1248: Housing Price History, Evaluating Real Estate Investments & Foreign Investor Assistance for American Real Estate with Stateside APM's Howard Jennings

Thanks for your support, Jason. I appreciate yours and Carrie's support and your whole network. It's really been very beneficial to me and a whole lot of others. I encourage everyone to use your resources that you have. But thanks. Thanks, Jason.

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 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 thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors. Welcome to episode 1, 2, 4, 8, 1248. And today we have another three part show. Adam and I have a couple things to say to you. As a follow up from yesterday's episode, we wanted to talk about that price history concept that we referred to yesterday. So we will do that. And then we, we got special permission from one of our repeat guests, Frank Galinelli. He's the author of a few different books on real estate analysis. At one of the Venture alliance mastermind adventures that we went on, I bought a case of Frank's books and I gave them away to our members so that they could learn to be better analysts of real estate deals. And so we're going to share a little lesson of his today. And I particularly like in this lesson how he talks about the way that you're not really buying the property in a way, what you're really buying is the income stream. And that's why we're all in this. We're in this because we call it income property, right? That is the proper name for it, income property. And we are buying the income stream. So let's not focus on the sticks and the bricks. Let's focus on the stream of income that is the most important thing. And then we will get to our main segment today and talk about a company that provides assistance to foreign investors. Foreign investors love US income property. They love us real estate and lots of foreign money here, which is a very bullish sign for the US Real estate market. And so for our foreign audience, we have listeners, of course, in 165 countries worldwide. You will especially want to hear part three of today's episode? Adam, let's dive into this price history thing. This was pretty amazing to me. I had lunch with my friend Jason yesterday. He's probably listening. Hey, Jason, how's it going? And he was just telling me about his parents home and the rather amazing price history. And, Adam, you took a look at this. That kind of blew your mind, didn't it? Yeah, it definitely shows the crash. Yeah. Oh, like, crash, crash.

The dates on it are very obvious. We'll put it that way. The dates are extremely obvious. So this home is in Port St. Lucie, Florida. Now, Port St. Lucie is a nice little area. It's a little bit of a. Kind of a sleepy area. A little bit. Not totally, but, you know, it's a little isolated, out of the way there a little bit, you know, and when I say that, I don't mean it's a, you know. You know, it's not in a major metro, it's not near a big airport. You know, those kind of criteria. But it is a growing area, this home, back in 2002, just to give the price history here. And Adam, maybe I'll do one price, you do the other, and we'll rotate. Okay, so in 2002, this property sold for 170. I'll round off $177,000. 177. But just three short years later, Adam, what happened?

It went up by about three and.

A half times and sold for $625,000.

Whoa.

Now, that's only three years. Okay. It's literally exactly three years and four months. Okay, three years and four months. It goes from 176 or 177 to $625,000. Then another year goes by, and it sells again for $700,000.

Wow.

So it sells for 700,000 now you can tell. I sort of wonder who bought it, right, because they put it up for sale right after they bought it the exact same day. This is the Greater fool theory in action then. Maybe it is. Maybe it is. And. And by the way, for those of you who are new listeners, the Greater fool theory says, no matter what I pay, some greater fool will come along and pay more. And that theory is like the game of musical chairs or hot potato. Do not play it. It is a mistake. Follow commandment number five, Thou shalt not gamble. That means the property must make sense the day you buy it or you don't buy it. And how do you know if it makes sense? Cash flow, perspective, and all of the stuff I teach in the prior episodes of this show at our live conferences. On our upcoming cruise with the Venture Alliance Mastermind in October, go to jasonartman.com cruise and join us for that. The greater fool theory is not an investment strategy. Okay. It's the theory of fools. Okay, so the. The property goes up for sale right away for $49,000 more the same day. Right. Then about seven months go by and they remove the listing. Okay, so the listing is canceled. And then what happens, Adam? Another. Another seven months. Yeah. Seven months later, they list it for sale and they drop the price. An astounding $4,000. So now it's 745,000. Okay, then what happens? Sits on the market. Yeah, it sits on the market just over three months, and they decide, yeah, I'm not going to get $745,000. And mind you, we are now in May 2008. Yeah. Wow. Which people notice is right about that time. Right about that time when the financial crisis really reared its ugly head. So the listing is removed. And I'll bet you those people just sat there and stayed in that home as long without making the mortgage payments. I'll bet you that's what happened. Because my friend's parents came along and in 2009. Listeners, are you ready for this? Are you ready for this, listeners? In 2009, they came along and bought that property for. Drumroll, please.

