Steve joins Jason Hartman to share his experience with HomeVestors as a house flipper. Jason adds that house flipping is a business that may not appeal to his more passive investor audience. The two also talk about the real estate market in Utah and if it’s worth investing in it or not.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self made multi millionaire who not only talks the talk, but walk the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities, this program will help you follow in Jason’s footsteps on the road to financial freedom, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:01
Hey, welcome to the creating wealth show. This is your host Jason Hartman, Episode Number 533 533. I’ve got one of our old co hosts back with me today. I’m so excited. He’s a great guy. Many of you have asked about him, and he’s come out of hiding. And that is Steve from Utah. Steve, how you doing?
Steve 1:21
Hey, I’m back by popular demand. It’s you are Yeah, it is popular demand. Yeah, I got letters and all kinds of posts. Steve, come back, come back. That’s true. Right.
Jason Hartman 1:34
Well, I’ll put it this way. You’re back by semi pocket
Steve 1:38
semi popular demand. Yeah.
Jason Hartman 1:40
I mean, there was no one that said they didn’t want you back. I’ll put it that way. But I can’t say everybody said bring Steve back.
Steve 1:47
You said that’s a possibility. So now you’re gonna hear Hey, well, we didn’t you’re gonna get flooded with emails.
Jason Hartman 1:53
We didn’t want him back. Now.
Steve 1:54
Everybody wanted you back. Yeah. Well, I’m back. So deal with it. People that didn’t want me back.
Jason Hartman 1:58
That’s right. Well, tell the listeners What the heck you’ve been up to. I mean, you are an investment counselor with us. But you’ve been on sabbatical. You’ve been on hiatus? And we’d love to have you back working with our clients. But you’ve been busy with a home investors we buy ugly houses. Yes. That’s their slogan. I love that slogan, by the way.
Steve 2:17
Yeah, we I still got my Maya license over there at the at the brokerage and you’ve been very kind, let me know that I can come back anytime and help people buy more properties, which I miss all my clients. Hey, guys, hope you’re doing well. And I know that lots of dealt with lots of great people when I was active as an investment counselor, but yeah, I’ve been doing the flip thing that lots of people think they want to do. And I’ve been doing that for about a year, I had some experience with it in the past. And so here in Utah and men flipping some houses and use that home investor model for it. And I don’t know how much I can like, say about their model, because it’s a franchise and there’s things you can and can’t say but
Jason Hartman 3:00
Right, right, right. But the flipping thing, I mean, you know, that’s a business. I mean, Steve, you’re running a business that it’s not an investment, right? It’s a business you’re running?
Steve 3:10
Oh, absolutely. People think they’re going to be a quote unquote, a real estate investor and you’re, you’re buying and selling a product, right? You any businesses buy the widget for price x and then sell it for price? Why? And that’s what you do. It’s it’s a business I, if I stop marketing, or stop doing anything, the the spigot turns off, and I’m done. Right. So you you’ve got to keep going. And, and that’s why if you’ve got the personality for flipping, if you’ve got some very specific characteristics, capital, that’s a big one, too.
Jason Hartman 3:44
Okay. Having money is helpful.
Steve 3:46
Yeah. What do you know? What do you know? I mean, imagine that these people they want money for their houses. So you got
Jason Hartman 3:53
the mean, they don’t give them to you for free.
Steve 3:55
That’s right.
Jason Hartman 3:56
That’s right. Imagine that, you know, they obviously don’t know that. You know, you expect things for free because you voted for Obama, right? You’re under the impression I
Steve 4:03
voted for Obama. No, I’m not.
Steve 4:07
I don’t know how I could have gone wrong there. I thought had been pretty clear. Then that did not happen.
Jason Hartman 4:11
Did you get a free phone?
Steve 4:13
My Obama phone? Yeah. No Obama for that lady or buddy in Cleveland Obama phone, you know,
Jason Hartman 4:18
that’s right. Okay, there we go off into politics again.
Steve 4:22
Yeah, we did it. We did it. My daughter. She’s, she’s really anti Obama. She’s seven. So we we raised her right. But I was talking to her about that. I love Obama Phone Clip one day, and she was listening. We call her the tape recorder because she will repeat everything she hears. She’s like a parrot. Yeah. So she we come home for the night and she goes back into a room to get dressed for bed. And I hear yellow. Because we were we were joking. We were saying Obama phone and hey, I want my Obama truck and everything was gonna come from Obama. Right. So she’s in her room and I heard it. I hear yell. Hey, Dad. Where’s my Obama shirt? Funny.
Jason Hartman 5:00
You know, the entitlement mentality is is just so destructive. That’s why we’re joking about it, folks, if in case you’re a new listener to the show, you know, this is a very destructive thing for society, the entitlement mentality. When you buy houses from people, they expect you to pay for them. What a concept, right? Well,
Steve 5:18
they have very, very high opinions of what their crappy house is worth.
