1714: 3D Printed Home Myths & Inflation Induced Debt Destruction

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 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 1714. 1714 and happy Monday to all seven. So we want to talk today about the most awesome, incredible real estate technology that is going to solve the world's housing problems. That is going to change everything. It's going to make housing affordable. It's going to end the homelessness problem. I mean, it'll totally end the homelessness problem. That is going to completely disappear. People that are living in little crummy houses, little crummy shacks all around the world are going to be living in much better, modern, beautiful houses and they're going to be able to do it for $10,000. It's going to be a massive disruption in the housing market. I mean, humanity will finally be housed properly.

Life is going to be good. It's an amazing time to be alive.

Not.

I wish that were all true, actually, I really do. But it's just, it's just a gimmick. And that is manufactured housing and 3D printed housing. I'm lumping these two together. We've talked about it over the years and folks, we just got to talk about it again because I am constantly receiving inquiries, people asking me my opinion of, look at these manufactured houses. Look at the houses on Amazon you can buy. Look at the 3D printed houses. Look at the ones they built in Austin for $10,000 each. Yeah, well, it's not what it seems. In fact, it's not even close to what it seems, as you know, because I mentioned it on a prior episode earlier this year. I went down the rabbit hole. Yes, I went down the rabbit hole. I thought maybe this is the thing, maybe its time has come and maybe it's time to get into the business. And Ashley was researching this intensively. I was researching it. We hired an expert consultant. You heard him on the show talking about it. And we looked at this stuff and a couple of years ago we looked into the houses you can buy on Amazon. Well, they're not really houses because they're hardly finished. You can hardly live in them. You can't even come close to living in them in what they sell on Amazon. So for all this talk, and it is amazing how much talk There is about 3D printed houses, about manufacturing, manufactured houses. Listen, I think this is all great. I'm all for it. Just make the numbers work, make the economics work and if the market wants it, we're gonna have it. How about the container homes? We've done some shows on that before. You've heard them years ago, not lately. On using those shipping containers. Right. There's lots of them around the world, especially in the US because we import a lot but we don't export so much. So a lot of them end up here. What to do, right? What to do with the shipping containers? Well, we have a virtual guest today to talk about this. Her name is Belinda Carr and she does a fantastic job. She's not really here with us, she's just here virtually and you're going to hear from her in two parts today. She did a fantastic piece on the shipping containers and why those don't make sense. And when I did shows on them before, I thought they didn't make sense at the time. But people keep talking about this stuff. It's kind of a funny thing about humans just the way we are. I guess we all have this optimism. We want to see the world conform to our utopian beliefs. We've got the rose colored glasses on, don't we? But reality just yanks those glasses, those rose colored glasses off our face and throws them to the ground and stomps on them. And then after they reality throws the glasses on the ground and stomps on them and breaks them, it slaps us in the face. We wake up and we say, guess what? This reality is not here yet. Maybe it will arrive. But it is nowhere close to being here, ladies and gentlemen. It's not even close. Several months ago when we were looking into these 3D printers, we, we talked to a few of the companies that make the printers. And I was saying, you know, and really thinking about this and getting very excited about it, I was thinking, you know, I'll just spend $400,000, I'll start a construction company, I'll buy a big scale, a large scale 3D printer, spend $400,000, give or take, hire a structural engineer, hire the people I need and I'll start printing rental properties that our investors can buy. And hey, I'll keep some for myself, of course, for my own portfolio. But I'll sell some to clients because with a 3D printer, hey, you can build a house in a day, right? Build it a day for $10,000. Maybe I can sell it for 25,000. That's a pretty hefty profit margin there. But it'd still be a lot cheaper than the properties you can find on our website, right? You'd buy them left and right like hotcakes. But guess what? The reality just does not match up to the hype. I'm really surprised that these promoters can just basically lie about this stuff. It's kind of amazing. Like how is it that they can get away with that? I, I don't know, I guess no one's filed a complaint or lawsuit or anything for false advertising. But you know, hey, they're doing it. Okay, we'll get to our virtual guest in a moment. Belinda Carr will be right with us. You're gonna love what she has to say. She is really, really smart. She's got, she's got a bunch of good stuff. This is just one of many, many great things she does. Lets talk about the pharmaceutical system for a moment. The medical industrial complex. The medical industrial broken debt enslavement complex. Just like the college industrial complex or the legal industrial complex. Folks, is it just me? Am I being cynical or does it seem like virtually everything is a scam nowadays? Everything is a racket, you know, it's unbelievable. It's just so discouraging. And I know, I know it sounds contradictory in some ways it's an amazing time to be alive. I know, that's my quote. I said it, I say it a lot and I believe it. But then, you know, someone rips the rose colored glasses off me, throws them to the ground, stomps on them and reality. And I'm like, how do you balance these things, right? It can be an amazing time to be alive. Yet at the same time in other parts of life, everybody can be on the take and things can just be a big scam. Well, certainly we know the medical system and big pharma is a big scam. Now if you heard my live stream, not last weekend, not yesterday, but the week before on Sunday, go to the YouTube channel and watch it. If you didn't catch that, I talked about how I've had this ear infection for over a week and a half now. And let me tell you, I've had two ear infections in my life that I'm aware of. I asked my mother, I said, mom, you know, kids get ear infections all the time. When I was growing up and even into adulthood, I heard about people talking about ear infections. I didn't know what that was. Somehow I escaped that. I don't know. But then when I was in China a couple years ago, I got an ear infection and it really hurt. And then a week and a half ago, I got one and it was so painful. I go to the doctor. Well, I go to the urgent care for $229, just pay cash for it. They prescribe a oral antibiotic. I go to pick these up at the pharmacy. $6 and change. Okay, that's great. That's nothing. And then these ear drops. $260 for the ear drops. And I said to the pharmacist, well, isn't there a generic brand? And she says, yes, it's $230.

