Introduction:
Matt Theriault is is an entrepreneur, author and success coach who shows people how to start over and begin a new life setting goals and objectives so they can create wealth and live life to the fullest. Matt is the founder and host of the Epic Real Estate Investing and Do Over podcasts.
The duo is talking about the importance of consistency and hard work, the power of passive income, and why not following the masses could be the key to your success. They also touch on the ever-changing investing and economic landscapes, and why neither of them tends to worry about the gloomy outlooks so many other investors focus on. Enjoy!
What You’ll Learn:
The incestuous nature of real estate investment coaches.
How a real estate infomercial changed Jason’s life forever.
Why he decided to get his real estate license at 19 years old.
The story of Matt’s rise and fall in the music industry.
How Matt learned about real estate investing from an unsuspecting source.
Why firefighters and teachers make great investors.
The two requirements for success as an investor.
How Jason ran his pre-Google business.
How going against the grain can help you succeed in this business.
Why you should consider doing business with high ticket items.
What Matt’s portfolio currently looks like.
How the investing landscape has changed over the last years; and
Why Jason doesn’t worry about that.
Why Matt and Jason love being renters.
Where you can get good (free) investing advice.
The different ways that you can invest in real estate.
The future of robotics and how it may affect real estate.
Jason’s opinion about international investing.
Why the two guys believe that rental properties are a hedge against future economic uncertainty.
Timestamps:
(1:00) Intro portion to the show
(9:24) Forbes comparison: Homes Within Reach
(19:07) Upcoming Little Rock Property Tour and Creating Wealth in Today’s Economy Seminar
(19:40) Introducing Co-host Matt Theriault
Links:
For Matt’s Epic Real Estate Investing see: www.EpicRealEstate.com
The Do Over podcast on iTunes.
Audio Transcription:
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, this is episode #407, 407. Thank you so much for joining me today. I did a funny thing. Happy Labor Day, by the way. It is a holiday, so I hope you can cut me some slack on this. I recorded an intro for you, and then I realized, towards the end of that recording, that the microphone was not plugged in. Oh my gosh, I’ve never done that before. Anyway, sorry about that. But I thought the content was pretty good, and I think you’ll want to hear it. You’ll just never be able to get it right the second time. So, I’m gonna play it, so let’s go to that. Please excuse the sound quality. Of course it’s usually better. This was recorded without the mic being plugged in. So, my apologies, but I think it’s good enough to work. Here we go with the commentary part, and then we’ll get to our guest today that I’ll announce in just a moment.
JASON HARTMAN: Welcome to the Creating Wealth Show! This is your host Jason Hartman and this is episode #407, 407. Thank you so much for joining me today. And thank you for getting us way up on the charts on iTunes! We recently were #9 in the business section out of all business podcasts on iTunes; we were #9. So, thank you so much for listening, thank you for your nice reviews, and thank you for referring your friends and family to the podcast. I really appreciate it. So, today, my friend Matt is going to join us for something very, very different. I’ve never done this before. It’s kind of an odd podcast, but I think you’ll really enjoy it today. My friend Matt has another real estate podcast. We were thinking well, you know, maybe we should be on each other’s shows and try this out, and then we got to talking and thought, heck, why record two interviews? We thought we’d just record one. So, nobody’s really interviewing anybody here as the guest today. We’re both guest and host at the same time, just having a conversation about how we got started in real estate, you know, what we think of real estate, and I think, as I recall, the other day when we recorded, we touched on the subject of robotics, and how that effects the economy, and that’s going to be a subject I want to talk to you a lot about in future episodes, because that is going to have a major, major impact.
And I’ve talked to you also about how I’m launching a new show. I know I’ve been saying that for a while. I’m a little slow on some of these projects. But it’s called the Longevity Show. And I’ve been really interested in the economic impact of increasing lifespan, and what that means for the housing market, what it means for the broader economy, and also, it’s not—remember. When we talk about lifespan, the lifespan is of course increasing, but what’s more important than actually considering the concept of lifespan when it comes to retirement age, people’s buying patterns, people’s housing needs, and so forth, it’s also the concept of what I call health span. So, it’s not just lifespan but health span. And we see now people, you know—someone posted—one of my friends on Facebook today posted a workout video of, I think the man was 91years old, and you can probably Google this and find it. Or maybe it’s viral and it’s showing up in your Facebook feed as well. He was doing all these incredible workouts! And I thought gosh, that guy, I’d have trouble keeping up with him in the gym. It was pretty amazing.
And you know, the point is, people are living healthy, vibrant, longer lives. But it’s not that the lifespan is really 120 or 150 years old yet. Of course it’s never been 150. But I think we’re gonna see it get there pretty soon, with all these longevity sciences that I’ve been talking about, as I’ve been recording shows before the launch of the Longevity Show. It’s about health span. And you know, I mean, I don’t know why the retirement age is honestly still 65. I mean, 65 is way too early to retire, in my opinion. I could have retired when I sold my last company back in 2005. But who would ever want to retire? People do not live very long in retirement. So, you gotta have a purpose for your life, and a mission, and something you’re passionate about, obviously. That’s going to make it work. You know, that’s one of the things we do here on the Creating Wealth Show and on my other shows, is we help people get out of their corporate jobs so they don’t have to be Dilbert living in a cubicle, and they can gain financial freedom through their investments, and that’s what we’re all about.
An interesting thing—there were some rankings floating around, and you always see these kind of rankings going around. At the top 10 most expensive housing markets in the US—and the top 10 least expensive, or I guess maybe you want to call that the bottom 10, least expensive housing markets in the US. And with my mom being on the show just on Friday’s episode, and we talked about how she just rented the house I used to live in when I was a kid in West Los Angeles. And you know, she’s owned that house for many years, paid $62,500 for it, and bought it from a guy named Jerry. I remember it well. And now it’s worth about $850,000, and it was rented before for 30—I think it was $3300 per month, and this time, she was ecstatic—and I had to burst her bubble, and she was probably a little mad at me for doing that, but oh well. And she was ecstatic that she rented it for $4000 a month.
And I said, well, you know, the reason you rented it so quick is because you got—you really got taken advantage of in that deal. You know, the property should rent for 1%. 1%. Remember, life is all about percentages. It’s not really about numbers; it’s about percentages and ratios. And that’s the important thing. So, if any of you listening are nationwide—well, I know most of you listening are nationwide investors, like myself. But if any of you listening happen to have any challenges in renting any of the properties you own, just do this! Be ecstatic like my mom in her example! And rent your property for a 0.5 RV or rent-to-value ratio, and I’m sure you will rent it in a day. In fact, I’m sure it’ll even be better than that. People will be lining up around the block to rent that house from you.
So, here’s an example. Say for example you bought a property through my network, and say it was in Houston, or Memphis, or Atlanta, or Little Rock, where we have our upcoming property tour at the end of September here. And I hope you’re joining us for that. Say you bought a property for $100,000. And instead of renting it for $1100, or $1000 per month, why don’t you just put it on the market for $500 a month? You will rent that property in a New York minute. Okay? Boom. It will be rented in no time. You will have many, many applications, I’m sure. Because think about it. In any market in the country, that’s pretty much the price of renting a single room. About $4, $500 a month is about the cheapest place you can rent one room, one bedroom, in somebody’s house with roommates, okay?
