To start the show, Jason Hartman shares the biggest cities with the highest foreclosure rate. He also talks about Florida being a no-income-tax state and how it is asset protection-friendly. In the second part of the show, Jason interviews an Orlando Local Market Specialist. He discusses what separates the Orlando market from other markets and the large companies investing in the area. Their topics also include market basics for achieving cash flow and appreciation, judicial foreclosure states versus non-judicial foreclosure states, and buying below replacement costs in Orlando.
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 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 1000s of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show, Episode Number 565 565. Thank you so much for joining me today. This is your host, Jason Hartman. And I’m here with Naresh and we are going to talk today about Florida. We’ve also got some good properties coming up in Orlando, Florida as well. And of course, nationwide and many of the most desirable real estate markets. You can check our website at Jason hartman.com for some of the best properties and some unique stuff coming up on the show, by the way, so stay tuned for that. Naresh, how you doing?
Naresh 1:37
I’m doing great. Jason. Just in Florida right now enjoying the nice end of summer weather?
Jason Hartman 1:43
Well, you know, I have to I have to tell you know, I just I don’t know why it is. But lately I am picturing myself living in Florida at some point in my life. I do miss the Arizona weather now that I live back in California, living here in San Diego, La Jolla area. You know, but it’s like too humid here for me.
Naresh 2:04
In San Diego, really?
Jason Hartman 2:06
Yeah. I mean, it’s been pretty humid lately, and and you know, I have this great app on my phone, I’d recommend it to everybody, it’ll cost you like a whopping $3.99 I believe it’s funny how people don’t want to pay for anything anymore. You know, they think if an app isn’t free, it’s too expensive, right? But yeah,
Naresh 2:25
I was gonna say even 99 cent books on Amazon and 99 cent apps, people are hesitant to do even that. I think it has more to do with taking out a credit card if your credit card on store and spending the two minutes putting down a number and all that.
Jason Hartman 2:38
Yeah. But if you don’t, you don’t have to do that with iTunes in the area in the App Store on Apple’s App Store. I mean, it’s just all in there. And you just click Buy and you’re done. It’s so easy. I mean, do you have an Android phone?
Naresh 2:50
No. I’m an iPhone user.
Jason Hartman 2:51
Oh, thank God. Yeah. I tell you people with Android phones are it’s such a big disadvantage. It’s like every question we get have, I can’t download the podcast, I can’t make it work. It’s always an Android user. It’s like never an apple user. So I know we have a lot of Android users listening. I mean, I know those phones look neat. And I love the open source idea of you know, the that that operating system, but I don’t know, Apple just makes it easier. It seems like everybody’s using Apple products just sort of has an easier life. But Heck, I use PCs for many, many, many years. And finally, when I switched my life just got a lot easier. So that’s my apple commercial end, folks. I do not own any Apple stock. Okay, so I am just speaking for my personal self. I have no agenda there. Okay, so dark sky is the name of the app. And this is a great app, I’m sure they have an android version, too. You know, this concept of knowing the weather, and the weather forecast. And you know, the five and the 10 day forecast, the the concept of dark sky, which tells you the humidity, the wind direction, all of this stuff, is that the most important weather report we all want is this, what’s going to happen specifically in the next hour. And that’s what that app is built around. It’s a great app, and I’ve been looking at it and the humidity in San Diego is ridiculous. It’s like 83% sometimes, and you can tell exactly what’s happening in the next couple of hours. Which is really the best weather report. It’s like, Okay, I’m going out to dinner. What do I wear? Do I need a coat? Do I not need a coat? So anyway, that’s my tangent on humidity and I don’t know if I’m gonna like that about Florida but I have been binge watching Burn Notice lately the show,
Naresh 4:48
Okay. I’m not familiar with that.