What a complete scam. Look, I can afford it. But even when you're rich, you don't like being hosed, okay? So just out of principle, I thought, I'll just tolerate the pain because the urgent care had closed and they couldn't change the prescription. First thing the next morning at 8am I call them up. I'm in so much pain, I can't even tell you. I could barely sleep. It's awful. Probably should have just paid for the ripoff drops the night before. Anyway, I call them up. The doctor on duty changes the prescription, sends it over. But wait, this is the important thing, and this is the hot tip I want to tell you, okay? If you haven't heard of this, it's pretty great. GoodRx.com GoodRx.com Rx like prescriptions. I never heard of that site. So the person at the urgent care says, well, did you go to Goodrx? And I'm like, what's that? So I go to Goodrx, I type in the name of the ear drops I need and I print out a coupon for 25 bucks. I go into the pharmacy with my coupon in hand and she says, it will be, forgive me, I can't quite remember all this now because the same thing just happened again. And I'm going to tell you the new update to it. And she says, It'll be like $33, you know, because of your insurance. And I said, well, so I got this coupon from Goodrx and I think the coupon was for like 30 bucks or something, or $33, I think. And if I use the insurance. It's only, I think, $25. I could be misremembering this a little bit, but it's close enough for government work. The concept is the insurance price was slightly lower than the good RX price. But I asked the question that everybody should be asking. I said, well, if I buy it through insurance, how much does my insurance company pay? And she says, well, they pay $125 plus you pay the 25 bucks. So it's 150 if you go through insurance. But I can use this coupon in my hand from goodrx.com and I can pay 30 bucks and my insurance company pays nothing. Well, what do you think everybody does? They just let their insurance company take the hit. Right? Same thing happened today. I go in, they updated my prescription, they said, we want to try a new ear drop because the infection is still persisting and it's still painful, by the way. Yeah, it's really a bummer when you can't hear yourself talk. Hey.

