Jason Hartman and Investment Counselor Adam discuss the growing trend of the nation becoming renters. This is just to a younger demographic but all age ranges. The older demographic 60+ are seeing an even bigger percentage increase than their younger cohorts. This is great news for landlords as it is a larger pool of tenants competiin the 20-34 or 35-59. This is phenomenal news for landlords, as more people are competing to live in your properties.
They then look into the market for pre-fabricated homes, the impact of recent Airbnb decisions, and a brief glimpse at the 9 effects of inflation that will be discussed further in Tuesdays show.
Investor 0:00
You don’t have any investment real estate investments, you will not have the opportunity to learn to make mistakes and learn from it. And then you will not be able to tell which one is a better investment. I think you just have to get it started somewhere and with the help of your investment counselor, and then keep moving forward.
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. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:09
Welcome listeners from 165 countries worldwide. This is your host Jason Hartman with episode number 1202 1202. Thank you for joining me today. And happy Memorial Day. And to all of our current and former military people. Thank you for your service. We got good news for you today. And Adam is here with me to share it. Adam. We do have some good news, don’t we?
Adam 1:34
We have some fantastic news, as long as you own rental properties,
Jason Hartman 1:38
really good news or good? Or a good reason why you should buy some rental properties or buy some more if you have some already. And most of you listening I know have some already. But guess what? something new, a new trend. We’ve talked about it a little bit. But now let’s take a deeper dive into this one. wonderful new trend for real estate investors. And that trend being that there is a whole new segment of renters that has been entering the market over the past decade. And it is a big deal. And most of these renters are nice, responsible, easy on your property renters. Adam, you want to tell them who it is?
Adam 2:26
I absolutely do. Have you ever met somebody 60 or older in your life? Jason?
Jason Hartman 2:31
Yes. And you know what? They may well be a renter because the number of 60 plus year old renters rose by 43% in the past decade. Now remember, the past decade is the decade ago, we were in the Great Recession. So like the millennials in the past 10 years, who many of them saw their parents get burned in the housing market during their formative years, this demographic opposite the millennials, age 60. Plus, in the past decade coming out of the Great Recession, they have flocked to rental housing. They’re not that interested in homeownership either. And that is a big deal. This is a totally new concept. You know, people in the past, looked at their home as something they would pay off. They would live there during their retirement years. Certainly they would live there after age 60. And now, we’ve seen this just massively change. It has massively changed yet.
Adam 3:38
And if you think about renters over the age of 60, they’re the kind they are not going to move when they come into your home. You’re looking at somebody who’s going to be there for years, because you know, a 20 year old 25 year old, they give their friends a case of beer and they’re good to go with their move, but somebody 60 and older there. They don’t have friends, we’re going to come over for a case of beer to help a move. That’s a whole big thing for them to move. So if you get somebody in there, the age of 60, in the age, you know, people are living to 70 8090. Now, you’re looking at potentially a renter for the next 10 to 20 years,
Jason Hartman 4:16
maybe, or they’ll just be renting something. But yes, they have more stuff, they’re more stable, and they will stay longer. And they’ll also be a lot easier on your property. These are great tenants. I would consider them in many ways your ideal tenant, the millennial might get a job transfer, you know, they’re trying to move up the career ladder, or you know, their friends are talking about the hot new city to move to Denver because we can smoke dope all day. Well, now actually, they can take mushrooms all day, I guess too. So and by the way, if you don’t know, Colorado, there’s a bill pending on I don’t think it’s approved, but Oh, one city approved it that legalized some psychedelics, so Wow, that’s amazing.
