Creating Wealth Real Estate Investing with Jason Hartman

There’s a nostalgic feeling to today’s Creating Wealth Show as Jason Hartman provides a live recording from the 2014 Meet the Masters event in Orange County, California. This gives listeners a taste of what they can expect from the January 2015 event in Irvine, California, and also provides a good opportunity to see how far the financial and real estate worlds have come over the past months. Key topics covered include the Case-Shiller index, reassessing Rent-to-Value ratios and the development of bitcoin.

 

Key Takeaways

04.30 – Jason Hartman’s investment strategy doesn’t focus on appreciation – if it happens, it’s a bonus.

07.45 – Bitcoin and its competing alternative cyber currencies really came about because people are starting to doubt the fiat money Central Banking model that we’ve become accustomed to.

10.50 – Despite being the most commonly used index, Jason Hartman would only recommend 6 of the 20 markets proposed by the Case-Shiller index.

14.08 – As humans, we find it inherently difficult to know when to cut losses and just walk away.

15.50 – Niall Ferguson claims that the most powerful part of the financial system is the bond market, and we would all do well to remember that.

20.09 – Real estate is not a very liquid market and so even when prices drop, they don’t drop as quickly as most other asset classes.

26.18 – Rent-to-value ratios change totally if you think about the actual utility cost per month – how much is your renter paying to use your property, and how does that compare with what you think the value is?

31.23 – The forms and uses of money have changed many times throughout history, and now we’re dealing with the technological side of currency, which has led us to bitcoin.

39.50 – Jason Hartman goes through step-by-step considering the relative merits and failings of the dollar, bitcoin, gold and income property.

 

Mentioned in this episode

The Ascent of Money by Niall Ferguson

 

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Jason’s guest, Michael Thomsett has over 35-years as an Accountant and is an investor in the most tax-favored asset class in the U.S., income properties. Mr. Thomsett has written over 90 books. His book, The Landlord’s Financial Toolkit will soon be printed as a second edition and re-named The Real Estate Investor’s Financial Toolkit. During today’s episode, he shares ten principles of real estate evaluations and unpacks each principle, so even those with a limited understanding of income property investing can follow along.  

 

Key Takeaways:

[1:29] Segmenting the real estate market is rarely done properly.

[3:28] Make it a goal to live in a no income tax state as a wealth creation strategy.

[6:44] Information on the next Meet the Masters, Hartman Education Special Bundles and available properties.

Michael Thomsett Guest Interview:

[11:46] The 9/10 Principles of Real Estate Evaluation.

[12:54] Defining the Principles of Progression and Regression.  

[14:09] The Principle of Conformity is keeping the features of a property in line with others in the area.

[15:11] The Principle of Substitution relates to the condition of the property.

[15:45] The Principle of Change applies to the economy, demographics, employment, and other “fact of life” incidents.

[16:46] The Evaluation Principle of anticipation is when expectations about future events affect the market value.

[20:24] The Contribution Principle - If the improvement is worth more than the cost to make it.

[21:46] Plottage or Growth Management should be consistent use of the surrounding lands.

[24:26] Highest and Best Use - Real Estate evaluations are best when land is utilized in the best possible way.

[26:13] The Competition Principle states an opportunity for a profitable investment leads to competition.  

[31:47] All the necessary tools for landlords are included in the second edition of Michael Thomsett’s book.  

Mentioned in This Episode:

Jason Hartman

Hartman Education

Thomsett Publishing

Direct download: CW_732__Michael_Thomsett.mp3
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Drew, a long-time real estate investor, joins Jason for the introduction portion of today’s podcast to discuss the pitfalls of trying to time the market, bulletproofing your properties and the downside of over-diversification. This episode finishes with a recording of the self-management expert panel of Jason, Fernando and Oliver answering investor’s questions during the most recent Software and Buying Event. If you have questions about moving from a property management service to self-managing your own properties this Q&A session is a must listen. Income property investors get answers to their real-life concerns about self-managing properties.

 

Key Takeaways:

[3:05] Drew sells commercial printer cartridges on amazon (shameless self-promotion) and invests in real estate.

[6:02] Was it a wise choice to buy a property in San Jose, California in 1986?

[9:57] Real estate can be a forced savings program for people who lack financial discipline.

[12:20] Be sure to have enough money to bulletproof your properties when you first purchase them.

[16:32] Don’t be a speculator, be a cash flow investor.

[22:54] Be careful not to over-diversify your real estate portfolio.  

Self-Management Panel Q&A:

[24:49] Is it difficult to find tenants when self-managing properties?

[27:35] Make sure to take good photos of your properties.

[28:16] What are the best communication tools to use with tenants?

[31:20] How to facilitate move out inspections, handle legal infringements and qualifying for the real estate professional material participation time.

[39:00] These are the questions to ask property managers when vetting them.