$235,000. Wow. That's astonishing. I mean, that's astonishing.

Wow.

And the estimated price, according to my friend, he said they just had it appraised. It was like 450,000 now or something like that. So definitely in that particular case, we're nowhere near the peak. Okay. But, you know, that's not a nationwide. It's just an interesting sample.

Yeah, I mean, you're still not even.

You're, what, maybe 2/3 of the way.

To the 2005 price?

Yeah. Yeah. You got some room. That price history is astonishing. It really is. You know, there are some weird anomalies, and that's why, you know, when you're investing, you want to deal with an experienced group like my company. You know, I said this before our Profits in Paradise event last year, our event in Hawaii. I filmed a little video to promote that event. And I said that I was approaching, you know, between when I was a real estate agent for many years and then between the time I owned my company and I had, you know, a couple different real estate companies over the years, including this one Now, I'm approaching 10,000 deals that I've been involved in or my company's been involved in. I don't know that there's anyone else in this field who can say that. I mean, and I don't know the exact number either. That's the unfortunate thing because, you know, hey, I haven't been keeping track all those years, but I just kind of did an estimate and yeah, I'm, I'm nearing 10,000 transactions. That's amazing. You want to deal with someone experienced. Yours truly. Okay, yep. Self promotion. Shameless, but whatever.

Go to Jason Hartman.com and join us for one of our upcoming events. Okay, so let's cut to analyzing real estate investments with Frank Galinelli. So what we want to do here is we want to give you a different perspective. Now, he's mainly focused on commercial real estate. We, of course, like housing the best. We like the residential real estate the best. We think that nothing appreciates better than a single family home. It's a better market in which to operate because you're not dealing with as sophisticated a crowd on the way in or the way out of the deal. You can sell your, your property to an investor who will analyze it, at least in theory, more analytically, or you can sell it to a more emotionally oriented home buyer and you can really capitalize that way. So we love housing, we love the residential side of the market. Frank focuses more on the commercial side, but the analysis concepts are the same. So let's just listen into this clip. It's about 10 minutes or so, and then we'll be back to introduce the main portion of the show today.

Our takeaway from the first few sessions of this course is that the income property investor is not really buying the bricks and the boards plumbing pack of Sandra out in the front yard. Not really buying the physical property so much as buying the income stream from that property. An income stream that is built around cash flow, growth in value, loan amortization, tax shelter. Now, the prudent investor is going to want to develop some sense of assurance that the property or properties that they're looking at are going to throw off the kind of income stream that will represent an adequate return on their invested capital. And so how do they develop that sense of assurance? Well, I guess the question might be how do you estimate what a property is worth right now? And how do you decide if it looks like a good investment? Or to put it more simply, how do you forecast its income stream? Well, it's a process that involves several steps. The first of these is going to be to collect some necessary information to collect Some data, you're going to do your due diligence. I'm sure you've heard that expression before, and we're going to talk about that in just a moment. Then you're going to start your financial projections with what is a real estate version of a profit and loss statement, something called an apod Annual Property Operating Data. From there you're going to build a cash flow and resale pro forma. And with these building blocks, you've got what it takes, I believe, to make the kind of forecast, to make the kinds of estimates, the projections that you need in order to decide if a property looks promising as a long term investment.

