Jason Hartman and Investment Counselor Doug take a look at the danger of manias, especially when it comes to investing in startup companies. They use the example of WeWork. While it is easy to get caught up in rising valuations it is also easy to lose a lot doing so. They also discuss the Wealth Simulation exercise that was held at Profits in Paradise.
Investor 0:00
Just about mid 2011, I was I was leaving command I just taken over a position in a great job at the Naval Academy for a two year position there and had a lot more free time than I did on my submarine as you can imagine, and I was searching for a way to shift active income into passive you know, I’d read Robert Kiyosaki books over the years, I really just, I mean, they just spoke to me, Rich Dad, Poor Dad, and most of the others, you know, his prophecy, it all just made a lot of sense to me. So I was looking for, you know, following his model of shifting into you know, passive cash flow income, and I’m a mechanical engineer. And the thing that made most sense to me, you know, not buying the coin laundry machine, although i think that that facility may be a great idea to but for me, it was about real estate and buildings. And so I was looking into that you happen to have a great podcast and I started listening in the teens, I think it was and I’m starting to listen to all of them. And I just kept kind of become a junkie with that. I you know, so I forgot my first property in the end of 2011 and St. Louis. I bought a few more there. I’m up to eight and my wife, Susan. Is today In fact, we’ll we’ll get her first three and we’ll she’ll be at six by the end of this month. And hopefully if all goes well, we’ll have Susan topped out and then we’ll go back and start focusing on Gary again.
Announcer 1:11
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 2:01
Welcome to Episode 1317 1300 and 17. And we’re glad you’re with us today. And today we is investment counselor Doug and myself. Doug, welcome back. How’s it going? Always great to be back, Jason. Doug, it amazes me and I know it amazes you how many investors fall for the silliest things. Now these aren’t just mom and pop real estate investors. These are the investors who should be, as they say, the smartest guys in the room, and they should be super sophisticated. They shouldn’t fall for manias and hype and Miss labeling of investments. And what I mean by mislabeling is the company we work, a company that I told you all many episodes ago was essentially a sham. And Boy, was I Right, right. Just go back Listen to the episodes. You heard me talking about it, months before it was in the mainstream financial press. And now everybody knows that the emperor has no clothes they knew a couple of weeks ago. But how is it you can take an executive suite company just like Regis Regis is an old executive suite company that’s been around for many, many years. There’s nothing new about this concept. As my favorite book of the Bible, Ecclesiastes, he says there’s nothing new under the sun. This is the same old thing. Adam Newman scam artist ed is tried to stick a new label on it and call it a tech company. What a bunch of hype.
Doug 3:41
Well, I think that the way that this comes about is that a lot of times you’ll have something that starts out and they get around venture capital funding, and they get a second round at a higher valuation and a third round at a higher valuation and then a fourth round. And then once people start seeing the valuations go up, then you start getting investors to just get on to try to Ride the trend. It’s a main set of because of any kind of underlying fundamentals. Exactly.
Jason Hartman 4:04
I want to remind everybody of commandment number 21 in Jason Hartman 10 commandments. We’re up to 21. Now, Doug, I don’t even know if you notice. Did you hear me announce commandment number 21 when we were in Savannah, Georgia at the venture Alliance retreat, I recall that there was a 21st from a prior podcast but I don’t remember off the top of my head when it was here it is. commandment number 21 of my 10 commandments. Of course, I’m being snarky, because we will be up to commandment number 32 eventually, I’m sure. commandment number 21 is thou shalt avoid manias. Thou shalt avoid manias. And this was a mania. It was just a silly mania, right?
Doug 4:49
Yeah, absolutely.
Jason Hartman 4:50
Okay, go ahead and keep on going. Now. Now imagine when Doug is talking about venture capitalist and all of this stuff. Remember, you could be one of the people who invested in the fund where the venture capitalist is deploying your money into this completely silly, stupid business? So this is your money, potentially, folks, maybe you would have invested in this company. Maybe you’re invested in one of these many other Sham tech companies, that doesn’t make any money, and probably has no chance of making any money continue.
