economic fundamentals.
Indianapolis is the international headquarters of the pharmaceutical corporation Eli Lilly and Company. Eli Lilly had revenues of $20 billion in 2008, making it the 148th largest company in the United States and the 10th largest corporation by global pharmaceutical sales. The company is publicly traded on the New York Stock Exchange and is a member of the S&P 500 stock index. The total number of employees for Eli Lilly stood at 40,600 in 2007.
Indianapolis also plays host to wireless distribution & logistics provider Brightpoint, health insurance provider Wellpoint, insurance company American United Life, Republic Airways Holdings, and real estate companies Simon Property Group & Hunt Construction Group. Other major Indianapolis area employers include Clarian Health, Sallie Mae, Cook Group, Rolls Royce, Delta Faucet Company and General Motors.
Indianapolis has also developed into a major logistics center. It is home to a FedEx hub and many major distribution centers for companies like Amazon.com, FoxConn, and numerous pharmaceutical distributors.
The city of Indianapolis possesses a very large and diverse workforce. With its employment base diversified across a broad range of industries, Indianapolis is known for exceptional stability during times of economic change. While many cyclical markets experience a recurrent trend of booms and busts as certain industries oscillate in and out of favor, Indianapolis continues to steadily grow with its fundamentally sound economic base. With such a broad base of employment opportunities, Indianapolis represents a highly attractive opportunity for investment property owners.
Indianapolis contains a broad base of higher education, and is the home of: Brown Mackie College, Butler University, Indiana University-Purdue University Indianapolis (IUPUI), Indiana Wesleyan University, Ivy Tech Community College of Indiana, Marian College, Martin University, Oakland City University (Indianapolis) Indianapolis campus, The Art Institute of Indianapolis, and the University of Indianapolis.
The median income for a household in the city was $40,154, and the median income for a family was $48,979. About 9.0% of families and 11.8% of the population were below the poverty line, including 16.1% of those under the age of 18 and 8.1% of those ages 65 or older. These characteristics support the strength of Indianapolis as an investment opportunity, since the household income is relatively high in comparison to the cost of housing and the poverty rate is relatively low. This creates an attractive environment for investment, since there is a healthy pool of potential renters with steady employment.
The National Association of Home Builders and Wells Fargo ranked Indianapolis the most affordable major housing market in the U.S. for the fourth quarter of 2008, and Forbes magazine ranked it the sixth-best city for jobs in 2008, based on a combined graded balance of median household incomes, lack of unemployment, income growth, cost of living and job growth. In 2009, Indianapolis ranked first on CNN/Money’s list of the top 10 cities for recent graduates.
In the 1970s and 1980s, Indianapolis suffered at the hands of urban decay. Major revitalization of the city’s blighted areas, such as Fall Creek Place, and especially the downtown, began in the 1990s and led to an acceleration of growth on the fringes of the metropolitan Area. This growth trajectory has expanded out to many high quality neighborhoods in the outskirts of the city with many newer homes and attractive affordability.
Indianapolis’s future appears bright as the city continues to invest heavily in improvement projects, such as an expansion to the Convention Center, upgrading of the I-465 beltway and an entirely new airport terminal for the Indianapolis International Airport, which is now open. Consistent with Platinum’s strategy of targeting strong, linear real estate markets, Indianapolis represents the type of market that we seek for our investors and for our own portfolios as well.
If you are interested in the investment opportunities available with the Indianapolis Market, contact your investment counselor for a one-on-one consultation. In addition to the investment properties, ask your counselor about our coaching programs where they will work alongside you to develop a holistic strategy that merges attractive investments, solid financial planning, exceptional education, and a strong focus on personal values to help achieve your goals now and into the future. We are ready to help you realize the success that you have ever dreamed of. Are you ready to take the next step?
ANNOUNCER: Welcome to Creating Wealth with Jason Hartman! During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before, and a new slant on investing: fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self-made multi-millionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it! And now, here’s your host, Jason Hartman, with the complete solution for real estate investors.