Okay, so let's begin with that data collection that I spoke of just a few seconds ago. There's really two kinds of data that you're going to want to collect. It's going to be market data and property data. Now, the market data is very often overlooked, especially by beginning investors. They think, well, you know, I've got to find out everything I can about this particular property. Well, properties don't live in a vacuum. They live in a particular market, a place and a time. And so it's really essential that you understand the market where this property lives. What are some of the things that you need to know about that market? Well, you need to know about things like lease rates, capitalization rates, expense ratios. To be even more specific, what are the market rents for properties like this? What are other people getting when they rent out units such as you're looking at, if it's an apartment building, what are other apartment owners in that area getting for similar apartments? If it's office space, what are similar office buildings leasing for? You need to know about your current and future competition for tenants. Is this property the only game in town? Is there not another apartment building for blocks? Is there no retail space available and you're looking at a small strip center, or is there an abundance of space and you have a lot of competition for tenants? You need to know along the same lines, you need to know about what are the current vacancy rates in that marketplace for that kind of property? Vacancy rates in general don't tell you anything. Vacancy rates in apartments are not going to be very informative if what you're looking at is a shopping center and vice versa. So you need to know what are the vacancy rates, how much space is going unrented in properties such as the one that you're looking at? We're going to be talking about capitalization rates a number of times throughout this course. Capitalization Rates. Kind of the shorthand explanation. This is the rate of return that other investors are getting on similar properties in the same location. So you want to know what are other investors getting as a return on their investment because you don't want to settle for less.

You definitely need to know about the terms of available financing, whether it's through banks or other sources. Before you go out making offers on property and assuming that you're going to require financing, you need to know what the terms are. How much of a down payment do you need? What is the interest rate that's going to be charged? What are the other underwriting requirements that the lender may have? All very essential information you need to know about the employment trends in that particular market. Are there any major employer moves going on? Are some major employers moving out, or is there talk of a major employer who's about to move in to this market? It can make a very big difference to the success of your property. Because when jobs are plentiful, demand for just about everything goes up. Demand for apartments, demand for retail space, demand for office space. But when jobs are disappearing, folks are moving away or just can't pay their rent and these will all have an impact on your income producing property. You also need to keep your ear to the ground about municipal budget issues, about property tax trends, and prospects for how property taxes may grow in the future. An example I always give is are you hearing that they're about to build one or even several new schools? Well, if that's true, then even though you know what the property tax bill is going to be on a particular property right now, if there's going to be a demand for more tax revenue, it might be wise for you to make the assumption that your property taxes could have a dramatic increase.

And you should have a sense of the general business climate. Kind of goes hand in hand with what I said about the employment trends. When business is good, investments tend to be more successful. But if business has been on a downward trend in this particular market, business in general, then various property types may suffer due to the lack of employment. Now, where can you get information about market data? I always suggest that you should get acquainted with some commercial real estate brokers because they will generally have information along these lines. You should also make the acquaintance of some commercial appraisers because they likewise are likely to have this kind of information because it's their stock in trade. In regard to some online resources, there are several that are popular as I speak, and I can mention a few of them with the caveat that of course, by the time I upload this lecture, it wouldn't be at all surprising to find that some of them have gone by the wayside and been replaced by others. That's just the nature of how things are in the information world. But places like LoopNet.com, coStar Real Capital Analytics, Reis reports realty rates. These are sources that have been around for a while and may continue to still be available by the time I stop talking here today. And my necessary and appropriate disclaimer is that I'm not actually recommending any of these, simply giving you some ideas as to places you begin to look. If you're looking for market related data for commercial real estate. Now, how about that property related data? Where do you get information about a specific property that you're interested in? Well, the place to start, of course, is with the owner's representations. What is the owner of the property telling you? Well, there's two ways you get that kind of information. You either get it directly from the owner if you're dealing face to face, or it may be filtered through a listing broker. Now, some items can be verified independently. You can verify property taxes very easily. In terms of property insurance, there's no reason that you need to pay much attention to what you're being told that the current owner is paying, because that's not going to be your insurance bill. So call your own insurance agent and say, if I buy this building, what's it going to cost me to insure it? In many locations, utility costs can be confirmed independently. In general, though, I suggest that you take anything that you're given in regard to the operating expenses or other costs related to a property with a very, very large grain of salt.

There is in the industry kind of a common practice which is politely called the reconstruction of the owner's representations.

Translation to that is I don't believe a word you told me and so I'm going to start from scratch as if you told me nothing.

