Jason Hartman educates real estate investors on the best market profiles during the exodus to the suburban areas. He goes into the Northeast Florida market with the local market specialist.
Jason Hartman 00:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 00:55
Welcome to Episode 1468 1400 In 68, and Don’t you love it when my predictions come true? I certainly do. Yes. It’s great to have predictions coming true. So the media has caught on to the Hartman prediction. And time is passing? Well, I don’t know. I was going to say time is passing fast. In a way it is. Because right now, it’s like we’re living in dog years. You know, they say, for every one human year, it’s seven dog years, right, which is not exactly accurate, but close enough for government work. And yeah, there’s so much going on in the world, things are changing so quickly, that it is like living in dog years and the past two months has just been a whirlwind. And now you’re starting to see the mainstream media, just totally catching on to my prediction about the Exodus. In fact, Evan, our resident investment counselor, slash Rabbi who’s been on the show, he shared with us a the cover of a publication called the week, the best of us and international media. And right on the cover, it says exit this and it’s got a picture of SUVs with all kinds of household stuff, mattresses, etc on top, and it says the pandemic driven flight of city dwellers to towns and suburbs. That is the cover story. And folks, listen, times are tough, and we’re going to see a lot of crazy stuff. Which by the way, George Friedman is out with a new book entitled The storm before the calm. You know that typical cliche is the calm before the storm, when I used to spend a lot of my life in the ocean in Southern California. Yeah, boogie boarding, yes, I tried my hand at surfing a few times. Surfing is not easy. You know, if you can serve, you’re in good shape. It’s not easy to serve those and really beats you up. But I remember, you know, sitting out there while not sitting, but you know, being on my boogie board or even body surfing, sometimes waiting for a wave. And it was always the calm before the storm, you know, those who would get very calm and mellow and then a set of big waves would come in and you’d ride them and get beaten up by them too. And by the way, you know, that’s a good metaphor for taking risk in life. You know, when you caught that perfect wave, oh, was such a thrill. You know, you just ride that wave right into shore, you know, cut out before it totally washes you in the shore so you could swim out and catch another one. And when you’re skiing, I love to ski as well, and you’re just chiming down that mountain. It’s just so fun, right? It’s so exhilarating. But then you make that one tiny little mistake in your crash, and you eat it and hopefully you don’t get injured, or at least not too badly. Hopefully when that wave crashes and you, you know, you misinterpreted or it doesn’t break quite the way you thought it was going to, and you just get totally beat up and, you know, in the in the ocean like skiing, you know, it hurts, right? It hurts. You know, sometimes after you get turned over, over and over again, by those waves, you’ve got water coming out, or your ears and your nose for the next three days. As you turn your body in different positions. It’s just, it’s just kind of crazy. But that’s a metaphor, right? If you want the thrill of the great ride, if you want the great return on your investment, you got to take some risks. Now hopefully it’s not too much risk you’re going to be prudent about your risk taking but risk, nonetheless, you must take risks because the only safety, the only safety and security is before birth. And after death, then, heck, you’re safe and secure. You know, you have a reliable state. But living is the very definition of insecurity. You know, there’s, there’s so much that can happen to us all the time. And it gets, it gets a little scary sometimes for sure. But hey, without that fear, there would be no thrill. And that’s what we’ve got to do. We’ve got to, we got to step out. And you know, just take the bull by the horns and do things, and always always in life, the people who do things, the doers, the people that take that action that take that risk are the ones who get the rewards. And that is so so true. So, George Friedman’s his new book the storm before the calm, I’m just getting into it. It’s really interesting. We have not had him on the show. Now, I asked one of my guests Booker’s several years ago to get him on the show regarding two of his other books. Forgive me if I get the titles wrong, but I’d like America the next hundred years and then America the next 10 years, and I wanted to hear about those but now the new book, we got to get them on the show, okay. He is a geopolitical forecaster and he’s a strategist on international affairs. He’s the founder of scrap for which you may have heard of that’s, that’s a company that a lot of very important. Three letter government agencies follow if you know what I mean. And he’s also founder and chairman of geopolitical futures. So, listen to this, you know, I understand completely, that we have listeners in 189 countries and I know have been to 87 countries. I have a world view of things, at least I hope I do. And I hope you think I do. I really, you know, try to look at things in a very broad macro picture