JASON HARTMAN: Welcome to the Creating Wealth Show! This is Jason Hartman, your host, and this is episode number two hundred and sixty-eight. Thanks so much for joining me today! And, gosh, we’ve got a few things to talk about before we get into an update on a market we haven’t discussed much lately, and that is good old Indianapolis, that tried and true market. I’ve been busy in that market for many, many years, and it’s been very good to us. So, you’re not going to believe this, but we actually have—yes, amazing as it may sounds—brand new properties there, and I just am buying into one of those myself, with a client of ours, and boy, I tell you, there’s some good stuff out there.
It’s pretty amazing that we are seeing the return and resurgence, as we have talked about on recent episodes of the Creating Wealth Show, of new construction. So, here we go with new construction again. And times, they are changing, aren’t they? Hey, that last show on abundance, as we talked to Steven Kotler, and his co-author, of course, is Peter Diamandis, on Abundance: The Future is Better Than You Think. There’s a couple things I forgot to mention, and when I talked about the futurists that I like so much, I forgot to mention one of the big ones! And that is Alvin and Heidi Toffler. Alvin Toffler, and Heidi Toffler, and their books, Power Shift, I remember when I read Power Shift years ago. What a fascinating book it was, and I mentioned many, many episodes on the Creating Wealth Show another book of theirs called Revolutionary Wealth that I read maybe, what was that, about two and a half years ago?
I remember mentioning that on an episode. That is another one of the great futurists, and one other concept, one other invention that I think is really going to change the future—I think this is a very, very significant one, by the way. And I remembering mentioning this at one of the meetings of my old traditional real estate company in Irvine, California, when I would conduct the Tuesday office meeting there at my company called Platinum Properties International, the sort of predecessor in name of this company, and another company I had. And I talked about 3-D printing. Have you heard of 3-D printing? This is an amazingly powerful, powerful advent in technology, a big advancement that I think is going to impact a lot of our lives in so many ways.
And I just wanted to mention it here, before we go into some of the other real estate investing and personal finance concepts on today’s episode. And 3-D printing—you know, I remember when I was in, I think it was Gelson’s Market. Or maybe it was Vons Pavilions Market, in Newport Coast, I’m not sure which. And I remember I saw a cake, and this cake, maybe you’ve seen this, had a photograph on a cake, and I thought, how do you put a photograph on a cake? I think it was a birthday cake, or maybe it was an anniversary cake, that’s what it was. And it was a picture of a couple who had been married for a long time, and it was a photograph of them, on a cake! A cake that you eat! I couldn’t believe that!
And so I asked, how do you put a picture on a cake? And they said, well it’s just basically an inkjet printer, and instead of printing in ink, it prints in frosting. Edible frosting, yes, you can eat the picture. Eat the photograph. And I thought, wow! That’s pretty neat. So, I had an anniversary coming up for my company, and one of my staffers went and they—I was telling some people how I thought this was such a cool thing, the photograph on a cake—and so they went, and they had our company logo printed on a cake. Yes. And I thought that was really cool. And then later, I remember talking in an office meeting about the concept of 3-D printing, and in the international space shuttle, this could be such an incredible, incredible thing!
So for example, these are machines that instead of printing in two dimensions something flat, a piece of paper, or a layer of frosting on a cake, they would actually print a part. Something three-dimensional. Say, for example, you need a new valve for a part in the international space station. Well, if you have a 3-D printer, rather than bringing up or shipping up in spacecraft, or maybe the space shuttle would stay, or having a bunch of spare parts stored onboard the space station, which could be unbelievable in terms of the resources, space they would take, and so forth—you could just print, if you will, this part on demand. 3-D printing is a big, big deal, folks. And you know, I saw an article recently about this exact subject. And here’s what it said. 3-D printing churns out more goods—Irwin, Pennsylvania, about 20 miles east of Pittsburg, the former heart of the nation’s steel industry, a small company called X1 is churning out a new generation of stainless steel boat propellers, oil pump parts, and doorknobs, but there are no clanging hammers, no wheezing presses, or even computer-controlled milling machines.
Instead, a dozen 3-D printers quietly stitch though industrial parts by meticulously spreading hundreds or thousands of layers of powdered metal onto a canvas until they form three-dimensional shapes. If you’re not familiar with this, folks, just envision what this is like. It’s basically a device, and this is me talking, not the article—which, by the way, appeared in AZCentral.com, it was actually taken from a USA Today story by Paul Davidson. And imagine what this is. This is me talking. This is a device about the size of a refrigerator, and it prints three-dimensional parts, shapes, pieces, whatever, okay? It prints anything. You basically put in the materials—the powder that creates this 3-D product—and you program the software to tell the computer to make this part.