Adam 4:57
Yeah, most six year old and up aren’t doing mushrooms. So now
Jason Hartman 5:00
Probably not, but boy times they are changing, aren’t they? It’s something else man that grew by 3 million people. And it wasn’t just them. However, I mean, even younger runners in the 20s and 30s went up 7%, even 35 to 59, who were starting families are have young families that increase 17% in the last 10 years. So it’s big numbers. It is a big deal. You know, basically what you have now is you have two giant, the two largest ever demographic cohorts in world history, who are accepting rental housing as a way of life. They’re fine with it. No problem. It’s not like you know, before as a landlord, you were constantly competing in the marketplace with people buying homes. They would leave your rental to buy a home, or they were thinking as they were looking at Your rental, and maybe you don’t even know they’re looking because they’re shopping online or in the old days they were shopping in the newspaper or whatever. But the competition was between Should I rent or buy? Should I rent or buy? And that has just dramatically shifted. Good news for investors. Congratulations to everybody listening. The trend is in your favor. And you know, if nothing else in life, just try and catch a few waves and ride them. And, and you don’t have to do much. You know, the rising tide floats all the ships as it were. Yeah. Adam, do you want to talk about the I said, I want to stop talking about them because we talked about them too much. These millennials. Gosh, they get too much PR too much free PR. But that’s the other big demographic cohort in the rental market. And we’re looking at an article that says, quoting the the concept of homeownership isn’t a necessity for most millennials. This is a survey. You know, you’ve heard the millennials avocado toast is more important than buying a home. That’s changed, hasn’t it?
Adam 7:04
Yeah, it has it looked at 65% of millennials say it’s a choice rather than a necessity. And they’re worried about the things that we’ve talked about before. They’re worried about student loans. They’re worried about the consumer debt that they have after they get out of college. And they worry about the ability to pay down their mortgage over time. So you look at the fact that they’re worried about they don’t have a career necessarily. They know, people are laying off employees 10s of thousands at a time, and they’re worried Hey, I’m not going to have I might not have a job in two to three years. I don’t want the mortgage hanging over my head. I want to be able to downsize to you know, smaller apartments, they are cheaper house, and so they’re concerned about that. So they figured why not rent?
Jason Hartman 7:45
Yeah, absolutely. So the results of this survey, and I’m just looking at a graph Now, over 40% very concerned about student loan debt. Another huge concern, credit card debt, car loan debt, you know, want to wait until they get married. That’s 20 percent of them that responded, but 65% said can’t afford the down payment. And then another 10% says, You know, I couldn’t care less I don’t even want to buy a home. So, I’m gonna wait till my baby boomer parents croak and give me their home. But hey, wait, they’re renting. So sorry.
Adam 8:20
Yeah. And there’s an interesting thing in here. It says on average, Millennials anticipate they’ll pay 218,000 for their first home. But if that’s their target price range, they’re not going to find that in the places they want to live. You know, in most of the decent sized cities and clothes, you’re not alone. That’s not an option. So if you want to pay 200,000 for a home, and you can’t find it, your other choices
Jason Hartman 8:43
to rent. Yeah, exactly. Now, it’s really good news for investors, folks. I mean, this is a huge market, and it’s a market for you to serve. So serve this market, they will really reward you handsomely on your investments. And by the way, I just scroll down the page. Adam, and I see this other article here. Nearly two thirds of millennials have home buyer’s remorse. According to another survey they did. So yeah, times they are changing. They really are. I want to talk about a little tangential item here, because you mentioned that in the survey, the typical millennial thinks that they can buy a house for $218,000. But again, that’s very unlikely in any city in which is going to be a highly attractive city for a millennial, especially a job seeker the other day, Carmen sent me an article link about how Amazon was selling prefab homes and we didn’t talk about this before I saw an article about it a while back, you know, everybody listening probably has heard of this and you know, the the prefab home, the container, shipping home, whatever, right? I think this should be something that is much more significant in the marketplace, but I actually did some real due diligence and I checked it out. looked at found the $40,000. home on Amazon. That looks really cool. I called the company. And I thought, if I can really buy this for $40,000, I’m going to start buying little lots and just plopping these houses on at these prefab homes. But wait, there’s more. It’s not as good as it looked. And, in fact, it was a lot less desirable than it looked by a long shot. Because this particular house didn’t include the glass, the fixtures, anything, it was just a frame. Okay, you know, so it’s not electrified, there’s no plumbing, there’s no HVC. There’s nothing. So I talked to the woman who answered the phone for a while at the prefab house company. And I asked about their entire product line. I asked about the reasons people are doing it, what it costs, you kept saying, well, you ordered it takes about four months to deliver it to your your construction site. And then I said How long does it take to build it? And she says, Well, you should allow at least you know, eight weeks, maybe four months to Build it right, depending on, you know where you’re doing it. And I’m thinking, you know, if you’re talking about California, you better, you better allow more time than that, because you’re going to have to have an environmental impact report. I don’t know if you will, but there’s some little bug on your lot that you might disturb. You have to pay a million dollars to the EPA, whatever. Right? So it’s the
Adam 11:19
it’s the labor of building it included in the 40 Grand i would assume not.