Among the things you want to try to reconstruct, if you will, let's start with the revenue stream. You want to see the lease contracts. Now, very often, if it's a commercial property, they may have what's called an estoppel clause, which if you get really deep involved in the transaction and if it's a property of significant size, you may be able to invoke that clause or ask the owner to invoke that clause to have the tenants directly confirm not only that the lease terms are as you've been told and have been shown, but also that there is no outstanding litigation between landlord and tenant that might spill over into your ownership. You might want to try to get from the owner some occupant and payment history. Take a look at his or her books. You'd like to try to reconstruct as many of the operating expenses as possible. I already mentioned property taxes, insurance and so on. But you may want to make your own estimates for items like maintenance, property management, and so on, rather than relying on what you're told by the owner.

And speaking of property management, you might want to examine any property management contracts that are in place to see if, once again, those are going to pertain to you, those are going to carry over if you acquire the property. In regard to looking at the books of the owner, you can ask for a history of improvements. So can you show me in black and white with an invoice or a contract when you replaced that roof, or when you replaced that heating system or did the rewiring.

But all in all, you may be better off relying on your own independent projection of maintenance, repairs and so on. And this is something that your ability to do this kind of grows over time as you deal with properties and you have a sense for how much does it cost really to get the snow plowed, or how much does it cost to get the lawn mowed or to get the hallways cleaned on a regular basis. One final item that I would mention in terms of reconstructing the owner's representations is that in my dealing with, especially with new investors, they tend to overlook the fact that the owner may not be mentioning all the possible costs that are involved in taking care of a property. They may not be mentioning, for example, property management. And so, alright, perhaps you don't need to hire a property manager yet, but at the same time you want to be realistic and compare apples to apples. When you're comparing properties, consider the fact that if you're going to manage the property yourself, that your time has value. And so a property management cost should be included. Even if initially you're not going to be hiring a third party. Look for other possible omissions in the list of operating expenses. A couple moments ago I mentioned lawn and snow. Well, if you're in an area where it snows and the owner hasn't included snow removal as one of their operating expenses, well, you know that somebody's going to have to remove that snow and you're going to have to be the one to pay for it if you own the property. So in summary, I've talked about collecting data about the property market, rents, competition for tenants, vacancy rates, cap rates, financing terms, and the state of the local economy. And about the property itself, the history of occupancy, operating expenses and improvements, as well as your own estimates of items such as maintenance and repairs and other costs. That's the essence really of your due diligence. Once you've done that, once you've accumulated basic data about the market and the property, then you can go on to the next step, which is to make your financial projections. You'll need to begin with what is essentially a profit and loss statement for investment property, something we call an apod, or Annual Property Operating Data.

Well, I hope you enjoyed that and learned a little bit more about how to analyze a real estate deal. And be sure if you haven't done so already, I know many of you have to go to jasonhartman.com and get that free video. If there is one thing you do and only one thing you do to further your real estate investing education, go to jasonhartman.com, watch that free video that I have there. It's 27 minutes long. And you will learn almost, not everything, but almost, almost everything you need to know to really be excellent at analyzing a real estate investment. It's at Jason Hartman.com right on the front page and it's totally free, so check it out. And we're going to talk to a guest today who specializes in helping foreign nationals who own investment property in the US and provide some services to them. The US Is a hotbed of real estate for foreigners. They love American real estate. So let's go ahead and dive in and listen to our guest today.

It's my pleasure to welcome Howard Jennings. He's managing partner at Stateside apm. Howard, how are you?

I'm good, thank you. Nice to be here.

Good to have you. You're coming to us from the Detroit area, is that correct?

That's correct.

Okay, good.

Sunny Michigan.

There you go. Basically, your company offers a variety of services for foreign investors, foreign nationals wanting to invest in the U.S. is that correct?

That's right. We are a one stop shop and we offer support services designed for the real estate investor. So we would from the start establish an llc, a bank account to go with it. We offer insurance and home warranty products. And then once you're up and running and established, we'll also do your tax filing at the end of each year to keep you regulated with the irs.

Okay, so that's income tax filing, right, for the rental income.

Correct. Yeah.

