Jonathan Bender is a former NBA player turned serial entrepreneur, having founded The Jonathan Bender Foundation. He joins the podcast to tell us about his different businesses and their models. Bender also explains what got him interested in making money on his own through hard work, which required a different skill-set from sports. He describes how athletics can translate to power in business and how ordinary people can launch second careers.
Bender is one of the rare social entrepreneurs who makes money and does good at the same time. He explains this new practice and how it’s a win-win situation for all.
Find out more about Jonathan Bender at www.jonathanbender.com.
Visit the Jonathan Bender Foundation atwww.thejonathanbenderfoundation.org.
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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 your host, Jason Hartman, and this is episode number three hundred and forty-eight, and we have former NBA player Jonathan Bender who will be our guest today. But first we’ve got some stuff to discuss with Steve! How are you, Steve?
STEVE: Hey! I’m back and ready for more. We’ll see if the listeners are ready for more Steve, though.
JASON HARTMAN: Back from where? You mean back from not being on the show for several episodes?
STEVE: Yeah, several episodes is a lot, for me!
JASON HARTMAN: It is, I like having you on, because we can talk forever [LAUGHTER].
STEVE: Yeah, well, like I said. The listeners, whether they like it or not, remains to be seen.
JASON HARTMAN: Yeah, well, we promised we’d keep this intro a little bit short. So, what do you have on the agenda today?
STEVE: Well, there’s an article from USA Today—actually, they’re just picking this off from the National Association of Realtors—some projections for the real estate market for next year. And I will add the asterisk, and I’m sure you would have done this anyway, that there are like 400 different metros in the United States, so these blanket articles are—you have to take them with a grain of salt, because this real estate situation that we’re in, it’s local now.
JASON HARTMAN: So, are you actually coming on my show and saying that there’s no such thing as a national housing market?
STEVE: That wouldn’t be the first time that somebody said that on your show.
JASON HARTMAN: [LAUGHTER] That’s for sure. Yes folks, if you are a new listener, understand that there are about 400 local markets in the United States, in such a large and diverse country. So, all real estate is local. But, there also has to be a national picture, just so you can have a sound bite. So, what does the National Association of Realtors say? They’ve had some pretty bad predictions on the last bubble. They thought it would go on forever. But heck, what they’re the realtors, what else are they going to do but promote their deal? Just like Wall Street does, right?
STEVE: Exactly. They’re the realtors. They’re gonna predict rosy pictures as much as they can. I was telling a client the other day, we were talking about contracts. And we’re going to talk about this today. But I was telling them, hey look, it’s no surprise that if the seller provides the purchase contract, then guess who it favors? Oh, the seller! And if it’s the buyer, it’s the buyer. Well, almost all contracts are provided now by the state board of realtors. And guess who they favor! Oh! So, not a surprise. So, they always want a steady real estate market, and they’re projecting that the median price is going to rise 6% next year, down from 11 this year. And basically, we’re going to continue marching forward. Prices—the volume is going to hold steady. But the prices are going to go up. Just because more buyers are entering the market, but more inventory isn’t necessarily entering the market.
JASON HARTMAN: I sort of wonder if that prediction—I mean, it’s a national prediction, so who the heck knows. I can’t even discuss the national market. I don’t make any effort to predict the national market. I just do it in our local markets, the ones we like especially. But I wonder if that’s almost too conservative! I’m actually a little more bullish than that! And these predictions, first of all—I mean, the big disclaimer here has to be that when you have governmental intervention, or pseudo-governmental intervention in a market, you can’t really predict it well at all. Because it all depends on what the Fed does. What the interest rates do. If they loosen the money supply, otherwise known as quantitative easing—or at least that’s part of it—and they keep rates low, then heck, I’m even more bullish than the National Association of Realtors. But if they tighten and taper and raise rates, then it could be worse than that. I mean, how do you make a prediction like that? It’s just almost impossible to tell.
But the nice thing about our philosophy is, who really cares? Because it doesn’t say what renters are going to do next year. Everybody needs a place to live, and the totally simple equation, Steve, as we both know, is: if the population in a given market is increasing or stable, and you add that—or, you take that into account along with the supply of housing units—you can pretty much tell what’s going to happen, either with rents or sales or both. So, everybody needs a place to live. And we invest for cash flow, so, we don’t really stress out about what’s going to happen with appreciation or depreciation. I mean, during the bad times, we used to always talk about how if the property value dropped by half—if it was cut in half, literally, if you can just maintain the same income and expense ratio, you’re going to get a return on investment, cash on cash potentially—I’m just giving an example here—of potentially 10 to 13 to even 17, 18% annually. And that’s before you get any tax benefits. So, who cares?
STEVE: Well, the chief economist for the National Association of Realtors—this guy’s name is Lawrence Yun—he will—
JASON HARTMAN: We had Lawrence Yun on the show before. And someone wrote me, and this was a couple years ago—we should get him back on. We should just have him on every once in a while to hear what he says. But, you know, some of their stuff is good. It’s kind of good and bad, you’ve just gotta understand where they’re coming from. But understand this too: we’re not realtors, by the way. Just so people understand this. Realtors—that word, with a capital ‘R,’ is actually a trademarked term of the National Association of Realtors. And I was a realtor for many years when I was in traditional real estate, and that means you have to join the trade association, the National Association of Realtors. It doesn’t have anything to do with having a real estate license, specifically. So, while you and I Steve, both have a real estate license, we are not realtors, because we didn’t join the National Association of Realtors. Now, for many years, I was a realtor. I’m not anymore, because we don’t do local real estate. I don’t feel any big need to be a realtor, where you join the local MLS, and you go to the board meetings, and you have donuts, and you have a lockbox key and all of that kind of stuff. But we have real estate licenses. So, there are about—somewhere, this is very approximate—there are about 1.2 million realtors in the United States. And I bet—and this is just a guess, but, you know, I used to know the number—I bet there’s about 3 and a half million real estate licensees. So, understand those are different things.
STEVE: Yeah. Well, this economist, Lawrence—how did you pronounce his name?