Doug 5:29
Well, in fact, actually, if anybody has a mutual fund with a in a growth fund, there’s a good chance that you have allocation to at least some of these Sham companies, because they all have extremely high price to earnings ratios are no price earnings ratio. They don’t have earnings yet, right? Yes, yeah, the infinite PE ratio earnings are really high price to sales ratio, which is what they usually use for the companies to that earnings. But then you know, the way the cycle ends up going is that yet people they just start writing that mania. And then if it goes on long enough, people think hey, this, this must just be how things work. Now, and then, of course, eventually bills have to be paid. And if you’re not producing any profits, then sooner or later people are going to stop giving you more money and it all crashes eventually. But of course, what happens is that the way that you almost everybody measures things is instead of looking at a full business cycle, which is five to 12 years, what they do is they look at one fiscal year at a time. So they’ll say, Hey, you know, we were, you know, increased by 450%. This year, oh, my God, this is a new paradigm. And they’ll say, hey, it went up by 40% this year. And you know, what, you know, what they want to say is, Hey, you know, we have something that, you know, started out with, say, like $300,000 in revenue and $500,000 in costs, and now they have 30 million in revenue and 200 million in cost. Okay, well, they’re actually getting worse over time. You know, the faster they grow, the worse they’re doing. This is like what happened with Groupon? You know, the more they grew, the worse their cash flow got. Yeah, yeah. At some point that comes unraveled. It has to come.
Jason Hartman 6:53
Yeah, absolutely. Absolutely. You know, the Piper must be paid. It reminds me back in 1998 1999. In 2000, all these people talking about the new economy, the new economy, oh, it’s all different. Now, you can have, you know, a P e ratio of 300 times earnings, and this company is going to be viable because it’s a tech company. Whoo. You know, Doug, as you and I have both said, guess what, folks, real investments and real businesses make money. Yeah, exactly. And have discussion. Okay. I
Doug 7:34
recall saying those exact words.
Jason Hartman 7:37
I know, I know, you did. I know. And I couldn’t agree with you more. But listen, I would not be so incensed at this. If I you know, if someone called me up, and they were an unsophisticated mom and pop investor and they said, Hey, I invested in this deal. When I lost money. I got suckered. But this is the whole institution. This is why Street. These are the as I said, the old saying the smartest guys in the room right? There’s a movie about the Enron scam artists scumbags who, by the way, are making their return as we’ve talked about, and it’s called the smartest guys in the room. And you know, it’s just amazing that these people fall for this stuff. I mean, yeah, I’m incensed at it because I could see if an unsophisticated person but not not the institutions that are the icon of capitalism. I guess they fall forward too.
Doug 8:34
Well, in fact, I had a wonderful conversation with one of the folks at profits in paradise about this. Because what happens is, you know, all of these tech CEOs, they get onto a TED talk and they talk like they’re changing the world or like, you know, they’re, what they’re doing is special and had a critically important social mission. Because of course, you’re clearly they’re not about making money because they don’t make any money. Well, I mean, they make plenty of money for themselves. Yeah, right. But you know, that They talked about how about how do we are not concerned about making money and go Well, clearly because your investors aren’t making any money? Yeah, unless they can resell the shares. Yeah, there’s no profits to distribute. But I think that’s how the scam goes is they get people emotionally involved, because they think that somehow they’re changing the world. Whereas the thing is that voluntary exchange changes the world for the better on its own, you know, because, you know, by definition of voluntary exchange without coercion or externalities has to benefit both sides. Otherwise, there’ll be no transaction.
Jason Hartman 9:29
Yep, you use the word externalities, which is an interesting term in economics, and what externalities are, usually they’re applied to environmental issues. Because if a company produces widgets, and it pollutes the nearby river, it doesn’t necessarily pay for the pollution it creates sometimes, but not necessarily. And so that’s what’s called an externality. It’s in other words, a cos Running that business, even though the business doesn’t actually bear the cost. People have many times criticized Walmart for this. And now finally, they’re coming around and criticizing Amazon, rightfully so Amazon deserves a lot of criticism as great as it is. And, you know, but it also deserves a lot of criticism too. And the way they would criticize Walmart is they would say that basically Walmart wasn’t paying people enough. And Walmart is using the welfare state to support its business model, because a lot of Walmart workers were receiving some sort of government aid in one way or another. And that was considered an externality of Walmart’s business that Walmart was not paying for any thoughts. I’m sure you want to expand on that, but I just wanted to give you a tee it up.
