Join Jason Hartman as he talks with real estate investor and Winners Circle founder and CEO, Roger Salam about Roger’s journey from going bust in the dot com business to becoming a successful real estate investor until the housing bubble burst. Roger began this journey by investing in himself before investing in properties, but as he said, “I was getting ready to get ready to get ready, and I was so scared to pull the trigger for the first house.” Finally, with the help of a mentor, he purchased his first property…in a war zone of drug dealers and thugs. He shares his experiences of cleaning up the neighborhood, building relationships and putting together a team of other investors. He started investing in higher quality neighborhoods and began working with hard-money lenders. Roger’s venture grew until it became nationwide, but the housing bust led to him unraveling his portfolio. Jason and Roger talk about the bad deals created by the banks and the shift in real estate deals that have created better opportunities for investors. Roger’s experiences taught him a lot and led him to create The Winners Circle.
W. Roger Salam is an award winning inspirational speaker, best-selling author of several books on sales & marketing and Real Estate investing courses. He’s the recipient of “Thought Leader of The Year” by the National Academy of Best-Selling Authors.
Roger is the chairman and founder of The Winner’s Circle, the largest and most respected invitation-only Mastermind Forum for top level business leaders and highly successful entrepreneurs. (www.JoinMyWinnersCircle.com).
Prior to founding TWC, Roger was a full time Real Estate Investor. He & his partner owned over 500 houses in the greater Tampa Bay area and his latest acquisition is the 38,000 sq. ft. home, which is the largest private residence on public records in the greater Tampa Bay area, where all TWC Mastermind forums take place today.
In 1990, he joined the team of world-renowned author and inspirational speaker Anthony Robbins. As Tony’s number one speaker & trainer, he has delivered over 3700 professional talks to various corporations, non-profit organizations and educational institutions in North America, Europe and Asia.
As a pioneer in Internet Marketing, he joined a start-up venture in 1998 and with a core team the company went to 2 billion in market cap during IPO in less than a year. He was responsible for three divisions and its sales and marketing efforts, strategic alliances, new business development and channel expansion involving $35 million in annual revenue for this B2B e-commerce imaging service provider.
He’s originally from Bangladesh and now resides in Tampa, Florida. He’s a graduate of UCLA. He has 3 lovely daughters and is most passionate about sharing knowledge and empowering people to reach higher levels of personal & business success!
Female Voice: 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 then 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 twenty years and currently owns properties in eleven states and seventeen 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 309, three hundred and nine. Thanks so much for joining us today. I’ve got Michael, one of our investment counselors, you’ve heard on the show before with me and we’ve got a couple of things to talk about before we get to our guest today, and I think we’ll have time for a caller as well, after the guest with — with a good question. Michael, how are you?
Michael: I’m doing great today Jason. How are you?
Jason Hartman: Well, good. It’s great to have you back and you’re probably thankful that you do not live in or bank in Cyprus, right?
Michael: Yeah, you can’t say that with enough emphasis. I mean it’s just absolute craziness about what they’re doing over there and you know I certainly hope it never comes to the U.S.
Jason Hartman: Well, it may well be coming to the U.S. You know that bank holiday — the banks just opened this morning, and that was the first time people could get access and you know, I saw the images on TV of people crowding and pushing and shoving to get into the bank, but they instituted pretty severe capital controls and if I recall correctly, it said that you could only withdraw three hundred euros per day, so that’s basically like an ATM. I mean you know what if you need to pay your rent or make a big purchase? Only three hundred euros per day which is — I — I think that’s equivalent to about three hundred thirty dollars now if I’m not mistaken. I haven’t looked at the euro exchange rate, but three hundred euros per day and if you’re traveling abroad, you can only take out of the country, one thousand euros, and if you’re a business person, you can — any transaction over five thousand euros is going to be scrutinized and has to be approved by the banks.
So, I mean can you just imagine the insanity of this? I mean, even if it’s not the end of the world financially for anybody who lives in Cyprus, maybe it’s — it’s just a massive inconvenience, but the concept Michael, of this happening is so, so scary. It is just chilling that that could happen. And that’s what I say to our — our listeners when it comes to investing. Own and control things. Things are harder for the government to get at. Money that’s a paper transaction or I should say, currency in a bank that’s real easy, currency in a brokerage account, really easy.
One of our former investment counselors that worked with us years ago, he grew up in Burma, now Myanmar, and that recently opened after being communist for so many years, and I remember him telling me this story, Michael, about how when things were nationalized there — okay, when the Chinese came in and — and took over, his parents owned a business and they — they would — they sent in two book — one or two bookkeeper type accounting people and a soldier, okay or two solders, I’m not sure, and came into the business and said, okay let us see the books. Let us see the cash register. Let us look around and you know, the government is taking over the business. But oddly I said, well what happened to the real estate you know, because they owned real estate and they said, no they didn’t bother — they didn’t do anything with the real estate, they just wanted the business. They wanted to control the commerce and the production. They didn’t really consider the real estate although you know it’s kind of a business too, especially rental real estate. It — it’s not a — it’s not like a — consider it as much in the GDP of the country right, so scary, scary times here, scary times.
Again, what’s going on in Cyprus is not communism or nationalizing. Well, in a way it is nationalizing the bank accounts, but not all of the money but it’s — it’s – it is scary. I mean, that is a very scary thing. I — I — I go online and I look at my bank balances and I’m thinking God, what if I didn’t have access to this money tomorrow? I mean, that — that would just be unbelievable.
Michael: What I think people don’t know — I’m not totally sure about this, but my friend that has lived in Barcelona for eight years, she said that virtually nobody uses credit cards over there, that it’s really a much more of a cash economy in Europe.
Jason Hartman: They don’t trust —
Michael: So —
Jason Hartman: — the system. Yeah.
Michael: Yeah. Well, they just don’t have — that’s why we’re in the state we’re in right now with our credit issues in the U.S., but you know some people may not understand the magnitude of not being able to pull out cash on a — you know, on a ready basis like that.
Jason Hartman: It’s so — it’s something really like electricity that we just kind of take for granted and it may not always be there. So, we’ll talk more about this in the future and how to protect one’s self. Be careful with — I know there’s a lot of people that want to run to go move their money offshore and all this kind of stuff. Folks, be really, really, really, really, really careful, okay. There are — just — there’s no end to the number of scams in that world and it’s just problematic. I would say, get yourself a bunch of rental properties, have as much debt as you can get against them and have a little bit of gold and silver. Don’t keep it in your house. Certainly don’t keep it in someone else’s vault. We’re going to talk about that in a moment, and — and — and some big scams going on there. Talk about fiat money with that zero hedge article that you just posted yesterday. We’re going to get to that in a moment, but amazing stuff. Yeah really, really scary stuff.
So hey, I think the first thing you wanted to talk about today is this article about — about the demand for rentals, right?
Michael: Yeah. So, this is an article that was on Fortune — online, and it just said — the title is Why Renters Are Still Driving America’s Building Boom? So — so, they brought up that construction of single family homes grows to nearly a five year high in February according to the commerce department. This is a point five percent rise to a rate of six hundred eighteen units, which is the highest level since June, 2008.
Jason Hartman: Hang on one second. That’s six hundred eighteen thousand units.
Michael: Oh, six hundred eighteen thousand units, yeah.
Jason Hartman: Yeah. Okay, go ahead.
Michael: This follows at thirty one point five percent rise in single family construction in the last year, but they point out you would generally think this is going to suggest that home buyers are going to buy these homes and that’s driving the demand, but it’s really renters that are playing an unusual role. So they said that thirty three percent of all residential construction today is multi-family and that’s markedly higher than an average of nearly twenty percent over the past two decades.
