To start this episode, Jason Hartman talks about the regulatory burdens of a new home and why it’s essential to get it under control. Then, Jason becomes the interviewee on Jasper Ribbers’ podcast, Get Paid For Your Pad. They discuss the difference in values of the GDP and the real estate market, how unemployment numbers will impact the housing market, and whether it’s a good time to invest in short-term rental properties.
Investor 0:00
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 0:17
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 multimillionaire 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 on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:07
Welcome to Episode 1684 1684, and regulatory cost. So how much impact does regulation have on the price of a home of an investment property? What does it really mean? Is it is it significant? Is it insignificant? Should it be part of the issue? You know, there are folks who say, Well, if we want to fix the housing shortage, let’s have more government aid, let’s give people more money, so they can buy more houses, let’s lower the interest rate. Nevermind, we’re going to bankrupt the pension funds, we’re going to really put insurance companies in financial hardship, we’re going to really, really hurt retirees that have spent their life doing the right thing, saving money for their retirement. And now, they are forced to go way way up the risk curve to get any sort of yield on that savings, which is totally dysfunctional. It’s totally dysfunctional. I say on the other hand, the thing we need to do to solve the housing shortage is to simply reduce the regulatory burden on home builders, so they can build more houses. What a concept. Focus on the supply. The demand is there. We know people need a house, we get it. There’s lots of demand. How about the supply side? You know, there was a famous and pretty good president. Like any of them, he wasn’t perfect. He had his issues too. But he was pretty good. He talked a lot about supply side economics. Yes. supply side economics. You know who I’m talking about. Good old, the gipper. Ronald Reagan and Arthur Laffer, creator of the Laffer curve. I got to meet Arthur Laffer when I was 24 years old at a conference and I’ve got sort of a funny picture with him. He’s out by the pool at the Venetian Hotel in beautiful Arizona. And I got to tell you, for an economist, Arthur Laffer, is a funny guy with a great sense of humor. I guess. Well, the main like Laffer you got to be kind of funny and entertaining and jovial. That’s how he was.
Anyway, let’s not go down that path too much. Let’s get back on track, Jason, because we’ve got a guest here today. My friend Jasper is going to be joining us. And we’re going to talk about the economics of the real estate market in many ways. But specifically, we’re going to drill down on short term rentals, which ones are failing, which ones are prospering. So we got to get to him. And also I want to make sure that I invite you to join the empowered investor inner circle. Why? Well, we are adding just a whole bunch of good stuff to that group. And one of the things we are doing is this week, on Sunday, we are going to have a very special monthly call where we’re going to talk about how to do renovations. How to do fix and flips. Yes, yes, yes, yes. We have a whole bunch of interesting focus. We want to help you listeners who are interested in this. We want to help you get into business and not be in business alone. But in business with us with our team. I know many of you over the years have asked me, Jason. I like what you’re doing. How participate, how can I work with you? Well, certainly 1000s of you have become clients. And we very much appreciate that. But what if you want to be more active? What if you want to go out and find properties and add value, and make quick profits on fixing and flipping? While we have a built in database of 10s of 1000s of investors, who will buy those properties? lickety split, in two shakes of a lamb’s tail, that’s how fast they’ll buy him.
We can help you with that process. So join the empowered investor inner circle. If you are interested in self management, if you are interested in greater control over your real estate portfolio, join the group, because this week, we have a really special special presentation on fixing and flipping on. I’m super excited about that. So that’ll be on Sunday, where do you go to join, you go to empowered r e. i, r e ai stands for real estate investing, empowered r e i.com. And join the empowered investor inner circle, there’s so much great content, we’ve added a whole bunch of bonuses, put them into a course platform, you’re just gonna love it. So join empowered, RTI calm. And as part of the bonuses, you get your free property tracker subscription. If you already have a subscription, we just add a year, you get an extra year. And by the way, we’re doing some nice upgrades to that software as well. So don’t miss that. Okay, so the National Association of homebuilders in a recent study found that regulations imposed by all levels of government, these regulations on new homes account for you ready for this? folks? Are you ready for this? I’m going to give you a number here. drumroll please. drumroll please. Here’s the number. A new home because of the government is going to cost you $93,870 extra, extra. That’s 23.8% of the current average sales price of 397,300 bucks. So that’s how much these onerous regulations will cost you. Now I’m not saying there shouldn’t be some regulations. Of course, we need some regulations. I get it. I’m not an anarchist. However, the regulations, I think anybody who knows anything about them, including yours truly, are pretty, pretty burdensome. And they’re making the houses cost a lot more money. And they are creating a homelessness problem. And if it’s not a homelessness problem, it’s a under housed problem, where people I mean, zillions of people all over the country all over the world are under housed. Yes, they may not be living on the streets. Thank God for that.