That is really a bummer. So I go in today and I've got the good Rx 25 bucks, insurance, $150. The whole system is completely broken. Why is it broken? Because the stakeholder, the person in interest, has no care whatsoever about what their insurance company pays. They sell their insurance company down the river for five bucks. That whole thing is so massively corrupt, I can't even believe it. I just learned about this last week when I got this medicine. Never thought about it before in my life. I don't think I've taken a pharmaceutical drug in like 10 years. But you know, sometimes you need it, right? And wow, what a complete scam that is. No wonder we have a broken healthcare system. No, Obamacare won't fix it. It didn't fix it. It made it worse. What we need is, we need a competitive marketplace. We need to let insurance companies sell insurance in every single state. So there's more competitive market, there's more companies with offers, and the patient needs to pay part of the bill every single time. And they should pay it, not on some funky formula. They should just pay a straight percentage because then they have the aligned interest with the insurance company. I'm always talking to you about, align your interest with the most powerful forces the human race has ever known. Governments and central banks. As the old saying goes, never bet against the Fed. Right? Never bet against the Fed. The Federal Reserve. Align your interest. This is the problem with property managers. Most of them suck. And that's why we help you self manage properties. We teach you how to self manage your properties, especially if you're a member of the Empowered Investor Inner Circle. By the way, last night we had a phenomenal, a phenomenal zoom meeting. We have these monthly zoom meetings. It was about civil forfeiture, gun trust and asset protection at a whole different level. If you are not a member of the Empowered Investor Inner Circle, you are missing out. So join. Go to empoweredinvestor.com Sign up for our conference, which is in September, and join the Inner Circle at the same time. If you're already a member of the Inner Circle, you get a $300 discount on the conference. So your ticket's basically half price. So either way, join us in September. But the best way to do it is to just join the Inner circle. You get a free ticket with that. All right, so it's a once a year deal we offer. It's available now, so take advantage of it. No health insurance required. There you go. All right, so I've got a good listener question I want to get to, but let's just get into our virtual interview with Belinda Carr for a moment and let's listen to a few minutes of this as she talks about are 3D printed concrete houses a gimmick? Tell us what you think after listening to the show today. Go to jasonhartman.com ask and let us know what you think. Let's listen in for a few minutes and then I want to circle back on this question. Then we'll listen a little bit more.

The first claim is that 3D printed homes can be built for less than $4,000. This is a flat out lie that started circulating in 2018. Journalists misled people for the sake of clicks by claiming that Icon3D, based in Austin, Texas, had a $10,000 tiny home prototype that could cost around $3,500 or $4,000 when printed in large quantities. Jared Gross, who runs a YouTube channel on 3D printed structures, interviewed the owners and the marketing team of Icon 3D. They categorically denied these claims. A lack of knowledge of the construction field is not an excuse to publish articles and videos with outrageous claims. The cost of 3D printed homes is a hotly debated topic because it is a new field with many unknown variables. Every company uses a different printer and a concrete mix and no one has printed homes in large quantities. Icon 3D, Logan Architecture and Three Strands have teamed up to build 1,000 square foot houses with two bedrooms and one and half baths for $450,000. In Austin, only the first floor is made of 3D printed concrete. The upper floor has conventional stick framing. The idea that 3D printed homes are the cheapest option in every market across the world is simply untrue. Before the blip in lumber prices, stick framing was the cheapest option in the States. CMU block construction is the cheapest option in the Middle East. Like the uae, steel or masonry bricks are the cheapest option in other areas. 3D printing can have lower labor costs, but there are other expenses to consider. The cost of electricity to run the machine, which is exorbitant in some countries. The cost of renting or buying the printer. And the cost of hiring specialists to calibrate and run the machine. The next false claim is that homes can be printed in 24 hours. 3D printers create walls, not homes. There are dozens of other components that go into building a house. Windows, doors, roofs, electrical wiring, plumbing, insulation, H VAC systems, interior walls, finishes, millwork, etc. The 24 hour timeline also ignores the time taken to ship the machine, offload it, set it up, calibrate it and dismantle it. Printing the first story of these homes in Austin took five to seven days. A viral video from 2014 claimed that a Chinese company, Vincent, printed 10 houses in 24 hours. A couple of facts are conveniently left out. They had four 3D printers running. They printed just wall sections and the houses were assembled by humans after the concrete had cured. The glass inserts and the roof were built by humans and they have no plumbing. A family in France was the first to move into a 3D printed home in 2017. Their home took 54 hours to print and cost 176,000 pounds. 20% cheaper than identical construction. The walls of this home are made of two layers of polyisofoam with poured concrete in the voids. Installing windows, doors, a roof, appliances and millwork took another four months. The outside of the home was manually finished with smooth plaster. Polyiso needs to be sprayed in a controlled environment, so the entire site was tented. You know what could be a better alternative? Stacking ICF blocks with plastic webs to nail or screw into. The next claim is that 3D printing will make jobs unnecessary. We are a long way off from that potentially happening. I think there's a common thread behind all these misleading claims. The productivity of the construction industry is lagging far behind others. Outsiders from the tech field want to fix it by disrupting and automating the entire industry without having any knowledge of its intricacies. They think that 3D printing is to construction as Tesla is To automation. A Tesla vehicle can be driven anywhere in the world with relatively small tweaks. The construction industry is at the mercy of nature and humans. There are millions of variables at play. Soil conditions, weather, local materials, culture, economy, design codes, and of course, form and function. The programmatic needs of a hospital, office building, factory, apartment complex, and home are vastly different. The global construction industry has thousands of specialized fields. Improving the coordination between all these trades is an ongoing struggle. But automating the printing of walls isn't the answer. Even on 3D printed concrete structures, you need humans to monitor, calibrate and clean the machine, Add reinforcement and insulation, frame out the door and window openings. Take a look at this smooth finished 3D printed garage in Florida. Since the client wasn't satisfied with the rough appearance of printed concrete, it was manually smoothened out. So much for eliminating humans on job sites.

