2088 FBF: Client Case Study - Unlocking the Long-Term Benefits of Real Estate & Income Property Investing

Welcome to this week's edition of Flashback Friday. Your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present and propel you into the future. Enjoy.

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Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before and a new slant on investing fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self made multi millionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating wealth show. This is your host, Jason Hartman and this is episode number 244. So I tell you folks, you sure don't have to convince anybody to buy good income properties anymore nowadays, do you? It is unbelievable how people are just gobbling up rental housing inventory right now. And I mean from an investor perspective. But you know, when I say rental housing inventory, that could easily mean rental housing inventory as a tenant. And I guess both are true really. And that's one of the reasons the opportunity is so good for investors. I recently interviewed Dan Ammerman on the show and we'll, we'll have that show published fairly soon here today we're going to do a case study where we have a client of ours on the show. Any of you listeners that want to come forward and be on the show, just touch base with us, contact us through Jason hartman.com and go to the contact us section and say that you're interested in being on the show and telling your story and heck, we may just put you on and we may even record an interview and heck if it's terrible. How about this? We won't publish it. Just kidding. Well, only half kidding, I guess. My ex girlfriend Melanie used to say there's a little bit of truth in every joke, right? And she only used to say that because her mom used to say it to her. I guess that's how old sayings like that get started. But you know, I interviewed Dan Amerman on the show and he talked about this really interesting article that he did about arbitraging Fed policies with rental housing cash flows. And that's mainly what we talked to him about in that upcoming show. But you know, I was just kind of looking at this article of his again as kind of a prelude to this show. And I just wanted to point out a couple of things that are just so telling and make this opportunity so incredibly, incredibly robust right now in terms of the opportunity for us as investors. And there's one chart that he has here, a 20 year history of financing cost and he looks at the 30 year fixed rate mortgage from 1992 to 2012. Okay, so for that 20 years, and he looks at the Freddie Mac primary mortgage market survey and you see that back in 92 rates were about 8.5%. They have just totally, totally plummeted to where they are now, just above 3.5%. But what does this really mean for us as investors? Well, of course it has a huge impact on our investment because when you combine that with what he talks about on the next chart, the average price of US single family home that is inflation adjusted from 1992 to 2011, and this is in $2011. You can't go to 2012 because the year is not closed yet, obviously. And this is the Freddie MA index, which by the way, I want to make a point much more accurate to look at that index, which people rarely do, than the. I'm going to just say it folks, this stupid Case Shiller index. I'm really getting upset with the Case Shiller index nowadays. And you know, we should get someone from Case Shiller on the show so that they can defend their index which only represents about 5% of the market. Only 20 out of 400 markets, 50, 14 of those 20 markets I wouldn't touch with a 10 foot pole. I mean, isn't that crazy that people just revere that and that's like the most, I think, I mean, at least anecdotally that's my impression. That's the most commonly used index. Everywhere I look, people look at Case Shiller, Case Shiller this, Case Shiller that. Why the heck are they doing that? It's so, it's so irresponsible. So in this chart, what he looks at here is 1992 and this of course is inflation adjusted, okay, the average home price. And by the way, there's a really good debate on what is a more accurate study is average or median. Well, median, remember median is just the middle number. A lot of times when you see these statistics, they're Looking at the median price, Okay. I think it's almost more important to look at the average price. Now probably the most accurate would be to look at a weighted average, but I don't even know how you could do that on a national scale. Certainly because so many markets and the prices differ so dramatically. You look at overpriced coastal real estate and in the socialist republic of California, or overpriced real estate in the socialist city of Manhattan. Manhattan, New York. I just don't know how you could even do that. But this is amazing. 170,000 or so, 1992 down, 2011, about the same price. And he's got a line right through the middle of that that shows it hovering just above $190,000 for the average price for that time period. Right. The average graph uses single family home prices in the US over the last 20 years as reported by Freddie Mac and is adjusted for inflation with the CPI U index, the urban cpi, the Consumer Price Index. U for urban. Okay. The two most striking features are the surge in prices that was the real estate bubble and the plunge in prices since that time. Now get this, we go to one more thing here to talk about, and that is this. Inflation adjusted mortgage payments. And when you look at what has happened to Americans and what has happened to people in this economy, even non Americans, illegal immigrants. Oh, I'm sorry, don't mean to say that. Undocumented workers, or as Hillary Clinton called it during the last election against Obama, people without papers. I know that's a little bit snarky, of course, but it just shows the ridiculous of our political discourse in this country sometimes. Okay, but anyway, you look at that and I was thinking, you know, gosh, I had this wonderful, wonderful housekeeper in Southern California for many years. I mean, her name was Gume. She was just a doll. And she must have been my housekeeper for, I don't know, 12, 14 years probably for a long time. And she was, she was great. And I just couldn't believe it. I was thinking back to that and was thinking, here in Arizona, what I pay, I pay 65 dol a week to have my house cleaned. And then I pay another different party to come through and clean the floors because the place is so big. I pay them 20 bucks. So I pay $85, I guess you should say, per week, right? But in California, I was paying $65 a week. No, I think I was actually paying 60. And I was thinking back to the olden days. I only paid goomy, like $50 or $60. And I was thinking, my gosh, isn't that ridiculous? Isn't that ridiculously unfair that the market price for house cleaning has probably not increased in, in like two decades?

