Jason Hartman: Paying Less Taxes and Making More Money

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This is a test of the Freedom Fastlane Broadcasting System. Ryan, Daniel Moran here and I need to give you a big red nerd alert. This podcast is we. I totally geek out with my buddy Jason Hartman. And if you're not familiar with Jason, Jason owns runs like 94 podcasts, all of them excellent. And he's dork like I am. We geek out on the same kind of ideas of investing and government and tax reduction, making more money in a business. And I brought Jason on to talk about investing with me. And we talk about tax reduction, we talk about what is the single greatest cash flow investment in the world. We talk about why that is. Now, I want to give you a little bit of a heads up that we geek out a lot on this podcast and it takes us a while to kind of get to the nuts and bolts. But if you stick with this podcast, there are some real golden nuggets in here about sheltering yourself from taxes, increasing cash flow, boosting long term wealth, how to ensure your prosperity 25 years from now. So if you stick with it, this is extremely valuable. Also, if you like this type of a conversation in if the real estate investment piece of this conversation is interesting to you, if you want to shelter more taxes, get more cash flow, build a more secure and abundant financial future, one of our guests at Freedom Fastlane Live owns 350, it might even be $400 million in real estate now and is pretty much the person to talk about this stuff. We haven't released his name yet, but it will be released soon over at Freedom Fastlane and tickets for that go on sale in August. So I hope you enjoy today's real Estate Nerd Alert podcast with Jason Hartman. Jason Hartman, welcome to Freedom Fast Lane.

Thank you, Ryan Moran. It's good to be here.

Jason, you are like a content machine. You are cranking out new stuff all of the time. I can barely keep up. What, what is your, your take over the world plan with all the different shows and all the different stuff you do?

Well, you know, I started podcasting nine years ago with my flagship show. It's called the Creating wealth show. That's about personal finance, real estate, investing, little bit of entrepreneurship stuff, but mostly on the investing and economic side and that kind of stuff. But, you know, I just kind of figured, Ryan, I got all these people that like to listen to me for whatever odd reason. And, you know, I kind of looked at the traditional terrestrial radio business and I thought, you know, if someone is a fan of, you know, whether you love him or hate him, I'm just going to say the name Rush Limbaugh, right? You know, he's on the air for what, 15 hours per week, plus he's got some repeats, right? And so, you know, three hours a day, five days a week is the live show. And, you know, when Bill O'Reilly was on the radio, it was kind of like the same thing. And, you know, people tune in and they listen to these guys for hours on end. And I'm interested in so much stuff, you know, different topics, not just investing in real estate. I want to. I want to live longer. I want to biohack my. My biology, my. My body and mind so I can be more effective. And I'm interested in these topics. So what better way to learn more about them than start another podcast?

What's interesting is you do a different show for each topic, which myself and most people will have. It's all in one show, but you do a really good job of segmenting them into different structured pieces of content. Is. Was that the goal to just have the topics be their own show so that if you're interested in just that thing, you could go there?

Yeah, to some extent, but there is definitely some overlap. And that's one of the nice things, because when I'm recording for all, you know, basically 20 different shows, some of the episodes, I'll take a stab that it's about 30% can be repurposed on other shows. So these things do overlap a little bit. And then every 10th episode on all of my shows in the entire podcast network, we do something of general life interest. So, for example, if it's a show about real estate investing or monetary policy or survival and prepping, or if it's about longevity, whatever the topic of that show is, the tenth episode, everything that ends in a zero will be something of general life interest. So we'll have Harvey McKay, Dennis Waitley, you know, I'd love to get Tony Robbins on. We have not secured him yet as a guest. But, you know, any of these, you know, whether Jack Canfield, whatever, you know, just a topic of general interests, life, success, effectiveness, time management. You know, it might be the getting things done guy, David Allen or whatever. You know, just a general topic. So that's the 10th. 10th episode.

I'm pretty public about my opinion of most podcasts. I think the quality of them is usually pretty low. But I'm shocked at. I listen to all of your shows. They're. They're. I think they're very next level, especially for our community. So I really appreciate them.

Wow. Thank you. I did not know that, by the way. So thank you very much.