Jason Hartman 4:50
Really well, they’re they’re in all these sort of Miami esque scenes and I’m not a big fan of Miami. Just somewhere in Florida. I don’t know like, when you know where Probably going to do a property tour there maybe in Orlando or Jacksonville? I’m not sure yet, in the next few months, you know, that’s just uh, maybe folks don’t hold your breath. You know how it is. I’m just kind of maybe I shouldn’t even be saying that. But until we have it inked, but we’re already planning our meet the Masters event for January, which, by the way, I know I’m all over the board here. But you’re always asking me about upcoming events, listeners. So meet the Masters, tentatively planned in early January. And I wonder if Brittany has that up on our website at Jason hartman.com where you can actually buy tickets? Yes, she does. It’s their early bird pricing available for meet the Masters January 9 and 10th 2016 location to be announced, but it will be in Southern California. I wouldn’t buy a plane ticket yet. You can’t reserve a hotel yet. But you can save the date and plan on the event. Early Bird Registration is open for meet the Masters now. That’s at Jason hartman.com slash events. And we’re gonna announce the location soon. I don’t think it’ll be in our same place. We just feel we need to change it up and not do it at Hotel Irvine. Maybe not even in Orange County. So we’re thinking of La we’re thinking of San Diego we’re thinking of Long Beach location to be announced. We’re scouring the Southern California market for the best venue right now. So we’ll be back to you on that. But again, you can register for January 9 and 10th meet the Masters now and maybe we’ll have a Florida property tour coming up too. Who knows? So yeah, Burn Notice. Florida no income tax state Tony Robbins moved there left California rush limbaugh left New York to move there all these rich guys moving there because it’s a very asset protection friendly and income tax non existent state. So kind of like those aspects. thoughts. You live there?
Naresh 7:02
Yeah, even little guys like me. I left Maryland to to come down to Florida. And it’s I think it’s I’m in Tampa. So you talked about Orlando, Jacksonville Miami. I think Tampa is a little underrated. Nobody ever talks about Tampa much. There’s a lot happening here. The the nightlife is great. The weather is awesome, because it’s right on the bay. So it’s on the water. The summer has not been as brutal as people warned me. If people were saying it was going to be just humid and hot. And the good thing is it rains here quite often. And that really cools down the weather. So I’ve loved the weather, the winters are awesome. Safety is not much of an issue compared to where I was living in Maryland.
Jason Hartman 7:47
Well, yeah, that’s, that’s probably pretty bad. No, but I’m a Tampa fan. And and people have asked many times, you know, why don’t we have properties in Tampa? Well, because they’re too expensive, you know, that market? Hasn’t, we haven’t been able to make that market work. Maybe sometime in the future? that’ll change? I don’t know. But, you know, so far just just doesn’t work from a market standpoint.
Naresh 8:07
So, you know, one thing I was looking at, there was a report, and I’ll have to get the guy who published his report on on one of your shows, but he had a list of the Top 20 big cities that went into foreclosure. And and big cities had defined as having a certain amount of people. I think it was a minimum of like 500,000 people or something. And Tampa was number one on that list. I’ll have to send you that report.
Jason Hartman 8:34
But well, just just to clarify something, this city does not go into foreclosure. You’re talking about high foreclosure markets, right?
Naresh 8:42
The biggest cities with the highest foreclosure rates, right. And Tampa was number one, I’m not surprised, just based on the people who I’ve met here and the way they they live life and look at life and things like that. But I thought that was pretty interesting. And I’m so surprised you haven’t been able to find good real estate values here. Maybe in the future.
Jason Hartman 9:02
Yeah, it’s a little little bit a little bit pricey. And again, a lot of it isn’t really about the market per se. Like I’ve told the listeners, it’s about finding the right team in that market to supply inventory to us. You know, we had some good presentations recently at Jason Hartman University, our first time doing that event, and I’m looking forward to doing more of those in different places around the country too. But you know, I tell you, Grand Rapids, Michigan, in the unique deals we have there on the land contracts, more and more of our clients are interested in that in in not being a landlord and being more like a banker being in the paper side of the business. That’s looking pretty good. I mean, you know, we first had our local market specialists, they’re present at our last meet the Masters January 2015. Check that out, folks. You know, it’s not on the website. I want to say this too. If you go to JC hartman.com you click on the properties section, you will see nothing about Grand Rapids, and the unique land contract, buying opportunity we have there to buy these discounted land contracts, and not have to deal with responsibilities of being a landlord. It’s pretty, pretty good deal. You know, as always, I like being a paper investor. I like doing hard money lending, you know, owning notes, owning the paper on the property, it’s not as good as owning the physical asset itself. But for those of you who don’t want any of the responsibilities that come with being a landlord, and we make those responsibilities a lot easier, that’s what we do. That’s our whole business model. You know, diversify your portfolio with a little bit of paper, it’s particularly good for self directed IRA investors. I think that is one of the ideal vehicles inside a self directed IRA, own some of the actual properties outside of your IRA, own some paper inside your IRA. So ask your investment counselor about that. Go to Jason hartman.com. Just fill out the contact us form. We’ll get back to you. And we can fill you in on that. But I wanted to make sure before we get to our market profile today that we congratulate another one of our clients, Russell Yes, I know you’re listening Russell, for leaving the rat race. And he recently just posted a few days ago on Facebook, that he just finished the last day of his corporate job. And he left the corporate world behind and he tagged me, he tagged Sarah, his investment counselor, saying you know, thanks for the help and inspiration along the way. So, Hey, thank you, Russell, and congratulations to you and your family. Getting out of the rat race based in part on your real estate portfolio and your real estate investments. We were glad we can help you achieve that freedom in leaving the rat race and developing developing the life you want a life of freedom and prosperity and success. So that’s that’s just really really exciting. Oh, yeah. Good.