So if you rented your house, your $100,000 property that you purchased through my network at JasonHartman.com/properties—if you rented it for a 0.5% RV ratio, like my mother’s example on Friday’s episode of renting the 850—actually, hers is lower than 0.5. $850,000 house for $4000 a month—you rent your $100,000 house for $500 a month—you will have no trouble renting it. So there’s never a problem renting the property. There is only a problem renting is for the expected ratio. The rent to value ratio of 1% per month.
Let me give you—that said, let’s talk about a couple of cities, because this is a very interesting comparison. As I was reading an article on Forbes—Forbes.com. We’ve had Steve Forbes has been on the show, and Rich Karlgaard with Forbes Magazine was recently on the show as well. We’ve had a few different Forbes writer. Thomas Sowell, who is awesome, by the way. That’s a really old episode. Folks, I know most of you listen to my back catalog. That’s what it’s called in the industry—the back catalog of old episodes. But go back, and if you’re not doing that, go back and listen to the old episodes, because there’s a lot of great stuff there. Not just the new stuff, but a lot of great old stuff that’s timeless.
Forbes comparison: Homes Within Reach
Forbes.com did this great comparison, and the infographic is title Homes Within Reach: How much house can a middle—can the middle class afford? So, they give the example of three cities—San Francisco, the Socialist Republic of San Francisco—Denver, and Atlanta. This is a great comparison, what I’m about to say. So, listen up. I think you’ll like this. In San Francisco, the median household—now, this is not per person income, or per capita income. This is per household income. Which really makes you see how little people make. It’s really kind of depressing, to tell you the truth. But in San Francisco, a high wage city, the median household income—so, that’s usually a two-person household, okay? It might be DINKs, dual income no kids, okay? It might be married with children. Whatever. So, the median household income is $84,129 per month. For $440,000, that’s what you can afford. If you make $84,129 annually, as the median household income, you can afford a $440,000 house. So, in San Francisco, only 14% of the people can afford to buy a home.
Let’s contrast that with Denver and Atlanta now. This is mind-boggling, how out of sync things are. In Denver, the median household earns $62,487 annually. That means that they can afford a $325,000 house. And boy, in San Francisco for $440,000, you can’t buy anything. You know that. By the way, the median price home in San Francisco is $1 million. Absurd. Totally absurd. In Denver, for $340–$325,000, pardon me—you can get a very, very nice home. I mean, it’s, you know, not a mansion, but it’s a very nice home, for $325,000. 50% of the people can afford to buy the median priced home in Denver. Not bad at all. Versus 14% in the Socialist Republic of San Francisco. Okay, let’s look at Atlanta now. It gets even more out of sync. And I know you’re probably—hopefully as I’m talking to you about this, you’re thinking of a good question. And that question is gonna be, well, Jason, why are you recommending markets that are so affordable? Wouldn’t everybody just buy rather than rent? I’ll get to that in a moment.
In Atlanta, the median household earns $55,465 annually. That’s the household, okay? Could be a single person household, by the way. But you know, I think the majority of households are dual incomes. Okay? So, the median household in Atlanta, just over $55,000. So, just to recap—San Francisco, I’m gonna round off here. $84,000 annually. Denver, $62,000 annually. Atlanta, $55,000 annually. Now, if that household earns $55,000 per year, they can afford a $273,000 house. And in Atlanta, for $273,000, you can get a really, really nice home. And that means that in Atlanta, 72% of the people can afford to buy the median priced home.
So, you know, I’ve talked a lot about self-driving cars on prior episodes, and how formerly, in real estate, or still, but I think it’s fading, and I think this is being downgraded as an important factor in real estate—what are the three most important rules of real estate? Location, location, location. Not so much anymore. Because you don’t have to live in these high priced cities! You know, look. I lived in a really high priced city. I lived in one of the most expensive cities in the country: Newport Beach, California. And I’ll tell you, since moving to Arizona three years ago, I think my quality of life is better. Arguably, except in the summer maybe now. It’s a little hot. But anyway, you know, I think overall my quality of life is much better in a more affordable place. Okay?
And look. I mean, I could afford to live very well in Newport Beach. One of my recent homes in Newport Beach was 3300 square feet. I owned it. And you know, I had another house that was 3100 square feet on the Newport Coast, and I owned that on too. And I felt like I was always spending so much money on my house. My last house payment, living in Orange County, California, okay? Behind the Orange Curtain, as they say, because it’s so different from LA. My last monthly household expense was almost $12,000 per month. I mean, that’s just a waste of money. And at that point I had an 1800 square foot house, okay? And so, it’s just these prices just get totally out of sync I mean, they’re just ridiculous. Now, oddly, the markets that are the most affordable, many times make the best markets in which to invest. Because they are affordable to buy. And you can get much better rent-to-value ratios. My mom’s example, the Los Angeles example on the last episode—that example, the $850,000 house for $4000 a month—look! That’s a great deal for the tenant, and a terrible deal for the owner, for the investor. So in Atlanta, you know, if you owned a $100,000 property in Atlanta, you could get $1000 to $1100 per month in income. 1% or more per month, versus less than half a percent in my mom’s example.
It’s all about ratios. It’s not about the amount. It’s about the percentage. It’s about the ratio. I want you to really focus your thinking on ratios and percentages. And you’ll start to notice them everywhere in life. certainly you’ve heard of the Pareto Principle, the 80/20 rule, right? You will notice that everywhere. You’ll notice it with success, you know? 20% of the people earn 80% of the money in the world, right? That’s been proven over and over. And then, walk into your closet, or open your closet. And look in your closet. And I will bet you, of 100% of the clothing in your closet, you wear 20% of it 80% of the time. I know I do, okay? So, the 80/20 rule applies to everything in life. It is an amazing, amazing principle. It even works with clothing, okay? The 80/20 rule, believe it or not.
As an investor, when you think about numbers, don’t think about the gross number. Think about the percentage. I remember when I was taking flying lessons. My flight instructor said—I remember we were sitting on the runway at John Wayne Airport in Orange County, which is like the hardest most stressful place to learn to fly, because it’s the busiest training airport in the world, and so, I was taking flying lessons there, and no wonder I never finished—Because I was just so nervous. You know, you get up in the air, and you’re 400 feet off the runway, and there’s just air traffic everywhere, and you’re scared of a midair collision, right? That’s no fun. But if you learn in Orange County, if you learn at John Wayne Airport, you’re gonna be a pretty good pilot, because everything else is easier than that, okay? Because there’s a lot less air traffic. And you know, there are busier airports. Certainly Chicago O’Hare, and you know, Hartsfield-Jackson in Atlanta, or LAX, are busier airports. They don’t do training. They don’t do general aviation at those airports, okay? This is an airport that still, believe it or not, does general aviation.