But they are still under housed. They got way too many people living in way to smallest space, their properties are falling apart. Well, how do you fix this? You don’t provide a tax credit to buyers. The buyers don’t need a tax credit they already want to buy, they can already afford to buy the interest rates are so low, they can afford it. But the problem is, there’s a shortage because it’s too hard for the builders to build. Okay, the commodities prices have gone through the roof. The regulations are onerous. And you know, if you want to work on anything, work on the supply side, supply side economics right there, right, work on the supply side, and offer some incentives and credits for builders to build more houses. Fix the supply problem. That’s what you need to do. Yeah, I think just don’t get it Do they just don’t get it as the beginning of May. The price of framing lumber is nearly 15 $100 per 1000 board feet. You ready for this one? That’s up more than 250% since April of last year, when lumber prices were roughly $350 per 1000 board feet. So can you imagine what that’s done to the price of the home? Well, it’s added $34,000 to the price of the typical house over five years, from 2016 to 21. The nhB also found That regulatory cost on an average home built for sale went from $84,000 to $94,000, a 10.9%. Increase, I rounded those numbers, by the way, a little bit of change after those, but you get the idea. Going back further the regulatory costs for a new home in 2011. So 10 years ago, these regulatory costs were only $65,000. And now, they are $94,000. There you go, right there, folks, right there, you can see why the prices are where they are. I mean, in part, that’s not the whole picture, of course. But we’ve got to solve the supply problem. Now look, from my own self interest point of view. And all of you listening, hey, housing shortage, putting huge upward pressure on rents, obviously, prices, but rents to the rent pressure, do you see it already, whatever you think the market rent for your investment properties is go higher, I’m telling you, the market will will take it, the properties will be absorbed by the rental market. So don’t be afraid to ask for more.
Sometimes, you might lose a tenant, and you retain it your property. But you might be surprised because your new tenant pays so much more than the old tenant. It’s happening. I’m seeing lots of examples. Okay, go to empowered r II, II, empowered r ei.com. and sign up for the empowered investor inner circle, you get tons of benefits. And one thing you get for sure is our Sunday meeting on zoom, we are going to be providing a lot of new good information and a lot of new tools to help you if you want to be a more activist investor. You know, it’s great to buy turnkey properties and just hold them. And the economics of it the inflation induced debt destruction, the packaged commodities, investing all the trademark stuff that I’ve taught you over the years, will work wonders, it will create tons of wealth for you. But if you ever thought, How can I push it? How can I make it go faster? How could I create more wealth more quickly, and gain more control over my portfolio and keep the property managers from ripping me off and make sure that I’m getting good prices on stuff, and getting the highest market rent, and getting all of these good benefits? The empowered investor inner circle is for you I haven’t mentioned in in probably a few months. But with this Sunday, Sunday event coming up this zoom meeting we’re having I really want you to be involved in that. So empowered, are II II, calm, join us, you’ll really like it. Okay, so let’s get to Jasper as we talk about real estate economics, the short term rental market, and some comparisons and parallels with a long term rental market, and which short term rental investors are doing well, and which ones are doing poorly, and a whole bunch of other things. So here we go.