JASON HARTMAN: (Yoon).
STEVE: Yun? Okay. He says—and I tend to agree with him a little bit on this—that the lack of income growth and higher home prices and rising interest rates, they’re going to weigh in on sales. That’s what keeps things from taking off, because the inventory shortage—he goes on to elaborate that we need more building to deal with this inventory shortage. And so, building will happen regionally. He means a few markets where the economy is doing really well, and building is likely to take off. Where others that aren’t so great, or maybe they’re just medium, the builders aren’t going to jump in yet and expand the inventory levels. If that were to happen, then you’d see prices take off a little bit more than he’s projecting.
JASON HARTMAN: Right, right. Well, you know what’s interesting about that—that again is sort of the classical economist view that doesn’t take into account the whole picture. Because—what did you say at the beginning of that? You said, we need to see higher incomes for the market to take off, right?
STEVE: Yes.
JASON HARTMAN: But you know what that doesn’t account for, Steve, which is dramatically true—and this is why a lot of forecasters and economists, they just get it wrong all the time. Because what it doesn’t account for—and why economics is so difficult—is because it has to predict the decisions of billions of people! I mean, 7 billion people in the world, and layer on top of that a bunch of institutions, which are just made up of people, of course. And make decisions differently. But what it doesn’t take into account is the fact that people will accept a lower standard of living because they’re forced to. So, you can say well, for housing prices to go up, we need to see incomes go up so people can afford to buy, to pay more for a house—no, not necessarily. Because the housing prices could go up, and people all along on the ladder are dropping down the ladder in standard of living. And this is how Europe is, and how I get frustrated talking with those socialist morons out there—
STEVE: That’s so mean, Jason.
JASON HARTMAN: Sorry about that.
STEVE: You libertarian hack.
JASON HARTMAN: Yeah, okay. Socialist idiots, is that better?
STEVE: Yeah [LAUGHTER].
JASON HARTMAN: How about socialist control freaks? Because they want to control—
STEVE: They certainly do. They’re controlling my healthcare right now.
JASON HARTMAN: And see how well that’s working!
STEVE: Yeah, it’s been rolled out like a gem.
JASON HARTMAN: Just wait till they actually get to manage the healthcare! They can’t even manage the website for the healthcare, much less the healthcare system!
STEVE: Well, our fearless leader was on TV yesterday backpedaling, and he was talking about the website, saying, this is very complicated, the website needs to compare prices of various different plans, and that’s not easy to do. And I’m thinking, every website in the universe compares prices of different products!
JASON HARTMAN: Unbelievable, you know. I mean, the three kids in San Francisco who were like 20 years old made a better website in a weekend, and they offered to give it to the government for free. And the government said no, we’re not going to take it.
STEVE: Jeez.
JASON HARTMAN: It’s absurd. I mean, you heard that story, right?
STEVE: Yeah, I did.
JASON HARTMAN: It’s just unbelievable.
STEVE: It’s a complete train wreck.
JASON HARTMAN: Well, but anyway—this is how I get frustrated talking with these socialists. Because what they don’t understand, if you look at Europe—people have just accepted a lower standard of living! In every European nation, basically—there’s a few exceptions here and there, because all real estate is local—but, the standard of living is much lower! So—prices can rise, Steve. On housing. And people will just accept—they’ll be forced to accept less house. If they can’t get as good a place to buy or rent, they just have to accept less. Tough! That’s how it goes! That’s what inflation does to people!
STEVE: That’s what socialism does! It just widens the gap between the haves and the have-nots.
JASON HARTMAN: Yeah, it lowers the standard of living. Absolutely. Yeah, very interesting. Okay, what else you got?
STEVE: We’ve got a couple of properties to talk about, but first, I wanted to get briefly into something that everybody who’s listening and thinking about acquiring properties from a distance can do to make that experience a little bit easier, and understand what they need to do from the inspection standpoint. And I know it’s a no-brainer for me to sit here and tell you, hey, get an inspection if you’re buying a property from afar. You’d want to get one from close, anyways.
JASON HARTMAN: Of course! When I was a realtor, selling local real estate in Irvine and Newport Beach, California, I mean, everybody got an inspection. I remember—it’s interesting. Way back when, and I hate to even admit how old I am, but I remember when people didn’t do home inspections. I remember when I first got into real estate, the contract was a one-page contract. Now it’s much longer, of course. And people didn’t do home inspections. I remember working at Century 21 in Anaheim, California, my first real estate office, where a guy came in—an inspector—to talk about inspections. And we were all like, wow, this is a unique idea! And they didn’t even, back in the past, they didn’t even have a disclosure statement! Nowadays, if you buy a resell property, there’s a disclosure statement that’s mandatory in I think every state now. But I remember when it came into California there used to not be a disclosure statement. And the companies—some of them started doing their own, because they kind of thought, hey, this is a good idea. And there was a case called Strosberg, or something like that—I can’t remember the other party in the case—that set the precedent for disclosure, because I think a house slipped down a hill, and the seller knew and didn’t disclose it to the buyer. So…
STEVE: Yeah, and that’s what everyone, that’s what he means, is that—
JASON HARTMAN: Eden Strosberger, I think was the name—
STEVE: Yeah, you have to—the seller has to disclose what they know, if anything is wrong.
JASON HARTMAN: Not just what they know, but what they reasonably should know. So, you can’t claim ignorance if there’s a giant hole in the wall that’s three feet wide, and you covered it with a painting. You reasonably should know that hole is there, right?
STEVE: Yeah, there’s a painting there, there’s no hole….
JASON HARTMAN: Exactly. So, let’s talk about inspections. This is kind of an ongoing issue, and one of the things I think that’s really important for our clients is to—you’ve got to notice in your contract the timelines for what you’re required to do, and when you’re required to object and notify the seller of the property when you’re buying it about items you expect to be corrected, etcetera. So Steve, let’s drill down on that.