Naresh 12:14
Congrats to Russell it takes a lot of courage and dedication to to leave something that you get so accustomed to. He was working a corporate job. And and I hope I hope he does well, I think you guys have set him up pretty well with with his real estate portfolio, and we will continue to help people leave the rat race.
Jason Hartman 12:32
You know what I think I need I think I need like a superhero costume for
Naresh 12:38
Oh, yeah, that’ll be great.
Jason Hartman 12:40
What would it be called? It would be called Well, I used to use the ROI director return on investment director, I that director’s chair? Where is that thing? I think it’s in storage. So one of my many storage units. So got to get that out for a future future seminar a future event. But yeah, a superhero costume for that would be good. But I gotta tell you listeners are Newport Rhode Island trip. We’ve had a few more people join us. And a lot of you you’re being uncommital What is this? Now I understand why you’re coming as a guest. So if you want to come to Newport, Rhode Island, and join us for our second venture Alliance weekend. It’s going to be a phenomenal weekend, we’re going to see the opulent mansions of Newport, Rhode Island. This is at the end of September. Go to Jason hartman.com. Click on events and learn more about that awesome event. We are going to have just a fantastic time, masterminding. We’ve got a great agenda lined up the day before we’re doing a side day trip to Martha’s Vineyard. It’s just going to be a phenomenal event. So hope you can join us you can come as a guest, just a $2,000 Guest fee. Remember, these are not like our regular events. It’s not like Jason Hartman University. It’s not like meet the masters. It’s not like creating wealth. In today’s economy bootcamp. It’s not like property tours. The venture Alliance. These are opulent events. First Class five star dining, unique experiences unique, memorable experiences. This one we’re going to have the mansions of Newport fall foliage, some great great dining. If you’re a foodie, you don’t want to miss these events. And the masterminding small group environment, create lifetime friendships. And the goal is to do deals together. So we’re going to be looking at deals that we can do together and continue to mastermind on this kind of stuff. And someone asked, you know, why is it that if you want to join the venture Alliance, it’s $10,000 per year, and this by the way is the the the pricing will increase as the group builds by $10,000 per year or 3000 per quarter and you have four quarterly events by Why is it I can come as a one time guest for only $2,000? Well, because that’s a, it’s a carrot, you know, we’re dangling a carrot to get people to join. And it’s only a one time opportunity. You know, you don’t get the full access, you don’t get the Facebook group access and the voxer access to me for questions and, you know, all of this kind of stuff. But if you want to come in and sample it, great, you know, we’ve got a few more people that have signed up to be a guest and check that out. And that’s just a great opportunity and, and nourish you’ve been being an East Coast guy, you know, Duke University and, and living in Baltimore. You’ve been to Newport, Rhode Island, right?
Naresh 15:38
Yes, I want to Newport I visited the mansions. And it’s incredible. It’s really a must see, I think it’s one of the the the top tourist attractions that the United States has to offer. So I did go there a few years ago. And it’s just amazing to think about the history and the architecture. And really the the innovation behind these these mansions such a long time ago. I think your your group is going to have a great time, I think it’s going to be a wonderful experience for them. If you haven’t checked it out, you definitely need to go see it. And I think we’re timing it perfectly. Because we’re really doing two things in one.
Jason Hartman 16:17
Well, we’re doing three things in one, of course, the mastermind in the business aspect of it. That’s that’s the first most important thing, the mansions of Newport. But we’re also timing it perfectly with fall foliage. So if you’ve never been on a fall foliage tour, you’ll get that you’ll get the mansions and of course, most importantly, the venture Alliance mastermind. So anyway, Jason hartman.com, slash events. And you can check that out. And we’ll look forward to seeing you there Naresh. Anything else before we get to our guest today.