Jason Hartman 5:23
And the houses you’ve been looking at have been pretty crappy. You’ve told me some stories,
Steve 5:27
man Oh, yeah. Well, there’s there’s opportunity in that that said saying from Warren Buffett be fearful when others are greedy and greedy when others are feeling fearful, right? So if a house has a bad roof and broken windows and a you know, a pitbull chained to an old white set in the front yard, that’s opportunity, right? That’s what you see. But it’s it comes with some hair on it. There’s always something funky going on when you when you get into house flipping. You also most people don’t know this, you become part time Legal Aid and a part time social worker, whether you like it or not, because these situations where somebody might unload their house quickly for cash for a big discount. I mean, there’s got to be something funky going on. And man does it stack up the stories because you just you can’t believe this stuff happening right under your nose all day.
Jason Hartman 6:15
Every day. You got to share some of those with us, like share a couple of stories. I mean, when I was in traditional real estate, I felt like I was a social worker. Yeah. Remind me I got to get Sarah. You know, our Sarah, our investment counselor, she wants to be called investment therapist. I gotta buy her a T shirt that says investment therapist.
Steve 6:35
Yeah, well, and then sometimes we are the Sarah therapist, because you know, the therapist needs a therapist.
Jason Hartman 6:41
That’s true. You know, therapy, every therapist both and every coach needs a coach.
Steve 6:45
Yeah, no. Hey, when I was an investment counselor, that’s Sarah and I wouldn’t do therapy, because it was
Jason Hartman 6:51
his usual therapy.
Steve 6:52
Yeah, that’s right. That’s right. So Well, yeah. You get some really crazy crazy stuff going on. I think probably the best one. The most entertaining one I had was it was in a place called Magna, Utah. Which magnet is a dive and I don’t have any trouble bagging on Magda on your show. I don’t think there’s anybody in magnet listening to the creating wealth show. Okay. All right. That’d be surprised. I I’m willing to wager porterhouse at Morton’s next time I see you.
Jason Hartman 7:25
Okay, magna listeners, please write me a complaint letter. So I can win a porterhouse steak. And where do you say Morton’s? Morton’s? Yeah, okay. All right.
Steve 7:34
Yeah, and you can’t Yeah, I’m gonna look it up. I am the Kelvin title. I can tell if you’re really in Magna. So Okay,
Jason Hartman 7:40
go ahead.
Steve 7:42
So okay, I get this call from this lady. Hey, can you come? Look at my look at my house and mag. Alright, fine. I’ll come in. It was at the end of the long day. I had a lot of appointments this day. So anyways, she tells me to come look at this house and magnet that she doesn’t live there. Just meet me at the house. You can see it. And then we’ll go see, we’ll go to my house a couple miles away after a talk because you don’t want to talk there. And this is something I hear regularly, but I’m thinking Oh, boy, this should be good, right? So I pull onto the street and magnet. And these are all like two bedroom, one bath houses, maybe 700 square feet tops. And usually I don’t like that kind of a house. But this whole area was that. So if I can get comps, I can value the house. Okay, I can sell it. And we pull up in front of this house though. And she she pulls up in front of me and I’m looking at the house, and you can barely see it. It’s got a little porch. And the porch is just stacked with stuff all the way to the rafters. can’t even get in the front door. There’s so much stuff. And in the front yard, this front yard had to be maybe 15 feet wide. 10 feet deep was all but we got mattresses and tables and garbage. And I mean you name it. It is it is the worst. So she says Oh hey, we can Let’s go see the house and she’s kind of depressed. I can tell she’s going is this really my life? Because she looked like a nice lady. She came in hospital scrubs. She was a nurse or something at one of the local hospitals. And I’m thinking you you don’t live here. You know, how did you get yourself into this?
Jason Hartman 9:19
yourself into this mess? Right?
Steve 9:20
Yeah, the wheels are turning right, what is going on with this thing. So we go down the the alley kind of the side there’s a side door and maybe like a five foot wide gaps go down this side and go in the side door of the house. And as we’re going down, I see somebody dark from the shadows back behind the detached garage and then another guy going on here. I mean, when I go to mag that I take one of my I take my assistant Mr. Smith with me. So by now my hand is kind of back towards Mr. Smith. Because I’m wondering what who’s in this house is his last name Wesson? It is it is you know him.
Jason Hartman 9:56
Okay. Yeah. Smith and Wesson. Yeah, I know. Yeah.
Steve 9:59
That’s right. He was with me. So we somebody had spray painted on this side door. You know, just get a look and spray paint. Toxic Waste do not enter. Oh, great.
Jason Hartman 10:11
So you have your gun, but you don’t necessarily have a biohazard suit, right?