STEVE: Yeah, so, first of all: always get an inspection. A third party inspector who is licensed and insured and has all the proper credentials, okay? Because he has to adhere to certain standards. So, you’ve got to get that. If the seller of the property says, oh, you don’t need an inspection, and they try to sweet talk you through that, or bully you and say you don’t need one, then run the other way. None of the property providers in our network would ever do that. If they did, they’d get a call from me immediately, and I’d smack them around and say, okay, you’re not going to do that again. And if they did, they wouldn’t be a provider anymore.
So, you need to get that inspection. And like Jason is saying, in these purchase agreements—and it varies state by state—there will be a section that says buyer has x amount of days—it’s usually a blank line that can be written in—to complete and independent and third party home inspection. So, you’ve gotta be Johnny-on-the-spot with this. Because if you don’t complete it, and notify the seller of any concerns that you have as a result of the home inspection, within that deadline, technically that has passed. I know in California, the inspection contingency has to be removed in writing. The buyer and the seller have to agree, and it has to be removed. But in a lot of these “landlord friendly” states, where the government isn’t as active, if the deadline passes, then that’s that.
So if you later go read your inspection report and it says that oh, this house was built upon an old nuclear waste site, okay, or something ridiculous that makes you not want to close on a property, and you’re past that deadline, technically the seller can retain your earnest money deposit, and the contract is cancelled and you lose that money. So, what’s the moral of the story? There are a couple of things to consider here. The providers in our network want to do business with you. They want to do business with us. So they’re not going to most of the time create controversial situations. If they feel like you acted in good faith, and you accidentally went past the deadline by a day or whatever, they’re not going to be jerks and hold your earnest money back from it even though contractually they could do so.
JASON HARTMAN: Well, Steve, be careful with that. Because you can’t say always that that’ll be true, okay?
STEVE: That’s what I’m saying—
JASON HARTMAN: We’re just saying, that’s the general vibe. And look folks, this is one of the reasons that you work with us as clients: because we have leverage. We give these providers our local market specialists, or LMS’s, a lot of business! And that’s what really, really makes the deal work so well for you, okay? Is that we have a lot of leverage there, because of our volume. We’re a volume client. So, you get the benefit of our volume. And they should be a little more understanding and a little more reasonable, and a little more helpful with you, than someone who’s just a one-off client, a one-off buyer.
STEVE: Yes, and they usually are. However, what I’m trying to say is, don’t put yourself in the position where you have to rely on somebody else’s generosity. Protect yourself with the contract. So, when you sign on the dotted line, make sure that you’re contacting an inspector and that you’re getting that inspection done, and you’re notifying the seller of concerns you have within that 7 or 10 or 15 day period, whatever it is. And if it looks like maybe you’re calling inspectors and none of them can get in the property in time, or maybe it’s on—let’s say you have a 10-day deadline, and they can’t get in until day 9, and you know it’s going to take them a little bit longer to get the report to you. You’ve gotta be proactive and tell the seller, hey, look. I’m making a good faith effort to contact inspectors. It doesn’t look like one can get out there in time. I need you to do an addendum and extend this by 5 days.
So that you’re still within the contract, and you don’t bump up against this thing and cause a problem for yourself. So, that’s how you can protect yourself from buying a piece of junk from afar. Then there’s the matter of, what does the inspection report actually say? Alright? These inspectors, some of them have different opinions about what needs to be done to a property. We want to get inspectors who understand, this is a rental property. It’s not going to do into some parade of homes, or glamorous home show. What we’re concerned about is good roof, good plumbing, good electrical, good foundation. We want to make sure the HVAC is all working and has a good lifespan left on it. We want to make sure there are not any other issues that are going to jeopardize the structural integrity of the property or the safety of the tenants. And sometimes they make recommendations that are debatable.
And just like in the inspection deadline, most of the time, our local market specialists are pretty good about fixing those things. I had one the other day that had a few things on there that were not a big deal. The client was all stressed out—do you think they’ll fix these? And I looked at it and I told him, yeah, these aren’t a big deal. And we sent them over, and they fixed them. I had one a couple months ago where the inspector, he was not kind about the roof on this property. And usually a roof, if it needs to be full replaced—that could be a deal breaker. Those are expensive. And sometimes, local market specialists might be losing a lot of money if they do that, and they’ve got to really sharpen their pencils and look at what they need to do here.
But we raised the concern about the roof, and they said yeah, we’ll tear it off and put a new one on there. The client was very happy that they got that inspection, they have a brand new roof now! Then there are other things. Talk to your investment counselor. Send them the report, talk to other people, get some advice, because some of these things, they’re just not necessary. In some states, if inspectors find something wrong with a property, there are things that they have to put in there. Into the report. And it has to be worded a certain way. I like to joke that if an inspector found an oil stain on the driveway, he would put in the report that there’s evidence of environmental contamination.
JASON HARTMAN: [LAUGHTER] It’s an EPA superfund toxic waste cleanup site.
STEVE: Exactly right. So, the client’s freaking out—I’ve got an EPA superfund issue on my property! And so, talk to us. Sometimes the way they have to put it…it’s different. I’ve been in inspections with inspectors. One time there was one looking at a furnace, and we couldn’t tell when the furnace was last serviced. But it was a relatively new looking furnace, and I was confident that if you service this thing it’s got a good span of life, and it’s a good furnace. But what does he have to put in the inspection report? He has to write: unable to determine when furnace was last serviced. It could be very old. Contact a licensed technician. Right? So you’re going, oh no, this furnace is going to kick the buck tomorrow! Right? You’re envisioning this old, rickety cast-iron thing that’s about to explode. But hearing his comments, he’s going, oh, this looks pretty new though, I don’t think it’s a problem. He can’t put that in the report.
