On this bonus episode, Jason looks at the uber-wealthy demographic. He gives us insight into leveraging debt and why it’s a good idea to always keep a high loan balance. In the interview portion of the show, he hosts James Arthur Ray. They finish a two-part series on what wealth means and look at what areas of our lives need redemption.
Investor 0:00
I really appreciate that you created Empowered Investor. It’s improved my life, the life of my family. And as far as I expect, you know, it will continue to do so for years to come. I’m just really appreciative of the impact that this has had and will continue to have on my life. And so I just want to thank you for what you do.
Announcer 0:19
Well, 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 1:09
Thanks so much for joining me from beautiful Denver, Colorado. This is your host Jason Hartman and I am coming to you today from charming Cherry Creek. Now this place is just dripping with atmosphere and the housing prices well they’re not that bad considering how nice and quaint the areas but wait until the thick of winter in the Mile High City 5280 feet will be chilly chilly chilly. So right now it’s like this nice fall type weather warm in the day but crisp and cool in the morning in the evening. Really nice. After being in Florida for a while you really begin to love weather like this. Tell ya. So what is in the news as we do the second half of our 10th episode show the second half from yesterday. This is a bonus episode this week. That’ll be the second half of James Arthur Ray, I think you’ll be fascinated by some of his principles. We we talked about the tragedy in Sedona, Arizona and the sweat lodge. And today we’re going to talk a little bit more about some positive stuff, as we talk about harmonic wealth and the law of attraction and all that kind of good stuff. So hey, what’s in the news? Well, did you see this article in the Wall Street Journal of how the ultra wealthy the wealthiest people among us are following Yours truly, and his advice to use leverage in a prudent fashion? Well, I don’t know if it’s prudent, that remains to be seen. I think it probably is prudent because remember, as I tell you, as we have seen some horrific disasters recently, right. The wildfires in California, Hurricane Florence in South Carolina, North Carolina, just destroying property and in really destroying many lives, sadly, with the trillions of gallons of water, and the flooding that is still occurring in North Carolina and South Carolina, we see again, my philosophy my statement from many years ago, I said this before and after Hurricane Katrina back what what is this now 13 years ago, something like that the best insurance. The best insurance is a high loan balance. Jason Hartman words, the best insurance is a high loan balance. Because when you have a high loan balance, you have room to maneuver in case of the nuclear option being needed. You will be the one during any of these natural disasters that gets relief. If you have a low loan balance and a high equity you will not get relief You will get stuck. Okay, so when they put the moratorium on mortgage payments, but sometimes the lenders do this out of the goodness of their heart. Sometimes the government mandates them to do it. You will not get this help when you have a lot of equity. So use leverage as much as you can. And guess what? The Ultra wealthy are doing that. This is about the super, they’re not even super. They’re super duper duper jumbo loans. Okay. Yes. The Ultra wealthy with get this you ready you sitting down $200,000 per month mortgage payments, yes, $200,000 per month in mortgage payments. I’ll share with you some things of this very interesting article in the Wall Street Journal. It says forget cash. Some of the world’s wealthiest buyers are taking out massive loans to buy luxury homes, entertainers, Beyonce and Jay Z and billionaire hedge fund excited Have Ken Griffin have something in common? They’re among a small but growing number of ultra luxury homebuyers who are borrowing 10s of millions of dollars for home purchases. Okay, the article, it talks about Beyonce and Jay Z and how they finance their $88 million purchase of this sprawling contemporary mansion in LA last year with a $52.8 million loan from none other than the folks at Goldman Sachs. That’s what the public records show, right? And look at how smart This is, folks. This $52.8 million loan, Jay Z and Beyonce must be listening to my podcast because they got an interest rate in initial fixed interest rate of 3.4%. Now that does become adjustable in 2022. But hey, If you can get 3.4% for just five years
Jason Hartman 6:05
on $52.8 million, that ain’t a bad deal. I’ll take it any day of the week. Not bad at all. Not bad at all. Okay, their mortgage payments will be more than $200,000 from the outset. Right now Ken Griffin okay. He’s the billionaire hedge fund manager has taken out more through an LLC. He took out two mortgages for a combined total of approximately 114 million dollars for the construction of his Palm Beach, Florida. Hey, I live in Palm Beach County in Florida, right.
