Jason brings on investment counselor Carrie to talk about some current properties. They take listeners through a tour in York, Pennsylvania. Later in the show Jason discusses the hybrid approach to property management. He then goes into economics educating us on inflation, deflation, and stagnation.
Investor 0:00
Our target is 100 doors we will get there and the next few years and that’s that’s just our vision our dream and we will accomplish it we know that our heart and we’re just going to keep coming to these events and every time we come back we’ll have more doors and that enable to life change leave a legacy and and help others along the way.
Announcer 0:19
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:10
Welcome to Episode 1393. And we have more properties to talk about today. I’ve got our investment counselor carry with me. You’ve heard her on the show many times. Carrie, welcome back.
Carrie 1:22
Hey, thanks for having me. Jason. Good to have you. So,
Jason Hartman 1:25
if lanta area well, this is technically just outside of Atlanta. It’s only nine miles from the Hartsfield Jackson airport. And looks like you’ve got some good properties there. Right?
Carrie 1:38
Yeah, we’ve we have a really good development here and new construction townhomes are three bedroom, two and a half bath and the price on these are only 167 900. So it’s a reasonable price for new construction.
Jason Hartman 1:52
Very good. So brand new construction, three bedroom, two and a half bath 1500 and 47 square feet. projected rent is 1350. So almost 1%. And pretty darn good rent to value ratio for new construction, that’s for sure.
Carrie 2:08
Yeah, the reason I like these a lot is because of the new construction factor and how Atlanta itself is just booming. So you’re going to have quality tenants, you’re going to have the need for tenants in that area. And they do these in phases. So they’ll do one development of townhomes in one month, and then they’ll close on another development the next month, this particular local market specialist I’m referring to, so they stagger them out. So your rents, that the rent opportunity will be more available than if you know they did a whole development.
Jason Hartman 2:40
They won’t have a bunch of competition with other properties at the same time, right? Yeah, it’s good. The way they staggered, that’s very responsible. Good. Okay. So projected cash flow is positive cash flow of almost 20 $300 a year and that offers an overall return on investment projected at 29% with our Conservative assumptions in there even maintenance at 3% and this is a brand new property so you probably won’t have any maintenance at all your first year or two and then the estimated completion for these you’ve got to know that because new home you know, new construction, you can have a longer lifetime, April to June. Okay, so you gotta wait a little bit longer for those but not too bad. Not too bad right
Carrie 3:21
now. No, there’s these will be. Yep, complete in the summer. By the time if you put them under contract, you know, sometime this month or next month. You’ll be closing in the summer.
Jason Hartman 3:30
Okay, great. Now, do you want to go to the other end of the spectrum and talk about this not so pretty house. I’m just going to say it in Mobile, Alabama. mobile’s great market. I own property there and have done well with it. I like that market. So this one is just $83,000 and this is a renovated property. Right?
Carrie 3:54
Right. So what our Mobile Alabama local market specialist offers is pre construction properties. So this is the before picture, Jason, he will have a prettier picture and groomed up property, landscaping and the end. This is
Jason Hartman 4:07
this is an ugly duckling. I mean, it’s not. It’s not terrible. I’m just it’s the contrast of what you know, we’re looking at pictures here, folks. So you have to understand that the contrast of looking at that beautiful new property you just talked about to this one is, is quite a difference. But this is pre remodel, right?
Carrie 4:24
Good, right? Yep. So the reason we really enjoy Mobile, Alabama, in Alabama, in general is the low taxes, the property taxes that they offer, so that helps definitely with your higher returns. So this particular property is at $3,000. And the monthly rent is 975. So you’re at a well over 1% Rv ratio.
Jason Hartman 4:48
That’s of course, projected rent, you know, going on,
Carrie 4:51
right and giving you an estimated monthly net cash flow of 291.
Jason Hartman 4:56
That’s great. Wow, that’s really good. So almost 30 $500 a year in positive cash flow on the performer here, yeah. Wow.
Carrie 5:05
Right. Yeah. And then of course, your cash on cash is one of the highest will have this market in particular 13%.
Jason Hartman 5:12
projected cash on cash return is 14%. That is, like unheard of nowadays, you know, and by the way, debt coverage ratio on this one super high 1.9. So, the chance of you getting into trouble with this property is almost nil, overall return on investment projected at 27%. They’re projecting just half the standard appreciation rate here. And they’ve got high maintenance costs in this one in the performance. So those numbers look pretty solid and conservative. They’re probably going to do a little better than that.