It could be a computer mouse. It could be a pen. It could be a bottle, it could be a valve, it could be a propeller, a doorknob, a tool, a hammer, a screwdriver—whatever! It’s amazing. It’s almost like the transporter on Star Trek, where it just creates something out of thin air. The article goes on to say, the machines look and function like document printers. They run automatically; a lone operator adds powder, programs the design of a new part into a computer, and removes the finished object. The minimalist factory exemplifies the latest chapter in the Industrial Revolution, one that could make US manufacturing more competitive globally, and bring more jobs back to the United States.
Just as it transformed music, TV, and books, digital technology is poised to reinvent a sector that might seem immune from the world of digital ones and zeros. That’s binary code, the ones and zeros, of course. And that is manufacturing. Well, 3-D printing also known as additive manufacturing, has been used since the late 1980s to make prototypes. It’s increasingly cranking out a limited number of runs of the actual parts for products as printing speeds increase and product quality improves. And it goes on to talk about, well, what does this mean for US jobs? Will it bring more jobs back to the US? Because on the face of it, it would seem like it’s another machine, right?
Another thing that would take the place of people. But not really! The experts say, while 3-D printing may well mean fewer US manufacturing jobs in the near term, they say that a growing number of factories are likely to relocate back to the United States, because their yield would increase, and it would ultimately lead to a net increase in US jobs. So, if you want to make a trophy in a 3-D printer, to a torque converter, a propeller, whatever—it’s amazing what this technology will mean to all of us. And I originally learned about 3-D printing about, oh, 10, 12 years ago. I read about it in some magazine, I remember. And it is really coming of age! This is an amazing thing.
And the article talks about how hobbyists are actually using 3-D printers now. You can buy a 3-D printer for a couple thousand dollars and you can make pieces of jewelry, or little parts for various hobbies, and so forth. It is an amazing thing. Another example of how the future is better than you think. Okay. Well, it’s not all good. Not all good news. I’m not that rosy, so don’t worry, I haven’t become an optimist. I’m still an opportunist. But, a couple things in the media that are pretty amazing here. This article I just saw—and this is in Inman.com, it’s a big source of real estate news—it says, rising home prices bring 700,000 more homeowners above water.
So, this is the talk, and this is from Core Logic, the company that keeps a lot of stats on this kind of stuff. And what this is about is the negative equity issue, and you’ve all heard about this. We’ve talked about it on prior episodes, of how so many American homes are underwater in terms of the equity position. In other words, they owe more than the property is worth. But now we see prices rising, so again, another 700,000 homeowners are now above water. They’re no longer underwater, and that is amazing news. Now, do you think maybe folks, that things are starting to get a little frothy out there? You know what I mean by frothy, where the news is getting all positive, and, you know, we’re getting in a position where maybe everybody’s getting too optimistic again!
Remember, I mentioned about the dristy, right? The dristy is your focus, your gaze. Keep focused on reality, folks. This is not a real recovery, as I’ve said many, many times before. This is just that W-shaped so-called recovery, where the first part of it was a deflationary depression or recession, and now we’re in the second phase of that, and that’s the inflationary part. And if you think I’m wrong about this, just look at these headlines that popped into my email box from my LinkedIn newsletter just today. Just a few hours ago. First article in the series: yes, the US housing bust is over; the Wall Street Journal reports, the housing market has turned at last. The US has finally moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming and the numbers are now convincing, that the market has turned, and the housing bust is over.
Next article: multiple offers return as buyers are back. Record tight inventories are making it increasingly difficult for growing number of buyers who are creating multiple-bid environments in markets that haven’t seen buyers battle over homes in six years. I’m gonna keep sharing a couple more headlines with you; just two more, maybe. Now this one is a little bit scary, because this is the sign of frothiness, again. New credit score system finds many borrowers to be less risky. Wow. I tell you, it’s even made its way into the lending and credit scoring environment.