Doug 10:47
I think you can actually take that even further now because Dollar General probably has taken that model and push it even deeper because there’s a lot of small towns that have Dollar General penetrated in and it’s push a lot of the even smaller moments. Places, because I think there is some merit to that Walmart argument. However, you know, as you’re fond of saying it’s compared to what? And you have to say, Okay, well, if Walmart wasn’t there, how would the community composition be without Walmart? And then with Walmart, because as low as you might get paid at Walmart, I would assume that if you had a better option, you probably take it.
Jason Hartman 11:18
Absolutely. Yeah, that’s what we’ve got to assume that each each person or each player company, two companies, and people in a capitalist system are going to get the benefit of the best bargain they can get.
Doug 11:31
Absolutely. That’s still the externalities are very real, I think, especially when it comes to things like pollution. And as much as I don’t like the idea of getting hysterical over climate change. I think climate change is real and you know, there’s something needs to be done about it. Now, my preference would be to just make it simple and just put a tax on carbon emissions. And then to sponsor more nuclear power. The one of the things that businesses are very, very good at is running away from costs. So the second you make something more expensive, all the smart accountants figure out how to minimize minimize it as much is humanly possible? They sure do. They should. Exactly Yeah, businesses are very, very good at running away from cost. So then it’s like if you can just align the cost of the externality. So a lot of times the market mechanism can solve a lot of problems without a lot of top down intervention.
Jason Hartman 12:15
Okay, good. I think we talked this one through the moral of the story here is folks, just don’t be fooled by the resume and the size of the institutions endorsing or promoting any investment. Use your own common sense. And let common sense rule the day. Good old fashioned common sense is worth a lot all this talk about, you know, these highfalutin esoteric terms that companies and CEOs and people are using and and the financial media is using are usually just a bunch of BS that just usually BS in final comment on that and let’s move on
Doug 12:59
final comment. Is that it’s just that things that make sense are always going to make sense. And there’s always going to be somebody trying to push some new ideas, some new paradigm to try to sucker you into throwing a bunch of money after an idea that was never viable to begin with. Yeah, that was actually a lot of our topic of our conversation is that, you know, people, these tech CEOs get people all emotional about their nonsense business models, to get them to stop thinking, well, if people just keep thinking, then you’re not saying you’ll never lose money, but it’s very unlikely you’re going to go bankrupt because you’re not going to put enough into where it can crush you.
Jason Hartman 13:33
Absolutely. Please keep thinking. That’s good. Okay, speaking of keeping thinking, we’re going to take a quick intermission here, and we’re going to play one of our blog cast. Then I want to come back and I want to talk about the creating wealth simulation game, and some of the lessons our listeners can learn from that game. So we’ll be back in just a couple of minutes.