of the entire world. And I was not born in the US. That’s why I can’t run for president. But hey, neither was Obama. Right? I thought I’d give you a little bit to chew on there. Okay, but I’ll tell you something. The US, America is a very unique, special country. And one of the reasons George Friedman, he’s talking about that. And he’s talking about how we’re going through in the new book, this time of storm. And this is not related, at least not so far in my getting into the book here to the pandemic. I don’t think it’s that kind. Now, there may be something on it, but I haven’t gotten there yet. It’s just related to Generally, you know, his thoughts about what will go on in the 2020s. And Neil house book, the fourth turning kind of addresses this, too. I think there are some parallels between these two books. I’m looking for that as I’m getting into George’s new book. But one of the things he talks about is the agility of the American economy. And even if you aren’t American, or you don’t live in the US, doesn’t matter. Doesn’t matter, because you’re talking about the biggest economy in the world. Okay. And it matters. You know, some people wonder, probably, I mean, I don’t know they’ve never told me this, but I just kind of think they probably wonder about this. You know, Jason, why do you talk about California, so much on your podcast, you don’t recommend properties in California. You guys talk a lot about how you have escaped California. But the reason I talk about California to a decent extent on the show Because if it were its own country, it’d be the fifth largest economy in the world. It’s, it’s a big deal. Okay, what do you have? You have the US you have China, you have Japan, then What’s the next one? I don’t even know off the top of my head. But then you have California be number five if it were its own country. Okay. So it’s, it’s worth talking about right? Even though it’s so messed up and mismanaged, and it’s awful, the Socialist Republic of California. But look, it’s a big enough player that you got to talk about it. Anyway, back to Friedman’s new book. So he’s talking about how the US has this agility to it. And I think this is also true of the real estate market in the US, because it is the only and get this. This is a neat way to put it. I don’t know if I ever thought of it this way. It’s the only invented country. Hmm, let’s see what he says about that.
Book Narrator 10:00
passengers on the American roller coaster. It should be remembered that each of these American socio economic cycles ended in a period of confidence and prosperity. The Civil War was followed by a tremendous growth period where 35 years later, the United States was producing half of the manufactured goods of the world. World War Two was followed by an unprecedented growth of a math professional class. And the Cold War was followed by the tech boom that changed the world. I am not predicting Doom, I am predicting an intensely difficult period of time between now and when the next phase of American history begins in the early 2030s, and the period of confidence and prosperity that will follow it. It’s important to note that unlike what sometimes happens in other nations, these cycles Don’t break the United States. Rather, they drive it forward. The cycles represent the engine driving the United States. Each period begins with a problem generated by the previous cycle creates a new model from which to draw on American strength and culminates in that solution playing out his hand and becoming the new problem that has to be solved. Just the orderliness and rapidity of the cycles that are striking. Were in other countries, the cycles are much more unpredictable in timing and intensity, the American cycles have been highly predictable and frequent. This has to do with the velocity and agility with which America developed. That in turn was the result of the structure of the United States, its regime, its people and its land. All of these created a platform not only for rapid growth, but for managing the growth. A nation’s growth can’t be linear, old systems that have outworn their utility have to be destroyed, and new systems have to be created the nature of the United State,
Jason Hartman 11:36
think Joseph Schumpeter and creative destruction, right. And he talks about how every you know, remember when I’ve talked about Nixon, Richard Nixon, and I was watching, you know, a couple videos about him over the weekend and in the famous checkers speech from what from 1956 it’s quite amazing to watch that. That’s a very famous speech. And you know, it’s about his, he talks about his dog checkers, right? And anyway, it’s great speech, look it up. It’s on YouTube. And Nixon in his great book, which I love that book, by the way, in the arena, okay, which is a fantastic book. He talks about how he’s been at the highs and the lows and how failure that does not destroy you actually strengthens you. And I think that’s what Friedman is talking about here in the book. And by the way, today, we do have a market profile for you. So we’ll get to that in a few minutes. But I just had to share some of the stuff with you because, you know, we’re in a time of confusion and distress to some extent, but I see real estate investors just doing their thing. And, like I talked to you about before, you know, I go on social media I I look in these different groups, I’m in on social media platforms, and I read the comments without even posting pating I just read them like avoir and look at what people are saying. And they are surprisingly even to me, surprisingly optimistic, but because of some silly elementary school idea that you know, prices are going to go up or anything like that, but just because they can get yield on their properties. And I think a lot of them are starting to catch on to this prediction I made a couple of months ago about the mass migration that is happening. This is like The Grapes of Wrath. 