So, you’ve really gotta take this stuff and try to understand what they’re really saying. Talk to your investment counselor. Talk to the seller, the seller may be able to verify that oh no, we fired it up, and we tested it and it works good; if they can provide evidence of that, you’ve probably got a good furnace there. So those are just a few general points of advice I wanted to give everybody. When it pertains to inspections reports, stick to the deadline, because if you need to bail out, you want to have the contract, not just the seller’s kindness on your side. And then pay attention to those items that come through. Some of them are more important than others. And then that way, if you’re in California, or you’re in New York and you’re buying a property in Alabama, you know, okay. A qualified person went through this property. I had a client a few months ago that wanted to fly out and look at the property himself. And I said, oh, are you a contractor? No, he wasn’t even close to it. He was a sales manager for some pharmaceutical company. And I said, just get an inspector! What are you going to do? You’re going to go out there and look at it, and maybe you feel warm and fuzzy? But it’s like telling the heart surgeon, hey, wake me up halfway through, I want to see how it’s going.
JASON HARTMAN: Exactly. Well, what I do want to say with that, Steve, is, we always encourage our clients to actually go to the properties. Very few of them do, honestly. But they usually—sometimes they go after they buy, you know. And again, I have properties that I’ve never seen, tenants I’ve never met. Of course, I’m almost—I really never meet my tenants. And that’s what happens. But we just, for a point of—it’s just, I will always encourage a client to go to a property. I think it’s always a good idea. And almost always they’re extremely impressed, and they can go and meet the local market specialist, and fly out there, and many times they do it after the fact. And they love it! It’s great. They get a tour, and they can go check it out. But again, it’s not for technical issues. What you’re saying is, it’s not for technical issues of doing an inspection report. It does not replace an inspection.
STEVE: It doesn’t. It doesn’t, you’re—the inspector is a qualified professional. Now, if you want to get a feel for the neighborhood, and meet the team, shake hands, get a feel for how the property management operates, totally get that, I definitely recommend visiting the market. But if you’re not a contractor, you don’t really know what you’re doing on the rehab front, and that’s the only reason you want to go out, you’re wasting some time and some money. Go out to meet the team, that’s a better option.
JASON HARTMAN: Okay, good! Good advice. You want to talk about properties now?
STEVE: Yeah! We’ve got a couple of properties to look at. I’ve got one in your favorite market, Bill Clinton’s hometown: Little Rock, Arkansas.
JASON HARTMAN: There you go, Slick Willy.
STEVE: Slick Willy. This property, it’s a little older, built in 1967. But I would put it up there in the tier one range, because we’re getting good rents on it. It’s actually, I’ll check the notes just to verify—they’re not saying, but the projected rent is $1095 a month, which is a good amount of rent, and it’s on a $99,000 property, so you’ve got over a 1% rent-to-value ratio.
JASON HARTMAN: And you know what’s funny, Steve—I was going to say, when you said we’re not looking for really nice properties, we just want to make sure the roof is good, the property is safe, and the HVAC systems, and all the other systems work well—and I was going to say, oh, you mean we shouldn’t expect granite countertops? Well, this one has granite countertops [LAUGHTER].
STEVE: Yes [LAUGHTER]. Which I’m starting to see more and more in some of these tier one properties, by the way.
JASON HARTMAN: Yeah, I agree. And that’s just another example of how in some ways, the standard of living is increasing so much. Because if you think about how it used to be in the past, I mean, in so many ways, life is so much better now. Who in the 80s had granite countertops? Except, those were in really nice homes. I should really say the 70s, more accurately. Back then it was like Formica! It was gross! So, there are a lot of things that are quite a bit better nowadays.
STEVE: It’s easier—granite’s not as outrageously expensive as it used to be.
JASON HARTMAN: And the reason for that is, number one there’s more demand. But number two is that our processes have improved so much. Our mining and manufacturing and distribution processes are so much more advanced, and that’s one of the things that I think really is a huge edge that the United States has over so many other countries. I’ll just use the Europe example one more time. You go to Europe, and it’s just their systems are so immature compared to ours, you know? In terms of their commerce, you go to stores, you can’t find what you want, there’s so little selection compared to our stores in the US. And the standard of living is just a lot higher here.
STEVE: It is, and we’ve decided that we want to have a lower standard of living and be socialists.
JASON HARTMAN: Hey listen, I’ll be the first to admit, we are going in the completely wrong direction. But, we’ve got a long way to fall.
STEVE: Yes, we do. Right, that’s comforting.
JASON HARTMAN: Before it’s time to bail.
STEVE: Yeah, well, when you have a long way to fall, you splat harder, I guess.
JASON HARTMAN: Maybe. Well, anyway, go ahead about the properties.
STEVE: Well, Little Rock property—we have a projected cash on cash return of 13%, with a projected 43% total return on investment. So—and I’ll backpedal a little bit, Jason. What’s great, I went through the notes, and this one actually is rented out at $1100 a month right now. They’ve got a lease, and a tenant is in there paying rent as we speak.
JASON HARTMAN: Good! Good stuff. Okay, so, the overall return on investment projected at 43%. Actually that’s not much of a projection, because it is rented. But of course, what could knock that projection off is if there would be some unexpected expense. Say the tenant is there, it’s rented, they keep performing on the lease, which is all well and good. But say there’s some unexpected expense that reduced your ROI. So like I always say, even if it’s half of 43% annually, what’s that, 21½%? Still pretty good, right?
STEVE: Even if it only goes half as well. I’ve heard that before.
JASON HARTMAN: Yeah. And the projected cash on cash return is 13% annually, okay, so cash on cash means before any other benefits. Just money invested versus money received in that year. And so, 13% cash on cash projection, and 43% overall. That is a fantastic deal. Let’s talk about the other one. Now this property, this one in Birmingham—you want to talk about the fourplex, right?
STEVE: This is a fourplex, a brick fourplex in Birmingham, Alabama.
JASON HARTMAN: And by the way, sometimes, although this shouldn’t really influence your decision as an empirical and analytical investor, sometimes the home really looks good and looks nice. Neither of these look that great [LAUGHTER]. I’m just going to be honest with you. Because you’re going to be listening to this, you’re going to go to www.jasonhartman.com, and you’re going to look at these. And this one in Birmingham, I even wondered if they needed an architect. It’s a square!
STEVE: Yeah, it’s a box.
JASON HARTMAN: It’s a square box, yep. But some of the square boxes make a lot of money, and this one looks pretty good that way.