But I wanted to ask you, you know, what you. You focused on, or at least I can probably consume the most of your content about investing, because in our community, in the entrepreneurship community, we're really good at talking about blowing things up and crushing it and making a whole bunch of things happen and making a whole bunch of money. And very few people, at least in my circle, talk about keeping it. And what was interesting is I got into being an entrepreneur because I was passionate about investing. I wanted money to invest. So I've really gotten good at the making money piece. It's my primary emphasis. But I'm fascinated by the investment piece. Have you seen this? Same thing where entrepreneurs know a lot about making money, but keeping it is this other topic that seems to confuse us so much.

Ryan, you are doing your listeners a big service by bringing this topic up. Because like they say, there's an old saying, it's not how much you make, it's how much you keep. And that is certainly true. And, you know, if you are throwing your money away on taxes, the single largest expense anybody has in their lives, taxes, you know, you're just losing. Depending on what state you live in and what your income is, you're losing about 40% of your wealth. And think of the compounding effect of that. Okay, if you can. If you can keep, and I'll just take a round number, we'll make it $100,000. If you make $100,000 a year, and you can keep $100,000 versus $60,000 after tax. Right. You know, think of what you can do with that extra $40,000 a year, that extra 40%, how much faster you can grow your wealth by investing that money in either an investment like income property, which is my favorite, or your business. I mean, if you can keep that money and not give it to the government, which is what the government is incentivizing us to do, provide housing to people, grow businesses, employ people. It's very patriotic. It's what the government wants you to do. Right. That's how the tax code is written, then it is amazing the compounding effect. Einstein, he called compounding interest the eighth wonder of the world or something like that. There's a quote, and, you know, he's talking about compounding interest at what, 5% or something like that. Right. You know, what? If we can compound an extra 40%, and then we can take that 40% we didn't pay to the tax man, and we can turn around and we can invest it in an investment that yields us anywhere between 12 and 40% annually. Yes, I did say 4,0% annually. I'm not crazy. That's not hype, by the way. We have thousands of people who actually do this in real life consistently year after year. And you know, it's just amazing the difference that can make in five years.

So I just, I want to tell you how I just interpreted what you said because the, the internal optimist in, in my head just heard you say, and I want you to correct me because I think I heard it wrong, was that you can never pay any tax and always get 40% returns on your investment.

Well, I didn't say you can never pay any tax. That's a little bit, that's a little bit of a stretch. Darn. Okay, I don't want to mislead people here.

We still have work to do in this country then.

Yeah, we do. We do have some work. No question about it. That's great. But you know.

If you look at real estate, and I know we're going to kind of talk about that topic today, and we're going to talk about some entrepreneurship and stuff too, but real estate is the most tax favored asset class in America. It's the most historically proven investment class in the world. I'm going to be as bold as to make that statement. It's definitely the most historically proven in America, but I'm going to say the entire world because I can't think of anything else that is better. And.

You can. Really? Really. I mean, if you do it right, wealthy people as well as middle class people can potentially eliminate their tax bill. Of course you're going to pay sales tax, you're going to pay other forms of tax. But in terms of your income tax, the holy grail of tax benefits is called depreciation. And it basically is the most wonderful thing, Ryan, because it allows you to take a tax deduction that is what I call a non cash write off or a phantom write off. In other words, if you want to save on taxes. Traditionally the two basic options you have are if you're self employed or you own your own business, spend more money on your business, hire more people, buy some more advertising, buy some more equipment, all of that's tax deductible, right? If not, donate to charity. You, you know, if you're, if you write a check to charity for $10,000, you can take a deduction on the charitable donation.

Can I ask you about, about this? Because there's Some block in my mind, I hear people say this, but it doesn't make sense to me to just spend money, to spend money in order to get the tax write off. Unless it's bringing back friends, it's bringing back profit, which then makes you more money. That. I mean, obviously I want to make as much money as possible, but I don't quite understand how spending more money or just the rule of spend more on advertising or more people helps me pay less tax unless it takes money out of my pocket. Would you help me understand it does.

