(Depending upon when you happen across this, the following conversation took place at least several years ago. While it is great for illustrating timeless investing concepts like what goes into assessing investor confidence, the market has likely changed dramatically. Please don’t base an investment decision on the information contained herein. Current information can be found at www.JasonHartman.com . Always do your own research!)
Episode #321 of The Creating Wealth Show features, George Walper, President of the Spectrum Group. Walper discusses the correlation between investor confidence and how investment decisions are made. He also shares whether investors are looking to get more aggressive given the market’s run-up. There’s been a lot of debate about the one-percenters; are they helping or hurting the economy and markets? Walper shares the data. Retirement has changed a lot over the past decade. How much do wealthy investors think is in the pot of gold at the end of the rainbow?
But before Walper takes center stage, Jason spends some time talking to, Jessica, who is part of the Local Market Specialist (LMS) team in Kansas City and St. Robert, Missouri. These two midwestern areas have done well for investors who have taken Jason’s advice to buy real estate there.
Why St. Robert Has Been a Gold Mine
To understand why this small central Missouri town has been such a gold mine for landlords, we need look no further than nearby Fort Leonard Wood, a massive U.S. Army training facility. With the base population 98% military, and a large percentage looking to live off base, it’s no wonder real estate investors keep coming back to St. Robert when looking to expand their income property portfolio.
How to Evaluate a Property Management Company
One of the first decisions faced by a new landlord is whether to manage the property him or herself or hire a property management company. Jessica has a few tips on what to look for as you start the screening process.
Look for simplicity. It’s easy to get lost in complicated accounting software and fee structures. According to Jessica, there’s no reason for it. As an example, her company charges a flat 8% fee based on the rent collected minus any pet rent that might apply. There are no additional fees of any kind. If you look very far, you’ll find that some companies charge fees for things like re-leasing after a tenant moves out, long distance phone call charges, cutting checks for the landlord. This is not to say you should automatically reject any property manager who wants to charge extra fees, but it does beg the question: If one company can earn a profit charging a single, simple fee, why can’t they all?
Are Active Duty Military Good Tenants?
If you listen to conventional wisdom, you might assume renting to active duty military personnel creates more headaches than it’s worth. Jessica says nothing could be further from the truth. While it is true that military members might suddenly be deployed elsewhere in the world, and federal law allows them to break a lease with a 15 day notice, it’s usually not difficult to find another tenant.
Historical return on investment with St. Robert properties is 25-30% annually. Not too shabby! For more information on the area, visit www.JasonHartman.com and click on the “properties” tab.
George Walper and the Spectrum Group
The Spectrum Group is a respected market research and consulting firm. Jason invited firm president, George Walper, to The Creating Wealth Show to talk about a variety of investment research. Spectrum analyzes information gathered from investors with varying portfolio sizes to get a feel for investor confidence.
We’d Be Doing Great if it Weren’t For the Idiots in Washington
Many people look to the stock market as a marker for how the country is doing overall. With recent closing highs being of a historical nature, it’s easy to think we’re having good times in the land of plenty. One thing to keep in mind is that looking at numbers alone, and not taking into account annual inflation, leads to a false sense of security.
Walper notes the following display of polling schizophrenia: Investors feel good about the stock market but are understandably nervous about continuing economic gridlock from our leaders in the White House and on Capitol Hill.
A Few More Things to Worry About
On a more personal basis, today’s investors are the first generation to believe that it’s pretty certain their grandchildren will have a lower standard of living. Healthcare is another issue affecting investor confidence. Most retirees exist on a fixed income, and it appears that quality medical treatment is not going to become more affordable any time soon.
The Weird Thing About Healthcare
Can anyone out there think of another industry where the consumer routinely has no idea what the cost of products and services are? It’s mind boggling but true. Even more mystifying is that most doctors couldn’t tell you the price of service either. The truth is that, depending upon insurance and eligibility for government programs like Medicare and Medicaid, each person pays a different price! And as Obamacare continues to be implemented in stages, expect the confusion to intensify.
Surprise! Older Investors Love Social Media
Conventional wisdom takes another hit! It’s not just youngsters who love their social media. The largest group of Americans reading financial blogs are wealthy people over 65 years of age. These well-heeled investors have a formidable presence on Facebook, Twitter, and Youtube.
Add Mobility to Your Resume’
Jason closes the show by making a point related to homeownership. He has long said that mobility is the most important thing to have on your resume’. Sometimes a good job becomes available in another part of the country but, guess what? You’ve got a mortgage on a home keeping you right where you are!
The Bottom Line
If you’re interested in digging deeper into Spectrum Group research, visit Walper’s website at www.spectrum.com or www.millionairecorner.com . (Image: Flickr | royblumenthal)
More from Jason Hartman:
Success in Tough Times with NY Times Best-Selling Author Frank McKinney
Income Property Investing and the National Housing Market Myth
The Jason Hartman Team