2020 john Steinbeck, what would he say today, right? This is like the new Grapes of Wrath. Instead of in a stagecoach or on a horse. It’s in an SUV, right um, a modern SUV, and people are moving to suburbia, and you are going to profit from this. So the question is, we’ve got these opposing forces, right? We’ve got the opposing force of old The economy is taking a hit. Nobody could deny that. I mean, we don’t even know how significant it’s going to be. I think it’s gonna be pretty significant. But I don’t know if I really am worried. I don’t want to say I don’t know if I care because I obviously care about it. But I’m not really too worried about it. In terms of the way it affects our strategy, because the opposing trend of this mass migration and these incredibly cheap interest rates, these negative interest rates, this free money, or you’re getting paid to borrow, you know, I just think it outweighs all of this. And the idea that people can move from these expensive areas where they’re paying 4000 5000 you know, 678 thousand dollars a month. You know, when I left the Socialist Republic of California, my mortgage payment, Principal interest, taxes and insurance plus Association fee He’s in Southern California was about $11,000 a month, $11,000 a month, I put my house up for sale. I also put it up for lease just to see what would happen. I didn’t want to lease it. And I was asking 40 $500 a month for lease now how bad a deal without a bet if I actually leased the property would have been terrible, because the rent to value ratios make no sense. But people are going to move from these expensive areas. And they’re going to buy the types of properties that you already hopefully own or at least right now you’re buying more of and you’re stocking up on or they’re going to rent them from you while they go and they figure out exactly where they want to live. If this is the community they want to live in, you know what type of house do they want to buy, they’re going to rent for a year first, and that’s going to push up your rental demand and push up your rental prices. So and there gonna come into your market, like a foreigner coming from a country with a strong currency into a country with a weak currency. Everything looks cheap to them. Everything looks cheap to them. So when everything looks cheap to you, you throw your money around a little more, and you’re a little more lacks with it. It’s like, Okay, well, yeah. All right, your house for 1600 dollars a month. Let me see should we quibble over, you know, trying to negotiate $100 off the lease or 50 bucks off the lease. We were paying $4,000 before in this house is twice as big and it’s in a beautiful suburban neighborhood. And we can socially distance and we don’t have to worry about the next lock down and being uncomfortable as little rats in our high rise apartment. Or even mid rise or low rise apartment. Okay, we got a big home now we’re gonna be coming Multiple we got space for the home offices, we got extra space for the kids to study, we’ve got extra space for a home gym. And when we moved from that more expensive city, we didn’t have any of this stuff, and we paid more than twice the price. They’re gonna be happy, good for you, you can supply that to them. All right, let’s listen to a little more
Book Narrator 17:23
has always facilitated this. And as I will examine in the coming chapters, it will continue to do so. The most important fact to bear in mind is that the United States was an invented nation. It didn’t evolve naturally from a finite group of people over thousands of years in one indigenous region, as it did, for example, China or Russia. More than that, the United States was an intentionally and rapidly invented nation. The American regime was first conceived in the Declaration of Independence and institutionalized in the Constitution. The American people were constructed from many countries and many languages with varied reasons for coming to America most freely and some By force, the people of the United States invented themselves from a blank slate, and in important ways the American land invented itself. It provided Americans with possibilities that were unimaginable to most and could be used in ways no one anticipated. The regime, the people and the land combined to give the nation agility most other nations lack the regime was built to be flexible, and to leave the people free to evolve as quickly as they could take advantage of the land. It allows the United States to develop with an extraordinary speed, and because all things must exhaust themselves at some point, it also leads to frequent crises that seem about to break the nation. But instead, America actually refuels itself from the crises reforming itself with a remarkable agility. I have divided this audio book into three parts. Part One seeks to explain the American character, American