Creating Wealth Real Estate Investing with Jason Hartman (general)

Even though Jason believes in a fixed rate, long-term, buy and hold mortgage strategy, he encourages people to be informed about the additional financing options available. This week he and Naresh take a deep dive into the adjustable-rate mortgage, breaking it down into easy to understand piece parts. They also discuss the wrap around mortgage, what the term negative rate means and give numerical examples to clearly explain each distinct type of calculation.

 

Early Bird pricing is available for the Orlando Property Tour & Creative Wealth Boot Camp

 

Key Takeaways:

[2:46] 5 Elements of adjustable-rate mortgages (ARM)

[4:19] 1. Start or Teaser rate

[5:10] 2. Index

[7:20] 3. Margin

[8:50] 4. Annual cap - 3 types

[13:38] Negative interest rates

[18:17] Negative amortization rate 

[19:05] Sophisticated investing techniques

[22:43] AITD - Wrap around mortgage

[24:23] Wrap around mortgage example

[28:48] Don’t forget about the Orlando Property tour & Creating Wealth Boot Camp

 

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The emerging middle class is a billion strong and they are driving the new economy. If new businesses and entrepreneurs wish to stay in the game they will need to embrace the changing business landscape. They should throw out the old business plan and start with a noble cause, one which connects people with something no other company is able to connect them to. Legacy brands find themselves fighting for a piece of the new consumer.

Key Takeaways:

Jason’s Editorial:

[1:30] Orlando Property Tour and Creative Wealth Seminar

[2:32] Early 2016 Venture Alliance trip to Dubai

[3:56] Message from Jeff about the Venture Alliance Rhode Island trip

[6:10] Rich Dad advisor writer Garrett Sutton speaking at the next Meet the Masters

[6:53] Upcoming shows

John Sculley Guest Interview:

[10:13] Unprecedented growth of company’s who talk directly with consumers

[11:38] Democratizing the economy

[12:44] Famous brands have their backs against the wall

[13:54] Our changing workplace

[15:28] Steve Jobs appreciated the Pepsi Challenge

[18:37] The experience expectation

[19:05] Consumer businesses John is working in

[21:01] $129 for an Obi Worldphone

[22:58] The legacy business plan is dead

[24:44] Why have a noble cause

[26:35] The new world middle class

[28:36] A customer plan using common sense

[30:30] How to contact Mr. Sculley

 

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Sculley Speaks

Direct download: CW_580_John_Sculley.mp3
Category:general -- posted at: 7:32pm EDT

If you thought economics was boring, think again. At the heart of wars, land grabs, politics, history, and almost any sort of human interaction lies economics. Remember – economics is about money, and money, depending upon your perspective, either makes the world go ‘round or is the root of all evil.

Either way, Jason Hartman’s interview of master economist, Martin Armstrong, for episode #382 of The Creating Wealth Show makes for scintillating listening. First, some background.

Martin Armstrong is the former chairman of Princeton Economics International Ltd. He is best known for his economic predictions based on the Economic Confidence Model, which he developed. In September 1999, Armstrong faced prosecution by the Securities and Exchange Commission and the Commodity Futures Trading Commission for fraud. During the trial, Armstrong was imprisoned for over seven years for civil contempt of court, one of the longest-running cases of civil contempt in American legal history. In August 2006, Armstrong pleaded guilty to one count of conspiracy to commit fraud, and began a five-year sentence.

Armstrong is the developer of the Economic Confidence Model based on business cycles. He is known for claiming to have predicted the crash of 1987 to the very day. Using his theory that boom-bust cycles occur once every 3,141 days (the number pi multiplied by 1000), Armstrong claimed in 1999 to have predicted the Nikkei’s collapse in 1989 and Russia’s financial collapse in 1998.

During this interview Jason and Martin delve into a number of topics:

Putin’s Plan
Armstrong reminds us that Russian President Putin is a KGB disciple who would love nothing more than to put the Soviet Union back together. Through this prism, it’s not difficult to see the reasons behind his land grab in the Ukraine. He believes that the strength of a nation depends upon how much territory it owns, so look out Poland, etc! It’s also worthwhile to note that the failure of communism in Russia left a void that has been filled by a good, old-fashioned oligarchy.