Jason Hartman: You know Michael, I think this really gives our investors an edge, because the bulk of our business is single family homes, and obviously a lot of people right now, and that’s what this article is about, wish they could buy a home but their credit has been destroyed because of what’s going on over the past couple of years and fico scores have plummeted. Some people are kind of getting back on their feet, but again folks, I stress this is not a real recovery. It’s a smoking mirror’s recovery, you know in every part of the economy almost, but you know it’s inflation induced and — and whatever. People feel a little bit of the wealth effect for a while and — and then you know, inflation catches up with them and then they — they realize they were only treading water. Some were falling behind, some were getting ahead, all depending on the way they were managing their money, their lives and their investments.
But yeah, the — the building is happening and a lot of it is in the world of apartments, but most people, especially if they have a family, they want to live in a single family home and that is I think really, really good for us as investors because the bulk of our clients are buying single family homes and we will provide for years to come this rental housing in single family home product and single family markets, where especially that — that tenant that is a family oriented tenant can really, really — they’ll really create a lot of bus — demand for this.
Michael: Yeah, yeah. So, there’s no doubt about that.
Jason Hartman: Yeah. What else about this article — you know, it’s — it’s amazing about the rent versus buy analysis. Truly, we had their chief economist on and we’ll publish that show here soon. By the way, the next show number 310 will be Jack Canfield. You certainly recognize his name, co-author Chicken Soup for the Soul and so many other things, but I interviewed him about a month ago and — and he’ll be number 310 as we do our tenth show. We always do a –a non-financial topic necessarily on the 10th show. So that will be up next.
But truly as rent versus buy report — I mean it mentions that in this article and their chief economist talked about it a lot in the interview, and it’s a — it’s a great time to buy, but people just can’t do it right?
Michael: Yeah. I mean, you’re coming out of a financial crisis where people’s you know credit has just completely been destroyed and more importantly, they just don’t have jobs and we’re — you know, we see the — the games that are being played with unemployment numbers. They seem like they’ve gone down overall in the last couple of years but there’s just so many people that were discouraged that are out of the work force or they took part time jobs, so they can’t afford to buy any homes even if they had the credit, and the people with the money, don’t have the credit either. So —
Jason Hartman: Yeah. And — and – and — and if it’s — you know, it’s a real quandary because housing affordability is at the highest rate it’s ever been, yet credit scores have plummeted and of course people are under employed. It’s not that they don’t have jobs, they’re just so under employed. I mean, you walk into Starbucks and order a coffee and you realize the person serving you the coffee has a master’s degree. Hopefully it’s not in philosophy or feminist studies or something that is not very employable. You know, hopefully it’s — yeah but — but even when it’s in engineering — I mean, people are under employed. It’s pretty amazing what’s going on out there.
And — and folks, if you think that that’s a big problem like the usual question is hey Jason, you’re pessimistic about all this. Well, who’s going to rent my house? You know, listen to the prior shows. I explained that about the ladder. People are moving down the socioeconomic ladder. You’re catching them as they come down that ladder and providing rental housing to them. There’s a — they’ve got to rent something. They’re just not going to live as nicely as they did before. I mean, my contention is that Americans are getting poorer. The vast majority of them are.
Michael: Well, I don’t see any sign of a slow down of that student loan bubble. Every week I talk to people and some of them are successful, some of them have been displaced in this — in the crisis but constantly people say you know what, I’m going to go get an MBA and my first thought is, it’s not going to pay off. I mean —
Jason Hartman: Yeah, it’s not worth it at all.
Michael: So, they’re going to take on a one hundred thousand dollar you know loan for you know, student debt and they’re thinking they’re going to come out and get a job for one hundred fifty thousand plus dollars that I — I can only — I don’t know. I have no idea what the numbers are of MBAs, but there’s so many that are going to be — have MBAs in the next three years that it’s going to get you probably a sixty thousand dollar job if it gets you a job at all.
Jason Hartman: Yeah. I think the whole college thing is a little bit overrated. I hate to say that because I’m very much in favor of education. Obviously, that should go without saying, but the whole thing’s kind of become a bit of a racket, to say the least, and we’ve talked about that before on the show, so we won’t go into it.
But hey, let’s — let’s talk about this chart that I just created, this new spread sheet and I’m going to get this posted on — I guess we’ll post it on the blog section of Jasonhartman.com or maybe in the resources section, but we’ll get it posted for you. I just created this and — and Michael, I just shared this document with you and this folks, is amazing. I can’t believe after all these years I’ve been talking about inflation induced debt destruction and I never actually did a spreadsheet on it. I always tried to just explain it, but I actually sat down and I did a little spreadsheet on it and this is amazing because it shows you exactly how it works. And basically look at it this way folks, I’m going to give you a lot of numbers here, but you don’t need to worry too much about the detail or the numbers. They’ll be on the website at Jasonhartman.com.
What you do need to focus on though is the concept and just notice how the numbers keep getting better. Okay, so what I did is I took a one million dollar loan amount. You know, say you bought ten single family homes and each of them cost one hundred twenty thousand dollars and you had one hundred thousand dollar loan against them — just — you know, as a very rough example. So, you have one million dollars in mortgage debt. Now for purposes of this example, let’s assume that you have an interest only loan and the reason I want you to use that assumption rather than an amortizing loan, Amorite is from the Latin origin and that means to kill — to kill the mortgage. When you amortize the mortgage, you pay principle and interest. So ultimately, you kill the loan in thirty years on a residential mortgage. But here the first ten years in this example, because for the example it really shows you the way things work. It’s interest only, and I’m — you know, I’m not even saying you can get an interest only loan. It doesn’t matter. What I’m trying to explain is the concept that you’re not paying down any principle. What is paying down your principle? Inflation is paying down your principle.
You know that’s my favorite phrase and it’s my trademark, inflation induced debt destruction and we’ll — we’ll make a little acronym for it. We’ll call it IIDD, IIDD okay? And — so here we start with a one million dollar loan amount and we have an inflation rate, which I think we already have of about ten percent. Forget about the official statistics. They’re totally maligned. We all know that if you’ve been listening to the show, you know we’ve talked about that at –at length and in depth.
So, here we have an inflation rate of just ten percent like it probably is now and what we’re showing here is how in — inflation is paying down your loans. Now, I’m going to give you a specific example rather than talking conceptually about it. So, one million dollars at the end of the first year, inflation has “paid off” one hundred thousand dollars in your loan amount or ten percent.
So in real dollars, what I’m calling RDL, real dollar loan, RDL, your real loan amount is nine hundred thousand dollars at the end of year one. Now remember, you didn’t pay any principle on the loan so your mortgage statements still say you owe one million dollars, but in real dollars the value of those dollars is only nine hundred thousand dollars. And if ten percent inflation occurred, if you had one point two five million dollars worth of real estate, then you got ten percent increase in the price of that real estate. But see, most people think the appreciation is the profit maker, and I say it’s not because I — you know in most cases the real estate is just — it’s just out pacing inflation by a little bit. It’s not making a major increase.
What creates the wealth is the inflation induced debt destruction, the IIDD, and the leverage that you get so that you can out pace inflation and then of course, cash flow, tax benefits, everything else — all the other beautiful multi-dimensional characteristics of an income property investment. So at the end of year one, in this is an example, you owe in real dollars, nine hundred thousand dollars. Now Michael, are you looking at the spreadsheet with me?
Michael: I am.
Jason Hartman: Okay. Let’s get another voice in here. At the end of year two, how much do you owe? You’ve take nine hundred thousand dollars, inflation pays off ten percent of the nine hundred thousand dollars, so inflation just paid another ninety thousand dollars on your loan. It’s only two years have gone by and irresponsible government spending, Ben Bernanke, a bunch of stupid social programs that don’t work and actually make people weak and make — make people who are pulling their weight, upset, has paid off one hundred ninety thousand dollars. How much do you owe now?
Michael: Only eight hundred ten thousand.