STEVE: Yeah, it certainly does. And it’s fully, it’s 100% occupied, managed, totally operational. The sales price on it is $119,000. Our monthly gross rent is $1800 every month. So, if you were to get financing on this—which talk to your investment counselor. Fourplexes, they’re a little bit harder to finance, because it’s tough to find comps. There’s not a ton of them around to find comparable sales for the appraiser. But talk to your investment counselor, there’s probably some options we can go through. But if you were to buy this one cash, you’d have a capitalization rate of 11.1% So it’s good. That’s a great cap rate. And if you were to get it financed, and I’m assuming 4.75% interest with 75% into the deal, so you’re going 25% down—your cash on cash is 21% on this deal.
JASON HARTMAN: Wow, fantastic. And the overall return on investment projected at 34% annually. So, again. All of this stuff is projected. It doesn’t always happen. Assume it’s going to be worse. But even if it’s worse, you’re still—I mean, look at your other choices out there! There is no other alternative. That’s what—the Wall Street folks invented that acronym, it’s called TINA. I mean, what’s going to be better? Income property is the most historically proven asset class for the middle class investor to create a lot of great wealth. So, phenomenal. Two southern properties, and the south is where the action is. The right to work states, where they’re business friendly, and they’re welcoming businesses, where places like the Socialist Republic of California are pushing it out. And they keep doing it, too!
STEVE: They keep doing it! They don’t need your business. Get out!
JASON HARTMAN: Absolutely. Alright, so, can we wrap up and get on with our guest now, Steve?
STEVE: I think we can. I give you permission to wrap up.
JASON HARTMAN: Alright, well, thank you Steve, for those contributions and those thoughts there. And everyone, get out there, get some investment properties, and we want to wish you happy investing. We’ve got a lot of great shows coming up. Just a couple things before we get to our guest today. Tons of great shows. You’ve gotta hear my interview with Bill Ayers. Wow. That one was phenomenal. And I’m not a Bill Ayers fan, okay? But he gave a really good interview, so that’ll be coming up. Harry Dent will be coming up. A whole bunch of really great guests. And we’ve got the Meet the Masters event that I’m sure will sell out. The price for that goes up every Friday, so get your tickets and register early. Many of you have so far.
That’s at www.jasonhartman.com, and that’s our event in January at the Hyatt Regency Irvine. Also I’ve got a few—not many—of those Meet the Masters Home Study Courses left—that’s the physical product—for half the price of the digital product. I know, it’s backwards. But I do not want these things in my storage unit. I want to get them out the door. It’s a closeout deal. $247, and go to www.jasonhartman.com and click on the store, or the products section, and you’ll find that. That’s a tremendous deal. A lot of you have taken advantage of that. And it will grace your bookshelf for many years to come. So, and when people walk in and they see your bookshelf, they will constantly comment on how intelligent you are, and what a prudent, sophisticated investor you are, because you have my stuff there. So, you can’t beat that! [LAGUHTER].
STEVE: You’ll be the most interesting man in the world.
JASON HARTMAN: Yeah, just like the Dos Equis beer guy, right? He’s great. Okay, good stuff! Well, let’s go to our guest, Jonathan Bender, and hear about his business and NBA adventures.
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JASON HARTMAN: It’s my pleasure to welcome Jonathan Bender to the show. You may have heard his name. He’s a former NBA player-turned-serial entrepreneur, and founder of the Jonathan Bender Foundation. And he comes to us from Houston today. Jonathan, welcome, how are you?
JONATHAN BENDER: I’m great, thanks for having me.
JASON HARTMAN: Well, good. The pleasure is ours. So, tell us a little bit about—first, I want to hear about your entrepreneurship and your transition to it, but first we’ve gotta hear about your career in the NBA a little bit. Give us a little background, if you would.
JONATHAN BENDER: Okay. I was born in Picayune, Mississippi, raised up there, and I was introduced to the game. My brother was a pro boxer, and he had the basketball bug, so I kind of got it from him at about age 12. And has a big growth spurt about 14—went from about 6’1, and when I was 15 went up to about 6’9. I had the skills of a guard, but was very tall, and entered the NBA at 17.
JASON HARTMAN: Fantastic. And you played for 8 years, is that correct?
JONATHAN BENDER: Yes, I played 7 with Indiana, and one with New York.
JASON HARTMAN: And why did you get out of the game?
JONATHAN BENDER: Well, in 2006 I started having some knee problems, and I actually had to have surgery, and they took all my cartilage out, so it was bone on bone, which was very painful. So I walked away from the game in 2006. And went back in after developing an apparatus that could help me, and in 2010 I played one year with the Knicks. And going back in there after four years, I was already into entrepreneurship, it just felt—every time you step into entrepreneurship, any job, it doesn’t matter how much it pays, kind of feels like a step backwards. So, I wanted to get back on the right track to fulfill my destiny long term.
JASON HARTMAN: So when did you first think of starting your own business? When did you really get that entrepreneurial spark?
JONATHAN BENDER: It was around 2005, and I was—I’m always, I’m the guy that always wants to figure out who’s pulling the strings, who’s the puppet master, right? So, once I started understanding that I’m a product, part of the NBA, I’m just one product. And things that I was not able to do as far as pass down processes and information to my family—I kind of felt like I was caged. You know, I was handed a lot of money, but still golden handcuffs. And I didn’t really know a lot. So, my quest was to go out and—I feel the only way that you can accumulate real wealth and knowledge is by building a business, and understanding a process. And being able to make money instead of sitting back and getting paid. I think there’s a difference. So, I researched our owners, and saw that they were into commercial real estate, and I started doing some entrepreneur ventures myself, and just trying to figure out where my talents were. So, kind of went from there.
JASON HARTMAN: Do you care to share your compensation while you were playing in the NBA? The reason I’m asking that is because a lot of entrepreneurs, they’re not blessed with starting with a lot of seed capital. So I kind of want to get a little bit of a framework, if you will, on what you had to start out with as you made that transition.