Naresh 16:49
That’s that’s about it. I think we covered a lot of a lot of ground here,
Jason Hartman 16:54
Here is our specialist. Hey, I wanted to talk today about Orlando, Florida, this area has really been one of the ground zero areas for the real estate collapse the the boom, the bubble, the bust, and then you know, repeating the cycle. But we’ve done business here over the years in in kind of a spotty fashion. I can’t say we’ve found really good teams in Orlando, maybe until now. And that’s why I wanted to just reintroduce this market to you. Of course, we’ve talked about it on the show before, but kind of reintroduce it to you and have our local market specialist talk to you today. So let’s dive in and talk about it. What is so great about Orlando, in this timeframe. Tell us more.
Orlando Local Market Specialist 17:40
So Jason, first, I want to thank you for having me be a part of this. It’s amazing to be a part of somebody who really does a great job of providing great education to people. It is definitely the time to invest in real estate. And even though we all know it is the right time to real estate invest in real estate, where do we invest in that real estate. And I think that what we’re seeing is we’re seeing a lot of people buy properties all over the country, it’s a great time to buy. What we primarily look at is we’re looking at where’s the greatest opportunity exist? in today’s market, what we found was that we have what we call linear markets across the United States, we have appreciation markets, and then like you said, Really Ground Zero, you have a ton of fluctuation in foreclosures in a market like Orlando, Florida. And it’s really caused what we believe to be the greatest opportunity that exists because you can cash flow positive in a market, that’s highly desirable, that’s really not supposed to cash flow positive. Because prices are usually too high. And now you have the opportunity to buy at a low price, you have a strong rent, and then you get to watch that market appreciate over the next several years as the population growth is one of its main drivers, as the business growth happens in this market. And we’re really seeing a lot of this now. fully take take on the recovery that everybody’s been talking about across the states in real estate. I was just going to mention some some basic facts about our market. And I think, again, anytime you want to buy cash flow property, I think one of the very basics to keep in mind is you want to be in a market that has a lot of demand and desirability, because that demand and desirability is always going to make sure that that property is rented that you have an exit strategy for that property. And that the value of that property is slowly climbing at a at a reasonable rate so that you can get what we like to call a mixed return or an interim internal rate of return where you’re getting both cash flow and appreciation. Not all markets in in the United States right now will give you that that’s true, you know,
Jason Hartman 19:57
so you know that’s sort of the hybrid between Linear and cyclical, that is nice to capitalize on when you can. And the great thing you know about your perspective is that you’ve done and really are doing business in several markets, I’m finding this to be more and more prevalent, that really good players in the real estate industry will actually change their whole life and move to different markets based on some timing, although I’ve never been one to, you know, totally buy into the theory of market timing. I always like to say, and maybe it’s kind of a disclaimer, I’m not sure, but, you know, I’m definitely a cash flow investor, I used to be a speculator, you know, had mixed results without some very good, you know, gamblers get lucky too. And you can definitely hit some home runs if you’re in the right place at the right time. But, you know, I always like to say that I’ve never been, I’ve never met anybody who can really reliably predict appreciation or depreciation. That said, though, I think if you’re, if you’re looking at it from a sort of a moderate perspective, and you know, you’re just wanting to do you know, maybe four to 8% appreciation, maybe even you’ll get lucky and get 10%. You know, that’s not that’s not the hitting it out of the park mentality at all, you know, like, where I live, right, La Jolla, California, San Diego area, you know, where all these people around here who call themselves investors think, Oh, well, yeah, I just bought this property, and I paid a million dollars for a condo. And I think it’s going to go up 15% next year? Well, you know, but in the meantime, I’m getting terrible cash flow. And if it goes the other way, I have an unsustainable investment. That’s really, really risky. But that sort of hybrid mentality. I think it’s legitimate. Can you speak to that a little bit?
Orlando Local Market Specialist 21:49
Yeah, you know, first, Jason, I don’t think you know this about me. But it’s, I want to share a really funny story that that speaks to this. I actually did three and a half years ago, overnight, pick up all of my stuff and move to Orlando, Florida, for these reasons. Oh, no, no, I knew you moved because you’ve been in the Las Vegas and the Tucson market, too. And, you know, it’s really interesting, because the market that I moved from, which was Las Vegas, Nevada, because of a small smidge of a difference in how the state of Nevada and how the state of Florida operate. One being judicial one being non judicial now,
Jason Hartman 22:29
What you’re referring to is the foreclosure process, meaning, and folks, of course, we’ve talked about this on the show before and I hope you’re going to speak to this. And this is the concept of market clearing and what I want, you know, what’s known to economists as price discovery, and in these judicial foreclosure states, where it’s such a slow process, like we do business in Illinois, as much as I hate the politics, you know, but the Chicagoland area has got a lot of attractive features that don’t have anything to do with Obama, Rahm Emanuel, high taxes, and and poorly managed government. But it’s got a lot of other very attractive things. Okay. You know, it’s a world class city. So there are multiple reasons to consider things. But you know, there we’ve got the same thing you’ve got in Florida, the market hasn’t cleared yet. And it’s mind boggling that this many years after the Great Recession, we’re still talking about a foreclosure market. So three and a half years ago, you moved on?