Mentioned in This Episode:

Jason Hartman

Venture Alliance Mastermind

Hartman Education

Ink Safari

Cozy

Voxer

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Today’s episode of the Creating Wealth Show deals with issues other than business and finance, but guest Lori Ann LaRocco of CNBC joins Jason Hartman to discuss her latest book, Opportunity Knocking: Lessons from Business Leaders. She talks about the pyramid notion of achieving leadership success both in your personal and business life and how important it is to know yourself before you can even hope to expand your potential for success.

 

Key Takeaways

01.53 – Stocks of the physical merchandise of the Meet the Masters and Creating Wealth Home Study Courses are still available but running low:www.JasonHartman.com/Products

03.24 – Successful leaders in any field all seem to follow a series of seven strategies, starting with something as simple as knowing yourself.

06.46 – Find others who inspire you and then form and follow your own aspirations.

10.33 – Take your idea and stick with it. Even if it’s not always popular, stick with what you know to be right.

16.54 – True passion is much more attractive to an employer or investor because it’s a great motivator.

19.55 – Some levels of the pyramid take longer to achieve, but it’s the culminated effort which brings success.

27.03 – Self-belief is really one of the most important elements here.

28.05 – To find out more information about Lori Ann LaRocco, head to her blog at www.LoriAnnLaRocco.wordpress.com

30.06 – In Lori Ann LaRocco’s earlier book, Thriving in the New Economy, she created the mini biographies of various CEOs to show their reactions and their mistakes in the lead-up to and aftermath of the financial crisis.

33.55 – The way that these bubbles work is that when you’re in it, you just can’t see it. Even with hindsight, we don’t seem able to learn.

 

Mentioned in this episode

Opportunity Knocking: Lessons from Business Leaders by Lori Ann LaRocco

Thriving in the New Economy by Lori Ann LaRocco

Start with Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek

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Jason, Fernando and Oliver make up today’s expert panel. They are discussing self-management options for your income properties. The experts agree, a great property management company is worth their weight in gold but it is also important to be educated about your self-management options. The panel shares information about companies who use technology to save you time and money through automating tedious tasks, best practices to improve home interiors without spending a fortune and what types of tenants are the best types of tenants to have.

 

Key Takeaways:

[3:40] Jason and Fernando discuss the flooring options available at an income property expo in Mesa, Arizona.

[9:19] Kwikset Kevo bluetooth locks make it easier for self-management of income properties.

[16:57] Jason recommends adding a little color to the interior walls of your income properties.

Self-Management Panel:

[20:33] Is self-management easier than having a property manager?

[23:27] The road to self-management and maintaining a good relationship with your tenants.  

[28:00] The flat rate fee system makes self-managing properties easier.

[32:47] Property managers are reluctant to take legitimate fees out of a tenant’s security deposit.

[37:06] Ask your property managers to lower their costs if you are realizing the value.

[40:11] Using Cozy makes rent collection and viewing tenant profiles easy.

[44:35] Disintermediation is getting rid of the middle man.  

[49:10] Rently allows tenants to do their own showings with only a credit card.

Mentioned in This Episode:

Jason Hartman

Real Estate Tools

Venture Alliance Mastermind

Hartman Education

Cozy

Rently

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Jason’s guest today, Dave, is a member of a real estate investor Mastermind group. During the last meeting, there was a consensus that two major problems exist with the rehabilitation of properties. Dave shares the two issues and some of the solutions discussed during the Mastermind meeting and feedback from his experience over the last year. Jason recognizes the property supply chain is currently going through a boom cycle. The disparagement between the property supply and demand makes it challenging for local market specialists, real estate investors and for tenants.

Key Takeaways:

[1:20] Real estate investors are seeing spikes in remodeling costs and having difficulty finding good project leaders.

[6:44] The challenges of the local market specialists, the real estate investors and tenants are due to a boom cycle.

[13:10] In the last year, a General Contractor has seen a 30% increase in materials.

[17:34] Increased material costs and missed time frames both reduce profit for real estate investors.

[21:20] Solutions to the problems include automating the process and having an efficient project manager.

[27:23] Real estate investor demand has far exceeded the supply of good inventory.

[28:04] Rehabbing properties has become entirely different than in the past. Current available properties are in worse condition.

Mentioned in This Episode:

Jason Hartman

Hartman Education

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Catherine McBreen is the President of Millionaire Corner and the author of “Get Rich, Stay Rich, Pass it On: The Wealth-Accumulation Secrets of America’s Richest Families”.

The U.S. is now seeing record numbers of millionaires. McBreen explains the effect stocks have had on this run-up. She recently released a service called “Find an Advisor,” and discusses how it helps people find the best financial advisor for them. She also analyzes investment newsletters in lieu of financial advisors. McBreen finally talks about the effect money has on happiness and marriage relations.