values and the history that led to the formation of the American people. It also shows why the United States is so resilient and why it can survive extreme periods. Part Two describes the two major cycles in detail and the realities that govern American history, especially what has led to the crisis the United States is currently experiencing. Part Three is a forecast for the future, describing the crisis that will happen when the massive forces of these two cycles converge in the decade 2020 to 2030, something that has not happened before, and then looks at what will follow and the future of America when the storm has passed. This book is the story of how the United States works beneath the surface. To understand that we must begin with grasping the texture of the American regime, people and land, the true story of the United States is how it systematically changes its shape in order to grow. And that means we must understand the shape of the United States from its founding, and then move on to how the cycles work, and what they portend for the future.
Jason Hartman 19:42
So don’t you love that he talks about how America is an invented nation invented, and he goes on to talk about how, obviously, the forefathers the founding fathers had this disdain for government. So they created a document And he doesn’t say this, that’s just me talking this part, they created a document the Constitution, right? That is one of the few maybe the only government document I don’t know there’s you can go back to the Magna Carta and that was sort of almost a precursor for the concept of human rights. But think about it. in history, the concept of human rights is like non existent in until the Magna Carta and then the constitution and this idea that you would create a document that would take intentionally take power. Like, think about this. You’re in a room with a bunch of old white religious men. Oh, god, they’re so evil, those old white religious man, you know, I’m so sick of hearing that stupidity. That’s absolute stupidity. Those old white religious men did us a giant favor, a giant favor. They did a favor for the entire world. Even If you’re not American, the example that the country set by creating a document, especially the Bill of Rights, the first 10 amendments, okay, that intentionally took power away from the government. Like, think about that. If you’re in this club, if you’re in this room, and you’re with a whole bunch of other, you know, all the evil white religious men, okay? And you can you imagine, they said, okay in setting up this new government, let’s make sure we take power away from it. Let’s, let’s take power away from ourselves. Let’s not take all the power we can, or take all the money we can or take all the control we can. No, let’s take less. Let’s give power to the people. A government of the people for People and by the people, right? That was a totally foreign idea. Like, nobody had ever done that before. Okay, it’s a totally unique idea. And what he goes on to talk about, and I’ll spare you anymore of the book, because you can check it out yourself, obviously. And I recommend it so far, at least, is he goes on to talk about how the country was intentionally designed to be inefficient. So it was very slow moving. So the President could never turn into a tyrant. He doesn’t have that much power. And there’s the you know, there are these three branches of government. Right. And, you know, some would argue that there’s four, there’s the Federal Reserve, that’s the fourth branch, right. So it’s pretty interesting stuff. Anyway, check that out. But folks, I gotta tell you, I think we have tremendous opportunities coming, the type of real estate that we all love that we’ve you know, every listener to this show, hopefully by into the idea of these inexpensive, suburban properties that makes sense the day you buy it that follow my 10 commandments. And you know, I think you’re just gonna do incredibly well right through the crisis. And remember, economics is a relative game, okay? It’s the bear in the woods story. You don’t have to outrun the bear, meaning the bearish economy. All you have to do is outrun everybody else. If you’re following our plan, you’re going to be out running a lot of people. So congratulations in advance. All right, hey, without further ado, let’s get to a market profile and talk about some properties that you can actually buy. And by the way, I think we’ll announce it tomorrow. But look forward to another great webinar we’ve got coming up this week on asset protection for real estate investors. We affiliated with an attorney who’s in one of my mastermind groups, and we got you a great deal on entity formation and asset protection services and stuff like that. So we should if that gets all edited, we should be able to announce that one here for this week. And also, we had some good questions from our 1031 exchange webinar from last week. Or last weekend, I should say. I’m going to be answering some of those questions on the show this week. So look forward to that as well. All right. Without further ado, let’s get to our market profile. Hey, I wanted to give you just a very quick update on a couple of our markets, Northeast Florida, which encompasses two markets and some kind of consider Ocala to be that area. I don’t know if I do but so we’re going to talk about three different things. What is going on, tell us more.