Steve 10:16
Yeah. I don’t have my hazmat suit with me. But the lady who’s a nurse just goes right in. She doesn’t care. Okay, this, this must be just some meth head, right? Trying to keep people out. And we go in this house and it is de gusting. Okay. cockroaches trash, everywhere a foul smell. I see a notice from the health department that the water and the utilities are shut off. That didn’t stop them from stringing up a couple of extension cords to the power line. Right? They had tapped into the power. And there’s a lady in there, living in the house and she says Hi, how are you walking around? I’m kind of thinking, I wouldn’t want to be in here but I’m with the owner. Nobody’s concerned we’re okay. And then all over the drywall in this house. Somebody had written with fluorescent permanent marker, these profound deep thoughts that I think they’re profound and deep when you’re on acid, but when you’re sober, they just are stupid. Okay,
Jason Hartman 11:18
now how often are you on acid you good Mormon boy.
Steve 11:23
I’m just speculating that if you were to be on it, this might be very, but this was just stupid stuff. And, you know, just toilets clogged. Just imagine the most disgusting thing you can and this was it. And then we go on the back and in the back yard. There’s a an old truck, a garage stacked to the rafters and there’s five people living in this garage. Right? There’s a guy grilling up something on a hot plate. He’s scratching his wrists. You know? Is he grilling a possum? to eat? No, it was it was an egg. He actually had an egg that somebody had got somewhere and, and but it could have been a possum. I’m sure that night it was
Jason Hartman 12:05
folks. We’re talking about adventures and flipping houses here. Okay. Yeah.
Steve 12:10
So we look at this. And this is a 650 square foot house. So actually, this is not as bad as it looks. only so much can be wrong with 650 square feet. I wasn’t so much worried about the repairs, as I was the unwanted tenants and whether they had rights or not. Okay. I mean, we’re not in San Francisco. It is, you know, so not
Jason Hartman 12:33
it’s not total squatter Ville and Utah.
Steve 12:36
Yeah, but at the same time, you know, who knows if it’s gonna happen, it’s gonna happen in Salt Lake County. We got some communists in Salt Lake County. You never know.
Jason Hartman 12:43
A couple communists?
Steve 12:45
Yeah. So I go get in my car and I drive to this lady’s house. Her name is Alice. And I think we get there and I go, Alice, what is going on? And she tells me, a whopper. She said, Okay, my debt, my dad died, I inherited the house. I’ve got three other brothers. And when he died, the University of Utah Medical Center put a lien on this state for five grand. And my brother who’s a drug addict decides he’s going to move in the house with all of his friends after dad die. So he goes in and moves into the house. And of course, this turns into hey, can bill and Bob come over? Can Susie and Phil come over? And now pretty soon Yo, you got 12 people living in 600 square feet. And it’s just they’re living in squalor. So one of the the roommates I like to call him the director. He decides that he’s going to film a porno at the house.
Jason Hartman 13:44
Oh, Mike. I use it. This story wasn’t crazy enough.
Steve 13:49
I know. I know. It’s getting better. Right? Yeah. So he decides he’s gonna film one of these at the house, but that he’s not going to check the ID of the actress.
Jason Hartman 13:58
Oh, she’s under 18 Oh, my God. Really?
Steve 14:01
Yeah. They film this. And then they burn a bunch of DVDs. Yeah, they ship the DVDs across state lines. And then a couple weeks later, the FBI kicks in the door and arrests everybody. So they take they haul everybody off to to the judge. And he pretty much lets everybody go but the brother because he had, you know, just a truckload of drugs. And of course, the director who’s gonna go away for a long time. So all of these other minions that the judge let go gradually hitchhiked their way or whatever, back to the house. And that’s what I walked into. Right. So it was an absolute train wreck. I was actually completing or competing with another investor on the deal. ended up getting the deal for $19,000. And I just wholesaled it real quick for 40 because it’s, you know, it was the cheapest deal on the whole county and investors just went crazy for it.
Jason Hartman 14:57
Okay, so you made 20 grand on that deal. And you didn’t have to pull out Smith and Wesson got pretty horrified. But by the time the IRS comes along, you’ve got about a $12,000 gross by the time the IRS gets their cut, so, yeah, okay, that’s that’s pretty good stuff.
Steve 15:16
Well, you got to take flipping, plus the years the cost of marketing and everything that comes out of your business, but, you know, income you make through flipping properties is taxed as ordinary income. So you gotta, I don’t want to get too much into my, my own details here. But you gotta, you got to use an S corporation to minimize the self employment tax, and it will save you a lot of money. It’s not going to, you know, negate the tax, but it’s going to save you a lot of money, you got to have an S corp on the back end of this that, that, then that’s something for everybody to talk with their accountant, if they’re crazy enough to want to flip properties. I mean, you heard what I just told you.