Jason Hartman 11:23
No, it’s just the parts. It’s just the parts. So here’s what was the amazing thing. I said, How much does it cost? And she says, it’s right in line with typical new construction. And she kept saying that over and over and I said, How much is that in your eyes? And she says, Well, you have to get the engineers to come in, you have to engineer the electrical, you have to engineer the plumbing, you have to engineer the hbic. Of course it has to have a foundation before we can deliver etc. And I said how much Just tell me the typical cost per square foot, and she says $200 per square code. I thought we’ve got properties that are a much better deal than that. And they don’t have this stigma, which, by the way, I think is an unfair in an unfortunate stigma. But let’s just face it, it’s the way our culture is. There’s a stigma against prefabricated housing. Okay. I don’t think it’s legitimate. Okay. I think that’s a very old idea. I think some of this prefab housing nowadays, it’s much better and could be highly desirable. However, it’s got to be a good price. And this is not a good price. I thought why would anybody do this? And she just kept harping on Well, the quality so good, blah, blah, blah. You know, it’s so frustrating to me. I see this stuff on social media about these 3d printed houses, and how these little $10,000 prefab houses or this beautiful $40,000 1000 square foot prehab fab house that I am telling you about. And none of this stuff is out in the real marketplace in any real way. Like I don’t know anyone, no one has ever of our many, many thousands of listeners, clients, etc. No one has ever talked to me about a prefab home, or 3d printed home. I’ve never seen any in real life anywhere that I’m aware of them being that all this stuff seems like just a huge amount of hype. And I’m sad that it’s that way I want this to happen. I think it’s a good idea. I think you should be able to build a prefab home on an assembly line and delivered to a construction site much more inexpensively than traditional construction. I don’t know why it’s not working. Maybe it hasn’t become big enough yet. And there’s no mass production. I don’t know, listeners, if you have any ideas. Go to Jason Hartman comm slash ask and tell us what you think. Because I don’t get it.
Adam 13:49
I would have to think that you’re basically buying not just a home but you’re telling yourself, hey, I’m going to become a real estate developer at that point. Because when you’re having to hire all of the people to come in and start building You’re home, and it becomes a full time job.
Jason Hartman 14:02
Yeah, it’s probably easier than building a house traditionally, because you do have the frame assembly, right? But it’s still no walk in the park. I mean, it’s difficult. You gotta hire engineers. And I said, well, who do I hire? Do you supply engineering and stuff like that? Can I just buy that from you? And she said, No, no, you just got to find your own people. And I’m like, Oh, my God, I gotta deal with contractors. I’ll tell you something that’s really interesting. I never hear anybody say they had a good experience with two types of people, contractors and lawyers. I never hear that. You know, it’s funny in the world as you go around the world for the listeners. Do you ever hear anybody say, Oh, I love my contractor. I love my attorney. You never hear that right. I mean, maybe an attorney if he could see a big settlement or something. Who knows? But I just don’t hear that. Here all this other stuff on HGTV whenever they show you the little homes that they build, they don’t talk to you about how you had to sue the contractor because they flaked out on let you down and rebuilt it wrong. And yeah, it’s everything’s harder than it looks folks. It’s everything’s harder than it looks from the outside.