JONATHAN BENDER: Well, you know, I had my contract, my normal contract that I signed with the Pacers. And outside leaving the NBA I had some of that. But, starting a business—the worst thing you can start it with is a lot of money when you don’t know anything.
JASON HARTMAN: In a way, you—by the way, I’m so glad you said that, Jonathan. Because in a way, you are absolutely right. Most entrepreneurs feel like they’re always undercapitalized. If they only had more money, if they could only get some funding from an outside source, or have money to throw at the business. But that causes a real lack of discipline, doesn’t it?
JONATHAN BENDER: Absolutely, it’s the total opposite. As an NBA player, I definitely thought that I could just throw money at a situation and win every time. But when you’re going into business, it’s about hard work and dedication. And if you have a service or a product and it’s worthwhile, money will come running towards you. You won’t have to go looking for money if you have a good idea and you’re [unintelligible] and you’re really doing it right. I threw a lot of money at a lot of things and lost every single time. And this is the least amount of money I’ve invested, but more time and dedication, and money came looking for me.
JASON HARTMAN: Yeah, that’s a great thing. I think that’s a really good metaphor, that you’re mentioning, for government. Government tends to just throw money at things, and it just never works out.
JONATHAN BENDER: Right.
JASON HARTMAN: If someone was actually thinking about the result of what we’re doing here, they might serve the public a lot better, right?
JONATHAN BENDER: Right. And I definitely don’t have a money-printing machine either. So, I guess that’s a lot different. But you make a lot of sense there.
JASON HARTMAN: Yeah, you don’t have Ben Bernanke printing a lot of fake money—
JONATHAN BENDER: Absolutely.
JASON HARTMAN: Well, tell us about your different businesses, and the different business models associated with them.
JONATHAN BENDER: Right now we have a product that I actually developed myself. Took me about six years of just research, and we have researched that down to the joint pain market, and we just entered the joint pain market with that product, and we’re looking to license and to, you know, sell them out to retail and online. So that’s a product that is out right now, and a small business of mine that’s out. I’m doing some things on the nonprofit side, and I find myself doing a lot of partnering as well, in the oil fracking industry. And anywhere where, you know, I feel like there is money to be made, and there is a passion, I feel like I can give 100%. That’s what I go and I look for.
JASON HARTMAN: So how many businesses total?
JONATHAN BENDER: Right now I have a couple partnerships, so I would say, two full-fledged businesses and a couple partnerships.
JASON HARTMAN: Great, very interesting to hear about those businesses and business models. How does athletics—you know, your experience as an athlete—translate into business success?
JONATHAN BENDER: I think you can use some of the things that you’re taught in sports. Like I would say consistency. I mean, you have to have consistency to get better at a particular sport, especially basketball. And you have to have consistency at whatever you’re doing. If you’re creating a service or a business, you have to have consistency, and make sure you’re working at it every day. And I also study it. You know, we watch film in basketball, so making sure that you find, discover someone that you want to be like, that’s doing what you’re looking at doing. And study them, and go out and try to mimic the things that they’ve done. And also making sure that you work hard, and you have the dedication, and not be a quitter. You have to definitely keep it moving, and keep going, no matter if you make mistakes.
JASON HARTMAN: Yeah, I couldn’t agree more. There’s a quote I like by Bruce Lee, and it goes something like, I’m not afraid of the man who’s practiced a thousand kicks. I’m afraid of the man who’s practices one kick a thousand times.
JONATHAN BENDER: Right, absolutely.
JASON HARTMAN: And that really speaks of consistency, doesn’t it? You know, with athletics, I also assume, Jonathan, that specialization would be another key, right? Really having sort of a narrow focus, and being really good at a few things, rather than sort of okay at everything?
JONATHAN BENDER: Yeah, you know, trying to be a jack of all trades and master of none, I think that’s a very dangerous way to go, and that’s sort of the direction I went in, trying to do all these different things, because you have money, feel like you can do all these different things, but you don’t really don’t understand none of them, you just throw money at a lot of stuff. So just narrowing down, something like real estate. Just narrowing down in real estate, and I did a bunch of properties in the New Orleans area after the hurricane, but understanding how that system works, and failing a bunch of times to learn, but now I understand how to create revenue out of a torn down dilapidated property, and the same thing goes for this product, creating a product from scratch. You have to go through it and fail over and over, but you have to have a real concentrated target, you know, at what you’re doing. And concentrate on that, and don’t move until it’s successful. Just stay there. And we have the tendency to jump around at times.
JASON HARTMAN: Yeah, certainly. We work with a lot of investors at one of my companies, and they buy real estate all over the country, and something bad is bound to happen in every deal, right. And some of them it’s just such a shame, because they say, okay, this real estate thing, it’s not for me. Yet millions and millions of people—probably tens of millions of people—have created real wealth with real estate. And they get discouraged at the slightest problem—
JONATHAN BENDER: It’s not a slap on the wrist type of thing though, with that. I mean, you can get punched in the face. It could be a mistake where you get punched in the face! You could take that type of repercussion from a real estate mistake. So…
JASON HARTMAN: Yeah, you definitely could. But you gotta pick yourself up and get back in the game, right?
JONATHAN BENDER: Absolutely. Definitely gotta learn from your mistakes.
JASON HARTMAN: So, how does one develop that persistence? I mean, with athletics you have a coach there yelling at you, probably. And you have a lot of incentive, because the stakes are so high. I mean, you can make a fortune and then be famous, and be at the top of your game. Any advice on persistence, and getting up when one falls down?
JONATHAN BENDER: It’s the type of person. I think some people are just wired with it, and others have to hear it, and it had to be engrained in their brain so much. Like me, I think it’s just wired in me, the fact that I want to finish. I create it in my mind, the attitude that whatever I’m going to do, I’m going to finish, you know? And I have to finish. I got addicted to finishing. So if I fail, I have to learn and see what happened and get back up and finish. So if I finish, at least I went through the whole process, and I understand what it takes to do a certain thing, or to complete a certain task. So, that’s one way to definitely think about it.