Do foreign investors buying U.S. real estate really need an entity like an LLC? I mean, we have clients from all over the world and some use entities and some don't.

Generally speaking, the reason someone would put their property into an entity would be to protect their personal assets. As most people know, America is sue happy. And one of the best ways to protect your personal assets is to have your investments owned in individual entities. So in the event that you are sued by somebody, they're actually suing just the entity. And they'll only have access to those assets rather than you personally, which would give them access to all of your world assets.

Right, but you know, to just give you a little devil's advocate, I mean, people need to understand that.

Setting up the entity does create some new levels of complexity, especially when it applies to financing. Now, that is less true with foreign nationals buying American real estate. But for Americans buying American residential real estate, meaning four units or under, the entity really does put a kink in the financing options. And of course you have insurance. I mean, you can insure around most of these problems. But for the foreign national investors, they won't be able to take advantage of some of the really cool financing that the American investor has. So, you know, maybe that that LLC burden becomes lower. And that's one of the reasons, you know, there are advantages and disadvantages. I just want to make sure people understand that on balance, you know, Absolutely.

It's not the be all and end all. It's something that you have to decide on for your own personal circumstances. With regard to finance for foreign investors, that's traditionally been tough. Certainly over the past few years, it is relaxing. And where we found clients have found financing, it tends to be only available if they're financing through a US LLC rather than trying to get it personally, which they would be doing if they're Americans. So it seems to be a reversed position for foreign investors compared to U.S. investors.

Yeah, it kind of does. Now, is the LLC the right entity? I mean, you know, foreign nationals can buy in their own name. They can use an llc, but depending on what country they're from, there are some other vehicles besides the llc. I know you mentioned Canadians as we were chatting off air and maybe some other countries. The LLC is not necessarily the best vehicle, right?

That's right. Typically we use an LLC because it's cheap and simple, it's easy to establish, and it's cheap to run and maintain. In most states, there are the odd exception, but most states are cheap.

And one of those exceptions would definitely be my Former home, the Socialist Republic of California. Very expensive place to have an entity.

And Texas is expensive as well.

Oh, how much? How much does Texas cost? I didn't know that.

To form a new entity in Texas is about 350 for the state fee. But if you form it in another state and then register it as a foreign entity in Texas, it's about 750. Hideously expensive in Michigan, it's 50 bucks.

Yeah, right.

Okay, so they're the sort of maintenance issues. But coming back to is it suitable or not? Canadians are the most difficult because the cra, which is the Canadian equivalent of the irs, will tax any entity as if it was a corporation. So even an llc, which is a pass through entity, which means it doesn't pay tax on its own, all of the profits pass through to the members who pay personal tax. The CRA will tax it as if it was a corporation. So the profits before distribution would be taxed at the corporation rate in Canada. And then when those profits are distributed to the members, they'll also be taxed at their personal rate as well. So they end up being taxed twice. So to avoid that, the only entity that a Canadian can use to avoid double taxation, but still use the entity to protect their assets is a limited partnership. Not to be confused with a limited liability partnership. Limited partnerships traditionally are quite expensive because they have to be individually written for each person and they are as easy to understand as the workings of the mind of a woman.

Okay, well, I'm sure women would say the same thing about men, but okay.

Yeah.

It tends to be incredibly complicated. And in most instances, Canadians who are investing sort of normal amounts are probably just as well to pay the double taxation than incur the costs and the headaches of trying to set up and maintain their limited partnership.

Okay, so there's obviously more to all of this. We're just doing a brief overview. So any other unique things about other foreign nationals besides Canadians?

No, we tend to find all of the clients countries or most countries tend to have tax treaties with the US and in almost every instance they get credits for tax that they pay to Uncle Sam in their own countries. So they avoid double taxation, which is the biggest issue. LLCs tend to be treated as pass through entities in most other countries apart from Canada. So whilst there are lots of entities out there that we can use, we tend to stick to LLCs because they're cheap and simple and are accepted by all of the governments that we tend to come across.

Okay, what other services do you provide? Sounds like you'll file their U.S. tax return for them. And that's going to be a relatively simple return just based on the properties they have in the states.