Anyway—you know, I’ve never been accused of being short winded, right folks? I go off on these tangents. So I’m about to wrap up my point here, and here’s my point. I was sitting on the runway, we were about to take off, we had just done the run up, where you test the engines and all that kind of stuff, and look at the instruments before you take off. I noticed a big jumbo jet taking off right before us, and that always concerns me, because whenever you have a big jet landing or taking off, you know, right before you, you become really concerned about what’s called wake turbulence. You know, a big plane makes a huge wake. And a little light plane, you know, that can make you crash. So, I asked the instructor—I said, hey, you know, can you fly that plane? The big jumbo jet? Right? And he said, you know, Jason, I could pretty much jump in that cockpit and fly that plane. Because it’s all about ratios. It’s—so, that plane has a different speed at which you take off and land, okay? But it’s all the same principles of aviation apply. You know, maybe the instruments and the buttons and the knobs are in slightly different places too. But he could basically fly any plane. As long as he knew a couple of key factors—the stall speed, the take off speed, the landing speed, things like that—he could jump in that cockpit and fly a 747 or a Cessna 172. You know? Pretty much it’s just a question of ratios. And the relevance of those numbers, okay? So that’s what I want you to think about when it comes to investing. It’s not about how much rent you get per month. It’s about what is the rent-to-value ratio. That is the key.
Upcoming Little Rock Property Tour and Creating Wealth in Today’s Economy Seminar
It’s getting down to the wire on the last chances to join us for our Little Rock Property Tour and Creating Wealth in Today’s Economy Seminar that I will be conducting in Little Rock at the end of the month here, at the end of September, and you can register for that at JasonHartman.com, click on the events sections. You gotta make your travel plans and get your plane tickets, so, register for that ASAP, and we’ll look forward to seeing you there, and let’s get to our guest. Well, today it’s not really a guest, I’m gonna call it a co-host. Let’s hear our talk with Matt. So here we go.
(19:40) Introducing Co-host Matt Theriault
MATT THERIAULT: Alrighty! Welcome everybody. Hello Mr. Jason Hartman.
JASON HARTMAN: Hello Matt! How you doing?
MATT THERIAULT: Doing very well.
JASON HARTMAN: You know what we’re doing today? We’re going to freak our listeners out. Because I know we have mutual listeners, and they don’t know which show they’re listening to right now.
MATT THERIAULT: That’s right, cause it’s gonna appear on both shows.
JASON HARTMAN: Yeah, that’s right.
MATT THERIAULT: So, we can save you guys a trip, depending on where you’re listening to it first. But we decided we wanted to do something a little different. The podcast world is—actually we were talking about it, the word we were using was incestuous.
JASON HARTMAN: It’s totally—a little incestuous is an understatement, man. It’s very incestuous.
MATT THERIAULT: Yeah. So, everybody’s interviewing everybody, and we just thought, well, let’s just talk. And let’s record it, and see what happens.
JASON HARTMAN: This’ll be like that show, I’ve listened to it about two times, but it’s called No Agenda, and these guys just sit and talk for like two hours. But we promise not to go that long, dear listeners.
MATT THERIAULT: Oh God, we just lost half of them.
JASON HARTMAN: Yeah, don’t hang up yet. Don’t turn off your smart phone yet.
MATT THERIAULT: No, we will not subject you to two hours of us rambling. Not at all. Jason, I’ve known of you for quite a while. I know you’re one of the very first, if not the first, significant real estate podcasters. I think we’ve been like one degree of separation for the last several years, and we just got to meet last weekend. I have no idea really what your business is about, how you got started, and what it is that you do. I just know you’re like this real estate guy. So I don’t know, share with me how you got started.
JASON HARTMAN: I grew up kind of poor. Lower middle end of the economic spectrum. And I didn’t like it very much. And when I was in 10th grade, I saw an infomercial about real estate investing, and I thought, this is the answer. So, I went out and bought the book; it was Robert Allen, I bought his book. I read three chapters of it which I was in high school. I put it down, my mom read the rest, and got fascinated by the topic, and she started going to all these real estate seminars, and by the time I was 18, I was just about to graduate from high school, and my mom says, hey Jason, you know, there’s this big real estate seminar in Anaheim by Disney Land. We lived in Long Beach. Why don’t you come? You’re the one who got me interested in this, and there will be all sorts of speakers. It was basically one of those weekend pitch fests, where it starts on Friday night and goes through Sunday evening. And I went, Matt—
MATT THERIAULT: You were in high school at the time?
JASON HARTMAN: I was in high school. I rounded up—you’ll like this. I rounded up nine of my buddies from high school, because you know, when you’re that age you can’t do anything alone, right? So, I went to this seminar, and all of them came Friday night, and only one was left by Saturday morning; all the rest went to the beach, and that was myself and my friend Rich, and then he faded out, and I went and I saw every speaker the entire weekend. And I didn’t know what they were talking about. You know, it was like they were talking in a foreign language to me, basically. I didn’t know what a point what, or APR.
MATT THERIAULT: Or escrow…
JASON HARTMAN: Yeah, or escrow. And I got my real estate license just to learn. I remember I was a big Earl Nightingale fan since I was 17 years old. Listened to Earl Nightingale, and Denis Waitley, and Zig Ziglar, and Jim Rohn, and that just changed my life. I mean, I wasn’t exactly the best teenager. I became a really good person with the success mindset and became a really conscientious good citizen. You know, I just wanted to learn more about what they were talking about, so I went to real estate school, got my license for the $99 Century 21 school, and started selling real estate while I was going to college! My first year of college, I was 19 when I got my license, and I’d only ever earned—I’d been working since I was 14 years old. I’d only ever earned minimum wage in my whole life, Matt. Then, by the time I had my first full month in real estate, I made $43,000 gross. Gross. You know, I had to split that with my broker. And I thought, this is so easy! All I did is I put these little classified ads in the newspaper, advertising government repo properties, HUD & VA repos, all the boarded up, really disgusting houses, in the inland empire in Riverside, San Bernardino, California, and I would drive the people around in my brand new Volkswagen Jetta that I had just purchased, and I would sell them these little properties! And they bought them, and that was the start of my real estate career. And then my investing career started shortly after that. And that’s the basic story. How about you? Tell me about how you got started.
MATT THERIAULT: It was funny that you’d said Earl Nightingale, because that was my first introduction to personal development and entrepreneurship. I didn’t go straight into real estate; I took a different route through the music business, had my own record label, major label distribution, and did very well for several years, and then that digital download thing came and just turned the whole thing upside down, the whole industry. And I was age 34, bagging groceries.
JASON HARTMAN: Wow!
MATT THERIAULT: Yeah. One day I was Puff Daddy, and the next day, poof, it was gone.
JASON HARTMAN: What kind of musician were you?
MATT THERIAULT: Hip hop music producer. And so, I started off making instrumental records for disc jockeys, the kind of DJs that would scratch, and use two turntables. And so, I was doing that, and doing okay selling those out of the trunk of my car, and kind of evolved up to having friends from the neighborhood go ahead and rap on top of those, and started selling those, and sold enough till one point caught the attention of EMI, and they picked us up and gave us a big fat distribution deal, and went from there.
JASON HARTMAN: Did you make a ton of money? What is a record deal like? Take us inside that a little bit. All of us real estate investors want to know.
MATT THERIAULT: Sure. Well, you mentioned you’d never made more than minimum wage before, and then you grossed $40,000. And that—
JASON HARTMAN: Right, in a month.