Jason Hartman: Wow, this is getting pretty good. Now, what I didn’t do and I probably should have done it right alongside this spreadsheet, but check this out. Remember, let’s look at what’s happening to the price of the properties. We started out — remember I said the houses were one hundred twenty five thousand each, so one hundred twenty five times ten is one million two fifty. So, at the end of year one — oh, at one hundred ten percent — at the end of year one, we’ve got one million three hundred seventy five thousand dollars in — in nominal price or value of the properties. At the end of year two, let’s add another ten per — or one hundred ten percent here. We’ve got one million five hundred twelve thousand five hundred, but our real amount owed is eight hundred ten thousand dollars even though our mortgage statement says we owe one million dollars still. The value of a million ain’t what it used to be, because of inflation induced debt destruction. Let’s keep going. What happens at year three, Michael?
Michael: Okay. So, at year three we do another ten percent, which was eighty one thousand of IIDD and we end up with a real dollar loan amount of seven hundred twenty nine thousand dollars at that point.
Jason Hartman: Boy, this is getting good now let’s see what’s the value of the properties now. We’ll take one million five hundred twelve thousand five hundred, which was ten percent at two years. Now we’re going to add another ten percent to that in appreciation and we’ve got one million six hundred sixty three thousand seven hundred fifty dollars, but again, I’m not saying you made any money on the value increase because all you did there is keep up with inflation. If inflation occurred at ten percent, and your property value went up at ten percent, you didn’t actually make any money yet because all you’ve done is tread water. You kept pace which, hey it’s better than if you had that money in the bank you would have lost, okay. So, you kept pace but with the leverage and the inflation induced debt destruction, you’re killing it. Your wealth is being accelerated so much faster than the rate of inflation. It’s just an incredible thing, okay.
We’re at year three right, the end of year three, now?
Michael: That was then end of year three.
Jason Hartman: Okay. What’s year four?
Michael: So year four now, we were at seven twenty nine thousand. Now we’re going to take off seventy two thousand nine hundred and we end up at six hundred fifty six thousand one hundred dollars for a loan — for a loan balance.
Jason Hartman: Okay. And I’ve got the calculator going here. Now the value of the properties is one million eight hundred thirty thousand one hundred twenty five dollars and you said year four, what do we owe in real dollars?
Michael: We owe six hundred fifty six thousand one hundred.
Jason Hartman: Wow, this is getting good. Okay, without boring everybody further with all these numbers on the — on the ultimate hidden wealth creator of income property, let’s look at year ten. Let’s just fast forward because in year ten, think about it folks, it’s now 2023 okay. It’s hard to say that. I’m not used to saying it. It’s 2023, the population of America has increased dramatically. Texas has probably succeeded from the union by now. Hey, maybe we shouldn’t laugh about that it might really happen, and inflation is probably run rampant. What we owe in real dollars, we still — our mortgage is — our statement — because its interest only, still says we owe one million dollars, but ten years later a million ain’t what it used to be. A million is worth a lot less.
Michel: Yeah. A real dollar loan amount at that point is only three hundred forty eight six hundred – three hundred thousand forty eight — I’m having trouble.
Jason Hartman: You know, let’s just round off. It’s three hundred forty eight —
Michael: — all right, three hundred forty thousand.
Jason Hartman: Yeah, it’s actually three hundred forty nine thousand if you round off, okay.
Michael: Okay.
Jason Hartman: And you’re an Engineer, so I know you’re a detailed guy, okay. So — so, three hundred forty nine thousand dollars is what we owe in real dollars. Now the properties — I didn’t do the calculation, although they’re worth well over two million dollars now, you know probably in the high two millions at ten percent a year, right. I didn’t — I didn’t calculate that. I’ll add another column to this. Maybe I’ll do that before we post this spreadsheet so people can look at all the numbers and tear them apart and analyze them. But look at this Michael, the — what is the pay off? I made that in green that line here. How much — over ten years, how much of this debt did inflation “pay off” for us?
Michael: So, it’s just a little bit more than six hundred fifty one thousand dollars.
Jason Hartman: Wow awesome, the awesome compounding power of inflation. Now you know what’s interesting? You can do — you can just use this example a whole other way. You can assume that someone had one million dollars in the bank for ten years and we had ten percent inflation. You know how much they had at the end of ten years in real dollars, three hundred forty eight thousand dollars – three hundred forty nine thousand dollars. Now granted they got a little bit of interest, but about forty percent of the interest they got went to the government because they have to pay taxes on it. They’ve just been killed. They —
Michael: Yeah.
Jason Hartman: — they’ve been wiped out. Inflation wipes out savers. Inflation transfers money from lenders to borrowers. The borrowers win like crazy in an inflationary environment. And now, we did the example at twenty percent inflation which is still historically speaking, for countries that have been in massive debt like the U.S., and are basically sort of insolvent, you know at least looking at the balance sheet they’re insolvent, unless we tap our natural resources, but it just — twenty percent inflation which is really no big deal. I mean in real inflation terms, I bet we — we experienced real twenty percent inflation in the Carter error in the late ’70s. We won’t go through all the numbers, but one million at the end of the first year, goes to eight hundred thousand and at the end of ten years, that one million dollars is only one hundred seven thousand dollars. Inflation has paid off eight hundred ninety two thousand six hundred twenty five dollars and eighty two cents in inflation induced debt destruction at the end of ten years based on twenty percent inflation. In other words, inflation has almost totally wiped out your debt in ten years. You owe — you owe about ten percent of what your mortgage statements says in real dollars. I mean, wow, awesome.
Michael: It’s just the ultimate transfer of wealth and — so, if you’re a borrower you’re going to take advantage and you’re going to transfer the wealth from the lender to yourself, but if you’re the lender, it’s going to go the other way around.
Jason Hartman: Yeah.
Michael: So, make your decision of which way do you want the wealth transfer to happen?
Jason Hartman: And this is exactly what the government’s business plan is. This is exactly what we’re doing to our trading partners. We — we give China our — our fiat treasury bonds and our dollars. We give them to Japan. We get all the stuff. They get the fake money, the fiat currency and we are debasing it through inflation so it will be easier and easier to pay off. You want to be folks, on the side of that sort of power. We are going to debase the debt to — that we owed these other countries and we — we don’t have the default. We just pay back in cheaper dollars, and — and they know we’re doing it, but what can they really do about it? It’s the way of the world. Inflation is the way of the world. It’s historically proven, you’ve got to get on the side of this powerful, powerful force. It can be a powerful force for profit or a powerful force to really ruin your lifestyle.
I mean, if you’re — if you’re saving money in — in dollars or any fiat currency, you’re going to get creamed. The only hope you have if you’re doing that plan is for massive deflation. And the likelihood of that is fairly low, pretty darn low, I’d say.
Okay hey, let’s go to that article real quick, because we’re funning out of time and we’ve got to get to our guest, but the zero hedge article Michael, you found that yesterday. Wow.
Michael: Okay. So, this was in — should we just validate you Jason, because this is what you’re always saying about precious metals and whether you really own them or whether you don’t really own them.
Jason Hartman: I’m going to gloat here, okay —
Michael: Okay.
Jason Hartman: — and say I’m right, yeah.
Michael: So — all right, the article on zero hedge was that physical gold you thought you owned? You didn’t. Now I’m actually off — I’m on the — the U.S. commodity futures trading commission site because I wanted to see the real press release from them. So interestingly enough, there’s actually two sets of crooks in this article and I won’t mention the names of the companies involved, but what happened was, they issued an order —
Jason Hartman: Why not?
Michael: — oh, do you want me to?
Jason Hartman: Name names —
Michael: Oh okay on that.
Jason Hartman: — these crooks should be exposed. I mean, I see John Corzine’s name in here.
Michael: Okay. So, the CFTC issued an order settling charges against two Boca Raton, Florida companies. Joseph Glenn Commodities, LLC and J.G.C.F. LLC and also — so the principles were Scott Newcom and Anthony Puleori. So, they were engaging in illegal fraudulent off exchange financial transactions in precious metals with retail customers. So basically what they were doing is they were soliciting customers to buy physical precious metals, gold, silver, copper, platinum, and then they were doing what’s known as off exchange leverage transactions.
So, they had the customers pay a portion of the purchase price for these metals, then purportedly they financed the remainder of the price and charged the customers interest on the amount they purportedly loaned to customers. So, this is the first violation. The CFTC actually had said that these financed off exchanged transactions with retail customers have been illegal since July 16, 2011. So, that was the first problem that these guys got into is they’re not even allowed to do this to begin with.