Local Market Specialist 24:53
Obviously, we’re always looking for signs in different times. And one of the main things that we’ve seen increased credibly is the occupancy rate. We have so far this month rented 52 units, which is 10 above normal for our property management group, we’re actually seeing an increase in rental demand. And I think it’s probably Jason. The fact that we’re more in a sprawl area. As you know, Jacksonville is the largest square mileage city in the nation on Calla has more elbow and has its own economic infrastructure, it has more of a rural feel. And that’s what people are drawn to right now, coupled with our new construction model where they’re able to see the homes through our keyless entry system. And being the first ones to move into it. It’s really increased our rental demand, which has been exciting to see
Jason Hartman 25:44
Yeah, let me tell you something. Every single expert I interview, I always I’m testing my own theory that by the way, I’m gonna pat myself on the back. I was saying this two months before anybody else was before john burns, before the mainstream media before the CEO of red fin. Okay, I’m a little envious that I didn’t get all that attention even though I was saying this before everybody else. And that is predicting the mass migration out of high density areas to lower density areas like the suburbs and even the curbs, and apartment rental traffic. Now this is apartments, I get it. It’s not exactly our product, but it’s still telling. They had the highest level of monthly traffic meaning searches on their website on apartments.com in April 2019 52,000,020 2059 million. Okay. So trap America is on the move, like we were talking about to give it a surfing metaphor. This is a swell that’s way out in the ocean now. And in the next couple of months, it’s going to turn into a wave and then at some point, I think Don’t know exactly when it will crest and then it will break and it’ll be whitewater everywhere meaning all those people have moved or are moving at that time to these lower density areas. They had over 7 million more visits and a growth rate of 14% year over year on apartment searches. Now, I’m guessing this is not in their survey, that those searches are high density apartment or high density condo people searching for lower density apartments meaning that if they want to move to an area, maybe they grab themselves an apartment first before they buy a home in that area or before they move into more permanent rental, they get an apartment on a short term lease. And then you know they they get into the home they really want but every expert agrees with me whether it be Jim Rogers, the you know, famous hedge fund manager that used to be partners with George Soros interviewed him two days ago. Today I interviewed Harry dent. He’s been on the show 11 times, he agrees, everybody agrees with this trend. So I think it’s just going to be huge. And our listeners are taking advantage of this with the type of product that you have available, because you’re the boots on the ground person.
Local Market Specialist 28:20
Yeah. And we’re going to be busy, Jason, because let me tell you something right now, we’ll start with Jacksonville. And they’re all the same for basically Palm Coast in Ocala. A normalized market and normalized market here has usually about six and a half months of inventory available for sale. Right now. We’re at 3.2 months of inventory. So you literally
Jason Hartman 28:41
in other words, we’re at half the absorption rate has increased, meaning people are gobbling up the properties quicker, or there’s just less inventory on the market. And I’ve kind of heard both of those things depending on the market, but you have literally half the inventory level. You usually have Write
Local Market Specialist 29:00
exactly half which is incredible, which shows and as soon as on one of our new construction models is done, we were at about 31 days and now that’s even shortened through the pandemic, four days to get it.