Jason Hartman 15:51
Sure. Yeah, that’s, that’s crazy. Well, okay. So, you know, we we have people that come to us once a while, and they say, well, let’s, you know, let’s flip properties and so forth. And, you know, I mean, I’ve flipped properties. I’ve made some money by it. But, you know, it’s it’s a business. I mean, in order for you to get that lead how many mate like you send out mailers? I mean, you were in the business of mailing stuff, Steve, constantly mailing out what postcards What do you send out how many things do you say, Oh, dude, well,
Steve 16:18
thousands of letters a month, you know, you’ve got to send a lot or you’ve got to have other various off market strategies to be able to do this because the MLS is buying properties right off the MLS. The multiple listing service is just insane. Right now the competition is nuts. And people are paying just stupid stupid prices. But even then flipping with all the the ridiculous shows on HGTV and whatever, everybody’s become a flipper. Right? Everybody is a flipper right now. And I’ve actually been doing more more lending over the last couple months than flipping, I just I figured, hey, and a gold rush. You know,
Jason Hartman 16:58
sell the pics and the axes and the Levi’s don’t go for the gold. Right? Yeah,
Steve 17:01
it’s not all it’s cracked. I mean, you get these flipping shows on HGTV, where, where the guy it shows, hey, I bought it for 250. Right? And then it shows some drama, oh, no, my tile cost more than I thought, Oh, nevermind. And at the end of the day, I I bought it for 250. And I put 30 into it. And I sold it for for 450. And people go Wow, look at that spread. And they have no idea that a all the work that went into getting that house and be that spread that is not that spread, your cost of capital is going to chew up a ton of that. plus the cost of running your business is all coming out of this. So I mean it I like it, because I enjoy the hunt. I enjoy going out and chasing down the deal and wrestle it to the ground, because it’s hard to do. But I like it and I’m decent at it. Most people aren’t. And I’m not saying that while you’re terrible. If you’re not, it’s just it requires a very unique skill set and a unique personality. And you have to know that, like you eat what you kill, and flipping. Right? It’s it’s not, it’s not like there’s awesome deals with huge equity spreads out there that you can just go pick up off of the street.
Jason Hartman 18:10
See, I have, you know, after going to like eight zillion real estate seminars over, you know, the last couple of decades, I’ve been intrigued by I mean, you know, there are many different ways to do flipping and so forth. But I’ve been intrigued by the way you do it right, which is mailing out the postcards or those you know, well, those are home investors, postcards you’re sending out right,
Steve 18:31
well, yeah, but anybody can do that. That’s not rocket science.
Jason Hartman 18:33
Right. Right. The unaffiliated people, though, that aren’t don’t have one of those franchises, you know, they’ll send out you know, just the yellow postcards with a black print. like they’ve got it down to a science, which one works. And they’ve split tested it.
Steve 18:45
Yeah, exactly. Yeah, they do that. Yeah.
Jason Hartman 18:48
And I’ve been intrigued by that. And I just thought, wow, you know, you spend it I throw in some money at that over the years where I’ve done it, okay, where I’ve sent out the mailings, I’ve gone. And I’m like, you know, nighttime sitting at the kitchen table with these people who can’t make up their mind who are just, you can see why they’re in the position they’re in and they got themselves in trouble because they’re just not to Swift. Frankly, you’re in these like, scummy houses. And I don’t know, I just didn’t like it. I didn’t, I didn’t, I thought it was like a lot of effort for very little reward. But, you know, like anything, if you just massively scale it up? I assume it could be great, right?
Steve 19:25
That’s what you have to do. Yeah, it’s, you have to massively scale it up. You have to get really good at it. buying homes at a discount from private sellers as an art. There’s a way that you talk to them. And there are various ways to make money doing it, right. I mean, you can flip the property. Sometimes you can get them to carry the financing and you can get into it with little or nothing down. You can assign the contract, you can wholesale the deal. And there’s there’s a lot of ways to do this. But you’ve got to really, really commit to this. This isn’t something that you’re just going to pop into and make an extra 250 a year.
Jason Hartman 19:59
Yeah. 200 50 grand you’re saying right? That’s right.
Steve 20:01
That’s right. Yeah, this requires a huge commitment on your part. Because it really it’s a no, it’s a numbers game. A lot of my mentors within investors, they say it’s a numbers game and a people business. Okay? So you have to, you have to know this, that, okay, if you go on 100 appointments, make 100 offers, okay? The odds are that you could get five to 10 of those, if you’re really good, maybe a little more of those offers accepted. And you’re going to have some attrition, and there you have one or two fall out due to whatever reason that may happen. But the thing is, is I can’t tell you in what statistical order those deals are going to come if we look at deals, or offers one through 10. Right, the nice tidy way would be every ninth offer gets accepted, right. But the way that it usually works out is well I got nothing for the first 50. And then I got three in a row. Right? So you got to be able to commit long term to it because it takes a lot of numbers for the averages to come into play.
