1433: Pandemic Investment Principles, Mortgage Forbearance

I have to say that Meet the Masters is what really sold me on your group and just the turnkey world in general.

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Welcome to episode 1433. 1433. And happy Easter to all. I know this is obviously a very strange Easter holiday. You know, people around the world where they used to have services, you know, I mean, look at the Vatican church services around the world, just vacant, not happening, going virtual. At least we have technology nowadays to make this kind of stuff easier. You know, it was just about 25 years ago, not 25 years ago today, but 25 years ago, that I was at the Garden Tomb in Israel and there is an unimpressive tomb for such a big event, obviously. And it just has a little sign on it that says he is risen. That's all. I took a picture by that sign and, you know, just a comment about religion. I know this is obviously not, you know, my expertise, but it's funny to me how people act about religion. Obviously there are different beliefs and there are people who are agnostic and people who are atheist. And for the non believers, that's kind of the most interesting crowd to me is, you know, you just kind of wonder, what is the big deal? Really the only honest answer about any faith is to be agnostic, because nobody really knows. Now, people who are devout would say they can feel it, right? Which, you know, I totally respect that. But people who are non believers, it's like you can't hear the dogs that don't bark, right? How can you be like an adamant non believer?

That one just never made any sense to me.

I can see how you can be agnostic, that's totally fine. But to be adamant, devout non believer is the most interesting one to me of all. Because even if any religion is just a story, say for example, that is, right, it doesn't matter. It's still good for society. It's good for society. The thing that we have learned throughout history is that when you don't make people accountable to something, when they're only accountable, like in communist countries which completely suppress any sort of religious belief, because the belief is that the state has to be the only thing you believe in the ussr, right. The former Soviet Union, the North Korean government, and the great leader of Kim Jong Il or Kim Jong Un, you know, anybody in the Kim family. Right. You know, the state has to be the highest form of belief. It couldn't be God. No, we can have that. We can't have people believing in something that we don't, as the state control, that we don't tax. Right. That we don't benefit from thinking from the state's perspective. You know, when you make people only accountable to a state, you have a recipe for disaster. And that's why I think religion is a good thing. Now, I can hear the other side saying, but look at all these religious wars and all this stuff that's been fought over religion. But, you know, I say, I don't know if you can hear that, but I've been listening to Pachelbel's canon. Wow, what a masterpiece. I mean, how did these musicians and how do these musicians today know how to create music even hundreds of years ago? That is exactly the way my ear wants to hear it.

Just absolutely beautiful.

Absolutely beautiful. That music is so gorgeous that it just. Wow. It's just like. It's amazing. It's truly amazing. Anyway, what were we saying? Oh, you can't hear the dogs that don't bark. So then they'll cite all of these religious conflicts and true, that's terrible, obviously. But the question is, how much worse would it be without religion, right? I mean, certainly there have been conflicts in the name of just the state, conflicts in the name of robbery, conflicts in the name of greed, conflicts in the name of all sorts of things.

Right?

And sometimes they hide them under the cloak of religion, so it's not what it seems to be. Then they look at the bad people.

And they say, well, look at all.

Those hypocrites who are religious.

Well, you're asking the wrong question.

How much worse would they be without religion? They'd probably be terrible tyrants.

I don't know.

This stuff will never be settled. But just a couple perspectives on it, okay? Hey.

Hey.

So shifting gears here, obviously, I know I'm completely off base. I totally get it. This is a financial show, so let's.

Get down to business here.

But you know, happy Easter to everybody. So our client, Aaron Copleson, a very bright guy, he's been on the show before, he sent out a mortgage update and kind of touched on the economy and the mortgage market just yesterday. And I wanted to just play part of that for you and share my thoughts on it. So here we go. Let's listen into this and I'll have a couple thoughts about it.

These might have long term impacts on your ability to get mortgage financing in the future. Kind of like what happened when people got short sales or modifications or, you know, obviously a foreclosure back in 0809 in the Great Recession. So let's jump into the first one, which is forbearance. Now, forbearance, you can kind of think of it as like a layaway program. You know, you go to a furniture store, they say, you know, you can leave with the merchandise today. Don't make any payments for six months or 12 months, what, whatever it is. So this post kind of talks about that. There's an article that was written, it's titled B of A slammed over Misleading Mortgage Relief. Let's go ahead and cover this real quick. It says Connecticut resident Roseanne Stoddard tells CNBC she got quite a shock when she called bank of America about her $2,200 monthly payments. They granted her a three month pandemic waiver, she says, but the remaining amount would then be owed at once. That comes to $8,800, which Stoddard can't afford. She calls it misleading to say the least. So that obviously for a lot of people would be really helpful only to find out that all of it is owed on the back end of the forbearance. So now let's talk about.