Carrie 5:47
Yeah, exactly. That’s very conservative. So expect to those higher projections in the long run.
Jason Hartman 5:53
All right, good stuff. Do you want to go to Hammond, Indiana, we’re really moving around the country here.
Carrie 6:00
Where in the world?
Carrie 6:02
Yeah, so this one in particular, it’s three bedroom, one bath. One bath is pretty common in this market. So don’t be discouraged from that if you’re set on your three bedroom two baths, and but the listing price on this property is 127 500. And it rents projected rents at 1325. So another good rent
Jason Hartman 6:20
who you’re above the 1% target, yeah, good.
Carrie 6:25
Yep. Yep. And so then this one has around projected and net cash flow of 27 per month, and around a cap rate almost 7%.
Jason Hartman 6:35
Yeah. Oh, that’s that’s pretty good. You don’t get that nowadays too much. So debt coverage ratio at 1.45 and total return on investment projected with all the multi dimensional stuff at 30% annually. As I always say, if it only works out half as well as projected, and you make a 15% return. You should be as happy as a clam. And clams, they’re always smiling. So they gotta be happy. Right? Okay. Carrie, do you want to just quickly mentioned before you go your little mini property tour, it’s right around the corner. It’s this weekend. Tell us about that. You know, from time to time, folks, our investment counselors will conduct a little mini property tour that they’ll just meet some clients in a market to our properties with them. And then also we can arrange individual meetings with you and appointments in any of our markets with our local market specialist if you want to go out there individually, but this is a small group and you know, if someone wants to reach out to you, there might be a space left for them or a couple spaces. Tell us more about it.
Carrie 7:42
Yeah, so we are going to travel to the northeast to York, Pennsylvania, and we will get on a bus with our local market specialists, their property management team, and tour before during and after construction homes. They’ll be properties available for the investors on the tour and you You know, it’s tight with inventory these days. So getting on a tour kind of gives you a first in line opportunity at properties, right,
Jason Hartman 8:07
which, interestingly probably is why you didn’t talk about any properties in New York today, because you’re saving them up for the tour. I’m guessing.
Carrie 8:14
That’s right. Okay, so no,
Jason Hartman 8:15
no, we’re not going to hear about any specific properties today.
Carrie 8:19
No. Yeah. So it’s a nice market. It’ll be great to actually get into these remodeled homes because as you’ve seen on Properties page, they’ve really cute remodels, they do a really solid job in just a different market a different opportunity than your traditional Memphis, Jacksonville. So it’ll be interesting to see.
Jason Hartman 8:38
Right. Good, good stuff. All right, Carrie. Well, thanks for joining us and we will talk to you real soon with some more properties. Thanks, Jason. Okay, let’s talk about a few things today for the second half of the show. First off, I want to say congratulations to one of our clients who has become The latest empowered investor, that is our client, Bruce, here are a couple of things he had to say about becoming a self manager taking the hybrid approach. Now, you know, I’ve taught you about the hybrid approach over the years, where you’re not completely self managing, you hire either a property manager on an Allah carte basis, or you hire a traditional real estate agent, simply to do the tenant turnover to do the lease up to handle the walkthrough to get the new tenant moved in. And that kind of stuff. That’s the hybrid approach. You can either do this through a property manager without them actually managing the property on a month to month basis. They simply would do the lease up the tenant term for you, you or you can have a real estate agent do that. So here, congratulations, Bruce. Here are a couple of quick things that he said.