Doug 13:57
One of the most frustrating things for him come from property investors is frequent mention of the housing market when people talk about real estate and investment properties. The subtle fallacy of the statement is the fact that there really is no such thing as a national housing market. Real estate is a fragmented localized investment category that has different characteristics depending on what city you select, and what specific neighborhood you choose for investment. another layer of distinction that’s important to understand is the relative movement of rents and values for different types of income property. We prefer to articulate the characteristics of these movements as the difference between housing and shelter. Now in the context of this conversation, housing refers to higher end accommodations that are preferred by people willing to pay premium prices. And shelter refers to a basic place for your family to live. Ultimately, this becomes a microcosm of the distinction between inflation and deflation that each person experiences by and large things that you need. Such a shelter rarely decrease in price. The reason for this is because consumer demand and willingness to pay for the necessities of life does not typically decline even during economic recessions. Now, in contrast to this, there are things that you want, such as premium housing that will shoot up or down in price wildly depending on the latest gyrations in supply and demand. The reason behind this phenomenon is because economies expand and contract from the top. This means that during growth phases, new wealth will be created and new markets for premium products will emerge with large profit margins for people that can satisfy this demand. On the other hand, economic contractions frequently impact large economic players before the general economy and create rapid reductions in the demand for luxury products. analysis of the rent breakdown for major metropolitan markets shows the difference between housing and shelter that can uncover valuable insights for investors. For example, Atlanta, Georgia, it has a large amount of its rentals concentrated in units with a monthly rent of $800 and below, with the sweetspot, being right around $700 per month in rent. The advantage to being in this segment of the market is that it sits at the intersection of people moving up the scale of affluence, and more affluent people seeking lower cost accommodations. extending this analysis to another major market like Dallas, Texas, shows that the phenomenon continues to hold true across multiple market areas. Now Dallas exhibits different characteristics from Atlanta in the rental distribution closely resembles a bell curve, where there is extreme concentration in the middle of the distribution, with a sharp drop off both above and below the average. In a market such as Dallas, it’s much more advantageous to offer shelter, as opposed to housing because of the simple fact that high priced houses only appeal to a small segment of the population and big Housing has a tremendous base of potential tenants. by positioning your income properties in the middle of large tenant pools, it helps to insulate you from economic cycles. Since expansions will bring more people to your properties from the below your target rent level, and contractions will bring in people from above. It’s also interesting to see that this phenomenon extends beyond cities like Dallas and Atlanta with healthy economies to more troubled cities like Chicago. While the shelter sweet spot is still present in Chicago, the city represented difficult market for investors because of the relatively high prices for properties. What ultimately results from these inflated prices is depressed cash flow, since market rents are very similar to other major metropolitan areas, resulting in lower profitability for income property owners. Ultimately, the optimal strategy for income property investors is to own entry level or shelter properties in markets with low land values and attractive a affordability. This will allow you to realize attractive cash flows from rental revenues and help to systematically protect you from economic cycles by occupying the gateway between low income people moving up the ladder and higher income people moving down. In the end. This is also a lucrative opportunity to insulate your portfolio from deflationary pressures while optimizing the beneficial impact of inflation. Since deflation disproportionately impacts luxury or optional items, in other words once it will drive down the cost of luxury housing yachts, sports cars and other status symbols that are traditional signs of wealth. The reason for this is because down cycles in the economy push people out of the marketplace for luxury products. On the other hand, deflation frequently bypasses necessity items such as needs, since there’s always a need for food, clothing, energy and shelter. It may be that the quality of the products and services people consume with decline, but the highest priority items on most people’s budgets will always be the needs of life. by optimizing your investments for this phenomenon, it will help to shield you from downside losses and maximize your upside profits. action item, focus your income property investments on entry level shelter deals. This will place you at the crossroads of people moving up or down the economic ladder and insulate you from market cycles while optimizing your profitability. by carefully selecting attractive markets with a favorable ratio of rents to property values. It will allow you to capture tremendous upside opportunities while minimizing your downside risks.
Jason Hartman 19:44
Hope you enjoyed that. We just want to give you a little variety in the show rather than just us two talking heads and mix it up a little bit. Be sure to subscribe to our Alexis skill. You can look for Jason Hartman’s real estate update on a Amazon or in the Alexa skills store, get that every day delivered to your Amazon Echo device. Doug, one of the great things that you did again, was you played a brand new version of the creating wealth simulation game. It was a lot of fun just as it was last year. Last year, we were in Hawaii for profits in Paradise and you were just super entertaining. If the real estate thing doesn’t work out for you, you can always get a job as a race track announcer dog I want you to know that or maybe an auctioneer, I think you’d be great at either one of those things.
Doug 20:37
I’d actually consider making the creating wealth simulation where you had to auction off properties to the different teams and see who would bid the highest for a certain market and cash flow. That’d be hard to administer, but it would make it really fun.