Furthermore, the CFTC said that Joseph Glenn and J.G.C.F. engaged in these illegal transactions and they were acting as dealers for a metal merchant called Hunter Wise Commodities, LLC. Well, Hunter Wise was supposed to be the source of metals for the — and the loans for Joseph Glenn and J.G.C.F. However, neither Joseph Glenn, J.G.C.F. nor Hunter Wise purchased or held metal on the customer’s behalf or disbursed any funds to finance the remaining balance of the purchase price. So —
Jason Hartman: Unbelievable. Does — doesn’t this — Michael, doesn’t this just amaze you? It’s like I always say, you know about the — the Peter Schiff thing right, he’s totally right. His premise makes perfect sense and then he’s telling people to go buy gold and keep it in the Perth Mint and it’s like oh, okay. So, I get a — I get to give you dollars for a piece of paper saying I own something. This is a joke. I mean, I hear the commercial literally every single day when I get in my car or turn on the radio in my house. I hear commercials for Republic Monetary Exchange, Blanchard, they’re a gold dealer, Scottsdale Bullion & Coin, Monex, Lear Financial or all these companies that are — or these gold dealers and they say this, they say own physical gold in your IRA or physical silver. Folks, news flash here okay. Here’s the first news flash. You can’t own physical metal with your IRA without breaking the law. And this is what I mean by that.
All these commercials, I think it’s a misnomer. If you want to be more specific, call it a lie because it’s a lie in my opinion, okay, but — but what they’re saying is that you give them your — your dollars and they will buy gold or whatever metal in you name and they’ll stick it in a vault somewhere and your IRA owns it if you buy it in the name of your IRA. And then there are some people that even say, you can take possession of physical metals in your IRA. You cannot do that. It’s not an arms length transaction, if you do.
So, in your IRA — self directed IRA, you cannot invest in collectibles like — or you cannot take possession of them, okay like art or gold or silver or any of this stuff, or even if it’s bullion, you can’t take possession of it. If you do, you’re breaking the arms length rule, okay. Now check with your accountant and your lawyer on this. I’m just giving you the concept. I’m not an accountant. I’m not a lawyer, but they — they say take possession of it. So, it’s a total misnomer when they say own physical gold. Well, I don’t know what the difference is between buying gold certificates on the Comex Exchange. It — it — what’s the difference? I — I mean, it’s just dumb. It — it makes no sense to me. If you want to own these metals, you take possession of them and you hold them in your hand and then you go stick them somewhere where nobody knows where you put them, like we talked about on the last show and certainly don’t keep them in your house. And it’s probably not safe to put them in a safe deposit box either. I’ll let you figure out the rest of it.
Michael: I guess pirates had it right a long time ago just find a — a remote island and bury it and then leave yourself a map.
Jason Hartman: Yeah. And — and — and leave someone else a map because when you die someone better be able to find it, you know. That’s why — I guess that’s why there’s still treasure hunters and you can — you can still find the stuff, so very interesting. But what — what else about that article? I — I mean another gold scam, imagine that.
Michael: I mean, it just shows you that these guys weren’t even following the CFTC’s orders, so you’re just potentially getting in bad with people that are breaking laws just across the board let alone whether they’re even trying to make an earnest effort at the end of the day to do what they’re saying – they’re — that — you know, the service that they’re offering.
Jason Hartman: I am pleading with you folks, be a direct investor and only invest in stuff you actually own and control like income property, okay. Don’t — don’t get into these funds and these pooled money deals and — and stuff like this. It just always seems to end badly. They’re — that’s my opinion. But yeah, thank you for bringing this article to our attention. I mean there are — there are so many things like this. You know, own physical gold in your IRA, you might as well buy some stock and put it in your IRA. It’s the same thing, it’s a piece of paper. That’s all you’re getting. Unbelievable, just how — how do people get so ignorant that they do this stuff? Anyway, whatever.
Okay hey, we got our Memphis property tour coming up. We’re going to have the price going up soon. The early bird price is going to end because we’ve had quite a few people registered, but join us for that.
You know Michael, I really want to see if we can arrange dinner Saturday night at Graceland.
Michael: Oh wow.
Jason Hartman: You know, the spirit of Elvis, but I don’t know if we’ll be able to pull that one off. But hey folks, we’re trying on that one, okay. I’m just going to tell you, we’re trying to see if we could do it at Graceland and that’s coming up at the end of next month, so get booked for that. Memphis has got some great cash flow properties and we’ve got two vendors that are doing that tour with us. So, you’re going to see two different product types. You’re going to see a variety of investments and of course, you’ve got the creating wealth boot camp there nine hours where you’ll get all — all the first hand education from me and the rest of our team and so that will be a great event. Anything else, Michael?
Michael: No, I think that’s it. Plus in — investors always chime in at your events and they always seem to share other things that other investor’s questions they were dying to hear answered. So —
Jason Hartman: Yeah, yeah, absolutely. And you know what I love about our events, I love just sharing so many meals with our attendees and talking to them and you know, hearing their stories and their experiences and the great networking that they get sharing this stuff with each other and overcoming challenges and things like that. Live events still have a place as — as much as technology has done for the world, live events are still pretty good.
Hey, we’ve gone so long. I don’t know what we have time for after this, but I — I — I — if — if we didn’t have time for our guest today because we — we talked too much, maybe we can just put the caller on. I’ll leave it up to our producer to decide what comes next, but thanks so much for joining me today, Michael and we’ll have you back on the show and everybody we’ll be back in sixty seconds with something else, I’m not sure yet but we’ll be back in sixty seconds. Okay, thanks.
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Jason Hartman: My pleasure to welcome Roger Salam to the show. He is an award winning inspirational speaker, a best selling author of several books on sales and marketing and real estate investing courses. He’s the recipient of the Thought Leader of the Year Award by the National Academy of Best Selling Authors and chairman and founder of the Winner’s Circle, and I should also mention to you that he lives in a very small home, a 38,000 square foot mansion in Tampa, Florida. So — wow. That must be a lot of work to maintain that, but let’s hear about it. Roger, welcome. How are you?
Roger Salam: Thank you, thank you Jason. It’s my pleasure to be here.
Jason Hartman: My pleasure to have you on. I’ve been following your work for a couple of years and wanted to get you on — on the show. Now you know, are you originally from Bangladesh?
Roger Salam: Yes, I’m originally from Bangladesh. I usually joke, I’m from outer space.
Jason Hartman: Yeah well, that’s what most people probably think. Few people have been there.
Roger Salam: Yeah.
Jason Hartman: But tell us a little bit about your background and how you got started. If you want to take it all the way back to Bangladesh, feel free to do so.
Roger Salam: Absolutely. I came here to go to school. I went to UCLA and then after graduation — and I started in — I was in California. That’s where I met Anthony Robbins at [inaudible] seminar and I was so inspired and I said, I want to master what he’s teaching instead of gambling in it, and what better way to master than to work for him? He’ll make sure I live it otherwise he’ll fire me. So, I went to work with him for — I used to be on the road forty eight weeks out of the year and traveling, and I did that for five years in the ’90s and then a few years after that as a consultant to Tony Robbins and I opened up UK for him and then in the late ’90s, I jumped into the internet band wagon, because I said that’s a new frontier and took a company from nothing to two billion in market cap in a short period during the ’90s — internet boom but I was also — went from dot com to dot gone.
Jason Hartman: Right, right. What — what company was that?
Roger Salam: It’s a company called IPIC Internet Pictures Corporation. You know those pre [inaudible] virtual technology —
Jason Hartman: Oh Bamboo, it was called Bamboo originally, yeah I remember.
Roger Salam: Exactly. So, I was — I was actually even before Bamboo. I was the start of a Jug Vision and Jug Vision turned into Bamboo and then Bamboo and IPIC combined and they took it [inaudible] IPL market. I was of the early one. I lived there and thought I was set for life financially and when the stock market crashed, it took me with it and I — I joke that when the stock market crashed, I slept like a baby, woke up every hour and cried.