Jason Hartman 21:01
So that’s a good analysis of it. Do you still like to do it? Are you getting bored with it yet? And you’re ready to come back to work? You heard that right on the show, folks. I asked him that question. See right on the show. You
Steve 21:13
asked the tough questions. I’ll give you that. I feel like come belayers right.
Jason Hartman 21:17
Yeah. fillers interview, some people said I was too easy on him. I think I kind of was
Steve 21:22
well, I think I told I remember that. After that. I didn’t want to totally hit him over the head. I mean, I still thought he was an idiot. But I didn’t want to just Steve, he builds himself as a communist with a small C. Because if it’s with a capital C, then you’re like a bad communist. Yeah. So does he drive a Hugo?
Jason Hartman 21:40
No, he probably well, what is that car they drive and they have two cars in Russia, the Volga. And what’s that other one called? I can’t remember the name of it. They both suck. You know?
Steve 21:50
We’ll Say what you will about her. But the columnist and the commentator and Coulter has my two favorite quotes on communism socialism. Number one is they don’t care if they turn this into Cuba as long as they get to play Castro. Right. That’s good. Yeah. And number two is socialism is for everybody. But the socialists.
Jason Hartman 22:09
Yeah. Very funny.
Steve 22:12
I’m sure bill got in his 750 high and drove home that
Jason Hartman 22:17
day. Yes, yes. His nice expensive BMW. Yeah,
Steve 22:19
that’s right.
Jason Hartman 22:20
That that’s just what nauseates me about those people. These people always think they’re going to be in the elite class when everybody else gets to, you know, live this little meager life meager existence existence. That’s no fun. You need to reduce your carbon footprint. Jason’s but Arianna Huffington and Al Gore, don’t? No, no, that is Richard Branson for that matter. You know, I was in second trip to Necker Island a couple of like, two months ago. Same deal. I’m thinking, you know, please Don’t lecture me on being an environmentalist when you own an airline. You know, I mean, I think Richard Branson’s an awesome, dude, don’t get me wrong. But, you know, isn’t that kind of hypocritical? I mean, Okay, forget about say, you’re gonna own an airline, because maybe the argument there, I’m gonna make his argument, right. Which, which, if I were him, this the argument I make, people are gonna fly anyway. I might as well selling the ticket and selling the ride on my planes. Right?
Steve 23:14
I just destroys your your whole argument, though. I just,
Jason Hartman 23:18
you know, if virgin save Virgin Atlantic and Virgin America, the airlines and as other virgin airline brands, if they didn’t exist, would another airline have cropped up to fill the spot? Or would an existing airline that was there before him have just added more planes and more routes to fill the demand? Right? You know, maybe, I don’t know. Okay. But, you know, certainly having another airline in the market creates a more competitive environment, at least in theory. Yeah. And more choice. So prices will go down. And when prices go down, more people will fly. I mean, look, flying nowadays is been called the Greyhound bus in the sky. It’s tacky, it’s unpleasant. And the reason it’s that way is because everybody can afford it practically. Right. But in the old days, I mean, I remember even when I was a kid, and that’s not that long ago, okay. You know, flying was kind of special. I mean, in the real old days before I was around, flying was the privilege of the upper crust. You know, that was the the elite class only the elites could afford to fly. So that’s one thing but but look, forget the airline argument. And Steve, maybe you want to comment on that? Why do you have parties on Necker Island, invite all these people to fly there. I mean, there are these websites, you can go on and analyze people’s carbon footprint and the carbon footprint from flying from I mean, like a lot of people on the trip I was on there. Were from Washington, DC area, the greater DC area, you know, Baltimore, DC, those kinds of, you know, New York, those kinds of areas, right. And I calculated and I can’t remember where they do it in like tons. have carbon spewed in the atmosphere. Right? And, I mean, it’s a substantial deal for two people to fly to, you know, Virgin Gorda and then go to Necker Island. It’s, it’s, you know, boats that are terrible polluters airplanes that are terrible polluters, all this stuff and listen, I mean, it’s just, uh, you know, if you if you really want to be an environmentalist, how about if you just don’t have an event? How about if you don’t have a party? How about if you don’t invite people to your place, then they won’t fly. I mean, I wouldn’t have flown somewhere else if I hadn’t gone to Necker Island. I went there. Because that because Richard Branson such a cool guy. And you know, he’s, he’s the coolest billionaire. Right. And I wanted to meet him again. And I, you know, I thought it was a lot of fun. And I had a great time. But I’m just saying like, you know, we’re, I don’t get it. We get it, because I don’t get it.
Steve 26:01
Well, you you had a post on your Facebook page A while ago, and I’m only remembering this because I commented on it. And then somebody did. It’s weird. When somebody comments on your Facebook post from a year ago. You’re like, Why? Why are you trolling your old Facebook posts, but whatever, right?