Here’s what it says. BusinessWeek.com: we always knew that most people have decent credit, but it turns out, about 44% of the US population has crazy good credit. That’s according to a new model of credit risk assessment by Fair Isaac Corporation, or, the famous FICO. And they’re now saying that they found a new way to score people to make them look better. I say, look better than they really are. So again, it’s starting to get frothy out there again, folks. These are just the initial signs of it. And mark my words, it’s gonna get a lot worse, and a lot of people, and a lot of companies, are gonna start becoming reckless. And they are gonna lose focus. They are gonna think this is a recovery. It’s not a real recovery. It’s just the inflationary recovery, and it’s largely fake.
And it will largely hurt millions and millions—tens of millions—if not a couple hundred million people. But, those of you who are following the plan that I’ve outlined on the last 267 episodes of this show, and my other shows, will actually benefit quite dramatically from this. The last headline, it says, US home sales up 12% from last year according to DataQuick. US home sales are up 12% from last year, and 10.6% from 2009 levels; home prices also went up with the median price hitting $193,000 on July 5th, up 6% from a year ago, and 4.3% from three years ago.
So folks, mark my words, it’s getting frothy. Now, here’s where I don’t think it’s too frothy, because I think these are pretty solid stats, and solid ways to look at the markets. Marcus & Millichap! That’s the big commercial real estate firm, right? Well, my friend Dave Gerome sent me an article, and he said, you know, I didn’t know if you’d seen this or not, but I thought I’d pass it on to you. Thank you, David! And it says, apartment investments continue to gain momentum, despite the softening employment market. Vacancy tightened across the board.
Well—and this means, in all the markets they survey, and I think that’s about 39 markets. It says, vacancy tightened across the board, while rents have surged past their pre-recession highs in some metro areas. Although construction is ramping up, so what that means is, more people are building apartments. The majority of development will be perennially tight, where absorption has been strong. So, supply remains limited over the near term, and that means, folks, that landlords will be the winners.
One more thing I’m going to talk about on a future show, but I published it—I posted it on the company’s Facebook page, and my personal Facebook page as well, but that is the SWOT analysis. Have you ever heard of the SWOT analysis? It stands for Strengths, Weaknesses, Opportunities, and Threats. And this is basically outlining your strengths, weaknesses, opportunities, and threats—SWOT—as a real estate investor. How does it look for you? And we’ll talk about that on a future episode, because I want to get to our interview today, and have you hear more about the Indy market, and some of the updates there. This is a market I own several properties, and continue to invest more, and I think you’ll like what you hear today from Angela, one of our local market specialists there, as she talks about the general market, and, believe it or not, new construction opportunities in this market.
Oh! And lest I forget! We have formally, formally, formally, inked and contracted for our Atlanta Creating Wealth in Today’s Economy Boot Camp, and our Atlanta Property Tour, and that will be at the beautiful, gorgeous—and I’ve stayed there before, I love this property—at the Grand Hyatt in Buckhead, in the Buckhead area of Atlanta, and that will be the last weekend of September, and I believe it’s a Friday, September 28th, and a Saturday the 29th, Sunday the 30th. That weekend, it’ll be on the website very soon, at www.jasonhartman.com, in the events section.
So be sure to join us for that, and we’ve got a special room rate for all of you, at only $129 per night. That is going to be a fantastic event. And by the way, for those of you in Europe, those of you in the east coast, the Middle East, wherever you are in the world, where this is closer to you—you know, this is our first event on the east coast. So, join us for this. you’ll get the Creating Wealth in Today’s Economy Boot Camp, and a property tour, at a super, super low price at the end of September. So look for that, and all the details, on the www.jasonhartman.com website. So, without further ado, let’s get to our interview today, and talk about the Indy market, and we will be right back with that in just a moment.
JASON HARTMAN: Did you know that you can call in to the Creating Wealth Show? Yes, you can call me and talk to me direct, for later broadcast on the show. The number is 949-200-8009. Or via Skype, JasonHartmanROI. Please make sure you have a good connection when you call. Get your questions answered, participate in the show, and share your experiences with other investors. Call in, 949-200-8009, or Skype, JasonHartmanROI, and participate in the Creating Wealth Show.