JASON HARTMAN: Yeah, I think that’s a great, that’s great advice. You know, Jonathan, it’s funny, because my mother used to always say that when I was a kid, and how when we’re kids—I don’t know if you have kids. But kids give up so easily on stuff. They just have no endurance whatsoever most of the time. And they get bored real fast, and things like that. And my mother would always say, Jason, finish the job. You gotta finish the job. So, exactly, exactly what you’re saying. That might have made me an obsessive finisher [LAUGHTER].
JONATHAN BENDER: And you have to have some determination. You have to have a little grit. And you have to be able to fall on your head over and over, and not say okay, I’m hurt, I’m not getting up anymore. I mean, you have to really learn from what you’re doing. And go and try again, like you said before.
JASON HARTMAN: Do you think that hardship is actually good for people, in that way? It toughens them?
JONATHAN BENDER: Absolutely. I think in some instances. It’s one situation where you may have hardships, and everybody around that person is having hardships, and they can’t really see an example of the light. That’s one example of hardship that I don’t think is healthy. But if you have—if you’re exposed to something, or you understand the limits on where you can go, and you’re going through hardships, at least you can see the light, and you know that all it takes is you. It’s on your shoulders to create an idea, and that’s all you need. To work with an idea and move forward with it.
JASON HARTMAN: Yeah, absolutely. Well, speaking of ideas, tell us about the product you created, the research you did, and what it is, and how it works, and what’s unique about it.
JONATHAN BENDER: Okay, so, I had a bone on bone situation, where the doctors went in and took all my cartilage out, so I had a bone on bone situation, so every time I walked it felt like someone was stabbing me with a small knife, right. So the only way to unload that is to straighten the quad and the glut muscles. And to do that, some of the normal exercises were real painful. So, I wanted to develop something that could unload my knee, and really engage my muscles. So I went out and watched how people walked, and how they moved, and their body motion, and I just imagined a band going down the back of their legs, and being able to do eccentric and concentric movements. So, I went to CVS, put a little small contraption together with some ankle braces and bands, and a weight belt from Wal-Mart, and came up with a contraption that looked like crap, but it worked. And it definitely worked for my knee, and basically what it does, is it unloads the lower extremity—the knee, the hip, and the lower back—and it places all the emphasis on the quads. It redirects the pressure to the quad and the glut muscle, so you get a rehab motion, sort of, just by walking.
JASON HARTMAN: So is it a brace? I mean, I picture that as a brace of some sort…
JONATHAN BENDER: It’s an actual apparatus that you strap on, so it’s actually a weight belt, and it has—it’s actually a waist belt, and you have bands that run down from the back of the waist belt to a pair of ankle sleeves that you put on your feet. So, it’s almost like putting an extra hamstring on, so to say. And by doing that, you unload the knee, and you also unload the hips, but when you’re walking [unintelligible] gets resistance, so you’re doing eccentric and concentric movements. And definitely engaging your core the full time too, so, it takes pressure off your lower back. So, I’ve learned about it. I’m not an expert, but I’ve learned all that stuff over the past years of just trying it on different people, and now we’re in stores, and we’re getting a lot of fantastic stories from people.
JASON HARTMAN: That’s great, that’s great. And, how are you selling the product?
JONATHAN BENDER: We’re in—we just partnered with Relax The Back in the Houston area. So, they’re selling very well. It’s climbing up the charts as one of the top selling products, and we’re looking to be nationwide with them very soon. And we’re talking to other retailers here as well.
JASON HARTMAN: What’s the price of this product?
JONATHAN BENDER: It’s 129. And it’s definitely a great investment for someone who’s thinking about having a hip replacement or a knee replacement. 130 bucks invested to save thousands of dollars, it’s definitely worth it.
JASON HARTMAN: So you’re saying they can do that in lieu maybe of a hip or knee replacement?
JONATHAN BENDER: Yes.
JASON HARTMAN: Oh, oh.
JONATHAN BENDER: Yeah, we’ve had several instances where we’ve had people that were scheduled for hip and knee replacements who put on our product and within, you know, three to four weeks, they were up walking and doing light jogging, because—not because of any magic, but we just unloaded the pressure and placed it where it needs to be. And again, it’s their muscles, their legs stronger.
JASON HARTMAN: So, it rehabilitates, so that ultimately they can not use the product, is that correct?
JONATHAN BENDER: Absolutely. But in anything, you have to be consistent. So, even if you go to physical therapy for two months, you feel better, you just can’t stop doing therapy, even if you don’t go to the therapist, you need to continue on your own. So this device will help you, as long as you’re consistent. So if you get to the point where you’re feeling better, don’t stop, keep going. Even if you’re not using this, but if you’re doing something else, getting in the pool or other things—this is just a tool that’s gonna help you.
JASON HARTMAN: And that’s exactly what you were saying, in business or investing success—be consistent. I used to say to people when I was training salespeople, real estate salespeople, I used to say, everybody comes up and asks me, how can I be different? How can I stand out? And I would say, if you want to be different, be consistent. So people are, that that will make you different. You will stand out by consistency, sheer consistency alone.
JONATHAN BENDER: Right, and also, just like the game, not really looking at other people. Don’t look to the left or right. Just look ahead. And also, I’m a believer in God, so I keep Him on my side, and I look straight ahead, and I know if I’m working, and I’m outworking everybody—if I get up at 2 o’clock in the morning and I’m working on my business plan or I’m working on my product, I know there’s not too many people up at that time, at that hour, doing what I’m doing. So, that’s gonna give me more confidence. It’s gonna make my service or product even better. And just putting in more time.
JASON HARTMAN: Yeah. That’s great, great advice. Well, tell us a little bit about—first I want to ask you about any tips that you have for someone who wants to launch a second career, and then I want to ask about your foundation.