Jason Hartman 6:44
mansion right in 2016 and JPMorgan Chase finance them. Okay. Darrell Katz, the billionaire owner of the Edmonton Oilers hockey franchise, paid $85 million for a mountain Boo, California compound earlier this year, he took on a $47 million loan $47 million mortgage, a 30 year loan from UBS. Right UBS bank, you just see how these billionaires these altra wealthy people are using debt, my favorite four letter word, they are using leverage. And they are getting phenomenal, phenomenal interest rates. And they’re looking at these mortgages, I think, as an asset. So here’s a couple quick facts. There’s a little graphic here in the Wall Street Journal. It says 233 mega loans, priced between 10,000,020 million with balances currently outstanding across the country. According to core logic, okay. 123 of these 233 loans were in California, 40 of them were in Florida 40 of the mega loans I told you about Florida is gripping with money. Very business friendly state. I mean, compare the population of Florida to California, and on a per capita basis, really should do this. I don’t have those numbers off the top of my head. But I’m guessing that that’s actually about proportional. You’ve got 123 of these mega loans in California, 40 of them in Florida, and you’ve got 31 of them in New York. Okay. So, yeah, population wise, that’s probably pretty consistent there on a on a sort of a per capita proportional basis. So interesting stuff. Use that. It is a very positive thing. Well, look at it’s been 10 years since the Great Recession. Right. And they kind of mark this at the point that Lehman was allowed to fail. I say that with very specific choice words, allowed to fail, because the others were bailed out with your tax dollars. Yes. your tax dollars at work, lest the 12 million plus Americans who got relief in the form of loan modification, short sales or foreclosures, it’s interesting that I would say foreclosure would be a form of relief. And I do mean that that was a form of relief. See, that was a feature, not a bug, as the software people say, right. A lot of times, the software folks will say, hey, this thing is wrong with the system. You know, it’s actually a feature. It’s not a bug. And that’s how you should look at these various things that happened during the Great Recession and will happen again, probably By the mid 2000 20s. if not sooner, we will see this cycle repeat itself, probably to a lesser degree, but a repeat on the last because hey, look, no matter what, there’s always a site Right. Some would argue that we are on borrowed time. But I don’t exactly think so. Because I think, hey, the comforting words from every investor who’s delusional This time, it’s different. No, it’s not really different this time. Well, it’s always a little different. It always has a slightly different flavor. And that’s why it’s hard to predict. But the bailouts, government failure to help homeowners after the 2008 crisis fueled populist anger at the finance sector, right. And this is just from the opinion section of the Wall Street Journal. And I would agree, I would agree, look, they bailed out the institutions, not the people, and it was massively inefficient. And do you remember when I broadcast from Washington, DC, and I got to play lobbyists for a day, and this was just about, I don’t know maybe nine years ago, we We’re in the thick of the Great Recession. And I went and I went and I met with arlen specter, right. And I met with I saw john kerry in the hallway at Capitol Hill. I wouldn’t call it on a bunch of these lobbyists. I went to Nancy Pelosi office, Nancy Pelosi, the biggest hypocrite in Washington possibly.