MATT THERIAULT: That was a ton of money. That was a lot of money. Because at that point, I was driving around from store to store all through Southern California; I had a route, I’d start in Los Angeles and hit Orange County and go down to San Diego, then come back up north through Riverside, all the way to San Francisco and back around again. And I’d probably hit, I don’t know, 50 record stores in that rotation. And I would get just ecstatic if I came home with like $2000 from that trip. And I did that trip once a week. And when I got the distribution deal, there was a middle deal there, when a guy said, I’ll take 500 of that one specific record. When I’d never sold more than two or three at a time to a store. And that person said 500; I was like, wow. This is something. And my check was like 3500 bucks or something. Then EMI came knocking, they said they were gonna give me $100,000 for records I hadn’t even made yet; they were going to give me an advance.
JASON HARTMAN: Wow. So did you get that advance?
MATT THERIAULT: Yes I did. So at 23, 24 years old, I got a check for $100,000, and that was just like—
JASON HARTMAN: I bet that didn’t last long.
MATT THERIAULT: I definitely had my fun, for sure. But I was able to put out records, and I kept that going, and kept it growing for a really long time. That’s how that started. And then I was bagging groceries. And I have a funny story, after about six months of bagging groceries, it was quite the pity party, and feeling sorry for myself, and crying on every shoulder that I could find, and there’s no shortages of pats on the back, telling me it was gonna be okay, and I think really, Jason, I was just kind of waiting for someone to help me. Like, someone please give me a break. Someone give me a helping hand. It took a while for it to sink in that wow, this is actually my life. You know, it’s up to me. I’ve gotta do something. No one else is gonna do it. And I think there was one day in particular where my store manager had noticed that I was sadder than normal, and he had said, Matt, what’s wrong? And I basically just told him the same story I just told you, in much greater detail, with more drama. And he said, why don’t you come up to my office, let me show you something. And he took me up to his office, and he laid out—he’d been working at the grocery story for 28 years, and he was just two years away from receiving his pension, and along the way, those 30 years, he had acquired a half a dozen apartment buildings.
JASON HARTMAN: Wow. Wow. This is gonna be a great story, I just know it.
MATT THERIAULT: Well, he just kind of laid out, like okay, I’ve got this pension here, and I’ve got my income from these apartment buildings here, and I’m gonna retire, and no one is ever gonna hear from me again.
JASON HARTMAN: Where was this located, by the way? Where were you?
MATT THERIAULT: I was bagging groceries at Ralph’s, in Manhattan Beach.
JASON HARTMAN: Manhattan Beach, California. Alright.
MATT THERIAULT: Yep. He’d said some words to me that have stuck with me ever since, a couple phrases.
JASON HARTMAN: Okay?
MATT THERIAULT: One thing, he said, Matt, I started doing this because someone told me that real estate was the final frontier where the average person has a real shot at achieving wealth.
JASON HARTMAN: And I believe that is still true.
MATT THERIAULT: Do you? Okay. At the time, I didn’t know. I knew I needed to believe in something, because I had nothing to believe in, and he said, if you want to recreate the lifestyle you had in the music business, real estate presents the greatest possibility for you to do that again.
JASON HARTMAN: He was a wise man, right?
MATT THERIAULT: Yeah. He did it right, and he had the evidence, so, he’s very believable.
JASON HARTMAN: So, he was a grocery store manager? This is why there are so many wealthy schoolteachers, and firemen, and cops, and pilots, and flight attendants, and people like this: because anybody where you’ve got a job, where you don’t work extremely long hours, and you do a second thing—you start buying some little houses on the side, usually you’re fixing them up yourself, with your own hammer on the weekends or days off. You don’t have to do it that way; that’s sort of the old fashioned method of investing. It works, and it’s sort of noble, in a lot of ways I think. There’s a lot of these very unassuming people that have some really nice wealth built up for themselves. And you know, maybe it’s not like they’re a multi-multi-millionaire or anything, but they’ve got a good nest egg! It doesn’t take a real high income. You know what it takes, I think, Matt? It takes starting, and then it takes consistency after that. You gotta just keep collecting. If the path is ten houses a year, great. If it’s one house a year, or one house every two years—whatever that pace is for you, you just gotta start, and you gotta keep doing it, because the cumulative effect is awesome! Look at your store manager, right?
MATT THERIAULT: Yeah, couldn’t agree more. That’s how it worked out for me as well. So I just kind of duplicated what he did. I think to a much greater degree at this point. But when I got started, it was just to do what he did, and hopefully I wouldn’t have to work at the grocery story for 30 years. But that night I grabbed a bottle of wine from the grocery store, and went home, and just started Googling everything real estate. And ran across an aunt that I hadn’t seen in 15 years, and she had been the #1 real estate agent for the last 27 years, just two cities over. I sent her an email, because it just seemed like the right thing to do, and she responded in the morning, and that afternoon we met for lunch, and I think 48 hours later I was in real estate school to get my license.
JASON HARTMAN: Wow, what year is this?
MATT THERIAULT: That was 2002?
JASON HARTMAN: When you started, you had email. And you had Google. I didn’t have any of that!
MATT THERIAULT: Right!
JASON HARTMAN: We used to use paper!
MATT THERIAULT: You used to walk to that seminar in the snow!
JASON HARTMAN: And it was uphill both ways.
MATT THERIAULT: You were advertising in classified ads, and had a rather progressive form of doing it. Who taught you that?
JASON HARTMAN: Well, my mom was doing it. I really got her interested in real estate, but she got her license six months before I did. And she started selling government repos at a firm called Americana Realty in Bellflower, California. She would just place these ads, and they’d be little ads in the register of the Pennysaver, and people would call—you know, back then you had a phone machine, you didn’t have any such thing as voicemail—and I remember my little phone machine, I would come home—I lived at home, I lived with my mom in Santa Ana at the time, and I would come home, and I’d see that little red light blinking, and I’d be excited, and then I’d push the button, and it says, oh, you’ve got 38 messages. And I was so excited! I would just make all the callbacks, and I’d schedule appointments, I’d meet them at the property, or meet them at their house, or my office, and drive them to the property. It was amazing to me, Matt, here I was , 19 years old, and all of these old timer veteran real estate agents at Century 21 in Anaheim, it was on Beach Boulevard—they would be sitting around the coffee pot, they’d be smoking—oh my gosh, I hate smoking, it’s so disgusting—and that was when you could smoke indoors. Like, literally, the office was full of smoke. It was gross. They’d be just sitting around complaining about why the broker owner of the office, they wouldn’t buy them notepads to pass out, they wouldn’t pay for enough advertising, and I’d just place my own little stupid ads. I just spent my own money for them, and I went out and just worked, and it was amazing! Five deals my first month, I had just turned 20.
MATT THERIAULT: That’s amazing. You know?
JASON HARTMAN: All you gotta do is work. The money’s out there. The world is an abundant place.