So there's one of the things that is not clear about the forbearance programs being offered. Number one, when do you pay it back? Because the forbearance is not a forgiveness, although I postulate that maybe it will.

Turn into a forgiveness at some point.

But the question is, when do you pay it back? Do you pay it all back at the end of the forbearance period? So if they give you a three month, a six month or a one year forbearance, are all of those payments due in one lump sum right then at the end of three, six or 12 months, or are they tacked onto the back of the loan? If they're tacked onto the back of the loan, that's a great deal. But if they're tacked on where you've got to pay them back all at once in three months, six months or 12 months, well that's not such a great deal. But it is better than nothing because if there's no interest accumulated, which is the promise, right, no interest and no negative credit reporting, which is the other promise they've made. Now keep in mind this is all kind of chaos right now, so be careful, get things in writing. If you are asking your lenders for forbearances on your different rental property loans.

And maybe your own home too, and.

Make sure that's clear. But again, these things have a way as we go along and we don't know this is not for sure. It's just a, you know, it's a possibility that there may turn into more.

Of a forgiveness on some of this stuff or a loan modification.

We will see. We don't know yet. But if I had to place my bets, I would say that's the direction things are going.

Now one other thing, very important about the forbearance.

Remember your mortgage lenders, if they're part of the credit reporting system, they have to report court every month and nobody knows how this will be handled. Here's what I mean. If you are applying for additional financing right now, say you picked up a property or a couple of properties@jasonhartman.com properties which is the only place you would.

Ever, ever want to shop for properties.

Of course, of course it's the only place.

There's no other places.

You know, that's kind of like the, the Soviet state saying you can't believe in any other God, only the state.

The all powerful state. Okay.

But anyway, that's the only place to.

Shop for real estate, obviously.

So say you're picking up a couple properties and you're financing them right now you're in that process. Well, how does your lender report your current mortgage situation if you've taken the forbearance option? They said there would be no negative credit reporting. But at the same time, are they supposed to lie to the credit bureaus and say you're making your payments when you're not because they're on forbearance? Nobody knows. This is the million dollar question. Nobody knows the answer to this. I do not and can't find anybody else who does. It's kind of chaotic obviously right now in terms of what's going on in the marketplace. So I don't know the answer. But I would say if you're buying properties right now, look it, I'm the guy who talked about the return policy for real estate when we had the rabbi on a couple of weeks ago. I believe in getting the forbearance. I think it's a great deal, right? Have I done it personally? Now my renters, so far they seem to all be paying. I haven't had reports from all of my managed properties, but for self managed I got paid the full rent, no problems at all. Okay. So I haven't asked my lenders for any forbearance. Frankly, it's not because I don't think it's a good idea. It's just because I haven't had time to call them and ask for one. They'll probably give it to me, I'm sure, like they'll give it to everybody else just for the asking, but I just haven't gotten around to it and so I may not even do it next month. I don't know.

We'll see.

But if you're asking for forbearance and applying for financing at the same time, I would say that might be problematic. So you might want to skip the forbearance, get your financing in gear, buy your properties. You can always ask for forbearance later. You'll have time, so don't worry too much about that. Anyway, let's go on here.

This article, which was in Market Watch, really kind of dives into this. The article says Fannie Mae described payment deferrals as a more affordable workout that's between a repayment plan and a modification and noted that the option may be well suited to borrowers whose ability to make on time payments was impacted by the national coronavirus emergency. It goes on to say under a traditional repayment plan, borrowers are required to spread out their past due amount over several months in addition to their normal monthly payments. And then with the forbearance plan, so.

See, that is the spreading out option. So in other words, it might be where they give you forbearance. So say you got a three, six or 12 month forbearance and you owe the lender $5,000 on the forbeared payments. Right?

You know, I'm saying it's a rental property, it's probably not your own home.

Because that would be a lot more.

Than that, I'm guessing.