Jason Hartman: Uh huh, yeah. Right, right.
Roger Salam: And —
Jason Hartman: That’s – that’s terrible. Now with IPIC’s or Bamboo, what was your position there? Were you at early hire or the creator or —
Roger Salam: Yes, I was the — I was one of the early hires and I was running three divisions of IPIC from — started with the regional — regional director — six regional directors as we broke up the country and I took the southeast from here — for the U.S., and then wanted to build up the region, I — [inaudible] verticals. I was leading and we took what, thirty five million in revenue out of — from nothing within a year and then — when we — when IPO — literally our evaluation was over two billion dollars and one of the hottest IPOs back then. The stock was strangely at fifty and I was — I thought that how do you diversify when I can take it to 100 and that it would be able to [inaudible] practically be — be lifted and stuff. And — and this is that — you know, with every adversity there is a silver lining and when — when it — part of life you know when you have to go through a crash like that, life it over and you could feel sorry for yourself late night, I can’t fall asleep, I am — I’m watching infomercial and all of a sudden this guy comes on TV and says, hey you can make money in real estate with no money, no credit.
Jason Hartman: Which — which guy was that, just out of curiosity? Was it Carlton Sheets or —
Roger Salam: No, it was — it was Russ Whitney.
Jason Hartman: Okay yes, I remember seeing him many, many years ago when he was a nobody, yeah. Great.
Roger Salam: Yeah, and Russ Whitney — and I literally looked at him and I told myself that no money, no credit, I qualify and I couldn’t go and I went there. That was — and I bought my first house in 1999 and I went full time right — right then and there and I didn’t have the money but I had the belief in me and I said if anybody can do it, so can I and I just believed in it and I went to seminar after seminar, boot camp after boot camp and believe me it was — some people looked at me and this is later when I realized that one of the reasons for my success — I had what was going to be almost twenty five thousand dollars for the first seminar that I went to because it was one of those free to get in but not free to get out and — and I — I went there. Look, I invested in myself before I invested in real estate and some people looked at me and said, for twenty five thousand you could have bought houses with those and you don’t even need to go to a seminar. That’s the reason I think I believe over the — the years, me and my partner, we both owned over five hundred houses in the five counties around Tampa Bay and my latest acquisition was in 2008 in this thirty eight thousand square foot home and I’m not telling you that to impress you — but to impress upon you but — and I don’t even live there. And yes, like you said to me, the production and the maintenance — and there’s thirty nine separate a/c units in my house.
Jason Hartman: Oh my gosh. Wow.
Roger Salam: And — I — I —
Jason Hartman: You’re — you’re carbon footprint is larger than Al Gore’s.
Roger Salam: Yeah, it’s a separate power plant [inaudible] bad. And I use it strictly for my master mind events there because — so that my friends and my guests — members can come and stay there with me and — and believe it or not, my — I didn’t buy it for my ego. Then I would have moved in there. I live in a very normal house. It’s a three thoisand foot [inaudible] house not — nothing too bad, but this is an easy house. And I have another house on the water and — and stuff, but my house is a normal standard house, three to four bedrooms, two baths, a full house and the kids and stuff, so that’s — but this particular houses — the other one is just to show my real estate investor clients and my other real estate guru friends what is possible. And I have learned that I did not buy this mansion because I’m such a good negotiator or anything or I could afford it. It came to me because I believe in building relationships first.
Jason Hartman: Tell us about your first deal and how you worked your way up. I mean, your — your first deal was in 1999, it was a single family home and what — what did you do? Did you buy it and flip it? Did you keep it? And where’d it go from there?
Roger Salam: Here’s the thing that I — I — I built my signature story of my — my [inaudible] and stuff, and I still have it and — 3937 Ninth Avenue South. I can buy hundreds of homes. You’ll never forget your first one, the address and everything, and one question changed my life. My mentor — and part of the twenty five thousand dollars that I — I bought it was a part of — my mentor came to town and walked me through it.
Believe me, I’m just like the next guy that’s hearing these things, first time getting into real estate, it’s not the knowledge, it — it’s con — lack of confidence and I went to seminar after seminar. I went to three boot camps and I — I was getting ready to get ready to get ready and I was so scared to pull the trigger, the first house then finally, I think I’m going to go to the next one, then — and I even — in between — we went on a bus tour — I went on a bust tour and I still didn’t pull the trigger. Finally, the mentor came to town and he said that hey, you gave me homework that we’ll go to these low kind of neighborhoods and — and have some properties lined up and we’ll go take a look at it and I’ll walk you through how to — if it’s a good deal or not and the very first house we went to was this house. It’s a six hundred fifty square foot, two bedroom one bathroom home in — in the war zone. I didn’t know that it was a war zone back then and I thought it was just another low income neighborhood that’s ready to find deals and there was a single mother with a — a child living there and I walked through the house — and I — I joke, that the only reason the house was standing was because the termites were holding hands and supporting everything. My mentor in five minutes, he walked in and walked out and said, buy this house. And I looked at Mark and he was — and by the way, and — for — I bought it for sixteen thousand dollars and they were generally asking —
Jason Hartman: Did you — did you pay cash for it or —
Roger Salam: Yeah, I paid — I paid cash for it. I didn’t have the money. I — all I had was my — a credit card left. Remember, I — I had just lost everything, my — and my savings and everything and so I had a couple of credit cards and I bought this house with a credit card. They were asking — it was listed with the realtor for thirty something thousand dollars so I — I offered fifteen and they — they said no. They had two years of back taxes and stuff, so it came out to sixteen something and change for this house.
Jason Hartman: That’s — that’s amazing. So they — they took half price. That’s incredible. So, do you still own that property, then?
Roger Salam: Yes, I – what I — what I did is I could had flipped it for five — ten thousand dollars and that would have been awesome. What I did is, instead of flipping it I looked at the numbers and I put in twelve thousand dollars and I made — I bought everything new. I made the house new with new a/c, new windows, new roof, new bathroom, new kitchen — it’s a two bedroom, one bath. It’s a nice size lot with a fence all around it. I paid twelve thousand dollars in one yea — in one — in one month and it appraised at sixty five thousand dollars.
Jason Hartman: Wow.
Roger Salam: I was in it almost for — for — for — I lived there — I was in it exactly from everything and taxes thirty thousand dollars and it came out to sixty five thousand and I gave the lady who was living there the first right of refusal to buy it and she said she was going to buy it but she couldn’t qualify, and that’s when I learned about — every adversity in business, there’s a silver lining because she didn’t qualify so I had to do a lease option to her. Back then I could do a cash-out refi and there’s no seasoning.
So, I took my sixth five thousand dollar appraisal to the bank and I did a 80 percent cash-out refi. I got a check for fifty two thousand dollars, and so almost twenty two thousand dollar tax deferred money that I could use in my — right back then and I still own the property, and it was lease option so I didn’t have any maintenance and my cash flow per month was two hundred eighty two dollars, between what I —
Jason Hartman: Okay. So — so, now — okay, great. So now tell us, how did you jump up and start purchasing a bunch of properties?
Roger Salam: Yeah.
Jason Hartman: Where did you get the funding? How did you buy them? How did you structure your deals?
Roger Salam: Right on that same block, not even the same street — same street within the first ninety days — because this — I didn’t know it was a war zone. I just bought my house across — next door house, I bought it for twenty one thousand dollars and the next house I bought for two hundred fifty dollars and then four houses down I bought the house for twenty five thousand dollars and these are — they were owned by other investors and they flipped it to me because that — I’m the new idiot on the block.
Jason Hartman: And the year is 1999?
Roger Salam: This is — by now it’s 2000, because in December, 1999 I bought the first house and then I’m in 2000 already.
Jason Hartman: Okay so you — you were basically buying up like a block in a really bad neighborhood and improved it, right?
Roger Salam: Yeah, improving it, yeah.