Take money out of your pocket? And that's kind of my point is that it's not, it's not the Holy Grail of tax benefits. It may help you grow your business, which is great. And, you know, a good charitable cause is great too. But what I'm saying, with income, property, you have the Holy Grail, the best tax write off ever, because you don't actually have to write a check or spend any money to get it. Got it. It's the way the IRS does. This is mind boggling. It's wonderful because you could have a property, Ryan, and you're a real estate investor, so you know how this works, right? But for the benefit of your listeners, you know, you could have a property that is increasing in value at, you know, 6 or 10% a year. Right? It's going up in value, it's got positive cash flow. Everything about this property is winning. Yet because of depreciation, the IRS allows you to take a loss on a property that is making you money. It's a beautiful thing. And I do need to make the disclaimer that I am not a tax or legal advisor, so everything I say, just go check it out with your cpa. But depreciation is the Holy Grail. It's the best tax write off going so far as I know.

You helped me understand something the last time we hung out in person in San Diego. And it was something I hadn't thought of before. And I had just been buying real estate for the upside, for the, the appreciation and the cash flow. And you pointed out two areas that I had been missing. And I, it was, it was like the heavens opened up. And I saw the bigger picture when you explained this to me, which is a, I write cat. I write a check for all of my properties. I had owned them free and clear. And your eyes lit up and you're like, no, you're missing out on the interest write off. Which as I ran the numbers, I realized would save me a boatload on Taxes. And then you pointed out the depreciation write off, which I didn't think I qualified for because I make too much money. But you told me about a workaround for that. Would you share that?

Well, the interest write off is fine on the mortgage interest, but that's not the biggie. The biggie and why you want to keep your properties leveraged and financed and engage in a practice over time as properties appreciate and tenants pay down mortgages for you. You want to engage in a process of what I call equity stripping. And I outline a plan and if you want to put it on your website, I'll be glad to give you some of the PowerPoint slides because there's a lot of numbers on these things. Okay, sure. But you know, maybe you want to share that with your listeners. I out a plan called I outline a plan called Refi Till youl Die. And what we, what we want to do is use our property portfolio for, in the most tax and wealth creation efficient way. And one of the great characteristics about income property, about real estate is that it's a multidimensional asset class. So whereas most people think, you know, I'll buy a property, I'll buy gold, I'll buy stock in, you know, ABC Company and it goes up in value. And the whole plan is buy low, sell high. But because income property is a multidimensional asset class, there are so many ways you can earn a return from it. And the one thing way beyond interest deduction is something I call inflation induced debt destruction. That's one of my little trademark terms. And inflation induced debt destruction, Ryan, is the way that tens of millions of people already, this is not some esoteric theory, already created massive wealth. They thought they were doing this because the property was appreciating, but what was really happening behind the scenes is the debt. The mortgage on their property was being paid off not only by the tenant, but also by inflation. And I know it's a mouthful, I'm going to say it again. Inflation induced debt borrow destruction. Okay, don't try and say that 10 times fast. But, but it is, it is a massive wealth creator. And I'm, I'm happy to give a real world example of the way this happened to tens of millions of people over the past couple of decades.

Yeah, let's dive into that example.

Okay, so I'm going to take you and your listeners back to 1971 because something very significant happened in 1971. That was the last time that the US dollar was tied to gold. Okay, Nixon. Because the Government wanted to spend more irresponsibly, and certainly we've done a good job at that. We sure have.

Nixon took the final last affiliation, I'll say, with the dollar and gold, and blew it away. He closed the gold window, as they say. And so then it allowed the government to spend as irresponsibly as it wanted to, and it created a lot of inflation. Anybody that has studied the 1970s and Jimmy Carter under his reign of terror, not that I have an opinion, but under Jimmy Carter's terrible presidency.

But I'm very politically neutral. Just kidding.

Under him, they coined a new term Ryan called the Misery index because things were so bad. High unemployment and high inflation at the same time. It was just a terrible combination.

And again, I'll share these numbers with you. You can share them with your listeners however you like, because there's a big chart here that I'm looking at. So in 1972, one year after we went off the final gold standard, the median house price was, and I'm going to round off here for simplicity's sake, was about $18,000. If you went to the bank and said, I want to get a loan on this single family home for 80% loan to value, they'd give you a loan for about $14,000. The interest rate back then was 7.37%. And in 1972, a dollar was worth a dollar. But by 1984, just 12 short years later, and I'm using 1984 because there's a famous book by George Orwell, right. That seems to be somewhat prescient today. By 1984, that same $1972 was only worth 40 cents. So 60% of its value just evaporated. Okay? And what happened here is for the millions of people who owned this stereotypical single family home and got this mortgage, they were making mortgage payments of $1,211 per year, about $101 per month on this house. Now, every month, they were writing a check that said $101 on it. But what was happening behind the scenes is the value of that $101 was getting debased. Inflation was. Was making it seem cheaper because that dollar lost 60% of its value.