MATT THERIAULT: I heard those exact words from a veteran real estate agent right in the beginning. He said, all you gotta do is work. Look at everybody here. He pointed at the people at the water cooler, and the coffee pot, and it was my first real exposure to, if you do what everyone does, you’re gonna get what everyone’s got. That was a good lesson to go against the grain. Everyone would hold open houses on the weekends. I held my open houses Monday through Friday. Right off the bat it got me rookie of the year in my office, and I did a little bit better the next year, and then I switched offices and did better then, and better then, and after four years of that I was like, hmm. I’m working an awful lot, and I had a client that gave me this repeat business over and over again, and I remember there was one Saturday it was the total turning point, I’ll never forget it. We had an appointment at 11 o’clock on Saturday, he was coming in to sign his docs, and I was there all early in the morning getting prepared, had paperwork all laid out across the desk—I was in my suit and tie, and he came in probably 20 minutes late in jeans and a t-shirt, and signed his paperwork, and he was off. And I was left there to process the paperwork and then go hold one of his houses open. And I was like, you know what? If real estate is where the money’s at, I think I’m sitting on the wrong side of the desk.
JASON HARTMAN: Very good revelation. Before I got into real estate, my mother had two small businesses; one was a pioneer chicken franchise, and it was in a terrible area of Los Angeles. I kid you not, she was held up at gunpoint, pistol whipped, when the burglars came in and stole $1200, made her open the safe, and they shot the gun into the ceiling and all this stuff. What I realized, and my mother realized too, is that when you do something in business, it’s good if you can do something that is a high ticket item. And real estate is a high ticket item. So, you have these cash spurts where you can make a lot of money—and by the way folks, we’re talking about traditional real estate now, we’re not talking about the investment side of the business, which is kind of different. But you know, in Southern California, properties are expensive. You sell some properties there, you’ll make a few bucks on real estate commissions, but you’ll never have the passive income, and the investors always really ultimately have the better life, because like you said, you realized you were on the wrong side of the transaction.
MATT THERIAULT: I made a large investment in my real estate investing education. Based on what I know now, I realize how lucky I was to have found a good educational program first. Because—
JASON HARTMAN: Yeah, there’s a lot of bad ones out there.
MATT THERIAULT: Yeah, I’ve heard so many stories of people who just go from one program to the next, and don’t end up any smarter than they were before they got started.
JASON HARTMAN: And they don’t own any more real estate than they used to either.
MATT THERIAULT: Yeah, that’s right. The bookshelf was full, but I didn’t know any better at the time, but I luckily picked a really good one at the beginning, and you know, within 60 days I had had my first flip done, then it took me about eight months before I got my second deal, but then I kind of got the hand of it, and they started to come in consistently, and I learned how to do it with none of my own money, none of my own credit, because after a failed record label, and finally bankruptcy, and divorce, my credit was nothing to speak of, and eight months in between my two investment deals, my cash was pretty much depleted, so I had to get creative, I had to get started with no money no credit, and here I am, almost 250 units later.
JASON HARTMAN: Wow. Yeah. Good for you. So, 250 units—is that in like a holding portfolio that you’re keeping? Or that you’ve flipped and kept, and total deals you’ve done, or how do you count that?
MATT THERIAULT: No, I’ve done a lot more deals than that. That’s my holding portfolio. So, I actually just counted this for last week’s episode, I hadn’t counted in a while. So it was 242. I’m in the process of doing some liquidation and upgrading properties. So, I think there’s something to be said for quality over quantity.
JASON HARTMAN: Yeah.
MATT THERIAULT: But that’s a mix of multifamily and single-families, and duplexes, triplexes all across the Midwest and the south. After that educational program, that’s about the same time I was introduced to the book Rich Dad Poor Dad, and introduced to the concept of passive income, and I heard of the expression before, but I never stopped to think about it, or how to create it, or what my life would look like with it; it just seemed like something for somebody else. So I kind of got a grasp of it—reduce your expenses and increase your residual income, and once that residual income surpasses the expenses, you are essentially financially free.
JASON HARTMAN: Right. You’re out of the rat race, as Kiyosaki puts it.
MATT THERIAULT: Yeah. Exactly. So I was able to do that in about 3½ years. When you look at the statistics, 95% of the country can’t do that in 40 years.
JASON HARTMAN: Yeah, I know. It’s really sad. But we’re trying to solve that problem.
MATT THERIAULT: We are. We are. So, I wasn’t rich or wealthy by any means, but I certainly did not have to report to anybody. So that was a really good feeling. All of
a sudden my sleep improved dramatically. I became a much more enjoyable person to be around. When you are bagging groceries one year, and a few years later you are playing gold on a Tuesday, people that know you—your family, friends, associates—start to scratch their heads and wonder what’s going on over here.
JASON HARTMAN: Well, they think you’re doing something illegal.
MATT THERIAULT: They just know that it wasn’t a good situation the last time they talked to me. Had a lot of coffee appointments, a lot of lunch appointments, a lot of dinner appointments, of people wanting to “pick my brain,” I heard that expression so often. I was like wow! Now that I’ve got my portfolio, I can see that there’s a lot of people that would like to learn how to do this, I think I have a unique twist on it, how to do it without using your own money or credit, let me give it a shot. And here we are with the podcast, four years strong running, and depending on which day you look, the number one, two, or three on the real estate side. It’s all been very, very good.
JASON HARTMAN: Let’s talk a little about the industry in general. Because you talked about the podcast, and I just want to share some thoughts with our mutual group of listeners as to, you know, the industry, the outlook for the market, that kind of stuff. You got a great story. I’ve got a great story. Everybody’s got a great story. As long as they do something. See, the common element of having a great story, is that whoever’s in the story took some action and actually did something. Otherwise, there’s no great story.
MATT THERIAULT: As far as the industry you’re talking about not the podcasting industry, you’re talking more about real estate agents?
JASON HARTMAN: Oh yeah, real estate investment business, you had mentioned the threat of them taking away some of the tax deductions, things like that.
MATT THERIAULT: You’re always hearing about it. You’re always hearing, the government’s going to change this, or take this away, or alter this, and I guess in some respects that we were impacted pretty significantly with the Dodd-Frank Act, and how we can sell houses to the general population, and just so many more loopholes and hoops that you have to jump through. Not loopholes but hula hoops. I hear about the interest deductions going away, or taking incentives away from real estate investors, and it’s always a concern, and I know you keep up with that more, that’s more the subject, you talk about more of that stuff than I do.
JASON HARTMAN: My take on it is that I don’t worry too much about that stuff, because everything in life and in economics always has an equalizing factor. If they take away the deduction, and they somehow disincentivize ownership of real estate, and really the interest deduction applies to homeowners more than investors. Because the investors, it’s just a [indiscernible.] You have your income and your expenses, and your expenses will always be deductible. That’s just like running any business. That would be a completely illogical thing. But for homeowners, it does matter. If the mortgage interest deduction were to go away, or to b reduced, as it was many years ago—they reduced it, I believe, to 1,100,000, I believe it is, and then there’s some tricky things if you refinance, and you can’t go above bases, or something like that. I don’t remember. But this is not what I’m concerned with. It’s not my area, because I’m not selling traditional real estate. We both only deal with 100% investors. I think that’s true for you, right Matt?
MATT THERIAULT: My client is 100% investors, yeah.
JASON HARTMAN: Yeah, same here. If they disincentivize homeownership, hey! That’s fine with me. Because that just means the rental market will strengthen. You know, if people don’t want to run out and buy homes, I have long said, I think the homeownership rate is too high! I don’t think we should encourage the homeownership rate to be 65, 69%. If the government were to get out of the business of encouraging homeownership through tax policy and through government sponsored entities like Fannie Mae Freddie Mac—if they were to get out of that, I think the homeownership rate would naturally and rightfully fall to about 50%. What’s that other 15% of the population gonna do? They’re going to rent. And guess who they’re gonna rent from? You and I, and our clients, and our listeners. Right?