JONATHAN BENDER: Okay. So, I would say project yourself out about 30 years, and see exactly what you want to—what you want your life to look like. I think that’s the very beginning. Understanding how much money do you want to have? How many kids do you want? Where do you want to live? What do you want to be driving? How much money you want on a monthly basis? And that’s gonna dictate what they need to do, because a person can go out and start something, and it’s not giving them what they ultimately want, and they’ll end up quitting. Saying it doesn’t have them the capacity to maybe get them what they want. Next I would say, evaluate their talents and their gifts and what they’re good at, and create a business model based on their gifts and certain talents, and also search out people who’s already doing what they want to do and have what they want to have, and read about them, research them, and just follow their routine. And start immediately. And take on all the characteristics that that person has. And move forward.
JASON HARTMAN: Yeah, yeah. I think that’s some great advice. Hanging around with positive people, and if you don’t have positive people in your life directly at any given time, look for them outside as role models. Biographies you can read, motivational speakers, podcasts you can listen to, like this one. Or anything with a positive influence. It’s so important to feed our minds with that. Jim Rohn used to say—the late Jim Rohn—used to say something, he used to say, your income will be the average of the five people who spend most of your time with. And I always thought that was pretty enlightening to notice that.
JONATHAN BENDER: Absolutely. Absolutely.
JASON HARTMAN: Good. Well, tell us about social entrepreneurship, and what you do with the Jonathan Bender Foundation.
JONATHAN BENDER: With the Foundation, we’re doing something called the [unintelligible] clinic, where we’re doing basketball camps slash arts and crafts and etiquette for females, and in the beginning we do some of the life skills program, where we do exactly like I just told you before when you asked me about tips for people wanting to start their business. We tell the kids to write down their goals, we want them to project out to mention, help them find out what they want, what they ultimately want out of life, and then kind of back into what it’s gonna take to get there, and make them understand that hey, there’s a lot of people out there making a lot of money, and it’s not just about sports or entertainment. It’s about what you’re good at, and how can you leverage what you’re good at and make it work for you. For instance, there are untraditional careers out there that can be made. You can make up a career nowadays. A perfect example is a dog whisperer. Who ever thought of a dog whisperer? You know? That’s not normal. But he was able to take—he had a good team around him, and he was able to leverage it. So, it doesn’t matter what you’re good at. If you can take that and make a plan around it, you can be successful.
JASON HARTMAN: Yeah, that’s great advice. The one thing that stuck out, though, that was kind of unusual, that I didn’t expect you to say when you talked about the Foundation, is, etiquette classes? Tell us more about that.
JONATHAN BENDER: Yes. My fiancé actually does the etiquette classes, for the females. You know, especially young urban females, just teaching them how to carry themselves in a professional manner. Nowadays we have young females going on jobs saying they really don’t know how to dress or carry themselves. Or when they’re at dinner, which fork is the salad fork, which fork is the fork for your meal. Just real simple things that some of these underprivileged kids are missing, because their parents are either moving too fast, or there’s only one parent in the house, and they may have not been taught by their parents. So I feel like that’s very important.
JASON HARTMAN: Yeah, I think that is very important. But why aren’t you doing it for males too?
JONATHAN BENDER: For the males, they’re going to be under my attention, and they’re going to get a lot of that in the life skills sessions. So, they’re going to definitely get an understanding of how to carry themselves on the court and off the court. And we talk about a lot of that during the actual basketball sessions as well.
JASON HARTMAN: Yeah, it seems like it’s a lost art. When I was in college, I read an etiquette book, and I tell you, back then, people kind of cared about that stuff. Now, nobody seems to care, and it’s unfortunate. All it really is, is consideration for the other person. That’s what etiquette is, I think. The bottom line. It’s just such a great art, and I’m glad to hear that you actually address that, because I think a lot of success can come out of that. Of course, mindset and motivation and all of that is very important, as we’ve talked about, but etiquette is an important thing.
JONATHAN BENDER: Absolutely. And a lot of that can be taught on the court. I learned a lot of etiquette on the basketball court, and on the golf course as well. Just how to respect your teammates’ time, that’s very important. Respecting another person’s time. Being 15 minutes early for a meeting, that you show yourself in a different light when you do that. To carry yourself accordingly. Keeping your pants up. You know, those simple things. Speaking where I can hear you, and really respecting what I have to say, and paying attention and really taking an interest in what someone is saying to you. So, just those different type of things can be learned through the game of basketball as well.
JASON HARTMAN: Fantastic. Well, that’s great advice. Jonathan, I’d like you to give out your websites, if you would, so people can learn more about you, and just ask you for any closing thoughts, too.
JONATHAN BENDER: Yes. My website is www.jonathanbender.com, where you can learn about me. And my product site is www.jbintensive.com.
JASON HARTMAN: And the Foundation is www.thejonathanbenderfoundation.org, is that right?
JONATHAN BENDER: Right, dot org. And once you go to my website, www.jonathanbender.com, we have everything there. A link to my foundation, and the product as well.
JASON HARTMAN: Fantastic. Any closing thoughts, Jonathan?
JONATHAN BENDER: I would say to anybody who’s listening, you know, if you’re looking to—anything’s possible, first of all. I was a young guy drafted at 17 years old to the NBA at 5th pick. Basically, there were teams fussing and fighting over me. You know, out of a small town called Picayune, Mississippi. Now I decided to be an entrepreneur, but I didn’t just decide—I WENT. So, whatever you want to do, you can do. But you have to move, and you have to—it has to be a destination that you would bust through walls to get to. And those are my last remarks.
JASON HARTMAN: Fantastic. Well Jonathan Bender, thank you so much for joining us today, and keep getting the word out and keep up the good work.
JONATHAN BENDER: Thank you.
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JASON HARTMAN: Be sure to call in to the Creating Wealth show and get your real estate investing and economics questions answered by me personally! We’d love to have you call in, share your experiences, ask your questions, and a lot of other people listening have those very same questions. So be a participant in the show! At 480-788-7823. That’s 480-788-7823. Or, anywhere in the world via Skype: JasonHartmanROI, that’s JasonHartmanROI, for return on investment. Be sure to call into the show. And we are going to enter all of the callers in a drawing for some nice prizes as well, so be sure to call into the show, and I look forward to talking with you soon.
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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 Empowered Investor, LLC. exclusively.
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