Jason Hartman 11:20
I went to her office and boy, her office was beautiful. She had like one of the nicest offices, well, hey, I guess that’s how it works in the crony capitalist world, for Nancy and the like. But you know, we call them the men we pitch them. And I remember I remember possibly an aide to who was that I told you at the time, go back and listen to that episode. But I did tell you, I want to say it was arlen specter, one of his aides, who said, the reason they literally said this to us, there were several of us playing lobbyists for a day, and I went with a national Ria group to do this. Maybe there were like four of us and a couple of his eight Were there and one of them said, the reason they gave the money and I’m talking about the three big Omnibus bailouts, right, that insanely large trillion dollar bailouts, the reason they gave them to the financial institutions, rather than to the people, because there were many studies on this, right, that said, Look, if they just wrote everyone a check, they could have written them a check for, like on average. And forgive me, I don’t remember the numbers at all for like, $80,000, right, or something like that. They could have written every homeowner in America check for like 80 grand, and it would have cost less than it did to bail out the institutions. But they literally said one of the aides said this, and I mean, this word, these were like choice words. I wish I had a video camera in there. They said the reason we gave it to the banks, instead of to the people is because it had a multiplier effect. And that that is true. Sadly, it’s true. A multiplier effect an inflationary effect through the the magic, or the evils of fractional reserve banking and fractional reserve lending. And that goes back to the idea of well, not the idea, but the reality that money is lent into existence. That is how money is created is lent into existence. And we’ve talked about this many times over the years, you know, goes back to G. Edward Griffin, the creature from Jekyll Island, all of the other earlier episodes that I’ve done in talking about this. And, you know, depending on where you are in your studies of how the economy works, and so forth. The way the whole system is structured, is amazingly complex. And it’s a very, very hard to get your head around these ideas to really understand it, and I’ll be the first to admit, I don’t really understand it. I mean, look Bill Bonner was on the show. Bill Bonner, the head the founder of a Gora financial and who I believe is really one of the most interesting and brilliant financial writers, right? He was on the show. And he said that he can’t even get his head around it. And boy, he’s brilliant. I mean, that guy is so smart, way smarter than I am okay. And he couldn’t even get his head. Right. He said, they’re right on my podcast. Go back and listen to the episode with Bill Bonner. Fascinating guy and really excellent financial writer. His books are great. His conclusions. I disagree. You know, he’s mostly just, hey, buy gold. I disagree with that. I think Gold’s pretty lame, but talked about that many times in the past. Okay, look, I’m looking forward to seeing you all in Hawaii. our upcoming event is first week in November, Be there or be square. You’ll hear a little message about that at the end of this podcast today. But without further ado, let’s get to part two of James Arthur Ray and talk about some 10th The show kind of philosophical mindset ideas for wealth creation and leadership. Then tomorrow we will be back with a regular episode, probably with George Gilder, I don’t know, maybe we’ll have a client case study. We’ll see. Tomorrow, we’ll be back. Okay, here’s a part two of James.
Jason Hartman 15:28
Many might say wealth is not what you have. It’s, you know, your abilities, your ability to get it back your relationships, you know, people would say things like that, right? What do you mean, it’s what you have when it’s gone. elaborate on that?
James Arthur Ray 15:41
Well, what you’re left with and all you have is gone is who you are. And so some of the things you referenced are certainly part of who you are. But you know, what we have to realize particularly in today’s disruptive world, where Fortune magazine is telling us 50% of the salary jobs are going to be gone in 10 years or less. I mean, a eyes are going to take a vast amount of jobs and intelligence, they’re going to do better than human beings are because they don’t ask for raises, they don’t whine and complain, they don’t call in sick, and they don’t need vacation. They just get the job done. And so that’s very disruptive obviously. And what it means is that a lot of people are going to be displaced. And it’s hard, Jason to reinvent yourself when you’re in your 30s. It feels next to impossible when you’re in your 50s. And believe me, I know. And so that’s what we have to build our foundation upon because our true security, like our wealth, is not in anything external. Our true security resides in our power to produce and to the degree that we invest in continuously our power to produce and our ability to reinvent to be flexible and to learn and to grow. Then we have tremendous opportunity. A lot of people are Right And right now, but the fact is Forbes also tells us a 1700 people a day are becoming millionaires in today’s world. So there’s tremendous opportunity for those who will seize it, and not wait until it gets dropped on them. If you follow. Okay,
Jason Hartman 17:18
I asked you about maybe the wrong book first. That’s your big book. But what about the newest book? Because you’ve had you’ve had quite a few experiences since then, of course,
James Arthur Ray 17:29
that’s correct. The new book is called the business of redemption, and the subtitle the price of leadership. And I’ve already you know, alluded to some of the principles that are in the business of redemption. And if you look at the word redemption, and find its original definition, which I’m I’m a big student of language, it means to gain or regain something by paying the price. And I’m going to suggest to you that we all need redemption because most of us have sold out. On our true hearts desire, most of us have sold out our meaningful life for money. Most of us have chased the money in the market. And yet Gallup poll tells us that 71% of the people surveyed are miserable in their daily work, that’s damn near three fourths of the population. Our country needs redemption. Our current president is talking about making America great again, but nobody wants to pay the prize. But let’s make the world great again. Because there’s always a price for the prize. And who’s going to pay the price? You know, that means I paid a tremendous price for my own redemption and for bringing bringing back what I once was or what I was earned and what I was created, and I’m still not completely there. But the price is always has to be paid first. That’s what the book is about. It’s a amalgamation, if you will, of my life experiences through this whole, what I call tsunami in my life, as well as the lessons learned and how they apply to leading a business because I had an entire team there. Yet I was the leader. And as I said earlier, the leader has to take absolute responsibility for everything.