MATT THERIAULT: True. True.
JASON HARTMAN: So, that’s gonna mean upward pressure on rents, and these things, folks, they always equalize. But here’s the part that kills you as an investor. It takes time for things to equalize. When we hit the financial crisis in 2007, 2008, depending on which part of the crisis you’re talking about—but when we hit the financial crisis, you know, in many ways that was really great news for a lot of people. The hard part is the two year adjustment period that you’ve gotta stay in the game and hold on when you think, oh my god, the world is ending, right? And the people that can look past that are the ones who always prosper long term.
MATT THERIAULT: A lot of people—we’ve all been taught and raised to think of our house as—our primary residence as an investment.
JASON HARTMAN: No way. Yeah.
MATT THERIAULT: And it is probably one of the worst investments that you could possibly put your money into. You know?
JASON HARTMAN: Yep.
MATT THERIAULT: Oh, you agree. Okay. I didn’t know you’d agree so quickly.
JASON HARTMAN: Totally, yeah.
MATT THERIAULT: Yeah, if you put it on paper, and start matching investments for investments over time, it’s a loser! At best.
JASON HARTMAN: It’s not that bad, I’m not gonna call it that bad a thing, and we’re talking your own home, the home in which you live. Look it. Anything you live in and pay for, is an expense, it’s a liability. It’s not an asset. The only time you get deceived is when you live in nutty, illogical places like California, New York City, or Miami, and maybe the expensive part of Chicago. When you live in those places, and every 10 years you got three years of boom time—I mean, the cycle is almost predictable, because it’s always 3/7, it seems like, are boom years. When you’ve got that, it looks like an investment, because it goes up in value, but that’s just a speculation! You just got lucky! I mean, good for you! I’ve gotten lucky many times, and I’d rather be lucky than good any day of the week, but I can’t count on luck, so I’m gonna count on, at my old age, I’m getting more conservative; I’m gonna count on prudent cash flow investments.
MATT THERIAULT: Amen. Amen. You’re right. In California that could be a little bit deceiving. How could you say that my primary residence is not a good investment? But it is a timing issue. You gotta time it right for that to work out for you. But over the long term, considering the money that you put down, considering the interest that you pay, considering you know, the appreciation, and how that goes right in alignment with inflation, and the missed opportunity cost of what you’re doing with that money, and then the extra money—it’s more expensive to purchase than it is to rent—it’s just like, you’re not any better off by the time you’ve got that house paid off.
JASON HARTMAN: I’ll agree with you there. And you know what else? You know what is a big hidden cost of homeownership? This is, homeownership of your own home, the home in which you live. It’s the amount of time people spend screwing around with the house they live in! I used to always own houses, and I was proud of that. I bragged about it. I thought, when I moved out of mom’s house, I moved into a condo at 147 Remington Street in Irvine, California, and I bought it! And it was $102,000, and I sold it a year later for 160, and I thought I was a genius, right? I was lucky. I wasn’t a genius. I did not know that would happen. I’ve always really pretty much been a homeowner. I can’t believe now that living in Arizona I’ve been a renter ever since I moved here for three years. And I love it! It’s like, I spend almost no time managing my surroundings. I don’t worry about stuff that’s broken, I don’t call and deal with repair people. I don’t do any gardening. I don’t argue with the gardener because the flowers died. I used to do all that stuff. It’s such a waste of time! I remember, Matt, I used to spend half of my Saturday every weekend at the hardware store! Like, I could be learning a new skill! I could have learned brain surgery in that time!
MATT THERIAULT: Of course, that’s what we need. Jason Hartman,
JASON HARTMAN: Brain surgeon.
MATT THERIAULT: Exactly. But no, you’re totally right. Then you’ve got property taxes too. That’s huge, depending on where you live. We just moved into a pretty large house in Glendale; it’s got an amazing view, it’s almost 5000 square feet—
JASON HARTMAN: Please tell me you’re renting it.
MATT THERIAULT: We are renting it.
JASON HARTMAN: Oh, good for you.
MATT THERIAULT: And it’s just an awesome house, just for two years, because then I’m gonna go to Malibu. The neighbor came over just this weekend. My girlfriend and I were out exercising out in front, and we just finished, and she walked over to introduce herself, and part of the conversation—oh, so are you renting? We are renting, and we made every decision too. Are you owning? Oh my gosh, you poor person.
JASON HARTMAN: Yeah, just tell him you own 242 units, and they’ll shut up real quickly.
MATT THERIAULT: Yeah. It’s more fun to keep that stuff a secret.
JASON HARTMAN: Snobs.
MATT THERIAULT: Totally. Totally. It’s all about education, because we both got—you went through that education weekend, and you got the Robert Allen program, and then you went to the pitch fest…
JASON HARTMAN: Yeah, I’ve done all that stuff.
MATT THERIAULT: For someone wanting to learn how to invest in real estate, what would be your—they said, Jason, I want to do what you do. Where would you tell them to get started?
JASON HARTMAN: You know, listen to the podcasts. Because they’re free. It’s a great way to sort of sort out the scammers from the real people, to get some education, but also, it’s not just a matter of who’s sort of a scammer and who’s not. And who’s reputable. It’s not just that. It’s also, what is your investing style? What’s so great about real estate is it’s so creative, there’s so many things you can go into. You can roll up your sleeves and get your hands dirty and really get engaged, and be in the—I’m gonna call it the real estate business, which is different than being an investor. I’m gonna say that my company, at least right now, and you know, we adapt and change things from time to time, as every entrepreneur’s always tweaking things, and offering something new. Right now what we really cater to, is we cater to investors. But you might cater to people that want to be more active and roll up their sleeves and get their hands dirty type people. I think. I know you cater to investors as well, but I think maybe you do that too, right?
MATT THERIAULT: We do both. A good percentage of the people that come to the how to course, the do it yourselves course, discover, wow, this is a lot of work!
JASON HARTMAN: It is a lot of work.
MATT THERIAULT: It’s a lot of time. It takes a little more effort than I thought. And you know what? I already have a career; I don’t need a second one, so why don’t you just do it for me? So that was sort of the natural progression of how that second half of our business started, and now it’s the biggest part of our business.
JASON HARTMAN: You can get in the business. If you want another business—if you’re looking for another career, heck, there’s all kinds of great active real estate stuff you can do that will take a lot of time, but could earn you higher profits and higher returns. You get rewarded for time and money invested, right? In anything. It’s just—what style of person are you? Are you the guy that wants to be driving around neighborhoods and looking for the—you know, the [indiscernible] sellers, Robert calls it, or the ugly house, as the Homevesters Franchise calls it. Or, do you want to be at your desk and be mostly focused on your career, and dedicate maybe one hour per month per unit you own, on average? We always like to say, it’s about an hour per month, on average, for each property. So if you’ve got 20 properties, you need to sort of have about 20 hours per month available to manage them, and manage the managers of those properties. There’s just different parts of it. You know? There’s all kinds of different areas. You can be a buy and hold investor, you can be a flipper, you can be a wholesaler, you can do a million things. There are so many little tentacles to this business.