JASON HARTMAN: Hey, it’s my pleasure to welcome Angela back to the show! She is our long time local market specialist in Indianapolis, and we wanted to get her back on the show—you heard her on before on prior episodes—to talk about an update as to what is going on in Indianapolis, and to talk about some rather unique opportunities that are again kind of surprising, and they fall into the category of—you may be guessing it now—that’s right. Have you guessed it yet? New construction. Yes, I can’t believe it, how new construction is just coming back all over the country there’s new development, and Indianapolis actually has some. Angela’s been able to source some really good deals that a lot of our clients are buying, and I’m actually purchasing one of these properties with one of our clients. Angela, welcome. How are you?
ANGELA: I’m doing great, thanks for having me!
JASON HARTMAN: My pleasure. Good to have you back on, and we’ve been working with you, gosh, I’ve been working with you for like 5, 6 years now. It’s been a long time. So it’s great to work with you all this time, and have you back on the show to give us an update. What is going on in the Indianapolis market?
ANGELA: Well, the business clime that Indiana set for major growth, Jason. We’ve been saying for a while that it’s hot here, and now people are starting to pick it up in the media and report it to everyone out there.
JASON HARTMAN: You just sent me an article about a big expansion, a big corporate expansion, right?
ANGELA: Yeah, Roche Diagnostics made a major announcement today that they are investing an additional $300 million into our economy, enabling the company to grow and add over a hundred jobs in the coming years.
JASON HARTMAN: Fantastic. And what is the tone of the market like? I mean, when we were working on properties last year and the year before, it was really hard to get a property, but the property—the deals were incredible. I bought three properties myself from you last year, and I don’t know, maybe one of those lingered over into this year. At least the closing. I think they all closed last year. I can’t remember off hand. And it was hard to get properties then, because you know, a lot of our clients would get discouraged. They had to make multiple offers, and the properties they were offering on had multiple offers, so they wouldn’t always get them. But what’s the climate like now?
ANGELA: Well, as you were saying, last year around this time, our inventory was about at a 4-month absorption rate, so that meant we had inventory available for the next 6 months. Right now we’re looking at a 4-month housing inventory, so it’s the lowest it’s been in years, and with that, the REO properties no longer make sense when much of the new construction does, because the REO properties’ prices have been driven up. There’s more competition, and we have some amazing new construction opportunities that are $64 a square foot, estimated, and you can’t beat that when they come 100% rent-ready with everything new in it. It’s an amazing opportunity.
JASON HARTMAN: And sometimes those are pre-rented, so we’ll talk about those in a minute. But the climate in the market now, I mean, can people get a property? How difficult is it? Because I gotta be honest with you, Angela—we were getting pretty discouraged in the last year or so with clients, and clients were getting discouraged, that’s why we were getting discouraged. Because if they can’t buy anything, it’s just a frustrating experience, where they had to make multiple offers, and it was hard to get a house! They’d have to buy above full price a lot of times, and when you say REOs, just for everybody, that means real estate owned. That’s what that stands for. Real estate owned by a bank, or an institutional seller. So, are you working in the REO market with properties right out of the MLS now? Or through banking relationships? And then we’ll talk about the brand new properties, because those have—again, surprised the heck out of me, number one, the amount of building that is all of a sudden going on. And really, the fact that those are pretty good deals! I’m surprised they can build them that inexpensively! But talk about the REOs a little bit more, first, and the resale type properties.
ANGELA: There are some REO properties out there. I always like to prepare investors that there is competition with those properties, and there aren’t as many available anymore, so you just have to be prepared if you’re an investor looking for an REO bank-owned property that you may have to submit 5 or 6 offers. And sometimes it’s not really worth it to go through all that work to not know if you’re going to get it or not. But when you get an REO property, it is a great opportunity to buy something under market. So, those properties do indeed work, due to, you know, them being less vacant sometimes for a year, and someone may come in still cabinet and store, throw paint on the walls, some different things like that. But there are still some available. But, like I said earlier, our inventory is like at a four-month rate right now, which means we have remaining inventory for the next four months. So it’s very, very low. And with that, prices are going up on the REOs, so if you were interested in an opportunity like that, I wouldn’t wait too much longer. I wouldn’t wait too much longer on anything in Indiana right now.