Jasper Ribbers 13:29
Welcome to podcast episode number 370 of get paid for your pad. And today, I’m super excited to have on the show my friend Jason Hartman. And Jason is with the empowered investor. He’s the host of the creating wealth show. And for the past 17 years, he’s been helping people buy properties nationwide. He also owns his own properties in 11 different states, and we are going to talk about the real estate market. We’re going to talk about the economy. A lot of people feel like things are not making sense. Right now. I’m getting a lot of questions around the outlook for 2021. Is this a good time to invest in real estate for short term rentals? That’s what we’re gonna talk about. So Jason, welcome to the show.
Jason Hartman 14:13
Hey, Jasper, thanks. It’s great to be here. And I got to tell you, I know there are the naysayers out there and people who think what they want to think, but the indicators right now are pretty bullish. I think we’re going to have another just a banner year, there’s a major shortage of housing. building material costs are skyrocketing. Biden wants to do this $15,000 first time hire first time buyer tax credit, and all that means is just gonna push prices up $15,000 It’s a terrible idea, but you know, it’s going to happen probably. So they’re there. We have a lot of wind at our back right now.
Jasper Ribbers 14:58
Awesome.
Jason Hartman 14:58
You know,
Jasper Ribbers 14:59
One thing that I learned from you when you did a training in the short term rental legends, masterminds. And what you pointed out was that even though real estate prices are really high right now, the affordability is actually very good because the interest rates are so low, right? And that I thought I found was, was really interesting. But um, but yeah, let’s let’s dive in. Let’s dive in a little bit more about in the real estate market economy. The questions that I get a lot from people is like, Hey, we just went through this crisis in 2020, where we saw in one quarter, I think we had a record drop in GDP and gross domestic product. You know, people can’t work and there’s, there’s so much going on. But if you look at the real estate market, look at the stock market, it seems like everything is just fine. Everything is on record levels. So
Jason Hartman 15:50
how do we it’s better than fine? Yeah. Go ahead.
Jasper Ribbers 15:56
Yeah. How does that how does? How do we make sense of all of this? And what can we expect?
Jason Hartman 16:01
Good question. So first off, when you create a whole bunch of money, trillions of dollars out of thin air, you can force anything to happen, right. And that’s what governments and central banks around the world have been doing. And it has buoyed the stock market, the real estate market, the crypto market, like every asset class, is just pretty much booming, right. And in terms of GDP declining, and, and unemployment, skyrocketing, what we have to realize, Jasper, is that this is a very uneven situation, it is a wealth transfer, the rich are getting richer, the poor are getting poorer, the divide is getting wider, that is a terrible thing. It is really bad for society. It you know, I personally, like an environment where there’s a large middle class, because crime isn’t a huge problem. You don’t have to worry about a revolution. People are happy. And that’s the America, I think that was so great of the past. And you know, of course, I’m talking about America, but I’m also talking about the world because America is still the biggest economy. And so it has a giant influence around the world. I wasn’t born in America, I was born in Europe, and I’ve traveled around the world, I’ve been to 87 countries. So I try to have a really, you know, macro view of things. But of course, the US economy is the main player. So you know, that’s what we’re going to probably going to be talking about a lot. So it’s a very uneven recovery, if you will. And you know, certain people in the service sector have been hit really hard. And other people in the information, jobs, they’re doing very well. They’re able to work remotely. They’re starting businesses, the business startup rate, last year was the highest it’s been in well over a decade. So a lot of people have used this time and quarantines and lockdowns to learn new skills to start a business to reevaluate their life. People have been saving money, they haven’t been spending that much, obviously, because they’re not traveling, they’re not going out so much. And it’s just a really interesting time, frankly. So you know, the Chinese have a symbol for crisis. And that’s a symbol is the same as the symbol for opportunity. And when you translate it, literally, it means crisis is an opportunity riding the dangerous wind. And, you know, it’s interesting, because every crisis does bring with it lots of opportunities. And that’s no secret. Now, everybody has seen it play out, they’re seeing it play out firsthand, over many months now. But back in February or March, that was that was a big secret, right? And, and so here we are. And when I present into your mastermind group, by the way, you just have a great mastermind group, I really enjoyed meeting your people and talking to your people, a bunch of very bright minds, people that are doing big things and doing great things in the short term rental industry. And, you know, I highly recommend mastermind group. So that’s they’ve changed my life. I’ve been a member of many of them over the years and really, really important thing to be around like minded people were going places and doing bigger things than you because it expands all of our thinking. So that was really great. And we can talk about that presentation if you want or wherever you want to take it.