MATT THERIAULT: Where we just met, two weeks ago, was at our Mastermind Group, and you know, my first time in there I was like, wow! They’re—
JASON HARTMAN: There’s a lot of stuff here! Yeah!
MATT THERIAULT: There are so many different ways to make money. And you
listen to people and their presentations, and what they’re talking about, and what their challenges are, and what their triumphs are, and you’re like, wow, I want to do that! And I mean, I’ve got an established business and I was still like, I didn’t even know you could do that! So, there’s unlimited ways to make money in this business. So, you have a lot of options, for sure.
JASON HARTMAN: Listening to the podcast, you’re gonna learn, what type of investor are you? And what I want to say to people is, try not to spend a ton of money on education. You know? Try to spend on education slowly and prudently, because a lot of that nowadays is cheap or free. In the old days, it wasn’t that way! You know, when I got started, we didn’t have the internet, okay? You know, we didn’t have podcasts. You had to buy books and go to seminars and sometimes enroll in really expensive programs. And that stuff is still available. Some of it is good, and some of it is really, really bad. I can’t tell you the number of people who have been to my seminars and said—they come up at like, usually by lunch. By the lunch break. They’ll say, you know, I just spent $9000 or $12,000 or $58,000 on this guru’s program, and you know, I could have just bought two or three properties instead. And I’m like, yeah, you could have. Most of the education you get is by doing things.
MATT THERIAULT: I agree. 100%. I think—
JASON HARTMAN: You’ve gotta be active.
MATT THERIAULT: Nothing is gonna replace the on the field education.
JASON HARTMAN: On the job training.
MATT THERIAULT: Which you gotta start. You have to get a base of the knowledge, and like you said, discover what type of investor you are. Because there are all types. As many personality types there are, go hand in hand with investor types as well.
JASON HARTMAN: Absolutely, no question.
MATT THERIAULT: I learned how to create my internet business. Now I’ve got two different internet businesses, all 100% for free, basically, from podcasts. On my other podcast, Do Over, I talked about that—to look for inspiration of what you want to do with your life, or what you want to do from this point forward, and podcast is just such a overflowing resource of just such awesome information, and you get to listen to it on your own time, you get to evaluate on your own time—
JASON HARTMAN: It really is. And you know, it’s like Wikipedia, I remember talking to my mom about Wikipedia when it first started to make a name for itself. And she said well, you know, Jason, people just put their own stuff in there. None of that stuff is verified. But think about it, really. What of anything is really verified in the world? What is true? What is true is the collective knowledge of a lot of people. And now, everybody listening to this has access to almost everybody else on the planet, and their knowledge, and it really is an incredible time in which to live. I mean, we are living, Matt, in an incredible, incredible era, and I tell you, right now as I’m saying that, I have goose bumps, because the things that are available to us nowadays are nothing short of amazing. In just the next five years, we’re going to be blown away by the kind of technology that comes along. It’s incredible.
MATT THERIAULT: I know you and I were talking about robotics, and that was one thing that you’re concerned about.
JASON HARTMAN: Concerned or hopeful? I’m not sure which, you know? I keep trying to—you know, that’s a good thing to talk about. I keep trying to understand where that’s going. And you know, Matt, every new technology has displaced people, and every new technology put people out of work. But then eventually, and it’s always that adaptation time, that couple of years in between that kills people. There’s always a lag time. That’s why you have to have something in reserve. You know? A few minutes ago we were talking about houses, and how houses, for living in them, they’re not a very good investment. So, don’t before house poor. When I lived in Orange County, it’s like, everybody was house poor there! Don’t be house poor! You can rent that house for a lot less money than you can own it, and just own a bunch of investment properties that make more sense. What do you think’s gonna happen with robotics?
MATT THERIAULT: Well, I don’t know. You certainly don’t see any parking attendants around anymore. there’s a hotel—I’m not sure where it is. I think Chicago, might have been Vegas, but I think it was Chicago, who’s experimenting now with robotic butlers.
JASON HARTMAN: Oh yeah! I saw that! That’s A-Loft, okay, which is owned by Starwood, I believe, the W, the same—the robot delivers things to your room, you know, so you call the front desk, you need a toothbrush or a towel, the robot brings it to you.
MATT THERIAULT: Right, right. It’s hard to fathom right now. I remember when I was in the music business, and the digital download was taking over. I couldn’t even see what was happening. I couldn’t even imagine something like iTunes at the time. That’s kind of how I feel with the robotic question. I don’t know, I don’t think about it. It’s not my creative capacity to imagine where we could go with robotics.
JASON HARTMAN: I think ultimately it’s going to increase the quality of life, and it’s certainly going to put a lot of people out of work initially, and this is why education is so important. If someone listening—like, one of the first industries that’s really gonna get rolled a bit is the transportation industry, because it is a giant industry. Cab drivers, and Uber drivers, and Lyft drivers, and truckers, and people that move people and stuff around—that’s a giant, giant industry, worldwide. Think of FedEx, UPS—if that stuff could be automated by machines, and Amazon’s drones that will deliver your packages—that’s a game changer. I’ve talked about this before on the show, but I’d like to ask you about it. I think it’s a big game changer for real estate, because you know Matt, the three cardinal rules of real estate—they’ve always been what? Location, location, and?
MATT THERIAULT: Location.
JASON HARTMAN: Yeah. Right. But I don’t know! I think that’s gonna change too, because—and I give this example in my show. If you could get in a driverless car, and you lived in Scottsdale, Arizona, but you wanted to go to San Diego for the weekend, which is a much more expensive place to live, and you could just go to bed and wake up in San Diego, six hours later—that’s a game changer. Do you—
MATT THERIAULT: Sleeping on the way.
JASON HARTMAN: Yeah, and really it would eliminate traffic, because if you could drive one foot off the bumper at 85 miles an hour from the car in front of you, which automating automobiles would be possible, and everybody didn’t have to drive at prime time, rush hour would go away! That is a game changer. So, high priced real estate areas, beware. Because you have a value destroyer, in my opinion, coming your way.
MATT THERIAULT: Yeah. You can’t see the ocean from Arizona, though, Jason.
JASON HARTMAN: Do you have to, if I can just go there every weekend? As long as fuel is cheap—the fuel’s gotta be cheap. It’ll still take fuel. I think that’s a factor.
MATT THERIAULT: Well, certainly nothing I know anything about, so—
JASON HARTMAN: I don’t either, but I certainly consider it, and that made a lot of sense.
MATT THERIAULT: I like the idea of going to bed and waking up somewhere else on my vacation.
JASON HARTMAN: It’s a pretty neat idea. It only takes about 40 hours to drive across the country from coast to coast. What’s that gonna do to the airline industry if you can bring all your stuff with you, jump in a car, bring your dog? Makes it really simple, you know?
MATT THERIAULT: Definitely. You know what? The one question I wanted to ask you about, Jason? When it comes to real estate, we’re both here in the United States. But there’s a lot of activity going on, a lot of discussion, a lot of chitter chatter, about investing outside of the United States. Americans investing outside of the United States.
JASON HARTMAN: Yeah, great question. So, I have another show you may not even know about. It’s called the JetSetter Show.