Inflation vs. Deflation
As all good economists do, Mr. Armstrong has a strong understanding of, and opinions about, the inflation and deflation in an economy. Of course, Jason loves this topic whenever it arise in conversation. The main point Martin makes is that it is not inflation that destroys an economy, but rather deflation. Listen in as he explains exactly how.

Other notes of interest from the interview:

  • Why we’re on a 25-year war cycle and 8.6-year business cycle
  • Why the US ended up in the enviable/unenviable status as the Brinks truck to the world
  • Is the American dollar now a de facto international currency?
  • The US will never enter hyperinflation (400% monthly inflation) – our corrupt bankers won’t let it happen
  • It’s almost impossible for Americans to open a bank account or do business overseas – what is Europe afraid of?
  • The next economic implosion will be in pension funds
  • The real reason behind the recent huge influx of foreigners buying real estate investments in the US
Direct download: CW_579_FBF.mp3
Category:general -- posted at: 4:13pm EDT

Be sure to sign up for our Property Tour and Creative Wealth Seminar in Mid-November in the well-rounded city of Orlando, Florida.There are major medical companies investing in the surrounding area. There are also basics to the State of Florida which make it a good place to invest. It offers asset protection, has no income tax for its residents and is pro-business and pro-landlord. This hybrid market is ripe and when the real estate market there corrects itself investment properties will appreciate to their proper values.

 

Key Takeaways:

 

Jason’s Editorial:

[1:14] A glitch in the previous Orlando podcast

[2:56] Orlando Property Tour in mid-November including the Creative Wealth seminar

[6:50] Meet the Masters in January

[7:42] The new Joe Investor segment and more great real estate investment content

 

Orlando Local Market Specialist Interview:

[8:57] Re-introducing the Orlando market

[10:10] Cash flow positive in a highly desirable market

[10:54] The importance of demand and desirability

[13:55] Judicial foreclosure states versus non-judicial foreclosure states

[15:02] Removing the supply drives the price upwards and eliminates cash flow properties

[17:04] Buying below replacement costs in Orlando

[17:30] Appreciation and regression to replacement cost are two different things

[18:28] Las Vegas may be a massively over speculated, natural growth was needed

[20:39] Florida basics create an environment for job growth

[22:09] Everybody knows Orlando, Florida - It’s more than Disney

[23:45] Light rail systems are up and running

[24:40] The market will correct itself; a cyclical evolution

[27:25] The right team, great deals are available in a landlord friendly environment

[29:07] Our management team was built for investors by investors

[31:09] Nobody wants an eviction but if it happens our group does it well

[34:56] Making the right choice in the real estate market - look 10 years in either direction

[37:50] Looking at linear about to go hybrid markets like Orlando, Chicago

 

Mentions:

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The mainstream media doesn’t ever mention investment property as an asset class. Are they owned by Wall Street? Small investors must not buy enough ad space. The Consumer Financial Protection Bureau, in an effort to protect the average person, makes new regulations which actually reduce opportunities for entrepreneurs or any mid-level company without enough money to pay an army of lawyers to sift through the glut of compliance issues. We discuss regulatory changes and the new closing form.

Key Takeaways:

Jason’s Editorial:

[1:37] Celebrating Jason’s birthday by paragliding

[2:54] Real estate service providers and introducing new forms

[4:35] New rules and documents for the Consumer Financial Protection Bureau

[8:36] Mini case study voicemail from Mason

[10:32] Outsmarting the Federal Reserve and the lame stream media

[15:20] Downward pressure on property pricing

[16:16] Upward pressure on rents

[18:26] The good way out is technological innovation

[19:50] Orlando income property tour in mid-November

[20:56] Meet the Masters in San Diego, California on January 8 & 9

 

Ken Trepeta Guest Interview:

[23:00] Integrating RESPA and TILA

[25:28] No more HUD-1’s

[26:08] The underlying rules are the responsibility of the lender of the closing disclosure form

[28:50] The devil in the details of the Dodd-Frank document

[31:50] Protecting consumers from paying too high interest

[33:02] The investor community has certain exemptions

[35:23] Small and midsize investors may need an army of lawyers

[37:57] New real estate investors walk away after seeing the roadblocks

[40:07] Preventing access to opportunities

[41:05] Condominium loans vs single family home loans

[41:58] How to contact Ken’s group

 

Mentions:

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Direct download: CW_577_Ken_Trepeta_The_Real_Estate_Services.mp3
Category:general -- posted at: 6:11pm EDT

Jason Hartman talks with one of his Investment Counselors, Steve, about a Naked Capitalism blog post on the new real estate train wreck in securitized rentals.  Wall Street’s newest “innovation” based on rental income.  Will this be another Wall Street scam like the pools of subprime mortgages, auction rate securities, derivatives or numerous other products that were misrepresented to investors.

Next up, a discussion of the ‘lost decade’ for the American middle class based on a Newser article and some talk about the investor-driven recovery in real estate. 

Direct download: CW_576_FBF.mp3
Category:general -- posted at: 5:31pm EDT

We break closing costs down into small pieces to support Jason’s #1 rule of investing, thou shalt become educated. Understanding which costs are fixed and which are variable will help you to protect yourself and allow you to become your own best advisor. We take the confusion out of calculating the fees. And, will private equity firms be the next big player in the mortgage game?

 

Sign up now for early bird pricing for our Meet the Masters event in lovely Southern California.

 

Key Takeaways:

Jason’s Editorial:

[3:01] An article about character - the essence of a person

[7:07] If you don’t stand for something you’ll fall for anything

[7:51] Artificially intelligent ads

[8:37] Edward Snowden, Hero or Villain?

[11:04] As banks retreat private equity rushes in

[11:37] Meet the Master event in January, SoCal - Get your earlybird pricing

[12:26] Orlando Property Tour

 

Guest Interview with Joe:

[15:45] Looking at lender fees

[17:15] Requirements for good faith estimates

[19:52] What are lender or origination fees

[21:01] Using an example of $142,500, figuring out the closing costs

[22:40] Insurance charges for lenders and owners

[23:49] Lender’s title insurance is one of the highest fees on the estimate

[24:11] Depending on your state the seller provides the clean title insurance

[25:01] Transfer stamps/taxes are local municipal charges

[27:07] Recording fees

[37:50] Points are fees to buy down the interest rates

 

Mentions:

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Newser Article

Dennis Waitley

@edwardsnowden

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Crunching the numbers sounds easy enough but which numbers do you use? National data doesn’t always reflect individual markets and using geographical data isn’t always a telling sign due to widespread changes in Fannie and Freddie’s level of risk. Jason and Daren take a deep dive into analyzing market data and how tagging markets as linear, cyclical and hybrid allow investors to understand good properties based on cash flow and ROI.

The Venture Alliance trip to Newport, Rhode Island was a great success. The speakers who are specialists in their fields were truly informative. The very first Venture Alliance member shares his favorite part of the Mastermind, the hot seat.

 

Key Takeaways:

Jason’s Editorial:

[1:26] Upcoming episodes on financing

[2:07] Our first Venture Alliance member is on the podcast

[5:01] Houses starting at $400,000 on Martha’s Vineyard

[9:06] Rehashing the Rhode Island trip

[10:21] Hard money, short and long term lending, how it affects your debt to income ratio

[14:18] The hot seat is the best part of the Mastermind

[16:10] Recreational time is still business time during the Venture Alliance trips

[17:44] A discussion is more intimate than a presentation

[18:26] The inflation/deflation debate

 

Daren Blomquist Guest Interview:

[20:44] National data doesn’t always reflect geographic niches

[22:24] RealtyTrac is, at its core a data company

[25:07] We have the ability to license, or re-sell the data to other companies

[26:40] Home sales are at an 8 year high when analyzing 190 markets

[29:00] The homeownership rate helps our clients to analyze markets

[30:54] We analyze the tax assessor information for rental properties

[33:37] Everything’s relative

[37:32] Thinking of real estate markets as linear (boring), cyclical and hybrid

[42:40] A combination of jobs and universities help real estate markets

[44:43] Extend and pretend or delay and pray markets

[49:44] Market influences are tipping towards introducing additional risk

 

Mentions:

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CoreLogic

Black Night

Direct download: CW_574_Daren_Blomquist_RealtyTracs_Housing_News_Report.mp3
Category:general -- posted at: 9:02pm EDT

Jason Hartman is joined by Dr. Steve Sjuggerrud, editor for Stansberry Research, for a discussion of real estate investing domestic and international, attractive mortgage rates, and government deals that are making real estate a much more attractive investment. Steve talks about what he calls the “Bernanke Asset Bubble,” where the Fed would like to see a booming real estate market and stock market to get the country back on its feet.  Jason and Steve also talk about the demographics of the rental market and comparative returns of the rental market and stocks.

Dr. Steve Sjuggerud is the founder and editor of one of the largest financial newsletters in the world, True Wealth.  Since inception in 2001, True Wealth readers have made money every year with safe, contrarian investment ideas. Steve did his PhD dissertation on international currencies, he’s traveled to dozens of countries looking at investment ideas, and he’s run mutual funds, hedge funds, and investment research departments. Steve’s investment philosophy is simple: “You buy something of extraordinary value at a time when nobody else wants it. And you sell it at a time when people are willing to pay any price to get it.” It’s harder than it sounds, but Steve continues to be able to do just that for his readers.

Direct download: CW_573_FBF.mp3
Category:general -- posted at: 12:00pm EDT

The fact that U.S. homeownership rates are tumbling is great news for real estate investors! The time is ripe for cash flow oriented linear markets. And it just so happens Pro.com’s home project service engine is up and running at full capacity. I talk with Matt Williams, formerly of Digg.com, about the latest and greatest tool for real estate agents and investors, Pro.com. Pro.com is a new service which gives you the price of a pro contractor to complete your home services upfront, so you know exactly how much you can expect the bill to be. There were no fee’s exchanged for this or any of my podcasts.

 

Don’t Forget Early Bird pricing for Meet the Masters available on JasonHartman.com

 

Key Takeaways:

 

Jason’s Editorial:

[2:06] Giddy for the upcoming interview 

[3:45] Removing the 3rd party from the equation

[5:23] Podcasters are charging guests to be on their show

[5:53] We are working on a self-management software tool

[7:30] Income is judged by the net operating income, not cash flow

[8:39] The Zerohedge article - U.S. homeownership rate tumbles

[11:00] I’m excited I want a 55% homeownership rate

[12:52] Median U.S. asking rent is $803

[13:46] The time is ripe for cash flow oriented linear markets

[14:55] Real income in the U.S. is at 1989 levels

[17:39] Will the economy be outdone by free market technology

 

Matt Williams Guest Interview:

[20:59] Learning the ins and outs of building marketplaces and communities at Amazon

[22:01] Digg’s V4 - An attempt at a personalized news experience

[25:21] Incubating Pro.com at Andreessen Horowitz

[27:26] Real estate investors are able to get a quote from any zip code in the U.S.

[28:25] Homeowners have access to what it cost to get their home ready for sale

[30:09] The most comprehensive pricing engine for any home project

[32:40] The problem is a lack of transparency for home services

[34:22] What the job should cost broken down for the consumer

[35:40] It’s really for every single job you can imagine in the home

[38:00] We handle the payment processing also

[39:04] Thousands of common projects and the multiple variations

[40:08] There are a lot of jobs left undone because people don’t know the price upfront

[41:10] We survey the pro after the job and post rankings

[41:58] How real estate agents work with pro.com

[44:12] This free service is nationwide, right?

 

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The Mystery of the Missing Inflation - Tyler Durden

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