That's correct. We have an in house CPA and we Prepare typically the 1040 or the 1065 if it's an LLC. Corporate and personal returns, we electronically file them and we'll prepare them for federal, state and city taxes where applicable. As well, we have a flat fee. Making it very simple. We charge, at the Moment we charge $250 per entity per year, which includes one property and each additional property is $75 on top of that. So it's very easy for the clients to work out what they're going to be paying up front before they get into anything. And they'll know that it's completely done, there's no other bits they need to do. For our US Clients, we tend to just do the real estate bit and then pass that to the client for the client to give to their CPA to file their normal returns.

And how about insurance services? Anything else you offer?

We are the one stop shop for administrative advice and services. So we can ensure in any state of the U.S. we run several master programs. So we are not insurance brokers or agents. We can't sell insurance. And I need to make that clear. We operate a bit like a membership where people sign up for our services and that gives them the option of adding their property to one of our master programs, one of our master policies. The advantage to that is the client gets the discount premiums of bulk purchase. We insure thousands of properties across America and our premiums reflect the value that we give the carriers. And so if we're charged 20 bucks, the client gets charged 20 bucks. And I liken it to joining Costco just to buy the cheap gas and never going in the shop in the store to buy anything.

Sure, sure. I don't know which company you're using and you may not want to share that on the air here, but we did have some clients who got burned by one of the companies that was sort of promoting to the real estate investor community. And a lot of the clients found out that it wasn't really like regular insurance and it was sort of this partially underwritten kind of insurance. I don't know that I'm explaining that very well, but essentially the company just wouldn't pay claims. And I'm sure they paid some claims, don't get me wrong, but we got complaints and definitely did not recommend that company. And they're big, they're well Known they changed their name recently. I think that was to maybe hide some of the bad pr.

But yeah, so we deal directly with the carrier or with a wholesale broker. The policies that we have, I'm going to call them programs because it's easy to understand. We have some underwritten at Lloyd's of London, some underwritten by Agent alliance here in the us, Some underwritten by National American Casualty here in the US and they are the people that pay the claims and do the underwriting. What you have to realize is that the type of policy that we have, the type of program we run, and it's the same program that many banks run for their REO business, you know, their foreclosure portfolio or property managers. The COVID provided is not the same as the COVID provided by your individual homeowners policy. So you need to remember that the COVID is different. The programs that we run offer actual cash value as opposed to replacement cost. Now typically what that means is if you buy a property for 50 grand, you can insure it for 50 grand rather than insuring it for 200 grand, which is what it would cost to rebuild it. Because in a 50 grand house, should it burn down, you're not going to rebuild it, you'll just buy a replacement for 50 grand because it's cheaper than rebuilding it. And so if you understand that the COVID is different and therefore the limitations on cover is different.

And when you say coverage, right? Yes. You say that like a Brit. Yeah, exactly.

So, yes, in America, the type of insurance is called basic form, standard form, special form, broad. They're terms that nobody in the world uses apart from America. Special form is what we would call in England and probably the rest of the world all risks, which means if it's not specifically excluded, it's included. So the COVID tends to say we're not going to cover seagulls bending your aerial. Or if the windows are painted green, they're the only exclusions. So if a seagull doesn't bend your aerial and your windows aren't green, anything else is covered, which makes them easier to understand. But you have to read through the exclusions. And the other thing to bear in mind is cover that's given to investment. Real estate tends to have a lot higher deductible than general homeowners. So our deductibles vary from $2,500 for all risks and two and a half thousand for theft and vandalism, all the way to five and five or two and a half and ten. So you know, if you depending on the premium you want to pay and where your property is, the deductible will vary. And if you're used to just having homeowners insurance with a $200 deductible or whatever, and you have a claim, and you know your claim is three grand, but. But your deductible is five, then that's disappointing because you suddenly can't make a claim. So we try to make sure that our clients fully understand exactly what it is that we have on offer and what they're getting, because we obviously want to avoid all of that. And we're very as transparent as we can be. We'd rather somebody didn't buy because they understood than bought it because they didn't.

Okay. Other services.