Jason Hartman: Yeah. Yeah, I think that could be a pretty good strategy. I haven’t seen that many people do it but we have this sort of class of real estate Roger, that we — we just call sort of a junk homes, and my firm doesn’t really recommend them because I’ve seen —
Roger Salam: People get burned by that.
Jason Hartman: — yeah, no, no, no, I’m going to — I’m going to — don’t worry, I’m going to — going to come full circle on this, but the – they’re like of people that sell — now obviously, Tampa’s a much more desirable area but a lot of these are sold in really blighted areas of like Michigan, especially Detroit and Ohio, and these people are —
Roger Salam: And Cleveland.
Jason Hartman: — yeah, and Cleveland, yeah you know — you know exactly what I’m going to say and — and these — these people are buying these houses for five hundred dollars —
Roger Salam: A thousand dollars.
Jason Hartman: — you know maybe a thousand dollars at a time.
Roger Salam: Yes.
Jason Hartman: And these people are selling them for twenty five — thirty thousand dollars. It is a total rip off, right. But —
Roger Salam: Yeah.
Jason Hartman: — oddly enough, and I — it doesn’t work — nothing works really in areas where the population is declining and where you have this massively business unfriendly atmosphere like you do in many of these blighted, blighted areas, especially Michigan being the worst of the worst. But in — you know I always thought that – in like places like Orlando and you know, obviously in Tampa — you’re going to talk about that, you could — if you want to control a whole neighborhood —
Roger Salam: Yeah.
Jason Hartman: — you really could gentrify it if you have — you need some real resources, you need some money. Now you did it sort of one at a time. You know, it took a little while for you, I’m sure and you know, I’m going to ask you about that —
Roger Salam: Yeah.
Jason Hartman: — but if you had some real resources and you could buy a whole bunch of continuous properties, I think you really could ultimately improve an area. The problem is you have leases that expire at different times and you have low income people and you could have some bad PR come out of it. Maybe you’ve encountered some of these problems, but tell us more about it because I’ve always kind of liked that strategy. I actually tried to do it myself in Orlando and just really could never make it work. I’m not saying I dedicated a whole bunch of time to it but I did dabble with it. I — I tried to do it a little bit, but — but go ahead, tell us more.
Roger Salam: And — and really, this — this was my [inaudible] and I loved turning junkers into jewels and tell — call it accidental, the difference is when I took it — the reason on the same block all these investors were dumping their properties to me at this — and back then it was still — because the properties were appreciating everywhere, so we had — the appreciation was on my side. I did one thing. If I never — for most people especially the junker properties, their idea of rehab was a coat of paint on everything. That’s about it. If it’s a cabinet, just paint them over. Instead what I did, because I bought the properties so inexpensively that I can put — make everything new, brand spanking new, I still would be fifty percent or less than the appraised value.
So, if you know it’s good enough, it’s good enough. I believe they deserve a good home. I can tell you stories that this lady — that my first house that I was referring to, and she had five owners before me and she had been there for three years or something like that and nobody fixed anything for her because they believe — they didn’t believe in her. So when I told her that I’m going to make everything new, she didn’t believe one word I said until she starts seeing that I really meant it and — and she was staying there while I did this rehab, literally. So my — I mean, she moved her stuff from one room to the other and — and while we did that, from roof to everything. So now she had pride for the first time.
I single handedly changed that block, and I even put white picket fence in the front, because that’s — I believe that’s the American dream so when people would call for my properties on any block — which house are you calling about? I’m calling about the house with the white picket fence.
Jason Hartman: I — I love white picket fences. You know, I love that — that whole style, the cape code style with the white picket fence —
Roger Salam: Yeah.
Jason Hartman: — is like my favorite, and I hope you didn’t get any graffiti on your white picket fence and I hope the drug dealers stayed out. So — so you started doing more and more houses. I mean, I’m really — I think our listeners mostly want to know about like deal structure and —
Roger Salam: Yeah.
Jason Hartman: — and the path of progress here —
Roger Salam: Yeah.
Jason Hartman: — that you engaged in for your career. So take another leap. I mean, you bought a couple on that block, and then what?
Roger Salam: Then I started advertising. Now the formula is working. I started going to meetings and basically started to put a team together and said, I can do it. Let’s put a team together so I can skill the — the skill and start putting systems and process it in place before I — went parallel — those two went parallel and continue this improvement on that particular — and also along the same time, I started buying into say better quality neighborhoods and quite frankly, I didn’t know that was a war zone, and there’s a saying that that which does not destroy you makes you stronger, and believe me when you said the drug dealers, the drug dealers did go into my houses and they vandalized it but I — I have so much money in it that I fixed it again, and no problem. But it hit me but enough time to destroy it but I said you know what, this buy coming back and they left me alone. And I — I don’t have the time to tell you there’s a — I actually did the underground espionage with the city — I helped the city to bust the drug dealers and all I wanted was for them to do is get out of my neighborhood. So they — they went out and I bought better quality neighborhoods. This is the — called the south Saint Pete neighborhoods. I started buying them north Saint Pete neighborhood, and there’s a little big difference between north and south. North is a nicer neighborhood. I started doing this, and as far as the structure of these deals I also started seeing money from private lenders. I started doing private lending seminars meaning that I would host lunches and I bought a list of people with savings accounts that had one hundred thousand dollars or more.
Jason Hartman: You can buy that list?
Roger Salam: Yes.
Jason Hartman: That — that list is available? That’s interesting.
Roger Salam: Yeah, that’s —
Jason Hartman: I’d like to know where? I’ll buy that list too.
Roger Salam: [Voice over]. I’ll — I’ll tell you that any city — any list quite frankly, any good list broker would sell you that — and people who have one hundred thousand dollars or more in money market or — or savings account, and I would send them — hey, come and have lunch on me. And they would come and I would show them that hey, I’ll pay you twelve to fifteen percent your first time, just so that you know and then I said I’ll — I’ll stop at — if you want to continue doing business with me, it’s ten percent — ten percent — two points, but I’ll start with your twelve to fifteen percent [inaudible] my point, to show you that I want to do business with you and — so that was money for — as a matter of fact last night I had dinner with one of my private lenders. They all became friends and then the private lenders, when they saw that the kind of money that I was making, and then I offered them, hey you can be my private lender or you can be my joint venture partner, but if you’re a joint venture partner, please know that you’re now risking the profit and the loss. So yes, you — you got – I — I don’t expect to lose, but there — if there is a loss you’ll take it with me. And so some of them became joint — joint venture partners, and —
Jason Hartman: So — so really what you did is you found hard money lenders, joint venture partners —
Roger Salam: Yes.
Jason Hartman: — and then you lined up the deals and used their money to buy them?
Roger Salam: Yes.
Jason Hartman: Okay. And you expanded that to what? Where did it go? Tell me the ultimate conclusion of it.
Roger Salam: The ultimate — ultimate conclusion of it is that, I was doing it in Tampa and I have another friend who was doing it in south of Tampa, in Sarasota, Venice and that neighborhood and he was buying — driving all the way about — two hours south [inaudible] south two hours, and she was a big Tony Robbins fan and with my background with Tony Robbins, he — when he found out I was in it — and he was already doing well, and he and I teamed up and that’s where we really took it to another level. We started doing television ads and infomercials to buy – just for local — local markets. I had — I took vanity number, 1-800-sell now. I was the biggest sign polluter in my five counties — those bandit signs —
Jason Hartman: Yeah, the bandit — and — and just for those of you who don’t know, those bandit signs, you can — there are companies that will distribute bandit signs and so forth for you. I — I’ve never used them and — if I did, I’d tell you, but I never have. I always thought it was kind of a good idea, though unless the other [inaudible].
Roger Salam: And in return —
Jason Hartman: And — and — and — what?
Roger Salem: — I was —
Jason Hartman: Talk — let me tell our listeners what it is, first. And those are those — those crappy signs that are basically trashed that you see on street corners. A lot of them are yellow. You see things like —
Roger Salem: Yellow and black.