MATT THERIAULT: I did listen to it on the plane on the way home.
JASON HARTMAN: Oh, as you were on a jet? Wow, that’s very fitting. I love it, you were a JetSetter listening to the JetSetter Show.
MATT THERIAULT: I listened to the one on Puerto Rico that you asked me to listen to.
JASON HARTMAN: Yeah. Oh, oh yeah, that’s really an interesting episode, yeah. But, I interview these guys about international investing, and I gotta tell ya, I just don’t see it. The numbers just don’t really—the US is pretty unique, as far as real estate goes. Our infrastructure is better than most countries. Rule of law and the fact that we have a multiple listing service, and that we have things like Zillow and Trulia—it’s just a lot simpler and more established, and the financing is much better here. The construction costs are lower here in most cases. I love the idea of international investing. I’ve definitely checked it out. I’ve traveled to 71 countries. I want to do it myself. Just for diversification purposes. But I look at these deals, and the rent to value ratios are like 0.5! Why would I do that when I can buy properties in business-friendly Texas, or Georgia, and get 1% per month? It doesn’t work. What do you think?
MATT THERIAULT: Right. It seems like you’re injecting an unnecessary element of risk into your investing.
JASON HARTMAN: Right, yeah.
MATT THERIAULT: It is far away. It’s under a different government. Different currency, I’ve seen too many movies where the government says no, and what are you gonna do about it?
JASON HARTMAN: Right.
MATT THERIAULT: They just change their mind on something, and I don’t know if that’s just the movies, or it’s how it is out there in the real world. I just like the idea
that I know what the laws and the rules are here, I know how to play by the rules here. I’ve done a lot of work on myself, I’ve got a lot of experience under my belt, and know how it works here, and to go into a different foreign land that I have to take either a boat or a plane to, it’s an additional element of risk, but it’s a significant element of risk, in my opinion.
JASON HARTMAN: It’s a big risk, yeah.
MATT THERIAULT: Way out of my comfort zone.
JASON HARTMAN: I would agree with you completely, Matt. And you know, people are always calling me up, and emailing me, and pitching me on why don’t we recommend Costa Rica properties or Panama properties or Brazil, or you know—
MATT THERIAULT: Belize, I’ve seen commercials on that—
JASON HARTMAN: Belize. I hate Belize. I’ve been there twice. Belize is so third world. You really must be kidding. I mean, just—if you think Belize is good, the premo place in Belize is called Ambergris Cay. Go there. I’ve been there twice. It’s a dump. Get a clue. You really just don’t know what you’re talking about if you’re thinking that’s good. Here’s the thing! A lot of people listening to this show now are from other countries. And isn’t it interesting that so much of the world wants to own American real estate? Maybe they know something we don’t. And when people talk about the collapse of America, listen. I do think America’s going in the wrong direction. I don’t think it’s as good as it used to be, in many ways. All I’ll say is this. It has a long, long way to fall before these other places rival it. I’m just being a realist.
MATT THERIAULT: Probably, you know, we look at out own books, our own clientele, and I think we’re approaching 40%, we’re right around, a little over 30% of our clientele is from another country, buying American real estate. That’s telling. It’s a clue.
JASON HARTMAN: It’s very telling. And we have lots of foreign buyers too, and lots of foreign listeners. They want to get American properties, and they can’t get enough of them. They’ll pay cash, they’ll pay 50% down and get private—they’ll bend over backwards to buy properties here. Earl Nightingale, the late great Earl Nightingale—we were talking about him earlier—he said, maybe the reason the grass looks greener, is because it’s getting more care than the other side. You know? So…
MATT THERIAULT: Exactly.
JASON HARTMAN: It’s something to consider.
MATT THERIAULT: I remember that actual cassette. That’s when we listened to it on cassettes.
JASON HARTMAN: It was on cassette! I’ve still got those cassettes. I bet they’re worth a bundle of money!
MATT THERIAULT: Me too. Lead the Field, is that the one you got?
JASON HARTMAN: I got the whole library of Earl Nightingale. Everything he ever made. I bought the whole library.
MATT THERIAULT: We could get it together and have a party, a listen party, Jason.
JASON HARTMAN: Yeah, but we don’t have a tape player.
MATT THERIAULT: That’s right, that would be the challenge.
JASON HARTMAN: We’ll have to buy one of those somewhere, in an antique store. I gotta ask you one question, before you go, though, Matt. So, I’m always talking on my show, and you know this, about inflation and deflation. And you know, what’s in the future. I gotta ask you what you think. Inflation, deflation? Or, stagflation? Or what do you think?
MATT THERIAULT: I certainly see the value of the dollar continuing to drop.
JASON HARTMAN: Inflation, yeah.
MATT THERIAULT: Inflation, right? And I look at real estate—whether our world goes to hell, or if it has a resurgence, if you’re owning real estate, you’re in a good place both scenarios. So I try not to predict those things, I try not to try and guess. It’ll cloud my mind, and maybe cloud my judgment on what I do next. But I kind of look at both scenarios. I was talking to a friend, and he had a friend from Russia, and he said that when the Russian country collapsed, that the only people that really survived, that made it through, are people that owned a business, and the people that owned real estate. So, I just kind of look at that. If we were gonna go down that path, or say, go down a lot of people compare what America’s doing now to the fall of the Roman Empire. Whatever scenario does play out, as long as you got real estate, and you’re buying real estate for residual income, you’re buying it the right way, so it produces an income for yourself, I think you can’t go wrong either way.
JASON HARTMAN: I agree with you. In the inflationary environment, it’s gonna be a home run. You’re just gonna score massively, especially with what I call inflation-induced debt destruction. In a deflationary environment, you’re gonna be scraping
for yield, and there’s not gonna be anything that offers any real return except the cash flow on your properties. Your gold is gonna be worth nothing, okay? Your silver is gonna be a terrible deal. All of that stuff is going to suffer. Stocks will be terrible, but cash flow real estate—the value of that monthly income actually increases in a deflationary environment, and if we have deflation, there’s gonna be no incentive for people to buy houses. And that means there’s gonna be more renters.
MATT THERIAULT: There you go.
JASON HARTMAN: Just—
MATT THERIAULT: And then—
JASON HARTMAN: I think it’s great either way.
MATT THERIAULT: I do too. I do too. And if real estate doesn’t save you from whatever happens, then we got bigger fish to fry.
JASON HARTMAN: Yeah, nothing’s perfect. If we have overall societal collapse, you know, guns and food and water—it’s way better.
MATT THERIAULT: Is this the Creating Epic Wealth Investing podcast? Matt Hartman and Jason Theriault?
JASON HARTMAN: I love it!
MATT THERIAULT: There you go. All right. So, if you’re confused as to who you’re listening to, you’re listening to both of us, and you can find us both. My name is Matt Theriault at Epic Real Estate Investing, and my co-host today has been Jason Hartman at the Creating Wealth Show.
JASON HARTMAN: Creating Wealth Show, and JasonHartman.com, yeah. Hey, thanks Matt. That was awesome.
MATT THERIAULT: All right, Jason. Talk to you soon.
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ANNOUNCER (FEMALE): I’ve never really thought of Jason as subversive, but I just found that’s what Wall Street considers him to be!
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[MUSIC]
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.