Jason Hartman 19:23
So when you say pay the price first, can you be more specific about that and talk about maybe the mechanics of that in, in a typical person’s life, if you will, you know, we know your story. That’s certainly a tragic one and nobody listening wants to go through something like that.
James Arthur Ray 19:42
But what I wouldn’t wish I wouldn’t wish it on my worst enemy. Right, right.
Jason Hartman 19:45
But what’s sort of the typical example of paying the price first, I remember a statement that influenced me very much at age 17, when I was lucky enough to discover four of the great motivational speakers Earl Nightingale Denis waitley Zig Ziglar and Jim Rohn talks about good mentors at age 17. Hmm. It’s pretty lucky to describe but Earl Nightingale
James Arthur Ray 20:08
cycled The stage was Zig Ziglar. Yeah.
Jason Hartman 20:10
So did I go? Yeah, I was on a little tour with him. It was pretty cool. But you know, one of the great things I thought Earl Nightingale said, as he said, among many great things, he said, don’t be the person sitting in front of the empty fireplace and saying, Give me heat, and then I’ll put in the wood, obviously, obviously, we have to put in the wood first, right? That’s paying the price, you know, but so many people expect gratification without any paying of the price without any work, right?
James Arthur Ray 20:38
Well, particularly in today’s world. You know, social media is both a blessing and a curse. I think it’s a great medium for marketing and for connecting with clients and those type of things. But it also is a curse in that particularly with the millennials, and let me just say, before I go any further, I firmly believe The millennial can potentially be some of the greatest leaders or countries have ever seen. And for them to do that, they’re going to have to really shift their mind dramatically because there’s so much mentality out there of I’m going to be the next Justin Bieber and just throw up a YouTube video and become world famous, you know, or Kim Kardashian or whatever. The fact is, you know, Bill Gates didn’t take one day off for six years, while even building Microsoft now one, you know, Elon Musk works hundred hour weeks. And I could go on and on. But I I, you know, built a $10 million business it was like, Whoa, you know, Inc 500. Company. Wow. How cool is that? Well, it’s cool. And I work seven day weeks for the better part of 20 years to make that happened. And then it was gone in a heartbeat. So there’s a price to be paid. If you’re not willing to pay the price, as far as I can tell Jason, the only place you get the reward before you pay the price is in a restaurant. You know, you go into a restaurant, you get the meal and you pay after everywhere else you got to pay first.
Jason Hartman 22:14
Yep. good points. good points. Well, what else do you talk about in the newest book?