Okay, I just had what my buddy Travis Sagle calls a braingasm.

I just saw the heavens just opened up again. And I got a concept that I had heard before, but you just explained it in a way that you gave me a brain gasm, Jason. I'm making it public.

I love that word, by the way. That's a good word.

So what. What you're saying, and I'm sorry to interrupt, but what you're saying is, is that until we were. Once we were removed from the gold standard there, we, we now are no longer tied to a fixed asset. So you have. I won't say runaway inflation, but you have unhindered inflation.

Right.

So when you lock in a payment for something like a house, you're locking it in at the current value, the current value of your dollars. But that is going to get cheaper. Assuming that inflation continues, which we all know it will, because the Federal Reserve says that a certain amount of inflation is healthy. I think they're wrong, and I think the amount that they do is incorrect. But we get to lock it in, and inflation is going to make it cheaper the longer we have it.

Right. They want. The target inflation rate for the Fed is about 3%. There's a, there's a concept in economics called the Phillips curve that is the relationship between inflation that is intentional and unemployment. And they, they feel that you need to have inflation to create more employment. Okay. And you can look up Philip's curve on Wikipedia if you want to read more about that. I don't want to get too distracted with that subject. But yes, you're absolutely right. They want inflation to a small extent, but the reality is that inflation ultimately. Now granted, there may be a, a stable or even a deflationary period before this. Okay. But ultimately, over the long term, inflation is baked into the cake. There's just no way out of it. And I'm happy to talk about that stuff, but I do want to just finish this example for your listeners because it's going to give everybody another brain gas.

Multiple brain gas.

Yeah, multiple brain. That's an awesome. Okay, so in 1984, now, these people are still making payments of $1,211 per year in what's called nominal dollars. Nominal means in name only. So if I said to you, Ryan, you know, if I held up a dollar and I said, what is this called? You'd say a dollar. Duh. You know, it was called a dollar in 1972, and it's still called a dollar today, but it's got a different value. Okay, the name has not changed. So nominal just means in name only. What we want to compare that to is what's called real dollars or inflation adjusted dollars. And keep in mind, when I talk about how that dollar went down by 60% in 12 short years.

I'm also only doing that based on the official or quoted inflation rate. The real rate is always higher than what the government leads us to believe. And there are ways they do that and manipulate the index through three basic things. Weighting, substitution, and what's called hedonics, which is the amount of pleasure we derive from our purchase. Hedonism, that's the root word for it. Okay, so, so now you're writing checks still for $101 per month, but the real value of those checks is only $41 now because inflation is debasing them. Check out what happens when we get to the end here of this example. It's now 2001. We're making the very last payment on that 30 year fixed rate mortgage and the dollar is now only worth 24 cents. Okay, it lost 76% of its value in 30 years. And we're still writing that last check that we send to the mortgage company. We'll say $101, but the real value of that check is only $24. So our payment has basically been reduced by inflation. But not only has our monthly payment been reduced by inflation, our loan balance has been reduced by inflation too. Now keep in mind, this is a property in which someone lives. It's their own home, it's not a rental property. This gets astronomically better when you rent the property out and you're not even making the payments at all. Someone else is making the payments. See, I know on your show and in your, with your business skills, you, you talk about the concept of outsourcing. Well, as a real estate investor, what we do is we outsource our debt to people called tenants. They're happy to take over that debt for us and even give us a little extra every month if we bought the right property.

So Jason, as a rule, do you, when you're investing, get the longest term mortgage possible?

Yeah, definitely do. Okay, if they had a hundred year fixed rate mortgage, I would love that. I'd be all over it. It's, it's counterintuitive. Most people think debt is bad and it is bad if it's consumer debt. Look, I have massive amounts of debt on real estate and I love my debt there. It's in fact, debt is my favorite four letter word. But, but I have no consumer debt. I mean, I haven't carried consumer debt in forever, basically. You know, I mean, a couple times in my life I've had a little bit of it, but you know, no credit card debt, no auto loan debt, no other debt at all. Just investment grade debt that is fixed rate.

What about Your personal residence?