Carrie 9:58
Hey, Jason, quick update, just I want to let you know that I made the transition and let my property manager go from my property, talk to all the tenants and set up a new gmail address and sign it all up through cozy cozy seems to seems like it’s going to work out pretty well, all the tenants and said, Hey, email me with all your requests and what you’d like done this and that awesome, currently kind of chipping away on all that and so far, so good. But just wanted to give you a update, saying I appreciate all the advice and definitely heading with the hybrid approach until it gets too much for me to handle. So thanks for everything talk to sin. Yeah, Jason, of course, you can definitely play it on the podcast. You know, I mean, just to kind of go into a little bit more. I just got sick of all the back and forth between the property manager and myself and what was going on. And I wrote all the tenants a letter to the units and I sent it out to them and they responded back to me so I called him and talk to him all asked him if they’d sign in a denim and go with me and let me manage property and kind of cut out the middle middleman. And they sounded delighted. They were like we would love to deal directly with you said, hey, look, I own the property. I’m going to treat you guys as my customer. And I’d love to keep you there. So let me know what I need to do to make you happy. And I’ll start working on it. So I started looking into cozy and tenant cloud. But I think cozy is free both ways, if you’re paying through checking accounts, so sign up for that and created a new gmail address so they can contact me directly through that, and seems to be going pretty smooth so far. So we’ll see. Thanks for everything. Jason. Appreciate it. Okay. So what he’s referring to there is he was dissatisfied with, I think a couple of his property managers. Maybe it’s just one I can’t recall, and is now dealing directly with the tenants.
Jason Hartman 11:53
And again, through our network. You can go either way you can use property managers. We have some Great Ones, I always say kind of, I like to let circumstances decide I do both. I have some great property managers that I really like. And they manage my properties for me. And if they ever have a bump in the road, and they become bad, you know, I just decided that they’re not doing a good job, then I will try self managing the property. You know, the properties, I’ve got self managed. They’re easy. It’s really so easy to do this, it is not some big mysterious thing. And we’re here to help you with it every step of the way. So congratulations to Bruce for becoming a self manager. And now getting that middleman out of the way and dealing directly with the tenants. I bet what you’ll see happening is the tenants like he said, they were delighted, because they’re probably getting crappy service from the property manager. And he can now improve his properties. Make them appreciate better. Just be more engaged. And this becomes second nature after you’ve done it before. So it is really not difficult. If you are interested in self management, go to Jason Hartman calm type in self management on the search bar and look for all the episodes on that topic and listen to those specific episodes, so we can help you more with that. Okay, we talk a lot about the three basic economic maladies, inflation, deflation and stagnation on this show. And I came across something interesting, a piece of nostalgia from Well, not from my childhood, but from somebody whose childhood I’m not old enough to have been a kid at this time. But it was the ticket prices for Disneyland back in 1964. So I was yet unborn, and it’s very interesting to see and that’s why I love to watch old movies. An old TV shows and listen to old music, because and read old books, because there’s a lot to learn from the past. Those who do not learn from history are doomed to repeat it. So here’s the problem with this Disneyland thing. using this as a barometer for inflation is not the greatest. The reason is, of course, disneyland has changed, right? It’s been upgraded. There are many more attractions now than there were in 1964. It’s not the same experience, but I’ll venture to say that probably in 1964, you hardly ever waited in line. And now those lines are really really long. So maybe it was a better experience back then. I’m not sure. But here’s one thing that hasn’t changed and gives us a very, very good barometer for inflation. This is a litmus test that is really, really good to know what has taken place in the economy. It is parking, parking. Yes. Our our friend Nathan pointed this out in our Facebook content group. And parking hasn’t changed much. Right? If you if you are the government and you want to hide the rate of real inflation, what are the three basic ways they do that? You know, I’ve taught you this before waiting hedonic and substitution, waiting hedonic and substitution. I won’t explain them today. We’ve talked about that many times in the past. Those are the three ways they maligned the real inflation rate. So we don’t really know what’s going on. But guess what? It’s hard to do waiting on parking. It’s hard to do substitution on parking. And it’s hard to do hedonic indexing on parking in a parking lot. Guess how much parking costs it Disneyland in Anaheim in 19. 64 parking for one day was 25 cents. Our client and self manager who’s been on the show many times, is a big fan of Disneyland. He lives near Disneyland. He and his wife and two kids and that is Drew Baker. You’ve heard him on the show before. He told me I said, Drew, you’re an expert on Disneyland, you know, he buys season passes, and all this kind of stuff. You know, I don’t know if he does it anymore, but it used to. And parking he tells me now is $25 a day. So it went from 25 cents to $25 from 1964 to today. But then you ask, What did the government tell us? The real rate of inflation was if you index 25 cents in 1964. How much is that today? What is 25 cents today from 1964 Well, drumroll please