Orlando Local Market Specialist 23:28
Yeah, and you’re absolutely right, that is exactly what occurred. And the Las Vegas market on top of it being a non judicial state. And as its has its ability to clear faster. There was also a bill that was written right before elections in 2012. In November of 2011, there was a bill that stopped the foreclosure process and said you cannot Robo stamp documents. Now that bill was also applied to the Florida market. But the real difference is I remember sitting there and I’m buying properties at auctions on the market, etc. And I remember the amount of homes on the market went from about 20,000 homes down to about 1500 homes overnight. So when you take away all that supply right away, what happens is it drives that price rapidly upward. And so when that price drove upward, rapidly, it took away the ability to buy cash flow property in that market. So as we’re looking at the Las Vegas market and seeing all the benefits to it, we’re saying where else can we go that mimics Las Vegas. And we know that we can’t predict the price or the appreciation. But if we just experienced and saw what happened in Las Vegas, if we find another market, it’s very similar but has a difference in the way that it’s managed. Maybe we can go in there and do a more conservative return like you mentioned. And so that’s exactly what we did. Now all the investors that purchased properties and And we bought properties in Las Vegas, we did really well because of the timing in the market. But we did not buy with the idea of appreciation. And the dream moment that you mentioned that sometimes people buy we bought, because it was a sound investment from a cash flow perspective. And it was in a desirable place that if the market did turn, that we would also get those benefits of appreciation. So when we came to the Orlando, Florida market, there were some very important things that we can mention. We, we saw that the replacement cost of these homes every time we buy one of these properties, and let’s say we buy a house for $100,000, the insurance is then insuring that property for $165,000. Because that’s what it would cost to replace that property. That’s what it costs to originally construct that property. And so anytime that you’re buying below replacement costs, that’s a good thing,
Jason Hartman 25:57
No question about it. And I just want to remind my listeners, that I actually make a distinction between the concept known as appreciation, and a different concept that I call I got a little trademark term for this, I call it regression to replacement cost. And I really think those things are different. I’m still working on this theory a little bit. But you know, appreciation is what happens when you’re at par when you’ve got the land value and the improvement value at replacement cost. And then you get appreciation on top of that. That’s appreciation, regression to replacement costs, is really just a matter of, you know, using a gauge for when a price of wood cost, what a price of wood is worth, you know, if you will. So that’s a good market. But I you know, I just want to ask you something, of course, we’re talking about Orlando, but because of your experience in Tucson and Las Vegas, Las Vegas, you would probably say is a little frothy now a little overvalued, I would assume or what do you think about that market?
Orlando Local Market Specialist 27:02
I’m not sure I would call it overvalued. I mean,
Jason Hartman 27:05
That’s one of those massively over speculated markets, right? It felt like, you know, in, say, 2000 to 2003, even 2004 and five, certainly, that it felt like everybody in Southern California had two rental properties in either Vegas or Phoenix. That made those markets go nuts, right?