But say it's some inexpensive little rental properties that you bought through our network and it would be spread out where they'd add a little bit to each month's payment to pay it back later. Hopefully none of this will happen. Hopefully it'll Be just a complete forgiveness might turn into that. You'll be surprised. We might all be surprised, but nobody knows. So don't bank on that one obviously.

Can'T hang your hat on that.

But the second best deal to forgiveness obviously would be just be tack it.

On to the back of the loan.

So that when the loan is refinanced or the property is sold someday, you pay it back then or you add an extra six months of payments due.

So the loan that was 30 years.

Now it's 30 years and six months.

Right, that's how that would work.

Again, we don't know.

Borrower can suspend or lower payments for a specific or a specified time period. But essentially a forbearance is kind of like the layaway program, the deferral. It's got more strings attached, there are requirements that need to be met where the forbearance is a lot easier to get. Another article here that I found interesting. Mortgage Crisis and Fed unintended Consequences. This article goes into kind of what's going on and why we're not seeing lower rates at the moment. They should be a lot lower, but they're not. And this article kind of goes into all the reasons why, the nuts and bolts of how this business works and why we're seeing what we're seeing last on rates. So we think they're going to go back down to the all time lows. The reason for this is, okay, now.

Here'S where I don't know, we'll see.

If Aaron is right on this one.

He's saying that the rates are going to continue to decline. That might be true and I agree that the Fed and the government of course would like to see that in the sense that it's stimulative for the economy, obviously. But the question is, can they remember? The question is how long can you keep defying gravity? They've been doing it for an awful long time. It's not just like the government and the Federal Reserve gets to decide, okay, low rates, let's just make the rates low. There are consequences, huge consequences for these things. And I'm not talking about when the economy is booming that it creates inflation. I'm talking about the fact that on the other end of low rates there's a bond, a Treasury bill, something that you need to get some other sucker, I mean other party to buy like China or Japan, okay? Or some other country usually is buying them. Sometimes individuals buy them too, but mostly countries, sovereign entities. So they gotta buy them. And if you don't pay a High enough yield on those T bills, nobody buys them, there's an auction for them and they got to sell them. So how do you sell an ultra cheap T bill or bond? How do you sell that in an environment where you've basically told the rest of the world you're just going to keep inflating, inflating, inflating and spending and spending, and spending. So the holder of that bond, essentially it's a bond, will be paid back in ever cheaper dollars. How do you talk someone into buying that? Well, this week coming up, we are going to have a segment on the dollar's reserve currency status and why the US has been able to get away with this. I don't know. It's not exactly a Ponzi scheme, but it's kind of a Ponzi scheme. Yeah, you could call it a Ponzi scheme, I guess in a way, in a sort of a different way how they've been able to get away with this for so long. But it begs the question, how long can it keep going? So, Aaron, I hope you're right, but I don't know.

Number one, if you look around the world, most of the countries have negative interest rates. So that means that if you were to put money in a bank, instead of earning a little bit of interest, you would actually pay the bank to hold onto your money. It's a very foreign concept.

Look, like I said before, you know when you have extra stuff that you don't have room for in your house, what do you do? You rent a storage unit. Well, when you have extra cash and you need to store it somewhere in something called a bank, you have to pay the bank. I know that's totally bass ackwards, right? It's totally bass ackwards, but that's the world we live in.

It's just weird.

Negative interest rates. What a concept.

Been around for really, It's a newer thing, maybe the last 10 years or so. That's number one. So the US now is kind of coming more in line with the rest of the world with lower rates.

Okay.

Number two, if we're not in a recession, it looks like we're headed into one. And pretty much every if history is our guide, every past recession brought lower interest rates. So the only exception to that was in the 70s when we had the oil crisis, we had Stagflake, which by.

The way, that's what I think.

As I've said, we're going into, we're.

Going into a stagflationary time. And Aaron is Right. Every recession did bring lower rates eventually as they tried to stop the recession and get the economy back on its feet. But the problem is this time, like we've talked about, the ammunition has already been used, most of it. There's hardly anything left for them to do because the rates are already so low. That's why going into a recession and at this time is a tough one for the Fed. They gotta reach, reach, reach and think of other tools to solve problems because the simple tool of lower rates is not as available as it used to be. Aaron, thank you. Aaron is just a super bright guy. He's a mortgage person and if you want to get ahold of him, you've heard him on the show, he's a client of ours. Reach out to us through jasonhartman.com and.