Jason Hartman 26:15
Oh, that’s because that’s because of that new feature, which I By the way, really like that Facebook memories feature? Every morning, I get my memories and I love that it makes me so nostalgic. For the good old days.
Steve 26:29
You get your memories. That’s great. All right. Well, this you made a post about Leonardo DiCaprio his yacht? Oh, what a frickin hypocrite. I mean,
Jason Hartman 26:40
I don’t I don’t know, Hey, I’ll say this at least Richard Branson, he has a beautiful yacht, it’s a catamaran. So it’s under sail most of the time. Now, of course, there’s all kinds of environmental sins that occur in building one of those boats. I mean, come on fiberglass, that can’t be good for the environment, right? Well,
Steve 26:57
we’re gonna need a lot more coal power plants to charge all these electric cars to Yeah, I know. That’s another it’s a it’s just a Neanderthal argument. I and and that’s the problem. I I can’t get over it. And I don’t know how many people are this way. But the hypocrisy of the people that advocated that’s why I just roll my eyes, and I never take it seriously at all. It just bothers me so much how they they just want the common folk to, you know, you just shut up and take the bus. Right? You know, we’ll fly around on our goal stream. But you you take the bus and just stop ruining the world. It makes no sense. You know, it’s just totally hypocritical. But I guess the elite class doesn’t mind their own hypocrisy. They don’t see it. They don’t. They don’t think they engage in it. Or they just don’t care. Maybe they just don’t care. No, no, we will never know. We just know that we’re very irritated by That’s true.
Jason Hartman 27:53
I am irritated by it.
Steve 27:56
Like Leo’s movies, the good movies, but
Jason Hartman 27:58
man, he’s an idiot. Yeah, he’s a hypocrite. That’s for sure. But you know, I tell you there is a saying, and maybe this is the saying they live by. It’s an old saying. And it goes like this. The best revenge is living well. So maybe that’s their revenge? You know, they’re getting revenge on us. Well, hey, what else do you see going on in the real estate market?
Steve 28:19
Well, on the on the retail side, it is it is pretty much bananas everywhere. Because I do I still teach some of my consulting gigs on the side where I’ll go for a weekend and teach a workshop to 10 flippers or so. So I do get a good pulse on on a lot of different markets. And, you know, we’re on my properties here. For example, I’ve got one that I’m closing up in the next couple of days, that actually might have to send a mobile notary to me in Puerto Rico. I’m still figuring out how to tell my wife that. I got to go downstairs and meet a notary for a minute, babe, because I’m headed to Puerto Rico tonight. I don’t think I told you that. For my 10 year anniversary.
Jason Hartman 29:01
Oh, hey, Happy anniversary.
Steve 29:02
Yeah, thank you. So we’re, we’re going we’re getting away from the kids. That’s gonna be great. I mean, we could probably go to Moscow or Detroit and be happy because we’re away from the kids. But
Jason Hartman 29:12
oh, my gosh, hey, well, you know, Happy Father’s Day to you too. There.
Steve 29:17
Hey, if you got young kids, you get it. You love them. But that was that song by Chicago. Everybody needs a little time away.
Jason Hartman 29:24
Yeah, that’s for sure.
Steve 29:26
So that’s what’s going on. But yeah, it’s crazy because you’ll typically get multiple offers. I can’t say that a lot of people in the last few years have bought houses that shouldn’t have I think for the most part, they’ve been fairly well qualified. They’ve got a job. The debt to income ratio is okay. I am getting a little nervous. There’s I’ve talked about this on your podcast before a book called The Big Short by Michael Lewis. And one of the fun managers in The Big Short found Some kind of metric, I got to find it where he could track. What is the median house payment in a particular metro area? And then what is the median income? And he identified a few places. It was like Miami and LA. And Steve, will you act like that something special? That’s called the housing affordability. He had something it was some other. It was I’ll look it up. And maybe maybe it is some blatantly obvious thing? Who knows?
Jason Hartman 30:26
Yeah, well, maybe there’s a twist on it he had. That’s interesting. Because because that doesn’t tell you everything, you know, but but it tells you a lot. It’s a good metric.
Steve 30:34
Well, and he was seeing that the house, the median house payment was 50% of the NA, oh, it’s getting to a level where it’s unhealthy. So I go, you know, wages are not increasing. But house payments certainly are, they’re going up, they keep going. Even with these interest rates crammed down to the bottom, they’re still going up. And I don’t know how long it can do what it’s doing. I don’t foresee something like 2008. But do you know that it’s gonna slow down at some point because it is pretty, pretty crazy out there right now. And that’s why, what what you do is is awesome, because people can buy cash flowing assets in stable markets, because I’m working primarily in the western US where the cash flow is just terrible. Yeah, I wouldn’t do it. But you go to you go to Memphis, or little rock or indie or, or any of those places where the land is so cheap. That’s where it can, it can make sense. And, and all this noise, all this market nonsense and noise. You just plow right through it make your return. I think it’s great. I still totally advocate that to people.