Orlando Local Market Specialist 27:27
Absolutely. There’s definitely something to be said about a market that its natural growth is ready to occur. And it needs time to grow naturally. So if you take California, for example, that you’re referencing, and you look at anywhere between the 1960s 70s 80s and 90s, in all Southern California, that was its natural growth that needed to occur, it had a lot of population, it had to build neighborhoods, etc. Job growth had to happen. So I believe there’s always a natural growth in the economy that needs to happen in certain places. So when you take a look at Las Vegas, or Florida, there was a natural growth that needed to occur there between the 1990s and the early 2000s. But what happened was, in combination with many things, the entire economy was just growing too rapidly. And the loans that existed for people to buy as their own personal property, just drove that price. And you’re absolutely right, Jason just drove it to where it’s an overvalued environment where the jobs just do not support. Now, what’s interesting is I see that changing quite a bit. And it’s because there’s a whole different kind of movement, going back to Orlando, Florida. And one of the benefits to Orlando, Florida is we have so many large companies that are coming to this market. When you’re when you’re looking at you know, Walt Disney is just someone who spearheads this, and then you have a lot of your medical city that’s being built. And you have all the doctors and you have all the tech, you know, they’re really trying to make Orlando be like the like the what’s the place I’m thinking of in San Francisco that everybody’s all tech, Silicon Valley, they really wanting it to be the Silicon Valley of the southeast. And it makes sense because there are basics to Florida, that make it an environment where you want to invest in. When you think of the the fact that the state’s business friendly when you think of that there’s no state income tax when you think of all the low property taxes, the landlord friendliness of it. All that is our basics that create an environment for growth and job growth. And so we’re seeing that happen. And we do believe that happening at a more reasonable conservative place instead of Las Vegas where you’re absolutely right. Recently the values have jumped up just because there was a great deal to buy there. Not because the market is recovering and it’s very safe manner like it is in Orlando,
Jason Hartman 29:51
right. So Las Vegas. What people have to remember overall, is when you get away from the glitz and glamour and a couple of really high end guys Gorgeous areas, by the way, Las Vegas is really kind of a poor city. You know, there’s there’s a lot of a lot of people struggling there and a lot of people on, you know, in part of, you know, what’s known as the working poor. So it’s a, you know, anyway, we’re not talking about Las Vegas In this episode, it’s not what it’s about. But I just wanted to ask you some of that. So, you know, Orlando has a population around a quarter million people, you know, that’s 77th in the US, what else would you say about it? Everybody knows Disney, everybody knows Disney World, of course, what else is going on there in terms of employment?
Orlando Local Market Specialist 30:35
You know, I started mentioned, there’s a lot of medical, there’s a lot of tech here, you know, some of some of the things that anybody can can go out there. And Google is the environment of, you know, Lockheed Martin being here, and Mitsubishi being here, and Darden restaurants, and Verizon Communications, a lot of these major players are in the market. But I think that, and this is something that you really got to get from a feel of being in an environment, and really understanding the growth. There are certain things that I’d like to say the mentality of the city, again, what is the environment doing here, they have teams that are driving business growth, driving software companies to the market, they have major Orlando city soccer teams that are coming into the market, they’re building brand new stadiums, you have the Orlando Magic, you have more of a well rounded city that has all the benefits for anybody to come live here and enjoy life. And I think that when people are enjoying life, and the population growth is in the top five over the last 20 years, it really speaks to a city that has not become a major city, but will be a major, major city. And when I say major city, everybody knows Orlando, Florida. But Orlando, Florida is not Los Angeles. And it’s not Miami, and it’s not New York, but I think it’s got all the basics of what it can be for its future, a New York, a Los Angeles. And what that means from an investor’s perspective is the direction of this market in the mentality of its job growth, population growth and environment for lifestyle is what really is going to drive that appreciation and that cash flow in your investments. Take for example, there’s a huge expansion happening right now with our main Interstate, our four, the four freeway out here, take, for example, our surrounding communities around the Orlando market are now having light rail systems that have been implemented already and are up and running. These are some major things that are happening in our cities that are not occurring across the United States and other cities. And you’re able to buy these properties at a value where it’s below replacement costs. I loved your theory that you mentioned a few minutes ago, I would just add on to it that, you know, it’s really the correction in the market that we’re still going to seek as far as value. So what I mean by correction is if we’re buying a property for 100,000, it will not appreciate to 150, it has to correct itself to 150. And then you’ll start to appreciate keeping in mind that in the surrounding neighborhoods that we buy properties, people used to own these very same houses for two and three times what we’re paying for them now. So it’s like the theory if somebody paid $5 at the gas pump before, and then it drops to $3. With the right financing and leverage, would they buy that gas? And at at the $3 mark. And so I think that’s what you’re going to see in our general population here. And also, this is what definitely separates us from many other markets, where people are buying real estate as well. Yes, we have investors buying in Orlando right now. But I think our future shows the sales happening to families and people who are growing and living in Orlando. So when you exit the property here for X amount of dollars, you’re going to be selling it to somebody who either lost their house previously, or they’ve moved into this market. And the financing is starting to exist across the board for everybody to go back into the market and own their own home again. And so I think it’s our cyclical evolution and uniqueness of Orlando that really makes it a great opportunity to buy at a low value and exit at a reasonable value. And if it if you do a lighter conservative appreciation of it of six to 8% you’re still in a market that’s extremely desirable. That’s going to give you great cash flow returns and then great appreciation returns
Jason Hartman 34:57