 

Visit Millionaire Corner at www.millionairecorner.com.

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If you are interested in growing your retirement money faster, reducing your risk paying less tax this episode is a must listen. You must align your interests with the financial institutions and the central banks as they are most powerful monetary entities in the world. As you build your income property portfolio you need to put your money in a retirement account which allows you to self-direct your funds without paying high taxes or penalties. The Solo 401k is a vehicle you can use to defer taxes and manage as a resource. Guest expert, Jeff Nabers, created the complete Solo 401k and designed an online tool so you can calculate possible risks before making major investment decisions.  

Key Takeaways:

[1:21] Financial institutions and central banks are the most powerful entities the human race has ever known and we should align our interests with them.

[6:50] Using the leverage of your 20% down on a property increases your power by 500%.

[8:35] The Newser Wells Fargo article: Details about the 185 million dollar fine.

[14:38] The Creating Wealth seminar is now part of the package available at Hartman Education.  

 

Jeff Nabers Guest Interview:

[16:35] The Solo 401k was based on the Pension Protection Act of 2006.

[18:39] The 3 main advantages of a Solo 401k.

[25:32] There are two qualifications which differentiate a Solo 401k from a traditional Roth IRA.  

[30:32] The Solo 401k allows you to invest $18,500 of your self-employment income.

[32:06] The IRS puts real estate investors in two categories one is a business and the other is a dealer.

[34:36] The rules of an IRA are much stricter than the rules of a Solo 401k.

[40:00] The most powerful thing an investor can do is to diversify.

[42:02] Health care costs and college tuition are impacted the most by inflation.

[42:34] The present value of money versus the future value of money and the lost opportunity costs of paying taxes on an IRA now.  

[46:54] It’s impossible to know how the government will tax retirement plans in the future.  

[51:26] Jeff Nabers’ company set up the only complete Solo 401k and designed an online tool.

Mentioned in This Episode:

Jason Hartman

Hartman Education

Solo 401K - Free Demo for Creating Wealth Subscribers

Direct download: CW_726_Jeff_Nabers.mp3
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Today’s episode focuses on our amazing digital future. Jason’s guest Professor Mark Skilton is a Professor of Practice and Information Systems at Warwick Business School. He is the  author of Building the Digital Enterprise: The Guide to Constructing Monetization Models Using Digital Technologies and other books and papers relating to digital ecosystems and architectures. He shares his expert opinion on the positive side of automation and digitization in future business models and how the real focus will be on expanding the customer experience through additional opportunities for engagement.  

Key Takeaways:

[1:13] Managing our language helps us to ‘relax” after dual live events.

[8:05] Self-management and managing property managers resources from the Phoenix event.

 

Professor Mark Skilton Guest Interview:

[10:13] A broad shift in automation and changing productivity will affect the entire dynamic of a marketplace.  

[15:54] The key difference is living in digitization is creating more value in an existing space.

[20:54] Augmenting and customizing the space is the real opportunity of digitization and artificial intelligence.

[23:31] Prof. Mark Skilton on how to see the future of automation in a positive light.

[26:28] Understanding the role of future technologies in the business model of the future.

[29:08] How to contact Prof. Mark Skilton and/or Warwick Business School.

[34:05] It’s all about reimagining the customer journey lifecycle.   

Mentioned in This Episode:

Jason Hartman

Denis Waitley Creating Wealth Episode

Mark Skilton

Building the Digital Enterprise

Warwick Business School

Direct download: CW_725_Prof_Mark_Skilton.mp3
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The impact of technology and the future of development plays a big part in today’s Creating Wealth Show. Jason Hartman talks about America’s growing role in this changing society, and makes particular note of the ever-increasing contributions of Generation Y.

Later, he invites Consuelo Mack of WealthTrack on to give her thoughts about China’s current state, the importance of a diverse investment portfolio and where technology will lead us in 15 years’ time.

 

Takeaways

04.35 – It’s looking more likely that technology will save the world, and that America will be the developer of that technology.

07.50 – If you’ve registered to attend the Creating Wealth Seminar, Today’s Economy Boot Camp and/or the Birmingham Property Tour, be sure to make your flight reservations as early as possible.

10.20 – If the New World Order really is the Old World Order, it means huge implications for America.

14.27 – It is the US consumer that drives the economy – this means a strong, independent economy, regardless of the state of the rest of the world.

17.55 – China’s family policies will be their own downfall because in 10-15 years, there will be a huge demographic hole.

22.17 – Who knows where the latest innovations of 3D printing and the self-driving car could lead us?

26.20 – An investment portfolio needs a good level of diversification and well-managed real estate investment could make all the difference.

31.00 – Alternative investments are looking like an interesting option, but we still need to clarify all the details.

32.19 – For archived interviews and more information, head to www.WealthTrack.com

 

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