In today’s episode Jason finishes off his idea of “the crowding out effect” and the damages it can have on our society. Then he explores the idea of various types of deserts, including investment deserts.
Finally, Jason talks with Sara McFarland from Homee on Demand, a new app that’s aiming to make property management from afar easier than it’s ever been before. Your tenant can alert you to a problem and send you a picture of the issue; from there you can get a quote and verify the issue is taken care of.
Listen in as Sara McFarland gives a rundown of the service, how they ensure you don’t get ripped off, and how you can best use it in your portfolio.
The Crowding Out Effect Revisited
Jason Hartman begins the episode thanking his listeners for their company throughout the years and notes that if you’re new to the podcast, it’s a good idea to subscribe so that you don’t miss any new episodes.
He then mentions that this episode features a tool for real estate investors, making life better and easier. There are a lot more tools emerging and it’s an amazing time to be alive. Technology is continuing to make strides and improve the lives and businesses of real estate investors.
Hartman explains that he gets a lot of questions and comments and would like to cover a few of them today. He has a spreadsheet that has thirty-five questions on one tab and another forty-seven in another tab, and he states that he needs to find a co-host to come on the show and ask questions for him. He’ll answer them, and the job of the co-host will be to cut him off accordingly.
He recalls that in the last episode, he ranted about Starbucks and has one more point to make about it. He states that libertarians say that if Starbucks is serving poison to people, the simple answer is to not consume it. They don’t seem to understand the concept of crowding out or the crowding out effect. We live in a winner-takes-all society, and this makes it hard for any competition. How many companies have you seen competing with Starbucks or Goldman Sachs?
Here’s the thing, he says. Crowding out is like the issues that arose from Obamacare. The government comes in and doesn’t have to play by the same rules as everybody else. They make laws in their own favor and crowd out any competition. Obamacare was largely a disaster, and Hartman explains that when he lived in Arizona, his health insurance was $900-something a month. He’s a relatively healthy person, doesn’t use the medical system much. Still, his premiums went through the roof. This is because of the crowding out effect.
Hartman states that he conducted an experiment and told himself that he was not going to eat at Starbucks and would try to find somewhere else to go. On his GPS system, all of the coffee shops that showed up were Starbucks establishments.
The Different Kinds of Deserts
He mentions the concept of deserts, explaining that there are various types of deserts including capital market deserts and investment property deserts. Many listeners might be living in one now, he says, adding that 60-70% of listeners live in areas where there aren’t any properties in the area that make sense.
He explains that he heard about another desert from the Food Babe, adding that he wants to get her on the show at some point. Food deserts are a reality for everyone. With big companies, even though we don’t have to eat what they offer, it’s hard to find alternatives. Saying no isn’t working because there isn’t a lot to choose from anymore. The whole country is obese, diabetic, and sick. We live in food deserts created by corporations that have manipulated our tastes so that regular food isn’t pleasing anymore.
Keeping it in the Family
Hartman mentions that if his listeners have any talents or abilities that they offer or projects they can help out with, go to www.jasonhartman.com/ask and talk about them there. He states that, speaking of deserts, there is something that bothers him about the ways his companies spend money on virtual strangers every month. He wonders aloud why we aren’t supporting our own more often. If you’ve got a skill, service, or business he can use, feel free to hit up the Ask section. Hartman notes that he would love to spend money with you, keeping it in the family rather than spending on strangers.
Addressing a Few Answers and Goals
Hartman mentions a couple of people who have answered questions on the Ask section. When asked what motivates listeners to take action and buy their first investment property, a listener Blake said passive investment was his first motivation. Hartman adds that there’s no such thing as a truly passive investment, not even a bank account, because people get destroyed with taxes and inflation.
Blake’s second motivation is tax savings, and the third is the fact that the stock market and other forms of savings are rigged. Blake’s goal is to have 10-20 single-family homes by the time he retires so that he can have income that will match what he would have earned monthly while working. It’s a very realistic goal, Hartman says. Time passes so quickly, and the great thing about real estate investing is that we put time and irresponsible government spending on our side.
Another listener Craig says that he got interested and purchased his first property to learn more about investing, to learn by doing. He states that it is the best investment for his family to secure a financial future. Investment property offers better retirement than what standard companies provide. Craig’s goal is to have more financial freedom and own 15-20 properties by the time his son graduates from college in sixteen years.
Hartman adds that this is a very realistic goal, especially if Craig buys one property a year. The quicker he buys them, delaying gratification, the sooner he can lock in on low rates and the easier the process will be.
He also adds that we can consider ourselves in a financial advice desert as well. Wall Street has crowded out everything else. He recalls seeing a commercial from TD Ameritrade featuring an actor that was talking about investors but didn’t consider real estate investors at all. They were not included in the description, even though when Wall Street crooks make money, they often put it into real estate.
Another listener, Lina, says that she got into real estate investing for passive income and to spend more time with her daughters. She wants enough income to travel with church missions and build communities.
Matthew has the desire for cashflow assets to do better than the market. Hartman states that in terms of Commandment 3, thou shalt maintain control, nothing brings about better control than real estate investment. Matthew wants long-term wealth with multiple cashflow streams to live the way he wants, with income properties being his main source of wealth.