Jason Hartman 29:13
But you know, that’s just amazing that it’s that inventory is that low and things are that strong. In an era when for two months, people really haven’t been out of the house. You know, they’re not they’re not even out looking. Imagine how this shift accelerates dramatically when people actually go out. They go to open houses, they started looking at houses, and wow, it’s it’s pretty amazing. Okay, any specifics on Jacksonville Ocala Palm Coast. Our main niche right now we’re focusing on is again, as you know, we’ve always done is the low density we have always stuck to residential, so the single family the duplex and the quad that’s kind of our, you know, three punches and they they again, how have space they don’t have giant gathering areas with too many people which people don’t want. So we’re staying with that model. And we’re seeing the demand grow. So we are overall we are, we’re gonna keep running the play. We’ve been running before the pandemic, Jason but now we’re seeing us get into even more favor with that simple thing because we are low density, like you said, in areas with more sprawl where you’re not on top of each other people can socially distance they don’t have to get into an elevator. They don’t have to take mass transit. And by the way, I interviewed this morning and the show will be published soon, and expert on homelessness who lives in New York City, and he he charts homelessness all over the nation, but it’s especially focused on New York City, he heads up the Central Park. Forgive me, I can’t remember the exact name but like the Central Park association or something like that, you know, Central Park, New York, and he says that the the mass transit infection rate is just a serious problem. So you don’t want to have to Get in any type of mass transit nowadays. What type of product do you have in each of those markets? Just tell us about that real quick. We have, again a mixture of single family homes, duplexes, and quads. And we are doing as you know, a project in Atlanta of townhouses that’s going very well near the famous Serengeti. So our product right now, duplexes in Palm Coast and
Local Market Specialist 31:24
Ocala. We do have a few quads available. And then a few scattered single family homes between each of Jacksonville Palm Coast in Ocala. And as you know, Jason, we’ve been we’ve been very busy. So we’re we replenish about the 20th of every month, but that’s what we have available at this time.
Jason Hartman 31:43
What do you mean you replenish the 20th every of every month is that when the truck comes in and delivers your new inventory of houses, I’m kidding. Santa Claus shows up.
Local Market Specialist 31:54
Santa Claus comes the 20th of every month where with our building partner, we sit down you Based on the demands of what we’ve done, looking forward to what clients are asking for, I am, again, putting us into a position of having the properties that are highest in demand. And like we said those the highest in demand. I’m very glad Jason, we stuck to low density. I think people are very happy. And again, it’s just the strength of a simple single family home. Yeah. And new construction, as you know, is, is showing even more worth because people aren’t traveling now. So a lot of people as you know, have been I’ve been purchasing through us, but they feel really good that they’re, they’re getting videos of the totally new home that they’re getting the 210 warranty. It’s giving them a lot more feeling of safety of more church or,
Jason Hartman 32:38
you know, anybody in the business of supplying anything for the home is going to do pretty well in these trying times, you know, for the people who have the wherewithal who have money Now granted, some don’t, you know, it’s a it’s a divide, there’s no question about it, but for the people that have money to spend They’re going to be buying furniture, they’re going to be improving their home, the home is the center of the universe. And they’re just going to want to make their home nice. They’re going to be buying home office furniture, adjustable height desk, home gym equipment, and they need space for that. And these these suburban type homes that you offer, through our network are perfect. I mean, they’re just totally perfect. You know, if they lived in a more high density environment, whether they owned a condo or lived in an apartment, you know, they had a common area, an apartment complex or an association gym and a pool, those things are closed down. I mean, I’ve seen them, you know, the pools are closed down, the gyms are closed down, they can’t use any of that stuff. So, you know, they want to have a garage or a spare bedroom for that. So you’re offering the perfect thing. So folks, if you want to check out any of these properties, go to Jason Hartman comm slash properties, reach out to our investment counselors at one 800 Hartman and we’ll be happy to help help you. smart investors are they see this wave coming and they’re taking advantage of it. They are stocking up on these good quality suburban rental properties before this massive tsunami of demand hits, and they’re getting in the in the right position. So thanks very much for sharing this with us. Thank you. 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. Sing 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.