Jason Hartman: — real estate investor seeks prodigy, you know or mentee and —
Roger Salam: We buy houses —
Jason Hartman : — we buy houses —
Roger Salam: Cash.
Jason Hartman: — lose weight now, you know, are you single —
Roger Salem: Yeah, lose weight now. Yeah all the — especially election time, you see them all — everywhere, you know during election time those are bandit signs and I don’t know why — why —
Jason Hartman: [Voice over] campaigns, they’re — they’re actually allowed rather than for commercial use.
Roger Salam: Yes, exactly.
Jason Hartman: Go ahead.
Roger Salam: And —
Jason Hartman: The bandit signs had good results though, huh?
Roger Salam: Oh my God. I had letters — every week I had three people that — at mid –3:00 am until 6:00 a.m., they would go out and put five hundred to one thousand bandit signs a week.
Jason Hartman: What did the sign say?
Roger Salam: Cash for your houses, call 1-800-sell now. And then — and sellnow.com is their website.
Jason Hartman: Okay.
Roger Salam: And —
Jason Hartman: Now, what — so sell now, isn’t that a real estate franchise?
Roger Salam: Yes.
Jason Hartman: Was that — what did you own a franchise?
Roger Salem: Later on.
Jason Hartman: Later.
Roger Salam: Later on, so later on it became not — not a franchise, it’s — what we did is — wanted to sell territory for that phone number because that’s just a hot number. Other real estate investors in other parts of the country could call also and then based on the call origination —
Jason Hartman: Right.
Roger Salam: — the call was rerouted to them so we get the — they allowed us to do that.
Jason Hartman: Yeah right, right with the IDR system or distribution.
Roger Salam: Yeah.
Jason Hartman: So, is that your company, then?
Roger Salam: I bought the rights one night in Minnesota and I — I wanted a [inaudible] number and I looked for this and I saw that a guy in — a realtor in Minnesota had this number and all he was doing — doing was buying houses. So, he and I partnered up and I bought the rights from him to Mark [inaudible], and he had no — told me that Mark [inaudible] to be taking [inaudible] by perfecting my neighborhood then we’ll take it. And it was 2007/2008 and then later in 2008 when the market crashed, I — I abandoned it.
Jason Hartman: Yeah. Good wow, what an amazing story. So — so it was just you. You did that to just create seller leads is what you did?
Roger Salam: Yes.
Jason Hartman: Okay. And the bandit signs — now I have to ask you Roger, did you ever get busted for those bandit signs? Did the city ever fine you?
Roger Salam: Oh my God [voice over] —
Jason Hartman: — or the police calling you, because it’s illegal.
Roger Salam: Well, in — in every county the — it’s legal except maybe two counties in Montana. There’s only two people that live there.
Jason Hartman: But — but — but there’s no people there, so no one would want to put that —
Roger Salam: Yes.
Jason Hartman: And — and — and you know this is the thing, one — one thing the listeners have to realize is a lot of stuff has really changed since you did this, because —
Roger Salam: Yes.
Jason Hartman: — the city’s have cracked down on bandit signs, which kind of thankfully because it looks trashy, and also so they’ve really stepped up enforcement of that stuff and also buy the list of people with savings accounts. You can still probably buy the lists today from a list —
Roger Salam: Yes.
Jason Hartman: — but you can’t call it — you can’t email it. Everything’s illegal now days, you know. So —
Roger Salam: But direct mail is not.
Jason Hartman: Right, but it’s expensive, so — direct mailing then.
Roger Salam: You can do — you can do post cards. Just can do post card mailing and that’s what I did. Post cards are the least expensive of that. You can do it. And by the way, the main thing — how I got away with is I outsourced to a company and I was buying lead. So how generally is that lead now is their problem and — so I didn’t — I didn’t get into the lead generation part and I — and they put their company name — I — on each and every bandit sign and they — they deal with the company — not — not a Florida company, another corporation, but they would get — they find them in — in Nevada and Florida has to go through Nevada to find them. There are lots of ways back then in which I don’t — there are plenty of other ways. The internet is right now is so — so much better for some of these things that we’re doing, we did other ways back then.
Jason Hartman: So, you got the hard money lenders and you bought more properties and some of them joint ventured for you — how many properties do you own now?
Roger Salam: Right now I’m — I’m doing — I’m selling — I’m not holding property, I’m selling property. As I did — last week I made an offer for one hundred seventh five houses and I teamed up with — this is the difference that the — in 2008 I stopped real estate just almost cold. And this large portfolio home that I — I bought — my strategy was I bought these houses and then refinanced it where it was almost close to eighty percent and then sold it to the people at one hundred percent lease options. And I did a cash-out refi, but when the market crashed all of the properties went down to almost fifty percent in value. So now my — what I owed was more than what the — and the — and I’d still like to continue it but the tenants didn’t also moved and that’s when the property — the — that formula didn’t work because my expert strategy of how I set those up didn’t work. Every — everything worked for that particular time and then came the game of short sale. The short sale game became because then I had to go again with my partner to the bank and negotiate on all of these loans, and so hundreds of houses — just created a huge mess.
Jason Hartman: Who — so who are your lenders and are you still short saleing some of them out now?
Roger Salam: Yes.
Jason Hartman: Okay. So, I assume —
Roger Salam: [Voice over].
Jason Hartman: — I assume a lot of them were B of A loans, right?
Roger Salam: B of A which is – it started with Countrywide but B of A took over. El Guamo was another one, Indymac —
Jason Hartman: Washington Mutual, yeah.
Roger Salam: Washington Mutual and Indymac. There are four or five lenders and in a title company. They were — they put their office inside our office so — because we’re dealing with so many volume that they would put one of the reps inside so that we don’t even have to go anywhere to do closings or anything —
Jason Hartman: Just amazing.
Roger Salam: — it was one after another —
Jason Hartman: Yeah.
Roger Salam: — so you can — the volume shop and we — we did that and now we’re — we’re doing for — now we’re doing long term but I am doing kind of in a way what you’re doing.
Jason Hartman: Now here’s — here’s a question before you get to that. On the short sales, have you been making money on the short sales? I mean, it is amazing how B of A and other banks too are rewarding people for short saleing with them. They’ll pay you twenty five hundred dollars. They’ll pay you, you know, seventy five hundred dollars up to thirty thousand dollars now to just do a short sale with them. It’s — it’s unbelievable.
Roger Salam: Unbelievable.
Jason Hartman: I mean, who would have ever thought that you could profit by short saleing. The only problem is the damage to your credit report. That’s really — they’ll agree to a no deficiency judgment that they’ll never come after you. You do have a tax liability potentially, but it’s usually washed out by the capital loss on the property value, so it is unbelievable. You know most people think Roger, and they just don’t really understand the full depth of this stuff. They — they look at it from a surface and they say, short sale, you must have lost money or even foreclosure, you must have lost money. No, people are — are profiting from doing short sales and believe it or not foreclosures, because what they’re doing is they’re — they’re collecting the rent on these properties. And I used to just have a real big problem with this from a moral prospective, because in the ‘90s I — I was doing short sales as a realtor for my clients and I had a couple of properties in the ‘90s down turn, that I wanted to short sale and I just couldn’t kind of bring myself to do it. But now days, the banks they’re — they’re just — they’re just such criminal enterprises, you know. I mean really, no one could really disagree with that except a banker, you know would — would obviously take issue, but the activity that is going on now, I mean look, they’re entering into an agreement. I — I had — you know I did a show with a lawyer about strategic defaults and — from a company called Youwalkaway.com and it was really interesting. I kind of gained a new perspective on it from — from talking to him and they will reward you for doing the short sale with them. It’s counter intuitive. It’s amazing to me. I would have never thought in a million years it would have come out this way, but it — it has.