James Arthur Ray 22:19
Well, all the qualities of leadership that are necessary, I think one of the things that’s really, really vital for leaders to understand is that leaders make decisions. And I had to make some decisions in a crisis zone. You know, when things were going sideways, and we realize that people are in trouble. I was the leader, I had to make judgment calls with limited information. While such as live, you know, leaders had to make decisions and sometimes pray that there’s a forgiving God because we know we’re making decisions based on limited information ation, we know that we may have To change those decisions, we know there isn’t an outcome and an effect of those decisions. And yet you still have to make the decisions. And that’s tough because some people want to gather more data. And, you know, wait around and analyze something until they get it perfect. And that’s the Surefire methodology to failure in a Mach 10 world in which we live. I’m not a political person, but I love the quote from Ronald Reagan. And I think it’s appropriate here. He said, when I gather enough information to make a decision, I don’t take a poll. Right. I’m making a decision now. That’s good. That’s good. You know,
Jason Hartman 23:39
one of the quotes that’s influenced me a lot and I know we got to wrap it up, James, and I’ll ask you to give out your website in a moment, but it goes something to the effect of successful people make decisions quickly, as soon as all the facts are available, and change them very slowly, if ever unsuccessful people make decisions very simple. Slowly and change them often. And it’s interesting to see the difference there, right? successful people have, you know, they have the guts to make the decision, you know, get the facts, make the decision and stick with the decision, whereas unsuccessful people, they never can make a decision. And then they, once they do they change it all the time. Right? We should, right? Yeah,
James Arthur Ray 24:20
I fully agree. I mean, ultimate performers make quick decisions. That doesn’t mean that or improved. What I would add to your point, Jason, is that sometimes we know that we don’t have all the facts, which I kind of alluded to before, because if we wait for all the facts, then we’ve waited too long. And going back to my situation, which I talked about in the business of redemption, is that I had to make some very fast decisions based upon the information that I had, when we realized that there was a problem. I had to start saying, do this, do that, do this, do that and I took some real hit. Frankly, in the media and in my trial for the decisions that I made now, if I had not been in a crisis zone, and if I had had more time what I made some different decisions, possibly, but the fact was, you can’t? What if, if you What if then you end up living your life miserably for the rest of your days, right? And so you do the very best you can do with the information that you have. And, you know, the fact is, is that many times, and I’m not talking about the sweat lodge situation, because that’s an extreme. But if you look at a business, many times the decisions that you make with the information you have, can be made. They can not work as you’d like them to. You can step back, analyze, make an adjustment and act again, before an amateur analyzes to perfection. Yeah, yeah. And I think there’s nothing
Jason Hartman 25:58
Yeah, and I think to be fair, that quote about as soon as all the facts are available. Look, I think we all any mature person listening hopefully knows that all the facts are never available. We’ll never have every fact. right but you get right. I mean, that’s a judgment call also. I mean, you know, if you wait for all the facts, you’re gonna wait till the thing already happened and then there’s nothing to make a decision on you’re just a spectator. That’s obvious. Yeah, good stuff good good points, anything else you’d like people to know and give out your website and we’ll wrap it
James Arthur Ray 26:28
up. I will give my website which is just James Ray or a why James ray.com. And we do a whole host of you know, one of the things probably, again, best well known for the secret. But what a lot of people don’t realize is that I cut my it that at&t is a C suite consultant. They’re working in leadership and performance and communication and sales and all of those type of things. So my team and I provide a whole host of live events still around leadership and performance and we also do Coaching and we do business consulting work. And if I can be of help, then I would love to do that. And you know, from my perspective, there’s no one that’s better equipped to help individuals who are living through this massive disruption in the market that we live in. Then someone who’s been through massive disruption, it doesn’t have to be just necessarily me. But there’s a lot of people out there who are kind of giving theory and book reports. And that’s not nearly as powerful as experience. And so while it still haunts me and hurts me to this day that I lost three clients, which I never would have wished for. I have to also suggest to all of your listeners, sometimes life deals us sucker punches and things you would never imagine. And yes, you grieve. And yes, you heard, but at some point in time, you have to ask yourself, okay, how am I going to get up And get back in the saddle and get on with it. And that’s, you know, how is this brought a gift to my life of learning and growth and expansion. And that is an empowering life.
Jason Hartman 28:11
Thank you for sharing all that, James. We appreciate your candor, and thanks for being on the show.
James Arthur Ray 28:15
Hey, thanks for having me. I really appreciate it.
Jason Hartman 28:20
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 Hartman. 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 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.