Jason Hartman 31:39
Yeah, yeah, you know, it’s a different thing. I mean, you’re you’re running a business, and we’re talking about investing. They’re different things. You know, that’s what people have to understand. They’re just different things. So Steve, I got a question for you. And I don’t know really how much or even if you know this at all, we used to do a fair amount of business in Salt Lake City many years ago. I remember, we had a couple local market specialists there. And you know, it was pretty good. Give me an example like, Can someone buy a good house there for say, $130,000? Or is it gonna be 150? And if so, what would the rent be on that? I mean, is it even is anything in Salt Lake City like that even possible anymore? Is it just way too expensive?
Steve 32:22
Remember that flippin magnet I told you about?
Jason Hartman 32:24
Yeah, how much was
Steve 32:26
that probably had a retail of about 80 on it. But that that’s the cheapest there is. The land is expensive in Salt Lake City, because, look, in the western US, you’ve got these problems, you’ve got this artificial. The supply and demand is artificially artificially constructed. you’ve either got big giant mountains, or an ocean, or the BLM is in the way,
Jason Hartman 32:50
right? Or it’s not the BLM. It might be like in California, the Coastal Commission, or any one of the, you know, Sierra Club, or any one of these other environmental
Steve 32:59
Yeah, or the military even right, you know, we’ve got a huge bombing range in Utah that, you know, out in the West desert, but it’s these are in the way and so the land is very, very expensive. in the Midwest, you can see it for as far as the eye can see. And it’s mostly privately owned, and can be developed as people want it. But here, it’s all there’s land, we got it, we got to develop it, you know, prices are so Herky jerky, they go up and down like that. And so in Salt Lake in the metro area, you’re talking, there’s a little over, we could have two and a half million people. I think Ogden is on the north side. And Provo is on the south side of the metro with salt lake being right in the middle. And if you’re in the Ogden area, that’s Weaver County, you can buy cheap houses stuff for around, you’d probably be all in it. 80 or 90, if you bought it on the open market and rehabbed and put a tenant in there, problem is you’re gonna run it for six or 700.
Jason Hartman 33:59
Wow, that’s it. That’s amazing. It’s amazing. But you can’t take a $90,000 house, you can’t get $900 for that. I think
Steve 34:06
if you did it up real nice. You might be able to but but then again, you go this is a this is like a tier three property. You mean it’s a C minus property or a C property? Right? What Yeah, yeah, you’re not you’re not getting the cream of the crop.
Jason Hartman 34:21
You know, I think D is a category. And maybe there’s f ones too. Hey, I sold a couple of D properties. When I was doing business in like, you know, Rio alto San Bernardino. In the old days when I did government repos, you know,
Steve 34:36
people say, Well, how do I know if I have a D? You know, you’ll know. Yeah. You don’t need us to explain it tonight.
Jason Hartman 34:43
Good point.
Steve 34:44
Yeah. But if you get into if you get into Salt Lake County, the prices go up and probably out on the west side. In fact, there’s a hedge fund that I know competes regularly with local market specialists called American homes for rent and they really Hit the west side homes built in the in the 90s. And these are homes that you can get 11 1200 a month in rent for but you’re gonna be in that stuff for a buck 60 a buck 70 Wow, that’s just crazy. You can’t get anywhere close to really 1% rv. If you’ve got to go multifamily in the land, it’s the land. That’s what kills it for you.
Jason Hartman 35:19
Yeah, wow. Sure does. Boy, that’s amazing. That’s amazing. Well, Steve, anything else you’d like to comment on going on the economy or, you know, anything in general, you know, anything investment related, economy related, whatever?
Steve 35:32
Well, I think in the stock market, I’m wondering, and you’re probably gonna carve me up on this. But if you can’t beat them, join them know.
Jason Hartman 35:41
If you can beat them, they’re about to get slaughtered. You know, I think, everybody maybe that’s a contrary indicator. Maybe that means it’s wrong. Actually, I don’t know who the heck knows, you know, but everybody seems to be out there saying that the stock market is just totally overvalued. I don’t know who the heck knows. You know,
Steve 35:58
it is I agree. I agree. It’s a madhouse. But can you make some money in the mean, I’ve been tempted, and I have made some
Jason Hartman 36:07
interesting, I just think that’s a gambler’s game, you know, it’s a it’s a distraction, and you got to just stay focused income property. It’s a proven asset class. You know, so that’s what, that’s what I love about it. Well,
Steve 36:20
and you always say that an income property, you know, people, they feel the bombs, right, and your mutual fund portfolio. Right, the the secretary that sued the CEO for sexual harassment, and then the company had to pay out a $10 million settlement. That’s a little blip in your stock portfolio. And that’s no big deal did the day to day operational nonsense. You don’t feel that tenant evictions and broken air conditioners, and that kind of stuff you feel but it doesn’t mean it doesn’t work.