Well, my personal residence about four years ago when I left Orange County, California I became a renter. And I very much believe in being a renter of this is an important distinction, a high end property. Because what happens there is the rent to value ratios or the RV ratio as I call it, they get way out of whack. So if someone listening to this, and this is kind of another discussion that would take some time to really drill down on it. But, but basically if someone listening to this lives in a property that is worth less than about $200,000, you, you should own it. If it's worth over 200 or 250, or maybe it's worth a million or $2 million, you should rent it and you should own a lot of inexpensive properties that you rent to other people. So here's an example of that. When I first left Orange County, I moved to Phoenix, Arizona and I rented a gorgeous penthouse that was brand new. 10 foot ceilings, 3,700 square feet, tallest all residential building in the state of Arizona at the time. And I rented that place for $3,600 per month. Okay. I had just come from Orange county where my total cost of housing for the house I owned was about $11,000 per month. Okay. And I thought I won the lottery because that property was worth, I would estimate somewhere around maybe a million 5ish. I really didn't know the exact value, you know, because there wasn't a good comparison. But I'd say it's worth somewhere, give or take a million five. If I invest 1 million five into 15 $100,000 single family homes in diverse markets around the United States, I'm going to expect to get $15,000 per month, $1,000 for each $100,000 single family home. And if I can, if I can place that 1.5 million into 15 diversified single family homes and control a $1.5 million asset that I get to enjoy for $3,600 a month, that is an awesome deal.

Agreed.

Yeah.

Now let me ask you the the opposite of this. If you are an income investor, do you want to be holding in the areas that are of less value, the under $200,000 where you would typically want to own or do you want to do the opposite?

You want to be in low priced markets? And I have something that it took me many years to discover. I call it the Hartman Risk Evaluator. And what it entails is something I call the LTI ratio. We hear of ltv, the loan to value ratio. Well this is the land to improvement ratio, the LTI ratio. And basically you want to be in areas where you get really cheap or even quite literally free land. And all of the value of that property is in what's called the improvement, the house or the apartment complex sitting on the land. Because really, at the end of the day, Ryan, I'm a commodities investor. I like investing in commodities. I like copper wire, I like petroleum products, I like glass, steel, lumber, concrete and labor. These are all commodities that are the ingredients of the houses and apartments I own. And the reason I don't buy these things because someone might say, well, why don't you just go buy them, you know, on the commodities market. No, because the commodities market doesn't allow me to get 30 year fixed rate debt against them. The commodities market doesn't allow me to give my commodities to a tenant and tell them to pay the debt for, for me, plus give me $200 extra per month. And the commodities don't give me a tax write off. They're not the most tax favored asset in America. The, the income property does all this stuff and more.

So I want to, we've, you've given me multiple braingasms. We've thrown a lot of meaty stuff here. So I kind of want to summarize in my own words and make sure I'm, I'm understanding everything.

Sure.

So you make the argument that income, property is the best investment historically probably in the world. And that is because. A few reasons. One, what everybody knows or what everybody thinks about is the appreciation and the possible cash flow of renting it out. And that's great, but where you really get excited is the fact that the value of the payment that you make over time goes down in real value dramatically. So you will take out as long of a loan as possible while both the tenant and inflation pay that down.

Beautiful summary. Yeah.

Plus you get the tax write off of the interest on the mortgage, which is fairly small, plus the, the depreciation of the asset, which can show a loss on your tax return even if you were profiting from it every single month. So combined all of those things, when you factor in the real tax savings and the money in your pocket in your estimation can be as high as 40% per year on a property.

Yes, it could even be higher. You know, if the property appreciates a lot, you know, you might even get a higher return. And certainly I can't guarantee returns. People lose money in real estate too. I mean, it doesn't always go well, but you know, if you're like, we've got one client who's been investing with us for a few years and he, you know, he's not a big client. I mean, he's just a regular middle class, nice guy. And he and his wife been investing with us for several years. And I think they're up to nine properties. And he was on my show recently and he said, you know, eight of them are great and one is a problem child. I just have this one property that is just always a problem for me. But he owns nine, so he's diversified and the, the eight will more than offset the one bad one. Right. And, and, and so, yes, your summary is correct. I do need to say one more thing about the depreciation. The whole holy grail of tax write offs, not everybody can easily qualify for it. It's a sort of a complex discussion, but basically our government punishes successful people. So if you make over $150,000 per year in adjusted gross income, you can't immediately take your depreciation right off unless you can qualify as something known as a real estate purpose professional. Which doesn't mean you have to go cart people around in your car and get a real estate license necessarily. It just means you're like a professional investor basically. And it's an IRS classification that is pretty complex to discuss how to do.