Adam 15:19
You would think, by the $40,000 home and then amazon prime would cover the rest, I would think you know,
Jason Hartman 15:24
but here’s the funny thing. The house was actually $36,996 and it was not prime. So you have to pay for shipping. Get this. The shipping was $4 and 49 cents. Oh my gosh, I thought that was so funny. So if you ship it back, if you don’t like it and you want to return it, can you ship it back for $4 and 49 cents? I kind
Adam 15:50
of doubt it. I don’t know that puts it over $40,000 I don’t know if I’m interested in the house anymore.
Jason Hartman 15:55
Yeah, it’s funny. Funny thing. Funny thing. Well, hey Adam. Let’s get to one of our blog cast for a little bit of real estate news here and then we’ll be back with some more news, more current events, some more ideas for our investors. Okay, so can we take a quick break? Let’s take one right here is one of our blog cas. And here’s our blogcast.
Adam 16:21
Thank you, Jason. buying real estate for investment purposes can seem like a big chunk of information to digest. If you look at it all at once. Let’s break it down into more manageable bites. The simplest part is stage one. During this time your primary focus is to stock up on debt. You want lots and lots of debt attached a high quality fixed rate long term investment grade debt. More specifically, you want this debt attached to package commodities, basic materials that are in high demand when used to construct structures like houses and apartment buildings. You want lots of this kind of debt because when you invest in real estate the right way, debt is your asset. debt is what will protect you from the ravages of inflation. And by the way, make you very wealthy as time goes by now it’s time to enjoy increasing rents appreciation, tax savings and let our refi till you die strategy make you financially free. This part is staged to see how simple this income property investing really is. When you buy real estate the cost of the commodities used to build the structure is locked in until the house falls down. This could be 60 years or more. In the meantime, you’re refinancing every seven years and pulling out large chunks of equity from your investments. Let it replace your working income while you buy more real estate. For more visit Jason hartman.com for the creating wealth blog cast, I’m Will weeks thanks for listening to this audio blog and please see disclaimers and important information at the website.
Adam 17:44
Alright, and if you liked that, then you could just subscribe to the Jason Hartman Real Estate Minute on Alexa. If you go to the flash briefing, and type in Jason Hartman Real Estate update I believe you can subscribe to it there and you get every morning to Alexa device just asked for your flash briefing. And she’ll give it to you.
Jason Hartman 18:01
There you go. Yeah, I listened to her and I have been inspired by my old podcast content. I really liked some of those. And, and it’s interesting too, because, you know, you look at how enduring real estate knowledge is, you know, something that we taught you on this show 15 years ago, can still be completely valid today. Of course, the market changes a little bit and there are some nuances, but by and large, the philosophies they endure because they work, you know, my 10 commandments, works, okay, it works, regardless of the market, regardless of the time, and I bet it’ll that that’ll all work and be completely valid 50 years from now, or 100 years from now, we’ll see. I don’t know, you know, but this stuff is pretty enduring. So yeah, get that on your Alexa device. And you can search it right on Amazon and type Jason Hartman is what is it Jason Hartman is real estate update, I believe It’ll come up for you on Amazon. Okay. And you can go enable skill, and it will be there in your flash briefing. So Adam, we’ve got a few more things to talk about before we wrap it up today. Where do you want to start? Well, I say we start with something that relates to your 21st commandment that we started last week. And that is the the mania that is Airbnb these days. Yes, that is a bit of a mania. And remember, thou shalt avoid mania. Okay, if it is a mania, I mean look, if you are a smart conservative investor, like we think most of our listeners are, avoid the manias. If you’re a speculative gambler type, then hey, throw a little bit of your money into a mania but not too much Be careful. So in air Airbnb is case, in some cities, you have to have a license in order to get your Airbnb and another’s it’s completely illegal, which, in a sense, having the license might be a way to essentially make it illegal because they just won’t grant the license. says but
Adam 20:00
go ahead. But so far you’ve been protected because you could just not tell your city and Airbnb doesn’t give the address until you’ve already booked it. However, in New York City, Airbnb has started cooperating with the city, and it’s going to release 17,000 addresses to the city. And guess what if you own an Airbnb in New York City that is not have a license. And Airbnb gives you up? New York City is not going to be happy with you.