So this is the result, the raw result of 3D printing.

It's kind of like concrete corduroy.

But if you don't love this look, they can smooth it out for you and make it look just like a regular wall.

The next claim is that 3D printed homes can solve homelessness and housing shortages. Like I've said in earlier videos, the arrogance of designers and architects really shines when they talk about homeless shelters. Making a shipping container or a 3D printed concrete shelter will not solve homelessness. We need to approach the issue with humility and address the underlying socioeconomic and and psychological issues, among other things. Lafarge Holsam has ambitious plans to build affordable low carbon housing in schools in Africa using 3D printed technology. I recently spoke to Nicholas Patel, the founder of Full Bore Africa, who grew up and ran several construction businesses in Kenya. His realistic perspective of 3D printing in Africa was eye opening. He pointed out the lack of consistent power, the need for several backup generators, the carbon emissions shipping the machine to Africa, the poor infrastructure getting to job sites, the legal issues clearing the expensive 3D printers at ports, 24 hour security, the cost of foreign trained specialists to run the machine, and their hazard pay, the dirt and sand that will get caught in the grooves of the 3D printed structure, and the difficulty in getting high quality consistent windows and doors to fit into the precise openings created by 3D printers. Nicholas believes in light gauge steel framing. A structurally sound steel frame should be used to create the bones of a building. Homeowners can choose any infill that they are comfortable with, Whether it's compacted bricks made from soil, thatch or concrete. This method speeds up traditional home building, empowers local communities respects local culture and environmental conditions and it's affordable to purchase and maintain. This is what I'm talking about when I say we need to approach housing shelters and infrastructure with humility. Imposing outlandish designs that stick out like a sore thumb isn't the solution.

Okay, so do you see how much More complicated this 3D printed home discussion is than maybe any of us originally thought? And when you listen to the rest of this, there's just much more to it than these promoters are talking about. When they're Talking about a 3D printed house, the vast majority of their time they're simply talking about the exterior walls. It's a completely misleading thing. Completely, completely misleading. Okay, so here is our listener question. And this comes from. From Monroe. Monroe, thank you for asking. By the way, cool name. Thank you for asking the question. Hi Jason, I love your show and thank you for putting it up. Inflation induced debt destruction. I'm currently doing a 1031 exchange and buying two duplexes in Memphis, Tennessee and one new construction property. I guess you're not saying where that one is. Okay. Or maybe that's in Memphis also. I also own a rental property in Jacksonville and will be buying an additional three new construction properties there as well. Now this is all great. This is what our network is for. To help you do all this. Awesome. Inflation induced debt destruction question. Should I buy down interest rates with points even if inflation induced debt destruction is going on? FYI, Carrie helped us find those Tennessee properties. Big shout out to her. Well, Monroe, I have to tell you something. Today is Carrie's seven year anniversary. Working with me.

Anybody who can put up with me for seven years deserves a big cheer.