It, but it is, to summarize, it has to do with the number of hours you spend. Right. And you have to be able to approve that in some way for an audit or something, correct?

Yep, definitely. Definitely.

Okay, so what do you recommend to entrepreneurs who.

Are in control of their income, but they're not in control of their long term wealth? It's, it's so interesting how income and wealth are.

They're different.

So different things. We, we tend to think about them as the same, but they're very distinct, distinctly different. So I know what I tell entrepreneurs, but what do you tell entrepreneurs who are in control of their income, but they're not in control of their wealth and they don't know what to do first and they're a little bit afraid of that problem child investment property, and they don't want to fix toilets and they don't want to spend their time in working on their investment? What do you, how do you advise an entrepreneur like that?

Great question. So, first of all, my company has, we have thousands of clients and what we do is we basically help make nationwide real estate investing easy for people. It's not perfect. There are issues and challenges to overcome, but we do make it pretty easy in terms of the management angle and all of that kind of stuff. Okay, so what I would say to entrepreneurs is, look, it's great that you're a successful entrepreneur, or it's great that you're about to be a successful entrepreneur. You're listening to Ryan's show, you're learning about entrepreneurship, and, and, you know, you're a great example, Ryan. You've done an incredible job with your businesses and, and Amazon and your yoga mat business and all that stuff, and that's where you earn your money. Okay, that's great. But you've got to put that money to work. You've worked to earn the money and make the business successful, but now it's time to make your money work so that you've got not only maybe a team of virtual assistants or employees or whatever working for you, but you've also got your money working for you. It is. I mean, I call Wall street the modern version of organized crime, okay? And it is. It is so sad. I mean, I've heard thousands of stories of people that, you know, they just. They know some financial advisor, they give them their money, and boom. That, you know, it's. They either earn a lousy return or they lose money. You know, on a rare occasion, the regular investor makes some money in with that plan. But you've got to be a direct investor so that you are in control. I have something I teach called the ten commandments of successful investing. And it seems that commandment number three, Ryan has resonated with the most people, and it is, thou shalt maintain control. What that means is, don't relinquish your money and your financial future to somebody else. Be a direct investor so you're in control. When you relinquish your money to somebody else, you leave yourself susceptible to three major problems. Number one, you might be investing with a crook. Number two, you might be investing with an idiot. And assuming they're honest and competent. The third problem is they take a huge management fee off the top for managing the deal. You know, that you should be in control. Just look at everybody listening to this show knows someone who started with very little and created substantial wealth with real estate. Yet almost nobody listening to this show knows anybody who started with very little and created substantial wealth in the stock market. Just think about that.

Wow, that's interesting. That's a really interesting distinction. And real estate has made more millionaires than any other vehicle.

Oh, of course. You combine that with entrepreneurship, and it is the one, two punch. It is the winning combo. Because you got to be in control of your own life. And that's what entrepreneurship is about, right? Not being dependent on a company and not having a boss and having, you know, being in the freedom fast lane. That's what it's about. But.

You need both of these things. It's a duel. It's the dynamic duel, to use Batman's analogy, right, where you have both of these things working for you. Before we go, Ryan, we let me just summarize that example of inflation induced debt destruction and leave you and your listeners with one more braingasm, please.

I'll take as many braingasms as I can get, Jason.

All right, so first of all, that dollar is now depreciated in value to only 24 cents. Over the course of this mortgage.

We made nominal dollar payments of about $36,000. But in real dollars, after they were debased by inflation, we only paid about $16,000. So we thought when we signed the loan documents for this mortgage that we were paying 7.37% interest, but in real dollars, adjusted for inflation, by the way, only at the official inflation rate, the real rate was higher. Okay, we only paid 1.06% to borrow the money, and we were paying the mortgage ourselves because we got to live in the house. But if we rented the house out, we would have most definitely been getting paid to borrow this money. One more line on this, because you get to deduct the mortgage interest.