Jason Hartman 20:26
Yeah, yeah. And you know, I wouldn’t be too happy with Airbnb either, because they just ratted you out.
Adam 20:31
Well, I would think Airbnb, I would guess that they’re doing this to cover themselves. Because if New York City finds out, hey, you’re not checking our people’s licenses. This could maybe just be a deal where they say we’ll forgive you for not checking for licenses, if you give us the addresses. And if it happens in New York City, it could be an easy, slippery slope. So if you have an Airbnb in a city without a license, that you’re supposed to have a license, it might be a good time to look into offloading it.
Jason Hartman 21:01
Yeah, it’s some, it’s interesting. Just remember, everybody’s always going to do what’s best for them. And that’s certainly no exception for Airbnb. So whenever you do anything, just try and make sure whatever you do is best for the other party, the Counter Party, and that means your tenants, the city, whatever, because they will ultimately do what’s best for them. That’s just the way the world works. Yeah, don’t count on them to do you any favors, and they certainly haven’t in this case. So, shame one of the Airbnb.
Adam 21:36
It’s one of the beauties of owning an actual you know, long term rental, however, is never going to be a time when they say, hey, if you want to own a long term rental, you need to get a license that just hasn’t happened.
Jason Hartman 21:46
Oh, well, I wouldn’t go that far. There are some cities that even with long term rentals, you know, they can be bureaucratic and difficult. But you know, by and large Look, I mean, the differences, Adam, that the long term rental houses world has been established for quite literally thousands of years.
Adam 22:06
So if you think about it, if you have the short term rentals, those are being competed against by the hotel lobby, and all sorts of powerful entities, the long term rentals, you don’t really have the huge city wide entities that are fighting against you. It’s just something that’s been around for hundreds of years. And something that’s just kind of accepted in the world today.
Jason Hartman 22:28
Yeah, right. Absolutely. Interesting stuff. Yeah, that’s going to be sad for those owners who were trying to make a living on their short term rentals. So anyway,
Adam 22:38
but also, if you run a good Airbnb in a city without a license, selling it to a homeowner, hopefully won’t be too much of an issue.
Jason Hartman 22:46
Well, in New York City right now, that’ll be an issue because that market has been really really faltering. So it may be an issue and you know, that changes free overnight. And by the way, if 17,000 additional properties go on the market all at once. That even makes it worse. So they may have hurt the real estate market even more there. So yeah, it’s
Adam 23:06
big. It’s kind of a big deal. And who knows how many other cities are going to follow suit? Yeah, you
Jason Hartman 23:10
never know. You know, the hotel lobby is strong and powerful and it’s not a great enemy.
Adam 23:18
So as they say, in all your TV Guide ads in the past, Check local listings to see if legislation affects you.
Jason Hartman 23:26
I wonder if anybody knows what the TV Guide is. It used to be a magazine just for some of you who don’t know, but yeah. Used to be a little magazine. All right. What’s next?
Adam 23:35
I guess you want to talk about spam?