Jasper Ribbers 19:39
Yeah, absolutely. Well, I think it’s interesting what you’re saying right? Because you’re saying the rich are getting richer and the poor are getting poorer and that’s because essentially the people who have like hard assets, the people who own homes, on other types of assets, maybe land or bitcoins or shares in the in the Stock markets, those those assets are going up in price. So if you don’t own anything, then you kind of like left behind. Is that what you’re saying?
Jason Hartman 20:11
Sadly, that is true. Look at when there’s there’s a, I call him my second favorite economist. Okay. There was an economist in the old days, his name was Richard cantillon. And he popularized or someone popularized, what’s called the cantillon effect. Okay. And the cantillon effect basically describes this idea that the people closest to the money, get the most of it. So whenever there’s money printing by governments and central banks, you know, who gets it first, the banksters Wall Street, the government, yeah, you know, the politicians, the people closest to the money, right. And as real estate investors, we sadly, don’t have the privilege that the Wall Street crooks and the banksters You know, that’s banker with a bankster, like, mobster, that’s the joke, if you if you don’t get it, I just want to make sure people get that. So the banksters, the Wall Street crooks, and they crooked politicians, you know, they’re close to the money. So they find a way to take advantage of it first, right. And so they get the biggest, the biggest profit off of the money printing, and the stimulus packages and that kind of stuff. But second in line, really, normal people can position themselves that way, because real estate investors have some very, very unique opportunities. I coined a phrase many, many years ago, I actually trademarked it, and it’s called inflation induced debt destruction. I know it’s a mouthful, say that 10 times fast inflation induced debt destruction, or II D, D, for short, maybe. And what that basically means, Jasper is that it’s the hidden wealth creator, that real estate investors take advantage of whether they know it or not. And it enriched 10s of millions, if not hundreds of millions of people over the last many decades. And what it basically does is, when we take out a mortgage, we get this fantastic three decade long, fixed rate mortgage. And most people consider, they’ll, you know, almost everybody will say, hey, real estate is a great hedge against inflation. And the reason they say that is because real estate is a commodity, in fact, a house, you know, you look around, you see the walls behind me, right. And house is made of ingredients. And I call this packaged commodities investing another one of my trademark terms, packaged commodities investing, because all it really is, is a bunch of concrete, lumber, steel, copper, wire, petroleum products, energy, glass, you know, these are all the ingredients of any house, right. And these commodities are traded on the market. But when we’re real estate investors, we buy these in a packaged fashion. And if we were to go to the commodities exchange, the Chicago Mercantile Exchange, for example, or any other exchange around the world, we could buy these commodities, or we could buy soybeans or coffee beans, or, you know, a bunch of other commodities to or pork bellies, right, all these things. But we wouldn’t get to finance them. With three decade long, fixed rate debt at artificially low interest rates. In the US since the Great Depression. Real Estate has been subsidized by the government through Fannie Mae and then later Freddie Mac. And these government sponsored entities basically provide us the opportunity to get these artificially low fake interest rates on mortgages. And the interest rates are below the rate of real inflation, not published inflation, but real inflation. And, and we get to pay them back in cheaper dollars in the future. So just think about it this way to make it really simple. I mean, I’ve got charts and graphs, and on my podcast, I’ve taken hours to dive into this deep, right, but just simply understand this, right, if over the next I mean, everybody argues about what the real rate of inflation, it’s okay, but there is some inflation. It’s not extremely high right now. But there is some, So say, for example, over the next three years, or five years or one year or whatever you believe, doesn’t matter. But say that 10% inflation occurs, okay, time period, optional, right? Think whatever you want, but there’s 10% inflation and you’ve got $1 million In mortgages out there on your properties, okay? Now the properties since they’re packaged commodities, they will go up or at right around the rate of inflation usually okay? Or maybe a little better than inflation, okay, so that’s fine. That’s your hedge against inflation. But the real opportunity comes in paying back the mortgage in cheaper dollars. Because if we have 10%, inflation, and then basically inflation had, you know, we might still owe $1 million in mortgages, right. But really, we got $100,000 or 10% discount on those mortgages, because in real dollars adjusted for inflation, we only pay back $900,000. And over the course of time, that gets further and further debased by inflation. See, people need to understand that inflation destroys purchasing power. It’s an insidious, hidden tax, that destroys the value of stocks, bonds, and savings. But thankfully, it also destroys the value of debt. And that my friend is a wonderful, wonderful, mostly hidden to most people, wealth creator. And it makes real estate a very special asset class.