This one is not a rental property in this example, so it doesn't qualify for depreciation, the holy grail of tax benefits. But because you just get the mortgage interest deduction only after taxes and inflation, in real dollars, after tax and inflation, we only paid $12,000 and change. Now, note, if you'll recall, at the beginning of this talk, we. We borrowed just over $14,000. So we actually paid back less than we borrowed. We literally, Ryan, got paid to borrow in real dollars. You mean in real dollars. Yeah, so we got paid 1.16% to borrow the money.

Now, Jason, I want to transition a bit because as much as we love real estate and the big returns it gets us, and I invest fairly heavily. It's my number one place where I invest. There's one other place that you and I both invest that has an even higher rate of return than real estate, and it's ourselves and our bodies. And I know that that has become a major focus of you lately, and I'd like you to share a little bit about that experiment, if you will.

Yeah, sure. Well, it's not a very formal experiment, first of all, but I started a new show called the Longevity and Biohacking Show. And you know, Tim Ferriss and the four Hour Body, four Hour Workweek guy, you know, he talks a lot about this stuff. And there's a big movement towards something called biohacking. In other words, how can we sort of play well with our own biology and improve it and strengthen it? You know, can we make our body more effective? Can we make our mind more effective? And it's just really been interesting to interview all of these experts on the topic. I think we are on the verge. Number one, it's an amazing time to be alive, Ryan. It really is. With all the problems in the world, I mean, we are living in this era that's literally an inflection point with technology. And we're probably pretty close, at least by what I can tell in interviewing all these experts on my show to discovering the fountain of youth. And the concept of age has dramatically changed over the past few decades. If you look at a movie, we talked about the 1970s, if, and I just, you know, any of your listeners, I challenge you, go on Netflix or whatever and watch a movie made in the 70s and look at the, the portrayal of, say, a 50 year old, okay, in the 70s versus today. You know, it's just a completely different human being. Right. And so, you know, I'm all about leverage, this concept of leverage. The philosopher Archimedes said, give me a lever long enough and I will move, move the entire world. So when it comes to entrepreneurship, I want to learn from guys like you who teach me how to get leverage on my business and make it grow faster. When it comes to investing, I teach people about how to get leverage on your investments and make your money grow faster. And when it comes to biology, you know, there are a lot of experts out there. I'm, I'm not one of them. I'm just a student of it who can teach you how to hack your biology. One of the big parts of this, and there are many, but I'll just share one with your listeners, is a movement called the Quantified self movement. And with the advent of the Apple watch and all of these apps on our smartphones, we can really track things. And the first important part of understanding what is going on with our biology is to just track it and accumulate some data. So I simply use a little app that I bought in the App Store for, I don't know, two, three dollars. Wow, big expense. And it's called Sleep Cycle. And I've been track tracking my sleep for about a year and a half. And it is really interesting, Ryan, after a while, what you start to realize about your sleep. For example, what night of the week do you go to bed earliest and lower, what night of the week do you sleep the best? What happened that day that affected your sleep? Did you consume alcohol? Caffeine? Was your day stressful? Was it relaxing? How did you sleep because of that? And there's an old saying, the unexamined life is not worth living. Right. So the first part of this is to quantify the quantified self, to examine it, to know how many steps you're walking every day. You know, the Apple watch has this feature that tells you to stand up every hour. And the ideal thing, a few months ago I got an adjustable height desk. Great investment, by the way. I'm standing now, but I can sit during this call and make the desk go down. And the idea is every hour, if you are at a desk, you need to stand up for about 20 minutes per hour. One third of your time should be standing. Sitting all day is. You know, Tim Cook of Apple said sitting is the new secondhand smoke.

It is. And I don't know if you've read it, but we've had one of my favorite authors on the show who talks about this extensively, Mark Sisson, and he wrote a book called the Primal Connection. And it just absolutely, it was one of the most life changing things that I've ever read. And it's one of those must reads. You know, I do one thing to biohack myself and I eat a diet called the ketogenic diet, which is a very, I guess, counterintuitive way of eating. I don't know if you're familiar, Jason.

I'm not too familiar with it. I'm sort of a paleoish kind of guy. But tell me about this. Sure.

So the ketogenic diet is actually, I do it because I've had stomach problems my entire life as a kid. And. And when I started eating this way, all my stomach problems went away. And that was the reason that I did it. But basically I eat 80% of my calories come from fat. So I eat almost no carbs. I eat a modest amount of protein, but most of my diet comes from really high fat things. And anybody who was born from like 1950 to 1995 is, thinks I'm about to die right now.