We'Ll be glad to connect you with Aaron.

He does California mortgages. So if you're looking to refinance or borrow on a California property, let us know and we'll be happy to connect you. Okay. Upcoming webinars we have got three in the works. I told you we'd have a pandemic investing webinar. We've got to push that back. It's like a moving target. I'm trying to teach this topic and it keeps changing. Stop changing. So I can have a solid syllabus here for, for you. Okay, so we're going to push that one back. It'll probably be next week, not meaning this coming week. I know it's Easter Sunday here. Remember, we're seven days a week now with you. Seven days. But we do have, of course, many of you have taken advantage of the home based business opportunity where you can profit off tax sales and you can check that one out at Bit Ly Bit Ly taxprofit and also our Tuesday webinar on funding. Remember, you're out there, you're going to the stores, you're stocking up on groceries. Hey, you're stocking up on toilet paper, clearly, because no one else can buy any. This is the time you need to stock up on cash, get your money out of your properties, get extra business credit funding through a credit line. We're having our webinar that on Tuesday, 2pm Eastern. So the link for that Bit ly Tue for Tuesday, the number two pmet. We'll have these links in the show notes, by the way, @jasonhartman.com But Bit Ly Tue Tuesday 2 Number 2pm ET for Eastern Time. So Bit Ly Tue 2pm ET I.

Know that's a little bit of a weird name, but I wanted to describe the time.

It is right in the link. Okay, so there it is. Now I want to give you another thought. Okay, that's. We need to expand on this in a future episode and then we'll get to part two of my interview from yesterday. Okay. If you don't think there's tons of inflation built into this system, I want you to think about a totally different angle. Forget about monetary policy. Forget about fiscal policy. Forget about it. Forget about it. Of course, that's all true.

We've talked about it.

But let me tell you another angle. I have said before that I cannot believe that these tech companies can't make money. Like, give me a freaking break. How does a company like Uber just burn cash like it is going out of style? Well, how is that possible? It's possible to. Because our venture capital system and our IPO system is a joke. It's a joke, people. It's a joke. Okay? The way capital is flowing toward these tech companies is absolutely ridiculous.

It's totally ridiculous. Okay, or ridiculous.

And think about this. If you don't think inflation is just baked into the system, look at all these tech companies that have been massively overfunded. Some have done IPOs that can't make money. They're just burning cash left and right. Well, the question is, are they going to stay in business? Is Uber going to stay in business? Is Lyft going to stay in business? Are the other ride sharing companies going to stay in business? Yeah, I think they will stay in business because the taxi business has been decimated.

Right?

So, and this is not a talk about the travel industry and the pandemic and all of this stuff. I'm just talking normal times, okay? They've got to raise prices. There's going to be a massive price increase, a massive price increase in these things so that these companies can become financially viable. There are so many of them out there that are just burning cash with this upside down system we have of venture capital and just silly IPOs. And there's a lot of inflation baked into the pie right there without even talking about ridiculous fiscal and monetary policy. Okay, let's get to part two of our interview from yesterday.

You know, in terms of your prior question, sorry about the long answer.

You know, it's kind of a timing.

The market question and I don't believe you can time the market. The problem is if one tries to sit out and say, okay, the deals are going to get better, you might be Right, okay, you might be right. I don't know. Certainly when you look at the three different kinds of real estate markets in the world, linear, cyclical and hybrid markets. Those cyclical markets, and those are the markets where if you're looking at a graph, they have tremendous glorious highs and really ugly lows. They thrive and then they crash and burn. Okay, Those are markets that, that get all the publicity around the world. There are places like the west coast of the U.S. san Diego, Los Angeles, San Francisco, Seattle, Vancouver, Canada, okay? The west coast out of the U.S. even South Florida, Miami, okay? The expensive northeastern markets, Washington, D.C. new York, Boston, markets like that. Around the world there are markets like Dubai, Paris, London, Hong Kong, okay? These are markets that have really high prices, they appreciate radically in the good times and they crash and burn in the bad times, those markets are going to suffer greatly. So when you hear someone talk about the real estate market, that's what they're talking about. When you hear these sound bites on the news, they're not talking about Atlanta, Ocala, Florida, Memphis, Tennessee, Jacksonville, Florida. They're not talking about Houston or Dallas.