JASON HARTMAN: Yeah, the market is pretty hot all over the country, frankly. I mean, at least in the markets we do business. I don’t know about Detroit, really, but we wouldn’t touch that. At least not any time soon. And we still think it’s too early for Las Vegas and California; just not there yet. But what I would say, that people have to remember, is that when you’re buying a bank foreclosure property, or an REO property, as we’re calling them, be prepared. It is some work. It’s gonna suck up more of your time. It’s not turnkey. And with that, there’s always it seems like a lot of times there’s always a little surprise here and there. So, whatever you expect to happen—whatever the budget you’re expecting for rehab—plan on another buffer of another $2000. And even if you have that in there, it’s still an incredible deal. But you know, again, it’s a little more work, it’s a little more complexity, for sure. Right?
ANGELA: Yeah. I would say it’s more for the seasoned investor who knows that things can go wrong, and they’re prepared for things to go wrong. Because in those properties you always have to expect the unexpected.
JASON HARTMAN: Those are the properties for people who understand Murphy’s Law.
JASON HARTMAN: If anything can go wrong, it will go wrong. I always say, expect the best, but plan for the worst. And still, the properties are great deals. I’m very pleased with all of mine. But did any of them go as well as I expected? Eh. One of them did, maybe. But two more didn’t go as well as I thought they would. But they were still great deals. So there’s what you’re looking at there. But with the new properties, we’re back to a really simple type investment. And you know, Angela, when we started working with you like six years ago or so, you worked for a new home builder. That’s actually how I met you. You worked for I believe Beazer Homes, is that right?
ANGELA: Yeah, I did at the time, I worked for Beazer Homes.
JASON HARTMAN: And so, you had kind of a corporate job there. And we were doing all new properties, and the beauty of the new properties is simplicity, and availability of inventory. It’s not the same kind of marketing program for the new homes. And the simplicity is there. Some of these properties are basically rented up as soon as you get them. And you pretty much know what you’re getting into. You got a one year warranty, you’ve got a sort of no-surprises type of scenario, right? Talk about the process a little bit with a new property.
ANGELA: Well, the new property—that whole process, when you buy new construction, is very, very simplified, like you said. When someone’s interested in new construction, I always like to send over some photos of new construction, because the quality is amazing. They’re brand new walls with no flaws, and you have brand new carpeting, and brand new appliances. So, it’s really nice for the investor to see that. And then you know in addition, it’s a simpler contract. You don’t have 50 bank addendums that you have to fill out. So, you know—and then the builder knows that we’re going to be putting in offers, so they have inventory available, and you’re not competing for it. The other great thing that I like to tell everyone about new construction is, new construction is in prime locations. The builders, for their own sake of profit, only build in areas where there’s a need for housing. They’re prime locations. So that’s the other great thing about it, is we’re able to put an investor in a great location with a really simple, easy product and process.
JASON HARTMAN: And kind of review one of those deals with us, if you will. Amazingly, you’ve got builders that are selling properties that are about just right around the $100,000 mark, right? And about 1600 square feet?
ANGELA: Yeah, I just sold a property so an investor for 1630 square feet. The price of the property was $104,000. So it was $64 per square foot. We were able to have the property leased for the investor before he closed at $1150 a month.
JASON HARTMAN: Wow. And all of these new properties that our clients have purchased are already leased, right?
ANGELA: Yes. They have been already leased. And the other great thing that the sellers are doing is, they’re 100% rent-ready, so the investor doesn’t have to get the appliances installed, or getting any new blinds put in, or anything like that. They make sure that they’re ready to go for the investor.
JASON HARTMAN: Yeah, that’s great to hear, that’s great to hear. Well, what else should people know about the new properties? Do you want to talk about area, school district, convenience, how they look, rent-ready meaning they’ve got the window blinds, the appliances, all of that stuff, right?
ANGELA: Oh yeah. The neighborhood that these properties are in are in areas that—because the builder has several different communities in several different hundred blocks across the state. But for us, we like to make sure that they’re in areas that there is a strong rental base. So we work with the property management company, who is totally third party from us. And they say, this is the area that we have renters contacting us. This is where we need more rentals. From there, we get with the builder and find out what communities they have within this area that would work for our investors. Right now, Franklin Township’s hot. Warren Township’s hot. Lawrence Township’s hot. Franklin, Indiana is hot, because of its close proximity to Commons and Toyota, and Columbus, and to the army base that’s close to there. So, we’re making sure that we’re putting these homes in areas that make sense for the investors. Not just short term, but long term as well.
JASON HARTMAN: And we’ve doing business in a lot of those areas that you mentioned for like 6, 7 years now, right?