Jasper Ribbers 26:25
Interesting. So um, so what would now be a good time then if someone is listening here and, and they want to they want to invest in a short term rental is now a good time to take out a mortgage and buy that property and rent it out on Airbnb?
Jason Hartman 26:39
Yeah, good question. So I am not as much of a short term rental expert, as you and Eric are your partner. But you guys do a fantastic job teaching short term rentals. So I’ll leave the details of that to you. Now we do have in our network, we have one short term rental market, St. Augustine, Florida. And what I can tell you there is that has done extremely well through the pandemic. I’m being snarky again. Okay, plan, dynamic pandemic, whatever you want to call it. And that market has done extremely well. And my theory originally, when all of this first started happening, you know, maybe we’ll call March, the main month that it really, really sort of changed everybody’s lives, is that I always thought that the best short term rental markets would be markets where people didn’t have to get on an airplane. And they could drive, hope probably less than four hours drive. Okay, that’s sort of, you know, maybe it’s a benchmark of what’s a long drive versus a shorter, you know, sort of little road trip, right, four hours is the number I sort of gave it, if they could drive four hours or less, and go to a place that was either lower density. So because density brings with it two problems. Number one, the threat and the fear of contagion of a virus, right. And, and so people don’t like density, the two biggest density problems, by the way, in my opinion, are mass transit, and elevators, okay, so people want to get out of places with mass transit and elevators, because they’re likely to get sick in those environments. Okay, now, there are other things, but those are kind of the two main things. And then, if they could drive to this place, it was lower density. Oh, and the other problem with density, by the way, is civil unrest. Most of the high density places have been affected by the riot, okay, and though, you know, broken windows and the fires and burning down buildings, and, you know, throwing things at cops and Molotov cocktails, and all this tragic, ridiculous violence. So if they could go to a place that was lower density, that would also offer them a vacation feeling, a truly different experience than where they lived full time. I would theorize that those short term rental markets would do great, and they have, at least in St. Augustine, Florida, and from everything else I’m hearing and reading. I don’t know if you’ll agree with that with every market, but I kind of think you will. What do you think?
Jasper Ribbers 29:22
Yeah, absolutely. I mean, we’ve seen the remote the drive to destinations do really, really well in 2020. And many of our our mastermind members actually had record years. Yeah. Which is? Yeah, so it’s it’s interesting is there’s a polarity, right, where people in the urban markets are still struggling. But the the remote drive to destinations are doing really well. So I think you’re 100% on point there. Mike. My question is, you know, if people are listening now and they and they’re thinking about buying, getting a mortgage buying a property in one of those markets, what do you think from you know, from that From the real, like looking at real estate prices and interest rates right now, do you think this this trend is going to continue where people are buying homes and their their mortgages are getting inflated, the inflated away essentially where the assets are still going up? Do you think that’s going to continue into the future?