They're not talking about Little Rock, Arkansas.

They're not talking about Gary, Indiana.

Yeah, well, Gary, Indiana, you might not want to talk about that one at all.

I saw you had a lot of properties in northern Indiana.

Yeah, yeah, but, but Gary is, you know, not one of the markets we totally recommend. Okay? I mean if you're a real bottom feeder type of landlord, sure, you can do, you can make money in those types of places. Same with Detroit. We've never recommended Detroit. Same kind of reason. But, but you know, there are some exceptions and people look at, you can make money in any area of real estate. I'm just saying that my plan is I think people should buy good quality properties in good markets and they should buy necessity housing. Okay? When times get hard, people need shelter. We all now know through this pandemic that the home is the center of the universe. Not an office building, not a retail center.

The home, that's where everybody's been told.

To go and stay at home, okay? And guess what? People now realize, you know, if they've got a roommate and they live in a two bedroom place, you know what, someone's got to move. My company told me I got to work at home. I need that spare bedroom now.

And maybe my company gave me an.

Extra 2, 300 bucks a month to work at home as an allowance, okay? And I got to set up a home office. So someone's got to move. Guess what? Just Happened, we just doubled the demand for housing. Double. Okay. Now another funny thing a lot of people have talked about all these couples that are at home quarantined with nothing to do and that there might be a coronavirus. Baby boom in nine months. Okay? So if that's true, you know, if people are making love right then, then they've got to, they've got to get a bigger house. So we've increased the demand for housing. If both of those people in that couple have been told to work at home and the kids have been told to study at home and there's, you know, a couple and two kids, okay, Think about how much more housing you need now, more space. What if people are fighting at home and they're arguing and they're just at each other's throats and they realized, you know, they never spent this much time with their significant other. I can't stand you.

After this is over, I'm getting out.

And the divorce rate goes up. Double the demand for housing. Okay? So necessity housing, the demand is going to increase dramatically. Necessity housing in suburban markets.

Well, then I just want to get a little deeper into that, clarify what we're talking about. Because people might be. I know I've got families that are looking at flipping homes or they already do flip homes. So then they've got long term rentals, we've got short term rentals, we've got vacation rentals.

I can talk about the short term.

I've made some good predictions on that too.

Where in the market is that opportunity? Long term, short term vacation rentals, apartment buildings. Can we drill down a little bit there?

Sure.

So first off, I think at least.

This year, of course, and maybe next year, the global economy is going to get smaller. It is going to shrink. And whether that means a technical recession or not, I don't know. Well, I mean, certainly this quarter or next quarter we have a recession. There's no question about that. Anybody who says different is they're looking at the world through rose colored glasses. They're, you know, they're smoking something because they're just wrong. Okay? We're having a recession, okay? But the recession could end pretty quickly, right? The technical recession. But many small businesses will go out of business, okay? The economy will be smaller. Okay?

And so that means that as real.

Estate investors, we want to catch people moving down and provide housing to them. The discretionary income of going on vacation is that market's going to get a lot smaller. It's going to shrink. Okay? Now in terms of the short term, Rental or Airbnb market people will still take vacations and a lot of their options are going to evaporate, either by choice or by economic reality. Examples, many cruise lines will go out of business. And by the way, as an aside, and I'm not being political here, I'm just being accurate, okay? I got to hand it to the Trump administration because when the cruise lines came to them and said we need a bailout, their response was, look, domesticate your companies in the U.S. hire U.S. workers, follow U.S. labor laws and pay into the system and then we'll consider a bailout. You've been avoiding taxes or evading taxes for years by domesticating elsewhere and getting all the big American consumer market as your customers. You have the best of both worlds. That's a scam, okay? You want to bail out, pay into the system. So we'll see how that works out. Maybe they'll domesticate in the US now and you know, like Carnival Cruise Line, the biggest one in the world that owns many other cruise lines, and maybe they'll work, work out some kind of bailout. So the cruise business will definitely shrink. No question. The long distance vacation market will definitely shrink. Even if it all comes back a lot less people will want to fly. You know, they're just going to be concerned about it. They're going to, you know, you get in a little aluminum tube in the air and you have no social distancing opportunity. Okay? So it's risky, okay? And there will be other viruses after this one. So when you can provide a short term rental property that people can drive to, and it's in a suburban type of setting, not a high rise condo, not requiring flying, people will still take vacations. And because the number of vacation options has compressed and it has shrunken people. Like we have one short term rental market that we offer, St. Augustine, Florida, and it's perfect. Our clients that have those short term rental properties there are doing pretty well. They've had, you know, a cancellation here or there.