Jason Hartman 23:37
spam spam. Hey, listeners, I need your help. We have another player in the marketplace, who is unethically spamming people. And if you received an email for a real estate company, and you did not subscribe to their list If you had never been to their website didn’t know who they were, please tell us about it. Go to Jason hartman.com slash ask, and just let us know. And if you can forward a copy of that email, either email it to reviews at Jason hartman.com. If you got one of these surprise emails that are spam, or go to Jason hartman.com slash ask and let us know. And we would very much appreciate that because this player in the market is doing unethical things, and it should not be happening. So let’s do things right here, folks. So that’s good. All right. Let’s quickly talk about the nine common effects of inflation. You want to do that? Sure. Okay. So everybody knows, I’m just looking at an investor PDR article and I thought this was interesting. Everybody knows that. Inflation erodes purchasing power. Okay, and we probably need on another show to dive into this in more depth because each Item literally could be a 10 minute discussion easily, right? But I’ll just go over the nine real quick as we’ve got to wrap it up today, but number one erodes purchasing power. And number two, encourages spending and investing. Okay, why does it do that? Well, obviously the money is becoming worth less. So it’s better to spend it now rather than say that, right? And the investments are appreciating value asset inflation, so it’s better to get in the game and invest. But number three, which is interesting, and we we could probably make a whole episode out of this one, it causes more inflation. In other words, it’s a spiral inflation causes inflation, it raises the cost of borrowing. Now, I would disagree with that. at first blush, you could see higher rates as a result of inflation obviously, because the Fed would try to cool the market. By raising rates, so if you look at it from that elementary perspective, true raises the cost of borrowing. But overall, once you’re a borrower inflation dramatically reduces the cost of borrowing through inflation induced debt destruction. And we love that as real estate investors, don’t we? We love it. We love it, we love it. And number five, interestingly, their point is lowers the cost of borrowing. Okay, so, you know, you see this as a two edged sword, okay, depends exactly what thing you’re doing at that time. It reduces unemployment. Okay. Now, one of the things I learned a long time ago when I owned an escrow company, I had my traditional real estate office and I also had an escrow division within the company. And as the market was booming, it became so hard to hire an escrow officer to escrow the transactions. You know, that’s a highlight Ability job for the owner. I mean, owning an escrow companies, you’ve got to be really careful with that. Okay. I felt like it was a big responsibility. Frankly, I didn’t like all that responsibility that came with it. But the thing I found in that inflationary environment we had at the time is that the cost of hiring an escrow officer was just becoming astronomical. It was getting so difficult there was virtually no unemployment in that field. Every escrow person, not just the escrow officers, but the escrow staff. They were fully employed, okay, and that was an inflationary environment. Number seven increases growth number eight reduces employment and growth. Now that’s maybe the later overall effect, okay. And number nine, weakens or strengthens the currency which is one of those complex diametrically opposed ideas and we’re just going to have to dive into this and probably do a whole episode I think this articles fascinating as Look at the Y Mar republic in Germany back in the day. And if you type inflation into Wikipedia, you will see listeners a picture of a woman taking the Y Mar mark the German mark and shoveling it into a stove, you know that produces heat, because it was cheaper to just burn the money than it was to burn the currency. I should say. It’s not money, it’s currency to burn the currency than it was to trade it by buying wood. That is absolutely crazy. But that’s what happened. And and you know, we look at the inflation rate in Venezuela now. They say it may reach Are you sitting down, folks? 10,000,000% it’s just tragic. I mean, can you imagine being the people that live there? That just must be so awful, but I have a feeling and has pretty much every legitimate democratic government in the world has not recognized the current, recently reelected president of Venezuela, I have a feeling he’s not going to last for too long. So we’ll see
Adam 29:12
it starting off your term with the 10,000,000%. Inflation is not the way to keep your job,
Jason Hartman 29:17
not the way to keep your job. So either there’s going to be a revolution that finally does overthrow him, or there is going to be they’re going to get some help from outside government sneaking in arms, or somehow the stabilizing even more as if it’s not the stable enough. These days, like his in his government enough to let the new guy take over. So that’ll be good news. Hey, by the way, it looks like we got another person that registered for our cruise that’s coming up in November. Join us it’s going to be awesome, awesome, awesome. We still have the last bastion of early bird pricing on the cruise at Jason Hartman comments right on the front page. So I hope you’ll join us for our First cruise event to Grand Cayman Cuba and Jamaica leaving from Fort Lauderdale early November. It’s going to be fantastic. Check it out at Jason Hartman calm and until tomorrow happy investing. 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 next episode.