Stephen got into real estate investing because he wanted to get out of the rat race. He states that he wants to buy at least one property per year for the next ten years in order to gain a passive cashflow of $10,000 per month.
The Hawkins Family’s 5-Year Plan
During the clip, Michelle introduces herself, her husband Phil, and the couple’s two children, and she states that their five-year plan centers around three main areas: health, wealth, and family.
Health-wise, Michelle explains that she and her family plan to focus on getting quality sleep, frequent exercise, and eat fresh food based on the family’s paleo diet in order to maintain their health, the cornerstone of success.
When it comes to wealth, Michelle states that she and her family want to achieve financial freedom in five years. They plan to build passive income through rental properties, and at this point, they currently have ten units, bringing in $3,500 per month. This equals 29% of their monthly needs.
For financial freedom, the Hawkins family needs $12,000 per month in passive income, and they plan to buy eight units per year for the next five years to reach fifty totals, bringing in $15,000 monthly.
Phil Hawkins plans to retire early from teaching and produce audio and video content from his own studio.
As for the family aspect of their plan, Michelle explains that she and her family want to make memories and travel the world. In the next five years, she wants to take her mother back to Korea and visit her relatives. She also wants to pursue her passions (reading, shows, new restaurants, and starting a blog).
One of the children states that they would like to publish a novel and learn to drive. Above all else, the Hawkins family wants to spend time with the people who matter most to them.
Hard Assets to Keep Up with Inflation
Hartman explains that having these goals for your investment portfolio will help get you through hard times. This is life, we are all going to have hard times. Real estate investing isn’t speculative. It’s real investing with passive cashflow, but it depends on how you’re structuring your portfolio.
A listener, Ken, announces that he is in need of twenty properties to settle his retirement and attain financial freedom.
Cody and his wife state that they’re in the process of purchasing their first investment property thanks to Carrie, an investment counselor.
Hartman thanks his listeners for sharing their comments and points out that we need to invest in hard assets to stay ahead of inflation, and investment property is one that dramatically wins out.
He reminds listeners to consider joining the event on May 19th in Philadelphia. The only Creating Wealth seminar of the year was selling quickly, but with a little less than a month to go, it isn’t sold out yet. Hartman explains that he has been conducting this event for the past fourteen years and will be adding a version of the portfolio building game from JHU to this year’s seminar for the first time ever.
The following week, on Memorial Day weekend, the Venture Alliance trip is set to take place in New York City. To register for either of these events, visit www.jasonhartman.com/events.
Homee Keeps Vendors from Cheating
Hartman introduces Sara McFarland, who has been working in property management for sixteen years. She has managed both single-family homes and industrial properties, and her company has 10,000 units across the country. She is introducing an app that facilitates residents with maintenance. Hartman refers to the app, Homee, as the Uber of home repair.
McFarland explains that with Homee, residents can request maintenance or repairs, and owners can quickly review and approve these requests. Tenants can download the application, request repairs on the platform, and get notifications as the owner approves or denies the request. She notes attractive pricing features and explains that Homee works with BLS data to determine what these vendors should be getting paid. Homee pays by the minute as well, so there are no house call charges.
She states that vendors bill via a timer, and if they spend seventeen minutes in the home, they will get paid for seventeen minutes. On other mediums, vendors will sometimes charge for service calls and a minimum slot of time spent. Homee gives the owner transparency to see what time was actually spent. In this way, the vendor can’t cheat.
She notes that vendors are also incentivized to complete work in a timely fashion as their pay rate is issued by location and experience. If a vendor isn’t 5-star rated, the earning potential decreases. For example, if they’re only rated 4-stars, they’re eligible for 80% compensation.
Hartman points out that from the vendor’s perspective, it’s like Lyft or Uber in the way that the vendor can turn the app on when they’re available to work and turn it off when they aren’t. This way, the app can fill in some of the downtime a vendor may be experiencing with traditional work.
McFarland adds that Homee works with all sizes of vendors, who can fill in their time and schedules with the app. She also states that when vendors work with Homee, they have a guaranteed job that might turn into continued customers. They focus on doing good work and doing it fast with this app.
Hartman mentions that with property management being somewhat dysfunctional, this technology could help clean up a lot of it.
Homee for Self-Management
When asked if Homee could be used for self-management, McFarland explains that self-managers have the advantage of immediate photos and videos of a job, giving them an inside glimpse of what they home look like. A tenant has to place a work order, and it comes through to the owner with a photo of what’s wrong. The vendor is also going to take photos of the issue before and after fixing it. The photos are GPS tagged and timestamped so that owners can tell that it’s their property. The vendor even has to take a timestamped photo of the front of the home with the address visible.
Insights on Your Home
McFarland states that while these photos add insights to the inside of the home, Homee is also a great asset for managing your own properties. Prices are low and if there are problems with the home, they can be assessed.
She also adds that with Homee, the resident’s time is valued as well, and maintenance is done at their convenience. They do not need to take the day off work to wait for a repairman to arrive. It’s on demand, and it makes the tenant feel like they have a stake of ownership. Happier residents lead to less turnover.