Jason Hartman 30:19
Oh, well, it depends. That’s the right answer. Okay. So I’ll just explain, you know, we, when we look at the country or the entire world, you can divide it up Jasper into three types of markets, linear markets, cyclical markets, and hybrid markets. And, you know, I’ve been talking about this for many, many years, but just briefly, a linear market is a boring market, okay. And these are the markets we like the best. If if people were to go to Jason hartman.com, and click on the Properties page, they would see linear markets, and a couple of hybrid markets, but mostly linear markets. And what that means is that if you’re looking at a chart or a graph, where you’ve got, you know, the two axes, x and y, okay, and you’re looking at prices, right, and I’m just kind of doing this with my hands, for those who are watching on video, but you know, if not all, explain it for audio only listeners. So you know, in a linear market, the line of prices over time just kind of goes up slowly. And it’s just sort of boring, you know, there’s little ups and downs, but they’re not significant. They’re not pronounced. In a cyclical market, it’s the opposite. It’s like a roller coaster, big ups, big, big downs. And then in a hybrid market, it’s in between the two as the name would imply. And so I think that cyclical markets are much more risky, okay, much more risky. So I would try to be close to hybrid or linear in my my investments, because those are a lot less risky. They tend to be cheaper houses, they’re necessity houses. Now, the only problem with this in the short term rental market, you know, you can get much bigger premiums, and you know, fewer properties to manage if they’re more expensive properties, right. So, you know, you have to weigh these things out, I’m not talking from a short term rental host perspective, as I am from a real estate investor perspective, because the vast majority of our clients, you know, buy long term rentals that they just want to keep forever and buy and hold cash flow, you know, rentals. So that that’s the thing to think about. I hope that answers the question.
Jasper Ribbers 32:35
Yeah, for sure. My follow up question would be, you know, right now, it’s really, it’s really affordable to get a mortgage. Right, we were just doing some calculations and and it’s even though the real estate prices are really high, it’s, it’s actually very affordable, because those interest rates are so low. Now, like when you get a mortgage, you can you can choose like different terms, right? You can do a 30 year, you could do a 10. Year, you even have mortgages, where where you’re paying an interest rate, that’s variable. So it just depends on on the the Federal offense rate, right. So and, you know, what I think is really interesting to understand is what you were saying about those 30 year mortgages, because you’re 30 years from now, those dollars that you have to pay back are worth so much less. And that seems to me that there’s the opportunity right to to buy to buy a property, get that 30 year mortgage, take advantage of those rates. And that’s how you create wealth over time.
Jason Hartman 33:35
Absolutely. Yes. That is the hidden wealth creator. People have to realize that, you know, most people think, well, the property is the asset and the mortgage is the liability. But the mortgage is part of the asset. If it is a three decade long, 30 year fixed rate mortgage at artificially low interest rates, the mortgage is a part of the asset. And here’s a prediction for everybody. Okay, I’ve been predicting this for a little while now. And this is probably going to be another one of my accurate predictions. I’ve made quite a few. What I’ve been very wrong about though, I’ll just tell you that up front is interest rates. There’s so manipulated, I can’t predict interest rates, okay, I don’t think anybody can, but I’ve been very wrong on interest rates. And they’ve just gotten lower and lower when they should be higher and higher, because but they’re so manipulated, you know, you can’t you never know what the intervention is going to be from the governments and central banks. But what’s going to happen in the future, and this might be something that you’ll really start to see play out three years, five years, seven years from now, nobody knows exactly when, but it’s going to happen. Look at there are millions of people that are refinancing their properties. And there are millions of people who are buying properties. The market is on fire. I mean, last year was an incredible year for my company helping investors buy property He’s nationwide. So businesses very good. And what’s, what’s going to happen here, if you just project this out into the future is, all of these millions and millions of people, 10s of millions of people have these ultra low, artificially cheap fixed rate mortgages, that you don’t have to make the last payment on until 2051. Think about that. 2051, that mortgage does not end until 2051. How much will the world change by 2051? It’s absolutely staggering, the changes, we’ll see. You know, there’s so much division in the United States, for example, the country may very well see states secede from the union, I mean, things will change massively, technological innovation will be unbelievable, lifespans will likely be extended, maybe dramatically. Okay, a lot of things changing. So