And interestingly, some of the bookings are.

Changing in character where they have a fewer number of bookings but longer bookings because people want to escape the higher density cities. So, for example, someone coming to St. Augustine, Florida for a short term rental vacation would come possibly from a higher density area of Atlanta or Orlando and they can easily drive to that or, you know, many other areas as well. Right. But if you've got a short term rental property in a high rise or in any high density type of environment, especially one that requires people to usually Fly to it rather than drive to it. That's a problem. That's not going to do well.

Yeah, so we're seeing. I'm glad you said that. We've got a rental property just outside of Traverse City in Michigan. Vacation rental.

Yeah, that's probably pretty good.

Short term vacation rental. People drive there and we're continuing to stay booked the entire year. And so I really like to hear that for that reason. And I also think it's a neat opportunity for retirees when they're looking for a second home that can present a way to have that second home and not have it really eat too much into your expenses, maybe even provide additional revenue.

I think you're right.

I think, I think that's good. I think that's good. Now your short term rental in Traverse City, by the way, you know, the other thing I'd say about that is the high, high end of the short term rental market will also suffer because people are going to be more conservative. I think people, the mindset is going to be toward a bit of a simpler existence after this. I think people are going to be more grateful for what they have and that's a good thing in a lot of ways. I think the, the extravagance and the super high end ultra luxury short term rentals are also going to suffer. Even if you could drive to them.

Sure. Yeah. So we see the biggest. That's one of the opportunities, these short term vacation rentals you can drive to. And then it sounds like you, your main business and what you really like is these suburban areas where you've got family housing. Not high end, maybe it's lower end, but you're buying a larger portfolio of these homes to generate revenue.

Is that what I'm hearing? Absolutely.

And you know, just as an aside, look at, I think the short term rental thing is fine given everything I said. But that's not our main thing. You know, remember, vacation is always optional and in tough economic times, people just aren't going to vacation. Okay. Or not as much. Right. So that market will contract. So you know, the core strategy is by inexpensive bread and butter necessity housing as long term rentals in good linear markets. Now what do I mean by linear? Earlier I explained cyclical. So remember that graph we talked about? Just helping people visualize there's a graph, right. The linear market is up or, sorry, the cyclical market is up and then it's down it goes. Has glorious highs and ugly lows. So those are all the west coast of the US all the trophy cities around the world that I mentioned and then the linear market are those boring markets you don't hear about in the news. Little Rock, Arkansas, Memphis, Atlanta, Ocala, Florida, Jacksonville, Florida and many others around the country that you could see@jasonhartman.com and those properties make sense from day one from a cash flow perspective. And they're going to sail through this pretty darn well, I think. Now, interestingly, I think this is going to lead to some obviously new government programs. Okay. And there's a program that you probably know about called Section 8, which is a rental housing assistance program for people that's been around for many, many years, decades. I mean, when I was growing up, my mom had some Section 8 rentals and that's where the government pays either part or all of the rent to the landlord. Okay. I think we're going to see a dramatic expansion in rental assistance. I think we may actually see a nationwide rental assistance program that a lot of people are eligible for. And I think the economy is going to become much more government centered and much more socialist. Whether we like it or not, it's the way it's going.

You know, if someone's listening and they're saying, you know, that that makes sense to me, I'd like to get into the rental market.

I.

And maybe they want to jump on this. I just want to. You've been through a couple different recessions in this market.

Oh, not just a couple, a few.

I've seen people lose a lot of money in real estate. I've seen people make a lot of mistakes. So if they're going to go down this road as we close here, what are some of the biggest things they need to look out for, especially those close to retirement or in retirement. If they want to go this route, they want to take advantage of an opportunity. Where have you seen people go wrong? What should they be watching out for?