Jason Hartman 20:50
You know, we played the game at prophets in paradise again, and it was very educational. It was also very entertaining. It was definitely very educational. Now, I want you to explain what this game is to our listeners. And let’s help them learn some of the lessons even if they weren’t in attendance. And if they were, we’ll just kind of reiterate some of those lessons, or maybe some of the lessons weren’t fully internalized by the attendees. So either way, whether you were there in attendance or not, I think this little chat about it will be beneficial to you. Go ahead.
Doug 21:26
Sure. So the way the game works is that we split the room into teams. And each team had a list. It was a hypothetical list of properties, but most of them were modeled based off pro formas from the Jason Hartman website. And so what we did was we said, Hey, we have different markets, different providers, and different properties. And what we want each team to do is to build what they think is their best portfolio with a given amount of money based on a balance of cash flow and appreciation. And so what people were doing was figuring out okay, how much do I want to put down Do I want to put down 1520 25% What are my closing costs, you know which ones are going to be more cash flow weighted, which ones are going to be more appreciation weighted, because the cash flow way to properties will be more resilient. But your long term returns are usually lower than your appreciation weighted properties. But appreciation properties tend to be more volatile. So basically, it’s how do you build your best overall portfolio with a given amount of capital based on all the moving parts? The thing that a lot of people really took out of this or really liked about it was that they got really deep into figuring out okay, exactly how much cash Do I need to build a given portfolio because most people, you look at their either investments or look at their housing purchases one at a time, so don’t go out and buy one house, then they’ll go out and buy another house. But if you think about it from an overall portfolio perspective, you would say, Okay, how much capital do I want to put into this portfolio? How do I want to deploy that capital? How do I want to split it out between market areas, you know, like, for example, if I’m self managing Self managing, you would realistically want to concentrate your properties in a smaller number of areas. So you can get some economies of scale. Right.
Jason Hartman 23:06
And and so that’s one of the optimization vectors. And by the way, Doug, I talked about this, I’m pretty sure you were out of the room when I talked about this. I brought it back from a long ago, creating wealth simulation game, it was the four optimization vectors, and one of them being management efficiency,
Doug 23:24
correct. And so that was actually one of the other options that we had was deciding whether to self manage or not. And the whole idea was that when all these portfolios were entered, each of the properties was simulated, actually, honestly, using random numbers. So because one of the people said, Okay, can you tell me how it’s going to turn out? And I said, No, I can’t because I use a random number generator with a probability distribution to forecast the performance because the future is uncertain, right? Just because it says 6% growth on a pro forma doesn’t mean it’s going to be 6%. It could be anywhere from negative five to positive 20 or any
Jason Hartman 23:58
or any other metric on that person. By the way, yeah,
Doug 24:01
yeah, exactly. And so that’s the thing is that, you know, injecting some randomness, what it does is it helps to see that you’ll have random factors that will push things up and down, and you’ll have things that are that are moving around. But if you have an overall portfolio built, you’ll be much more stable than if you just have a single property or if you just have a whole bunch of properties all concentrated in the single market.
Jason Hartman 24:22
Okay, good. So, you know, remember, these are conflicting optimization vectors many times, right? Like management efficiency would dictate that you want all your properties in one market in one area, so that it’s sort of easy to manage them, but then you don’t have optimization factor for diversification. And so you want to balance these things, you know, look, everything in life is a trade off, right? So you want to have some diversification, optimization, and some management, efficiency optimization. And the thing you want to do is just find the right blend of These things and and of course, there are more vectors like optimization for portfolio size, etc, etc. Or, you know, overall cash flow return on investment, you know, tax savings. I mean, you could there’s like an endless list of optimization vectors. But okay, so we don’t know what’s going to happen with the property, we take our best stab at it when we pick and we make a choice. What else Doug?