So we've covered tax returns, insurance. We offer a home warranty which cuts down on maintenance. That covers things like your furnace breaking down or the hot water tank leaking. And it covers repair and replacement. And you can cover different parts and appliances. We can get tax ID numbers. Very important. You can't file taxes to the IRS unless you have a tax ID number. If you're American, it's your Social Security number. If you're a foreigner, that's just something.

Normal that comes with an entity. You set up a tax ID number. Right.

Well, you get the tax ID for the entity, but you have to have a personal ID number to file your personal taxes.

Right. So if you're not using an entity, you need that.

Yeah. Well, if you are using an entity, you're still going to be having personal income, so you still got to file personal taxes.

Yeah. Because if it's a pass through entity. Wow. Okay. All right. Anything else people should know. And you know, maybe if you want to just talk, Howard, as you wrap it up on general real estate investing, that's fine, too.

The hardest thing that our clients seem to find is reliable property management.

Oh, tell me about it. We've been doing this for 15 years, and that is the biggest challenge we face on a daily basis is getting good property management. And even with our level of volume and experience, it's just amazing that really how bad that industry is. But you know what? I try and compare. There's a lot of bad industries. I mean, just finding real estate agents or lawyers or anybody to do anything. There's just a lot of bad apples out there in every. In every field.

It seems to be that people are looking for how much they can make in one killing as opposed to looking at the long term picture. And we tend to be the other way. We are Far too lazy to go and find new clients.

Yeah, yeah, well, that's a good point. You know, almost every decision in life comes down to the decision of instant gratification or delayed gratification. The bigger payoff by thinking longer term or the quick buck, if you will, by thinking short term. And whether it be with people's diets and health or their money and you know, how much they can milk a customer for, it's absolutely disgusting. I mean, these people just, yeah, they want to nickel and dime people to death. And I think the property management industry is. The rebellion is finally starting and I hope to lead it myself because we've been teaching people self management for the last 10 years. Interestingly, you really can self manage properties pretty effectively from a distance with some good techniques, local contacts and technology. We have great technology to help us do this nowadays and I frequently profile this stuff on the podcast, so. Yeah, but go ahead.

Yeah, I think where people fail is in due diligence. I think you can't do too much due diligence. And we have a tremendous number of clients that say, oh, no, I've never seen my house. When you ask them the last time they came to see it because it would reduce my investment return if I spent the thousand or $2,000 extra coming to look at it. And consequently they're setting themselves up for failure because they're nickel and diming themselves. You need to come and see what you're buying, in my opinion. And you need to make sure that you do due diligence and don't let people get away with it. I just keep saying it. Due diligence. Ask questions. And don't think you're appearing stupid if you ask a question or have to ask it twice.

Well, the other thing is, don't just accept answers from them and don't just accept repair costs. You know, make sure that you are getting a fair deal. Pushback is the thing. I would say definitely. Yeah.

Ask for photos. If you get an email that says the toilet's broken, it needs to be replaced, say, fine, send me the photograph. You can see it's broken when they replace it. Send me the photograph of it replaced so that I can see you've done the job. And then I'll pay you.

Yeah, the beauty is now, you know, of course those photos can be faked, so you got to be careful of that. But the beauty is now there are apps for smartphone apps that geotag those photos. Of course, I'm sure any system can be cheated, but it's a lot harder and they time track, they location track, they do all kinds of things. So this is getting better, folks. It really is getting better. Technology is making it a lot easier to really manage your own properties from a distance or keep tabs on your manager because they, like the late Ronald Reagan said, trust but verify. And I'd say that goes triple in the property management world and with contractors.

Yeah, and I think that's the biggest problem we come across more and more frequently. We are coming across more and more reputable people that are selling properties. And I think more people have realized there's more money to be made in being honest than there is in being dishonest.

Well, I hope your optimism is true.

I get a little bit cynical about it, but that's probably a longer discussion than than we have time for.

Anyway, give out your website so you can see all the services we offer@www.statesideapm.com I'm not going to spell it phonetically because I can't.

That's all right. Don't worry about it. Stateside APM Howard, thank you so much for joining us.

Thank you very much. Appreciate your time.

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