Right, Right. They think fat is bad.

Right. And it's not. And what actually has happened is for most people who Go on a ketogenic diet. Their hormones level out to ideal levels, their sleep gets optimized, and right now, I need to optimize every second of sleep I get because I got a crying baby every few hours. And your mental performance goes up and mine has.

Has.

I'm happier. I have more energy. My lifts at the gym are noticeably stronger. So I did it in order just to feel better, because I was sick and tired of just feeling awful all the time. Three days a week, I could barely move. My stomach hurt so bad. And now most of those problems are gone. And I have all these other benefits as well. So that's one of the ways that I am sort of a biohacker, and it came accidentally. But as a result, I'm more productive, I feel better, and I get more done.

Yeah. You know, you asked me before, Ryan, that's great stuff. You asked me before about investing in the most important asset we have ourselves and hacking our biology. Well, you know, one part of that is education. But the one thing I want to say is, don't pay a lot for education. The price of education has been dropped dramatically in the real world. Not college. That's still a big ripoff. But in the real world, education has become pretty cheap. Just listen to Ryan's podcast and you'll learn a lot of stuff.

So education is the shortest distance between poverty and wealth. But you've got to feel good. Your body needs to have energy. Energy is really the key to a successful life. Anything you want to do takes energy. You know, it takes physical and mental energy. And that's why it's so important to pay attention to this kind of stuff. And just like you, I haven't always felt good. I grew up on a diet of fast food and junk, and it's just really important to pay attention to this. It's a very important thing.

Well, I like to say everything is an investment. Everything you buy, everything you do, everywhere you spend your time, everything you eat has a financial output. The way you carry your body, the way you eat, the way you sleep, all has a direct financial return in what you earn. And in the same way, every way you spend your time, the way you think, all of it is an investment. And you are either in a profitable investment or you are in a negative return investment. Even leisure. I make more money when I have a significant amount of leisure time, because that's when I become creative. It's when I get filled up. And when you think about things like that, all of a sudden, when I'm holding a McDonald's cheeseburger. I think what is the financial output of this cheeseburger? It makes making decisions a lot easier.

That's a great way to look at it. I love that.

So Jason, you've got a bunch of shows and I listen to a lot of them and I recommend that other people do the same. Would you just give us a quick list of some of the shows that you've got out there?

Sure. First of all, you can find all my podcasts, of course, on itunes or Stitcher radio. Just type my name, Jason Hartman, H A R T M A N. Or go to hartmanmedia.com.

And all my shows are there. The Creating wealth show, mostly about real estate investing, is my number one show. The longevity and biohacking show that I just mentioned, that's a good up and comer. And you know, I've got a bunch of other shows on a variety of topics, whether it be travel, offshore investing, asset protection, things like that. I have the Jetsetter show for that. I have the Speaking of Wealth show that is about infopreneurship and entrepreneurship and public speaking and things like that. So, you know, a good variety of topics. Basically just anything I want to learn. Ryan, I've got a show on it because I'm just fascinated by the topic. So it's just really great to be able to interview all those thought leaders all day. You learn so much from them.

Well, and it's been a privilege of interviewing you today on Freedom Fast Lane. Thank you for nerding out with me today.

Hey, thanks so much. And by the way, we talked a lot about real estate. My real estate website is just my name, Jason hartman.com and thank you for giving me some new terms, especially brain gasm. That's just hilarious. I love it.

That's what I'm here for. Jason, I hope you had a brain gasm while listening to my Nerd out conversation with Jason Hartman. Hey, if this type of stuff is your thing, head over to freedomfastlanelive.com some of the best people in the world on this topic will be joining us in December in Austin, Texas. Also, I'm starting to put the bones together for either a workshop or a course on this topic. If you want more info on that, head over to Perfectly PassiveIncome.com and join the notification list. I haven't quite finished the outline of how I'm going to teach it, either in person or just via teleseminar, but we're starting to put together the outline for that course. So make sure you're on the notification list for that. And as always, I'd love to hear your thoughts over@freedomfastlane.com would love to hear what type of braingasms you had while listening to Jason and I nerd out. Thank you so much for listening to Freedom Fastlane and I will see you on the next episode.