Doug 25:23
Another thing I think that really came out of this emulation, that a lot of people that was educational for a lot of people was that the teams that did the best had a combination of appreciation markets, you know, markets that tend to appreciate faster but didn’t necessarily have as much cash flow and cash performance markets, you markets tend to be more linear, but will have higher cash performance ratios. The way we would say it in Jason Hartman vernacular would be hybrid markets and linear markets, or as I call it, the flashy, trashy portfolio methodology just tongue in cheek, but to that point, a lot of people you have found it really illustrative that a combination of how Hybrid markets that will, you know, when the economy goes up, we’ll really be able to ride that upside wave, but can still sell finance, the cost of carrying their debt, combined with the cash flow markets will make it so that when there’s a correction, they can write it through. But then when the sun shines, they can make hay. And I think that’s a good strategy for most investors. Because right, we don’t know when the expansion is going to stop, it could go for one more years, three more years, five more years. We don’t know when the recession is going to be or how long it’s going to be, you know, we know that there will be a recession. We know it will start we know it’ll end we know there’ll be an expansion that starts has a middle and end and there’s going to be another recession at some point. But we don’t know what any of those numbers are going to be. So what you want to do is you really want to build a portfolio that’s going to give you exposure, positive exposure to all of those ups and downs.
Jason Hartman 26:52
Yeah, I agree. I agree. Okay, so how do you do it? I mean, what do you do you say that and everybody’s nodding. Go ahead saying Okay, sounds good to me dog. I agree.
Doug 27:02
So in that case, then essentially what you do is you segment out your places to invest to say, okay, of all of the, you know, say our hybrid markets in the portfolio, which one speak to me the most? And then say, of all the linear markets that are available, which ones are those speak to me the most, or which ones do I feel the most comfortable with? Or the way that I look at it is not just the market, but which provider do I feel the most comfortable with? Because I can tell you that if you’re working through an investing partner, if you have somebody who’s good, that makes your life a whole heck of a lot easier, it sure does. You know, as I’m fond of saying, right, a good provider can’t turn a bad property into a good deal. But a bad provider can turn a good property into a bad deal, right? But that’s one of the other things really think about is Who are you going to be working with, because that is going to be really critically important over a given amount of time because especially when you’re really starting out, it’s critically important to make sure that you’re working with somebody who is a really high quality Because if you stumble on your first steps out of the gate, there’s two things that can happen. One, it will create a serious detriment to your long term compounding. And then number two, is that it will make you really gun shy and paranoid, being worried that something’s waiting behind every Bush to bite you.
Jason Hartman 28:17
I would say that that is probably the biggest danger is how it affects our own psychology as investors. You know, the investors, or just people in general in life, that get on in the world and become successful are the ones who can let things roll off their back, like the metaphorical water on the duck’s back. Right. And, you know, you take it, you learn the lesson, you get up, you dust yourself off, and you move forward with gusto. And, you know, those are the people that win the game, whether it be investing or just life in general. But, you know, Doug, you have two kids, and I know that as a parent, you’ve always got to balance these things. Get Know you want to spoil your kids you want to protect them you want to do everything for them but that’s not really good for the kids because you need to make them self sufficient and teach them how to fend for themselves because you’re not always going to be there to fend for them right? Even though you might want to do that you gotta let them fall down a little bit right exactly.
Doug 29:19
And anybody who says that they know exactly the right thing to do at any given time isn’t doing it themselves
Doug 29:27
like we work CEO
Doug 29:31
yes exactly to say yes I’m going to change the world by by leasing office space and then releasing it not for profit hell
Jason Hartman 29:38
but Doug us changing the world because because they have coffee and beer. That’s that’s the new economy.
Doug 29:46
The new economy is about coffee and beer apparently. Which I am a fan of both of those things. I am both pro coffee and pro beer.
Jason Hartman 29:55
Me to their Okay, I’m good with both of them especially my
Doug 29:58
name is Doug Brooke, and I approve this message.
Jason Hartman 30:00
Yeah, you’ve got that German blood in use of the beer, right? Yeah,
Doug 30:05
exactly, exactly.