Jason Hartman 36:51
Yeah. And it doesn’t mean it’s not happening. Like you said, it’s you don’t feel it happening in that company that you invested in, but that company is losing money, and that’s affecting your return, you know, so So, you know, a lot of this is just about controlling one’s emotions, you know, and, and just getting a handle on your own mental state and not getting all flustered, you know, when you get that bill for the air conditioning, or whatever, and just keep them looking at the big picture, you know, yeah. And you
Steve 37:17
didn’t call your investment counselor, because sometimes there is a legitimate problem. Sometimes you’ve got to talk to somebody who has their finger on the pulse of the overall strategy here. And they, you can tell them, here’s what’s going on. And they can say, yeah, that’s a problem. And they’ll get on the phone with a local market specialist or whoever, and they’ll talk it through with them and see what they can resolve. Other times, they’ll say, welcome, welcome to the party. Sit tight. It’ll get better.
Jason Hartman 37:43
Yeah, exactly. Exactly. Well, cool. Well, hey, it was great having you back on the show, man. And I hope you come back off your sabbatical sometime soon. Okay. We’d love to have you back working with our clients and stuff, but it’s always great talking to you. And let’s see who wins that steak dinner here, folks. So someone from Magna Magna Utah, right, that’s where you need them to be from. Right. That’s,
Steve 38:05
and they’re not listening. There’s nobody from Magna to send
Jason Hartman 38:09
me an email and tell me you heard the show. So I can forward it to Steve and I can when mistakes
Steve 38:16
happen. It’s not gonna happen. Just like there’s nobody in Kandahar listening to your show.
Jason Hartman 38:22
Oh, I got someone in Kenya listening. I know that.
Steve 38:25
Okay. He is. You probably have some members of armed services in Kandahar that re listening but oh, maybe maybe. Yeah, that’s probably I don’t think the Taliban are listening to the show. I mean, we you know, we were making fun of them earlier, their feelings are probably hurt.
Jason Hartman 38:37
If if they are then I’m on the B heading list, which scares the heck out of me. So let’s just hope not.
Steve 38:43
Well, just keep Mr. Smith nearby. There you go. Yeah, but you can’t bring it with you when you travel. You know, that’s that does cause a problem. Either the TSA tends to not like Mr. Smith. Oh, friggin TSA. I have that TSA Pre and half the time it’s closed.
Jason Hartman 39:01
I like that thing, though. Boy, when you just go through the line like that. That’s pretty darn handy. But you know, that’s the way it used to be before the government invented this terrorist threat to some extent. I mean, it’s not all invented but to some extent, it’s invented in my humble opinion. Yes. I’m a wacko I know
Steve 39:18
Yeah, you’re you’re a libertarian hacker, whatever it was, but it’s I was going through TSA the other day, my bags going through the X ray, I’m waiting for it to come rolling down the little ramp and put my belt back on put my life back together. Right. And, and these two the one watching the X ray screen is just yucking it up with some guy next door. You could tell she had it bad for this guy. And and I could have had a bazooka and an assault rifle in my luggage and it would have just sailed right on through.
Jason Hartman 39:49
Unbelievable. Isn’t that scary, though?
Steve 39:52
I hope they have a software that can say hey, yeah, that’s an assault rifle. You missed it. You might want to check.
Jason Hartman 39:57
Yeah, the software can identify it without the person And I hope so. But this
Steve 40:01
is the government I might be a little too optimistic. Yeah, you probably are. Yeah.
Jason Hartman 40:06
Well, Steve, hey, it’s been good talking to you about almost everything under the sun. Thanks for educating our listeners a little bit on flipping. And I think the lesson is, you know, just to kind of tie that back in that flipping is a business. What we talk about on the show, by and large, is investing, which does not consume all your time and is not a business. It’s an investment portfolio. This should not consume all your time. Unless, you know, you’re you’re buying 5060 units, then it’s, that’s a little more of a commitment. And, you know, maybe you want to treat it a little more like a business. But other than that, you know, it’s, it’s something you do on the side. Okay. Right. It’s moonlighting with real estate. There you go.
Steve 40:48
There you go. Thanks for having me back. And when you see your your listenership take a nosedive. You know, I
Jason Hartman 40:56
we better wrap this up right now. Anyway. Steve, thanks for joining us. Good talking to you.
Steve 41:02
All right. Talk to you later, Jason.
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I’ve never really thought of Jason is subversive, but I just found out that’s what Wall Street considers him to be.
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