Roger Salam: You — you hit something. That’s one of the reasons I — I could have made a lot of money but because of one moral dilemma, I didn’t get into that side and with all of this happening — because it didn’t make sense to make the payment of the short sale, but then the — one step further is, if I’m not making the mortgage payments and then I’m renting those and keeping that rent money, that’s what I — I didn’t do. I said that’s why I have a problem with this. One thing is not making the payments because I — it doesn’t make sense financially to throw good money after bad. But then let them have it and these houses. Right now I know people in today’s market that’s a strategy that they’re doing is taking away all the houses that are behind and then [inaudible] just delay the foreclosure for four or five years and in the meantime simply collecting the rent. So then they put zero practically overhead. So I — I got out from — from that side of [inaudible]. I — I give them the houses back to the bank so they can do whatever they want to do. And they cut their loss and I’m cutting mine too.
Jason Hartman: Then it’s not really the bank’s losses, they’re just making money from the tax payers —
Roger Salam: Yes.
Jason Hartman: — and that will show up in higher taxes and inflation so ultimately we pay for all of that anyway.
Roger Salam: And — and — [inaudible] —
Jason Hartman: But the circular logic on it. Yeah. They have — they call it collected insurance.
Roger Salam: Yeah, of course. Because all of things are — now — now I — I — if I knew that later on, probably the [inaudible] and right now I’m doing a few things more strategic and that’s when I found out how criminal the banks were.
Jason Hartman: Oh, it — it’s mind boggling. It really is. Yeah.
Roger Salam: So then I could see — if I knew that then I would have probably [inaudible]. If you can do that then let me do — everybody’s taking advantage of — but anyway, I’m glad I said [inaudible] of buying —
Jason Hartman: I — I just — I just — I just bring that up because I want people to really understand the — the triangle here that’s going on with the banks and the government and the insurance companies and the borrowers. And just understand the deal they entered into is that the property is the collateral for that debt and if they can’t pay the debt, give the property back. And that’s the deal. That’s the business deal they entered into.
Roger Salam: I have — I have only [inaudible] created a higher step seminar called cash for keep — cashforkeep.com and you — and the bank will pay you. You can bring them both to the foreclosure procedures anywhere from two thousand to up to – from ten thousand dollars this way to handle [inaudible]. They give you the money and then walk away.
Jason Hartman: It’s — it’s unbelievable. It’s unbelievable. So just tell us now, how many properties do you have now? Have you unwound your portfolios or —
Roger Salam: Yes. I’ve — I — I have almost all of them. I still have one, two, three, four — I — I’ve counted in my — calculated maybe a half dozen homes.
Jason Hartman: Okay. Well so you have a small number of properties now. You’ve really unwound that portfolio. Boy that is nice.
Roger Salam: I — I — I’ve unwound that portfolio.
Jason Hartman: Amazing.
Roger Salam: Literally. And — and part of my settlement was I — I gave my partners — keep — my partner took with all the good end of that, if you enter — dividing up our losses, you can have mine also. My share and you — if you get the outside, then you get all the outside. That’s — that’s how I unloaded everything I bought.
Jason Hartman: It’s fantastic. What is your outlook now, I mean I hope you’re getting back into real estate because that’s —
Roger Salam: In a — in a bigger way —
Jason Hartman: — it is — the — the opportunities now are unbelievably—really it’s sort of —
Roger Salam: Bigger than before.
Jason Hartman: — I think it really shifted about one year ago and — and I’m talking early — I think it shifted really in early 2011 in a big way. Now it was starting to shift before that. There were certainly great opportunities before that, but the real, real change and real interest just — it started going crazy about a year ago, I think. You know and —
Roger Salam: And — and I — I missed it, quite frankly and I — and I’m regretting that I didn’t get back into it because I don’t think it’s too late and there’s a lot of options — the same houses even in the Phoenix market or Vegas market and the three markets that I operate right now and for property that’s probably on the option, they’re getting — you’re getting one or two bedrooms [inaudible] with ten to twelve —
Jason Hartman: Oh, Phoenix — Phoenix is almost impossible to operate in now.
Roger Salam: So, Phoenix was twenty to thirty bids a property.
Jason Hartman: And then — and many of them going above really —
Roger Salam: And above —
Jason Hartman: — yeah, many of them are going above their fair market value.
Roger Salam: Yeah.
Jason Hartman: So Phoenix is very difficult to operate in now. But, what is your outlook on the economy and what would you say to real estate investors who you know thinking about getting back in the game or getting in the game for the first time, now days?
Roger Salam: Right now, appraisal is only an opinion. What I go by is replacement cost value. The houses that I’m buying I — I literally was — made a bid for one hundred seventy five homes and lets say that what I’m buying for, insurance company is making the — sure that those properties for double what I paid. So if I’m paying one hundred thousand dollars and you can buy the newer homes.
Jason Hartman: Yeah. It happens all the time now days. Yeah, yeah.
Roger Salam: But I’m not in the junker neighborhoods, I’m now in — into the bread butter homes — these particular one hundred seventy five homes, they’re 2006 to 2008. They’re brand new homes and no repair — all of them have tenants in them already, and if I paid one hundred thousand dollars more the insurance company is making the insurance up to two hundred thousand. So that’s the real — and then I’m — would be — what I’m doing is, I’m selling them for five – ten thousand dollars more than what I paid and to buying home investors for long term. And then I’m getting for the same long term.
Jason Hartman: Yeah. So — so obviously, if you’re buying below the cost of construction, below the cost of replacement which we’ve been talking about that strategy for a long, long time and you just got your profit built in there —
Roger Salam: Yes.
Jason Hartman: — because — because now you start to see new construction happening again —
Roger Salam: Yes, yes.
Jason Hartman: — and by the way, you know Roger it is amazing how quickly the new construction development has come back online.
Roger Salam: Yes.
Jason Hartman: I’m amazed and — and I attribute that to the fact that many of these large builders that are publicly traded companies, money has been sitting on the sidelines. They were sort of tentatively jumping into a few things here and there, but they’ve been acquiring land for the last couple of years at bargain basement prices and as developments start to make sense, they’ve got — their equation is for them to be in business is, they’ve got to sell the property for the land value, for the construction cost or improvement value plus their profit. And if they can’t do that, they’re not going to build. And so the fact that you see them building means that your profit is locked in. If you’re buying a — a — a six year old resale home that was sold for two to three times the cost of the peak of the market, and now you’re buying that for thirty to fifty percent — or maybe even sixty to seventy percent of the cost of replacement today and the land is free, you are just crazy not to be jumping into this market, because the builder down the street or around the corner in that new neighborhood is building it for one hundred percent of — or selling it for one hundred percent of construction cost, plus land cost, plus their profit.
So you know, it is — it is an automatic win almost. I mean, nothing is guaranteed, of course nothing is automatic, but it’s — it’s pretty darn awesome the opportunity, as a matter of fact.
Roger Salam: Pretty darn awesome, yes. And that’s — that’s the game that I’m excited about, and I also know that because it’s heating up this time, this — this bargain — the difference between that — that replacement value and the bargain that we’re paying, that cap is shrinking. So you probably have maybe a couple of years before I believe that cap will evaporate. Two to five years by [inaudible] so get it. So this time, I’m not — remember my old — I bought one house at a time? Now I’m buying hundreds of houses at a time. What’s different — so my private lenders are not private lenders who can have — give me one hundred thousand dollars then give me ten million dollars or twenty million in — in that range.
Jason Hartman: Fantastic. Well good stuff, Roger. So, where can people find out more about you?
Roger Salam: Right — right now, the real estate side and — just quickly, I run the real estate guru mastermind and that’s called the Winner’s Circle and that’s been my primary mastermind for — and that’s where I do all my real estate deals also through this big network. So, they can come to — look at my website, join my Winner’s Circle — join my Winner’sCircle.com and also the Winner’sCircleInc.com, either one is fine — they can reach me.
Jason Hartman: Okay, fantastic. Well Roger, thank you so much. Again, we’d love to have you some time on my other show the Speaking of Wealth show, because you’re quite an info marketer in your own right, of course, and — and publisher, and thank you so much for sharing your thoughts and what — your experiences with us today. I appreciate having you on.
Roger Salam: Thank you, Jason.
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