Jason Hartman 30:06
Okay. So back to the
Doug 30:09
back to the topic to back to investing. The thing is what we’re talking about is are just things that makes sense. And I think what the portfolio thing where that gets really important is that when you’re starting out, let’s say you have zero properties, right? So you have a primary residence or so you don’t have a primary residence, right? You starting out you have zero properties, and you say, okay, over, say, the next three to five years, I think I’m going to build a portfolio of about x, well figure out about what you think that’s going to look like, and about how you think it’s going to perform once it’s stabilized. So then what you can do is if you end up having a short term setback, you can say, All right, I’m just not a step toward my overall portfolio. And once I get to the end point, I’m not going to have to worry about these little fluctuations, you know, because if you have a single property, you know, then however, performance is how it performance. If it performs good, you’re awesome. If it has problems, then you’re depressed You know, if you have 10 properties, then any problems you have in any one property unless it’s a really, really big problem probably won’t be that detrimental to your overall performance.
Jason Hartman 31:10
Yeah, that’s true. So you, you want to have those optimization vectors. And that’s the diversification optimization. Otherwise, you know, it’s related to, but not exactly the law of large numbers, right, which we’ve talked about on the show before, many times and, and hey, that’s how casinos make money, but law of large numbers, right.
Doug 31:31
So and I think it is exactly what it does love large numbers. And, you know, you don’t actually need that large numbers for it to really matter because ordinarily right, you know, say if you’re talking casinos, you know, you have hundreds of thousands of people who are all playing the different floor games, and it all averages out in life. Yeah, exactly. But on the other hand, you know, you can recognize a pretty significant benefit with really just a handful of properties, especially if they’re diversified across a couple of markets. You know, it doesn’t take like 50 properties doesn’t even take 30, probably 10 will get you in pretty good shape and even five, you’ll have pretty decent level out. So that’s the thing is that it’s getting through that initial fear of volatility while you’re building up your portfolio until it gets to the point to where any one property doesn’t represent that big of an overall swing and the performance. Because Yeah, you’re going to have some vacancies, you’re going to have some evictions, you’ll have some tenants who create damages, but it probably won’t happen in all of them once
Jason Hartman 32:31
right, very, very unlikely that that would be the case. Good stuff. Any final thoughts on that? We got to wrap it up for today, just that
Doug 32:39
I’m already jotting down ideas to make the meet the Masters simulation even better. And so I just want everybody who’s listening to book your tickets for meet the masters and
Jason Hartman 32:50
Weibo can’t book them yet. Okay. So tickets when they are available, make it make a mental note. Okay. We are not yet announcing Our date or location for meet the Masters, but it is coming soon. So stay tuned for that it won’t be
Doug 33:05
an undisclosed future time and location. Yes, yes. During the fiscal year of 2020.
Jason Hartman 33:12
During during the spring of the fiscal year 2020 spring
Doug 33:15
of the fiscal year 2020.
Jason Hartman 33:17
Actually the calendar year 2020, which is the same as the fiscal year and
Doug 33:23
sometime between January 1 and December 31. In 2020, it’ll be
Jason Hartman 33:27
the spring. Good stuff or generally the spring maybe a little bit before spring. So good sometime
Doug 33:36
during the month of February to April. Most likely, yes, yes. Yes, it’s possibly but not specific.
Jason Hartman 33:43
We want to make a lot of disclaimers as many as those Wall Street investment houses do, you know, tons of disclaimers. So very last Yeah.
Doug 33:51
And now we have to play tech CO and we’re going to change the world with a new paradigm. That’s the new economy. The old rules. Don’t apply in anymore if everybody can’t tell that I’m being facetious, I’m
Jason Hartman 34:03
being completely snarky here, folks. But make sense. Yeah, just so you get the idea. Well, Doug, this has been interesting. Thanks for coming on today. And listeners. Thanks for joining us and go to Jason Hartman calm for more info. And by the way, I have to just remind you every once in a while, if you have not recently, or especially if you have not ever watched the free video on the front page of Jason Hartman calm, which will teach you in 27 minutes, how to analyze a real estate investment. Make sure you do that. Do yourself a favor. If you want to really understand how to analyze a deal on the front page of Jason Hartman calm. There’s a great video for you. Go check it out. And if you haven’t listened to that lately, make sure you’re watching that every six months or so. Okay, Doug, thanks again. And until tomorrow, listeners 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.