Okay, so looking back at Well, before we look, I want to look back at a little bit of Orlando history if we can, too. But you know, and I’m just talking about sort of Great Recession era and kind of what went on there. And some of that stuff. That’s, that’s still working itself out of the system, because we talked about the slow foreclosures, but speak about the landlord. friendliness issue. This is something we definitely look for in markets. We like markets that are friendly to our causes landlords, if you’ve got a deadbeat tenant, you got to get them out. I mean, society really depends on being able to enforce contracts. Otherwise, you know, it’s it’s like Trickle Up poverty, it’s it’s just, uh, you know, it’s a disaster if one if one party can’t keep their contract, and, you know, it’s the domino effect onto another one. We need tenants and a regulatory climate that’s, that’s friendly to us as landlords,
Orlando Local Market Specialist 35:51
you know, I think, again, with everybody knowing, look, now’s the time to invest in real estate. So where should I invest, and you start comparing different states and markets, and then you figure out, okay, Orlando, is one of those great markets that we want to invest in, because a, it’s a good deal, be it’s landlord friendly, see, I have the right team. So when we talk about it being landlord friendly, I think we can also start talking about our team and how we operate as a management company, you know, when you are managing properties in somewhere, for example, like California or New York, and you have to go through the eviction process, you’re likely to have to hire an attorney to do that, what we’re able to do is we really do our evictions in house, and an eviction in New York, California may cost you 1000s of dollars, where an eviction here in our Florida market might only cost you two to $300 in a couple of recording or document fees to the county. So again, the benefit there is having our team in place that does that for you. And then having the kind of environment where the timing of the eviction is, it can happen pretty quickly. So we can evict somebody in the Florida market, within the month. The benefit is that when you’re doing your projections and your numbers on your investment, you want to let’s suppose that you say that your property is going to be vacant for a month out of the year, if you weren’t able to evict somebody in a landlord friendly state like ours, then you would be going multiple months without that income. So those are one of the benefits. You know, I do want to continue to speak on our team. And just in general, how we operate, you know, our management company was really built for investors by investors. And we originally as a company only invested in real estate for ourselves for a long time. And we had been buying a lot of turnkey properties from 2008. Up until 2012, we’d bought several 1000 properties for ourselves. And it wasn’t until about three and a half years ago.
Jason Hartman 38:08
And you’ve got By the way, I just think that’s a good spot for you to talk about your personal portfolio, you’ve got what about 100 properties in your personal portfolio?
Orlando Local Market Specialist 38:12
Now that’s correct, we have about 100 properties in our personal portfolio. And one of the things that we’ve really moved to do in our personal portfolio over the last year and a half is we’ve really moved to start to leverage and really employ the idea of leverage with rates being low and the market changing. You know, there’s a lot of portfolio, oil lenders that didn’t exist before that exist there now. So once you get to a stage where you have so many properties, you know, to really take your business to the next level and start doing other things like buying large commercial buildings or buying just more single family homes. I think leverage is one of those ways in today’s world, that you can do that. And so we’ve been working hard at it. And we, myself and my wife, we own a little over 100 properties. And we also own some commercial buildings and
Jason Hartman 39:12
Okay, so Orlando, yeah, like it landlord friendliness. How tell us about the eviction process. You know, God forbid, I always say, plan for the best prepare for the worst. So hopefully no one’s going to have to do an eviction. But if they do, how does it work? How long does it take? You do it in house, you’ve got the management company, as part of the offering. Right?
Orlando Local Market Specialist 39:34
Right. So it’s, it’s, I’m going to share a combination of things. I’m going to share how it works legally with you and I’m gonna share how a good management company works with tenants. Ultimately, you don’t want to be Victor tenants because every time somebody moves out of your property, it costs you money. So we’re a big believer in protecting ourselves legally, but working together with tenants. Especially when you want to reap the benefits of being in a hot market like Orlando, Florida, you have to understand that over the last five to seven years, we’ve been in a very down economy. So it’s all part of managing properties through that process of the economy recovering, you know, when you take employment that used to be in double digits, and it’s down now to 4.9, you have to understand that there weren’t that many people that were doing a great job of paying their rent in 2012. But Fast Forward 2015, we have that same tenant, and now they’re doing better, they have better jobs. And so I guess what I’m trying to say is, you really have to understand the combination of managing these rental properties with what’s happening in the economy, you’ve got to have a lot of common sense, you’ve got to invest in these properties, and then treat them and manage them like an investor also. And I really think that’s our biggest difference in the way our style of management is, with your regular management out there on the street. So legally, what we do is we issue a five day pay or quit, we usually will issue that five day pay or quit between the seventh and 10th of the month, depending if it falls on a weekend or not. Then after we issue that five day pay or quit, you’ll issue them a 24 hour notice. And after that 24 hour notice, then you’ll take all your court documents, and you’ll fill those out, you’ll take them down to the courthouse, at which point they’ll schedule you for an eviction or a hearing, or they’ll send paperwork out to the tenant and seeing if they want to contest. And then you’ll have a hearing and it’ll be pretty cut and dry. And I think this is where it becomes very landlord friendly. The judge is going to stand there and say, Hey, have you paid rent? And then they’re gonna say, Well, no. And they’re gonna give a reason why. And the judge is gonna say, well, but you didn’t pay rent, did you? And he’s gonna pretty much order them in the next 24 hours to have all their belongings out of the property. So that whole process takes as little as two weeks as long as three or four weeks, depending on scheduling,
Jason Hartman 42:07
That’s really fast. So even with a tenant that knows how to play the system and contest the eviction, I mean, you get them out that quickly. Hmm, that’s, that’s good.