Jason Hartman 17:01
You ready for this? It’s $2 and eight cents. So according to the official rate of inflation published by the government, the consumer price index tells you that parking at Disneyland today should be not 25 cents as it was in 1964. It should be $2 and eight cents. Yet, it is more than 10 times that price. It’s 25 bucks. So clearly, the inflation rate is wildly understated, because parking hasn’t changed much the user experiences. Actually, I would argue that it was probably better in 1964. Why? Well, the spaces were larger. I’m sure you didn’t have to get into these little crummy parking spaces and bring your doors. You probably didn’t have to go as far park your cars far away. Right, they have trams. Of course, we all know that. We’ve been to Disneyland, but the parking experience probably hasn’t changed much. So you can’t argue that well, it’s better today than it was in 1964. So that’s why it cost $25 versus $2 and eight cents. Okay? Yeah. Nope, can’t can’t make that argument. It’s a losing argument. Hey, I want to share with you speaking of the old times, something from the 70s and this is a very short sound clip from CBS News of Jimmy Carter’s infamous, they say famous Malays speech. Remember, the Carter era was typified by Malthusian thinking, right, that resources were scarce. We have peak oil. Don’t heat your house, don’t cool your house, wear a sweater. Go naked, whatever it takes to be comfortable. Okay, if it’s too hot or too cold, You know, live on less expect less from life because we are running out of everything. That was the thing that typified the Carter administration. during the era when the misery index was developed, where we had high inflation and a stagnant really anemic economy, then you have stagnation, which is the worst of all things okay. It’s it’s, it’s worse than inflation, which is usually part of a booming economy or at least a healthy economy healthy and other ways. And, and deflation, which is a whole different concept. We won’t get into that today takes too long, but just listen to this short clip about Carter and then Carter speaking himself. It’s kind of an interesting historical perspective. Two years ago today that Jimmy Carter gave his famous malaise speech, he never used that term. But that’s the name that was given to a speech in which the President said the country’s economic woes were due in part to a crisis of confidence in the country. It has come to be known as perhaps the most politically tone deaf speech in modern American history, take a look.
Carrie 20:05
It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national world. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation. The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.
Carrie 20:39
The confidence
Carrie 20:42
that we have always had as a people is not simply some romantic dream, or proverb and a dusty book that we read just on the Fourth of July. It is the idea which founded our nation and has guided our development as a people conference. In the future, has supported everything else. public institutions and private enterprise, our own families and the very Constitution of the United States.
Carrie 21:13
competence has defined our core
Carrie 21:17
and has served as a link.
Jason Hartman 21:19
So that’s interesting. First off, I would say the irony of that talk is that Jimmy Carter did a lot to destroy American confidence. Okay. I mean, he was the, he just typified the sort of mouth museum. That’s the best way to say it. It’s it’s the Malthusian idea that resources are scarce. And humans are not a resource when I say humans are the biggest resource of all. So just kind of interesting to look back on that. Now. The question is, and by the way, I would love to hear your feedback on this. Go to Jason Hartman comm slash ask Jason Hartman com. Ask, tell me listening to Jimmy Carter there in the 70s. Do you think we have? Do you think Americans at least have more confidence in their future today than they did back then? Do you think this is a time of more confidence or less confidence? And obviously, we made it through. And what do you think happened in the 80s? How do you think, you know, when reagan came aboard after Carter, what do you think happened to American confidence then? So many people will say, it’s not all about the economy. It’s not all about financial things. It’s not all about money. Well, okay, sure. It’s not all about that. But let me tell you, that’s a big part of it. That’s a big part of life. That’s a big part of how people feel. It’s a big part of how the nation feels, but Carter even referenced back then how There’s a lack of unity of purpose. Well compare that to today. I mean, what do you think about today versus that right? unity of purpose? I mean, I’d say that’s that gap is even bigger today, right? Something to think about. Go to Jason hartman.com slash ask, and tell us what you think. Anyway, tomorrow, we got to talk about the record number of renters who believe renting is a better deal than owning and what that means to you, as an investor. What does that mean to you? Also, tomorrow, we have a another technology tool that can help you better manage your property managers, or better self manage your property. Either way, whether you have property managers, or you are self managing this app that we’re going to go over tomorrow, a free app is going to help you take another Step in becoming a more empowered investor. Until tomorrow, happy investing, go to Jason Hartman calm for more, or call us anytime at one 800 Hartman thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional and we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the new Episode