you pay that mortgage back and cheaper dollars. And that’s wonderful. But here’s the big prediction, housing supply is going to be constrained more and more and more, because these 10s of millions of people are not going to want to give up those cheap mortgages. When mortgage rates when they rise as they must rise. We they cannot be artificially cheap like this forever. This game, that the governments and central banks around the world, especially the US government is playing is essentially a Ponzi scheme that, you know, it defies gravity, it defies the laws of logic, physics, monetary policy, fiscal policy, it doesn’t work, okay, now, nobody knows when the jig will be up. Okay. Nobody knows how long they can kick the can down the road. Nobody knows how long they can defy gravity. But it cannot possibly happen for ever. It’s absolutely impossible. So rates will have to go up at some point. And remember, a lot of people don’t realize this. But low rates are toxic to the economy. They are nonsensical. They cause malinvestment. And they’re really bad for older people who have saved money and done the right thing all their lives, they’re really bad for pension funds. There’s a huge pension crisis, you know, on the horizon. And there’s just a lot of a lot of bad things about low rates. So these people will have these cheap mortgages, and they’re not going to want to give them up, their family might expand in size, they might want to move, what what you’re going to see is a boom in probably the stocks of Lowe’s and Home Depot. And and then in home remodeling companies are going to do very well. People are going to add on to their house, they’re going to improve their house, but they’re going to stay put because the mortgage cannot be moved from property to property. Okay. And so that is going to constrain supply, people will move and they’ll say, hey, the mortgage is so cheap on this house, let’s just keep it as a rental. Okay, so the new supply that is going to be available for future buyers is going to have to be built largely. Okay. Now, certainly people will sell their houses, not everybody will keep them. I’m just saying there will be a big motivation, a huge motivation by 10s of millions of people to hold on to what they’ve got. Because that that mortgages there. Got it. Yeah.
Jasper Ribbers 38:35
Awesome. That’s, that’s pretty interesting. So. So you expect interest rates to eventually go up?
Jason Hartman 38:41
They have to go up? I don’t expect them to they must go up. Got it. I don’t know when. But it has
Jasper Ribbers 38:47
to happen. Because what happens if they don’t grow up?
Jason Hartman 38:51
Well, then then basically, the economy. Well, the dollar as a reserve currency has to collapse, that there’s just no way you can do this. And other central banks around the world and other governments around the world that don’t, that can’t play the game the US can play because it’s the reserve currency. They they are much worse off in the United States. The US has the bully pulpit, that the US can get away with all sorts of shenanigans that other countries cannot get away with. Okay? So it’s in a really privileged position. But again, nothing can defy gravity forever. You know, a plane has wings, a bird has wings, they can both fly. Eventually the plane runs out of fuel, eventually the bird gets tired. Okay, you know, it cannot go on forever. The last thing
Jasper Ribbers 39:43
I want to touch on is unemployment. I think there’s a lot of people that are worried that we’re going to see a lot of people being unemployed because of the COVID crisis. What are your thoughts on that?
Jason Hartman 39:56
Well, it’s actually worse than COVID. Okay, so first off, you You know, like what I said at the beginning, it’s very uneven, the situation is uneven. The the haves are getting richer, and they’re doing great. Most of them right now they’re doing better. You know, look, look, my year was great. Last year, your year was great last year, your listeners, if they’re following our advice, and they’re investing in real estate, they’re doing great. Okay. You know, so some people are doing great, and some aren’t. And it’s really a sad situation. And I think, look, we should all be conscious, as members of a society, not just looking out for ourselves, but looking out for the greater good. Now, that doesn’t mean a bunch of stupid government welfare programs that don’t work and never work and really cripple people. What it means though, is to just be conscious and to be thinking about what’s going on. Okay. And, you know, to do things that create more housing availability for people that create more capital for people. And, you know, investors do that kind of automatically whether they want to or not, you don’t have to be altruistic. It’s just money has an energy about it. And you know, it doesn’t sleep Money Never Sleeps as the saying goes, right? So it’s going to do something in the economy, right? But you direct it, you can optimize it a little bit, right? So that notwithstanding, it’s uneven. And automation is going to make the unemployment problem even worse. Okay. So we’re probably moving toward a now I do a talk and I’ve got a course on what I call pandemic investing pandemic investing course you can go to pandemic investing, calm, get a free book there and learn a little bit about it. Okay, pandemic investing