Orlando Local Market Specialist 42:17
You know, I think the other reason we get them out even faster than that is that we, like I said, have a different mentality of managing our properties. When a tenant is late past five days, we will start on a commitment with them, or a payment plan. If they do not follow that commitment plan, their document they signed to have a payment plan releases their right to go through that eviction process, they actually have to just if they don’t, if they don’t follow that payment plan, we have the right to go file that document and then have the sheriff go evict them 24 hours later. So in house, we’ve really created an environment where they want to stay in the property, they’ll commit to it. If they don’t follow through, then we have a right to skip the whole eviction process. So we’re even faster at times.
Jason Hartman 43:16
Okay, what else do you want people to know, just in wrapping up here about real estate investing in general or the Orlando market?
Orlando Local Market Specialist 43:23
You know, I think that the greatest transfer of wealth is definitely happening over the last few years. And I think that there is always the desire to have a crystal ball to invest. And I think rather than have a crystal ball, I think a lot of great education, and using a lot of our experience and your experience in real estate to really make the right choice on where you’re going to invest. I always asked myself, can I buy a property in Orlando for $100,000 10 years ago? The answer is no. Can I buy a property in Orlando 10 years from now? The answer is probably not. So is there an opportunity to buy something that’s truly unique in the real estate market now versus buying something somewhere else that you could buy for that same price 10 years ago, or 10 years from now? And so I think that there is a lot of correction, like you mentioned, Jason that needs to happen in our market to get us to replacement cost. I think once we get to replacement costs, there’s a lot of lending and movement happening with the banks where the general public and all the high population and demand of Orlando, Florida is going to have the opportunity to buy a house again, I think that that’s going to continue to drive our prices up. I think as our prices drive up and together with inflation, we’ll definitely be a market that’s leading the charge to increase rent rates, and to increase the appreciation and value of these properties. I think that’s going to happen with a combination of our infrastructure, our business, our growth, and the kind of mentality and environment that not only we have as a company and how we invest in our properties in the places we invest, but also the mentality of the city and their aspirations for growth and and the movement for Orlando and its future.
Jason Hartman 45:11
Yeah, good stuff. Good stuff. Well, thank you so much for joining us today. And listeners, I tell you, that was a great talk. And especially with the 10 years in either direction example, I think so good stuff, talk to your investment counselor, visit Jason hartman.com. Check out the properties on the website, I think you’ll like what you see, again, I’ve been to Orlando many times, we’ve certainly done business there over the years. You know, I think I think the opportunity is good. And as I always say, a big part of this equation is having a good team in the market. You’ve constantly heard me say over and over on the show, I’d rather have a B market and an A team than an A team or wait, sorry, yeah, that’s right. I got that wrong. I’d rather have a B market and an A team than AI and a market and a B team. Because the team is so critically important. But in this case, you know, I really think we have both. I mean, certainly you would have been better off investing in Orlando or anywhere for that matter. Four years ago, no question. But four years ago, you know, very few people had much confidence in the market. And the opportunity is still there in these linear, possibly about to go hybrid markets, I think is a really ideal opportunity. And so those markets, I believe are Orlando, I believe our Chicago land areas like that, and a couple of other markets as well. And then the vast majority of the rest of them just hybrid, reliable, dependable cash flow markets. not sexy at all, but good, stable, great markets, too. So they’re all at Jason hartman.com. Go take a look, we look forward to helping you with your investments. Thanks again. Thank you.
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