ANGELA: Right. And they’re just proven markets that time and time again, they rent out at a great rate. They rent out quickly, and the investors are very happy. I have some investors who come back to me and they’re like, I’ve had such great success. Put me in another property in this area. So, it’s working. And then I know you were talking about the finish of these homes. Well, just so you know, a lot of investors, when they think of new construction, I’m sure they think, well, if someone’s building new construction for investors, it probably looks like a track house. It’s not attractive. Some different things like that. We’ve worked with the builder to make sure that they’re very attractive elevations, that all of the elevations have some brick on them, that there are color fluctuations. We actually went into their office and picked different color palettes for the investors. They’ve been willing, and have done some different things for us, like put laminate flooring into some of the properties to make sure that it helps with each time the tenant turns over—so, tenant turnover, there’s less cost involved, because there’s laminate flooring and not carpeting needing to be taken out. They’ve made sure that they put good quality appliances in there. That it’s two-tone paint on the walls in some instances. Different things like that that make the properties unique, so it doesn’t look like there’s a ton of different properties that look exactly the same out in the market. But make them make sense for the investor, for the longevity of their investment.
JASON HARTMAN: Yeah, fantastic. What else would you like people to know about Indianapolis and the process? You’ve taken good care of our clients over the years, and we’ve had a very long relationship with you. You come out to every Meet the Masters event we have—and by the way, we’ve got another one coming up, Angela, so hope you’re gonna be there! It might be in Phoenix this time. We’re again a little late on getting the plans finalized for that, I hate to admit, but, we’ll announce it pretty soon. What else would you like people to know?
ANGELA: Well, a little bit about the market—Indiana was recently named #5 in the top 100 largest housing markets for highest rent increase. And part of that’s due to our employment gains, and our low housing availability. So, the rents in Indiana, year over year, are up 11.1%. Which is amazing. If you’re an investor right now in Indiana, it’s a great time to be an investor. Our unemployment rate is 7.9%, which is well below the national average, and it’s in a three-year low for us, so it just goes to show that our market is growing, and if you can get in on this market, at this time, you’re gonna have a great investment property for years to come. Because as more jobs come, there’s less inventory. Prices are only gonna go up. And right now rates are low, prices are low, and there’s a ton of renters out there.
JASON HARTMAN: And you know what, even if prices never go up, you still got a great cash flow vehicle, so that’s the thing to really understand, is that the cash flow, and the tax benefits, are so good, that you don’t need to invest for appreciation. If you get it, great, it’s icing on the cake. But the properties are just so solid, and it’s such a nicely performing market for us. That if appreciation comes, hey, great. But not required, by any means. Right?
ANGELA: You won’t see the huge appreciation rates in Indiana like you’ve heard about states like Florida and California in years past. We’re a very stable market, but it’s the fact that we’re such a stable market with great rental rates that makes us a very safe place for investors.
JASON HARTMAN: Right. There’s an old saying about that: the higher they fly, the harder they fall, right? That’s certainly true with markets like California and Florida and really the northeastern states too, are like that. A bunch of those areas up there—Boston had a terrible time. New York had a terrible time. If they catch it right they can do okay, they can do well, but boy it’s risky, and when it falls, it hurts really, really bad. So, definitely a great place to invest. Well, Angela, thanks for this update on the Indianapolis market! And if anybody is interested in investing there or talking to Angela, get in touch with your investment counselor through the website, www.jasonhartman.com, and we’ll get you in touch with her. And I know a lot of you listening are already Angela’s clients, so you already know how to reach her. So you can contact her directly in that case as well. Thanks again Angela, appreciate it.
ANNOUNCER: Have you listened to the Creating Wealth series? I mean from the beginning. If not, you can go ahead and get book one—that’s shows 1-20—in digital download. These are advanced strategies for wealth creation. For more information, go to www.jasonhartman.com.
ANNOUNCER: This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com, or email [email protected] Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, or business professional for any individualized advice. Opinions of guests are their own, and the host is acting on behalf of Platinum Properties Investor Network, Inc. exclusively.
Transcribed by David
The Jason Hartman Team
Episode: CW 268: Positive Equity & Evaluating Real Estate Investment Opportunities in Indianapolis Indiana
Guest: Jason Hartman
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