There you go. Yeah. And you know Sarah and Brittany, they've been with us, I think they've been with me like 14 years through different businesses and everything. So good stuff. Anyway, what you're asking is does a buy down make sense? And a buy down is basically this. When you pay points on a loan, it's nothing more than simply prepaid interest. That's what points are Now. I've owned a few mortgage businesses over the years. I haven't been in the mortgage business in a long time, but I used to be in that business. Honestly didn't like it very much. The mortgage business is a little bit shady, I thought so I didn't want to be part of that, but I tried it a couple of times. Long, long time ago. Back in the early 2000s with my traditional real estate company. And then in the investor business, I did that Also in about 2000, I don't know, 6, 7 and 8, I think it was in the mortgage business a bit. So understand that when a loan is priced, the bank or the mortgage broker or the mortgage banker will basically have what's called a par price. So what is the price of the loan at par, meaning you're not paying any points? If you think of it like golf, right, it's a par three. Well, you can either go under or over the par. The par is meaning it's exactly as indicated. Three strokes and you got to have the ball in the hole or you're going to be over par. Hey, if you do it in two, you're under par, right? And you're a fantastic golfer. So congratulations. So that's the deal. At par means there's no points. Almost every loan, though, is priced based on the idea of one point or so. That one point is technically buying down the interest rate. So if the par price on the lender's rate sheet says 3.5%, which by the way, I can't even talk believe, I'm talking about those numbers. They're so low, it's incredible. And many times they're even lower than that, as you know. But I'm talking about investor loans. And investor loans are a tad more expensive, but still incredibly cheap. What they might do is they say, okay, if you pay a point, you know, that price is really, well, makes us competitive. Everybody kind of expects to pay a point. No big deal. So we'll say one point and that'll make the interest rate a quarter point less for the interest rate because you prepaid some of that interest rate in the form of points.

So the question that Monroe is asking is, should I buy the loan down by paying more points up front to get a lower interest rate for the long term? And my answer is, you need to do a little spreadsheet. It's real easy, just a little calculation. Heck, use a napkin, you don't need a spreadsheet. And just calculate the payment based on par with no points, and then maybe based on 1 point, 2 points, 3 points, and calculate the break even time. Usually it'll be around three and a half years, give or take, meaning that it will make a lot of sense to pay extra points and buy down the loan as long as you're following my plan and you're a buy and hold investor. So I hope that helps. Be sure to go to empoweredinvestor.com right now. Go there right now and get your tickets, your early bird price tickets. For our September event and also join the Empowered Investor inner circle. And let's get to the rest of this video with Belinda Carr. It's really awesome. Here we go.

Another claim is that 3D printing is sustainable. While prefabrication and 3D printing can help minimize waste, generalized claims of sustainability over all other forms of construction are untrue. The building construction industry accounts for 40% of all energy related carbon dioxide emissions, of which cement accounts for 8%. As much as I love the material and the solidity of concrete structures, it is one of the most destructive materials on earth. It is responsible for almost a tenth of the world's industrial water use. It adds to the heat island effect. Limestone quarries and cement factories are air pollutants. Accelerants that are added to concrete to decrease curing time can pollute indoor air. Also, walls are a tiny portion of the entire structure. We need a holistic approach to construction to to make it truly sustainable. Now don't get me wrong, I am excited about 3D printed construction. Whether it's concrete, mud or synthetic stone. I love the raw layered appearance of 3D printed homes. I even made a video on this technology a couple of years ago. Hey everyone, it's Belinda. Welcome back to my channel. This video is going to be an introduction to 3D printed concrete. I do not think the technology is a gimmick, but I despise the sensationalist coverage, misleading claims and over promises. They generate a lot of buzz and probably help fund startups. But I think the lies cheapen the value of the technology. In 2019, Cobod released a white paper titled the Facts about the True State of the art of 3D construction printing. They tackled the misconceptions in the press like the Office of the Future in Dubai which was actually made of pre cast elements printed in China. All the interesting architectural details were not 3D printed but made manually. They also clarified that no one has printed a building in 24 hours. No one has printed an entire building, just the walls. And that as of fall 2019 only three companies supply printers. COPOD and Pericroup are setting a precedent for the rest of the industry. They are pushing for responsible coverage. Right now, 3D printing seems to be a solution looking for a problem. Maybe it solves homelessness. Maybe it's the cheapest and fastest construction methodology. Maybe it's sustainable and will fix the planet. It's going through an identity crisis and trying to fit into niches instead of just being itself. The technology has so much potential, but it's still in its infancy stage. I see so many parallels between the hype and media coverage of shipping container homes and 3D printed homes. I'm sure people in the comments will call me a buzzkill like I did with the container home video, but I hope this video helps people understand the limitations of the tech. It helps companies and countries realize that may not be appropriate for them, and I hope it encourages critique.

Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the shows specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional and we also very much appreciate you reviewing the show. Please go to itunes or Stitcher Radio or whatever platform you're using and write a review for the show. We would very much appreciate that and be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.