You know, the simplest thing I can say is, well, number one, I got a great free video for your listeners and it's just on the front page of my website, Jason hartman.com. it's 27 minutes long. It's totally free. If you simply watch that one video. If there's nothing else you do to learn about real estate investing, just watch that one simple video that teaches people how to analyze a real estate deal. It's totally free. Jason hartman.com Just watch that one 27 minute video and it will really, really help. But barring that, even faster, as a rule of thumb, look at good rent to value ratios or otherwise known as RV ratios And if you can get somewhere in the neighborhood of 1% of the value of the property every month, you're going to do pretty well. Okay? What that means is that if you're looking at $100,000 property and that'll rent for close to $1,000 a month, it's very hard to get hurt on that deal. Okay. I mean, yes, other things can go wrong. Life is complicated. Of course, there's no foolproof investment, but you're going to do pretty well if you get 1% per month because you're going to be able to hold onto that property during bad times and you're going to thrive during good times. The place people get hurt is they buy these crazy properties in California or some of these cyclical market cities that the properties are too expensive and the rent to value ratios never worked. I have something I call the ten commandments of successful investing. And commandment number five is thou shalt not gamble. Thou shalt not gamble.

And you know, I just believe in.

Being a conservative, prudent investor. And when I say not gamble, I mean that the property must make sense the day you buy it or you don't buy it. And what does making sense mean? It means it has a good rent to value ratio. Everything else explained in the 27 minute video, that's free on my website. But rent to value ratio, if you just get that, that's a good safeguard. Okay? People do these crazy properties that are, you know, oh, it's a $500,000 property and it rents for 2,500amonth. Don't do those deals like that. They're very risky.

In the short term rental market.

People make mistakes all the time because they buy these high fluting properties and they think they can rent them all as a short term rental, well, guess what? That market's going to contract just like we talked about a few minutes ago. So you'll never lose if you have the more basic necessity product in the marketplace that will always be in demand. Do people like champagne and caviar? Sure, but it's not necessary to survive, okay? What's necessary to survive is meat and potatoes. Okay? So that's the kind of rental property you should be thinking about.

That's awesome. Jason. I know this is just a crazy time for you right now and you've got to run. And, you know, as we come to a close, I'm just going to ask one more final question, if I may. And that is, what would you have if someone's listening in and they could just remember one Thing from this conversation. What do you want them to know?

That housing has universal demand. Everybody has three basic needs. Food, clothing, and shelter. And we're in the shelter business. Provide basic shelter to people. It's the most historically proven asset class in the entire world. And I think it's going to perform pretty darn well through this whole pandemic we're going through. And just focus on the fundamentals. You know, I guess I'll say just maybe four things that are maybe more general, okay? And I said this on my podcast. Number one, stay calm. As everyone is panicking around you, keep your head straight. Stay calm. Don't listen to the news day by day. Step back, look at the big picture and think, look it. This is going to be an entirely different situation in six weeks, okay? A month and a half from now.

The news will be entirely different.

Hopefully it's going to be a lot better. I think it will be. Okay? So in six weeks, this whole thing's gonna change. So calm down, okay? Relax. It's, you know, this is not the.

End of the world.

We will get through this. Number two, keep good counsel. Be prudent. Listen to prudent people. Like your show, like my show. Just make sense of things. Keep good counsel, okay? Don't go off on every harebrained idea you hear, okay? Number three, keep your eye on the ball, okay? Focus. Focus on the big picture. You know, you had a game plan probably, hopefully, for your financial life. Stick to it, okay? It's still going to work. Okay? Yes. The world is changing in some ways. Don't be a speculator, okay? Stay focused on prudent investments that make sense the day you buy them. And number four, don't be paralyzed. Take action. Paralysis is always going to hurt you, okay? So take action. Keep following your plan and keep going. Be a little more careful. Be a little more cautious. That would be sensible. But keep your big plan going. Keep doing all the right things that you've planned to do. So you got to take some action during this crisis.

Well, great words of wisdom, Jason. I believe action is always key during times of crisis. To find the opportunity, we have to take action. We had to have a very timely conversation here. However, I would love to have the opportunity to have you on again because I think real estate can play a valuable role in a retiree's portfolio, and I have a pointed conversation about that in the future. Hope we get that chance. But thanks for joining us.

Absolutely, Casey, thank you. Happy investing to you and your listeners. And if I come back on in six weeks we will be having an entirely different conversation, I think, but we'll see. Best wishes to everybody and wash your hands and stay home and be safe.

That's right. Thanks Jason.

Take care.

Thank you.

Thank you so much.

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