calm. And, and that’s how to invest for a pandemic. So what are some of the things I talked about in there is how we are quickly gallopping toward more socialistic governments around the world, we are going to see an expansion of rental housing assistance, either through the current section eight program or new programs, we’re going to see a big push toward universal basic income or UBI. Like it or not, it’s coming. And, you know, I’m warming up to that idea myself. As you know, I’m very libertarian in my thinking. But I think that UBI is not as bad as some people would make it out to be. I had Andrew Yang on my podcast, he ran for president. And his big platform was universal basic income, okay, whatever, it’s complicated, but, you know, that’s where we’re going. And we’re also going toward a digital dollar, or a Fed coin, as some people are calling it. But $1 a cryptocurrency and other countries around the world are going to create their own digital or crypto currencies. So with that, there are a lot of terrible things about that, it means the end of spending privacy, it means the government can really centrally manage the economy by you know, you’ll get your your allowance, your UBI on your phone, and they can do things like this. I mean, it’s really quite scary. You know, if hopefully, everybody’s read the book 1984 by George Orwell, it’s a must read, because it’s happening, literally. And one of the things they could do is they can basically say, Okay, here is your monthly stipend, your universal basic income, or it could be your rental assistance, just put into your account, deposit it on your phone, but the rule is, you have to spend it within 30 days, for example, or it expires. So they could create Velocity of Money artificially, okay? This is like puppet master managing the economy, right? They could also say things like, Okay, look, you know, it’s not safe for people to travel. So you can only spend it within three miles of your home. You know, the home The phone has geo tagging in it, right. So your cash might be no good when you go out of the radius that they allow you to spend it in. I mean, it’s really pretty scary. But the the tyrannical leaders we have love it, they’re gonna love it. Okay. Joe Biden will love it. Okay. You know, the new Treasury Secretary Janet Yellen, former Federal Reserve Chair she’s gonna love it. Okay. It’s, it’s, it’s great for tyrannical politicians. And, you know, they’re all that way, basically. So they’re gonna love controlling our lives. And that’s not going to be good, but it is what it is. Well, you know, my basic philosophy Jasper is, you know, we can disagree. All we want with everything that’s happening, and a lot of it is awful, okay, philosophically, I hate it. But look, I’m not going to be able to do anything about it. I’m just one person. You’re just one person. You know, what we need to do with our investment strategy is align our interests with the most powerful forces the human race has ever known. What are the most powerful forces the human race has ever known governments and central banks. They’re the most powerful forces on earth. And we want to just align our interests with theirs. And that pervades all of my investment philosophies align your interest with the powers that be
Jasper Ribbers 45:19
that’s a that’s a powerful statement. I love that and you know what people say a lot is don’t fight the Fed.
Jason Hartman 45:26
Yep, don’t fight the Fed, right? Or that another thing is never bet against the Fed.
Jasper Ribbers 45:31
Cool, man. Well, thank you for sharing your your faults and ideas. I’m sure it will provoke a lot of people to start thinking about the future and and their best strategies, especially when it comes to real estate investing. So definitely appreciate your your opinion, your vision and your thoughts. Before I let you go, where come if people want to learn more about you, or what you’re offering, where can they go?
Jason Hartman 45:55
Two places – my main website is Jason hartman.com. Just my name Jason and then h AR t ma n COMM And then for the free book I mentioned, that’s pandemic investing calm, and you can get that free book and and learn about pandemic investing there. And it’s a totally free book, there’s no pay for shipping or no credit cards, it’s just completely free, you’ll get it instantly as a PDF file. So pandemic investing calm or Jason Hartman, calm. And I want to also say that, look, income property is the most historically proven asset class in the entire world. Whether it’s long term rentals, like we specialize in, or short term rentals, like you specialize in. Either way, it’s income property, and it’s the most historically proven asset class in the world. And it’s also the most tax favored asset class in America. And taxes are the single largest expense in our lives. And with a Biden Harris administration, they’re bound to be a much higher expense. So you want to get tax favored assets in your portfolio as much as possible. Awesome.
Jasper Ribbers 47:05
Great advice. Thank you for for coming on the show. Jason. This is awesome. And to the listeners. Thank you for listening or watching on YouTube. And we’ll be back next week with another podcast.
Jason Hartman 47:16
Happy investing everybody. Bye. Bye. 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 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.