Welcome to this week's edition of Flashback Friday. Your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present and propel you into the future. Enjoy.

That's insanity, folks. I mean, America, when you look at Americans and you look at all these salary surveys, Americans haven't had had a real wage increase in over 20 years now, folks. Yet their cost of living has shot up dramatically. And a lot of it, I say, is deceiving again. And I remember when I was taking back at UCI, University of California, Irvine, I used to take these classes on what they called light construction development, which is, you know, all the classes in this IREM or merm. They had like two series, forgive me, I don't remember what the acronyms were, but these were basically all the classes you took if you want be a real estate developer. And I remember I took these classes years ago when I first got into the real estate business because I always wanted to be a developer. And after taking those classes, I realized what an insanely risky proposition that is and how totally complicated that is. I would much rather be in the business of what I do now or rehabbing properties or something like that than developing them from the ground up from scratch. So when I was taking these classes at UCI to learn how to become a developer, what amazed me is the way that they would look at the statistics and especially as they related to inflation, cost of living and lifestyle. And I remember in the classes they were always talking about how the average American home, the square footage has increased so dramatically. I'm just giving you the concept here because I don't have the exact numbers, but just conceptually, this is the idea, you know, they would say something to the effect of, well after World War II, when the baby boomers started their family formation years, the average American home was like 900 square feet. Well, you know, that's true. And I think of a place like Lakewood, California as a great example. But there are many other places around the country that of course became these suburban locations for these small homes. But what they didn't tell you and what they never tell you is that the density, they were on a quarter acre lot. Okay, at that time. Nowadays though, or you know, maybe a 8,000 square foot lot, but still a nice sized lot, by the way, an acre is about 42,000 square feet, I believe. And what they don't tell you is nowadays, yes, the house is bigger, which means the building materials, it consumes more building materials, of course, but the density is so much higher. I mean, people are packed into much smaller spaces nowadays. So when you adjust home prices for inflation, you've got to really consider what are you really getting. I mean, in the early 70s when this beautiful area in Newport Beach, California was built, called Harborview Homes, okay, maybe mid 70s, don't quote me on the year. Exactly. I think those homes, when they were originally sold, sold for like $45,000 or something like that, okay, in, in the 70s. And nowadays they're easily upwards of a million dollars and much more. Most of them have been remodeled and dramatically improved or knocked down. But the neighborhood is like a million plus neighborhood, okay? And so back then that was sort of your upper middle class home and it was on a big lot in a neighborhood with green belts and a school right in the center of it and so forth. Whereas nowadays you have a little row home. Yes, the house itself, the structure is larger, but the density is much higher. And so people are much more on top of each other nowadays. So in looking at this chart, this is interesting. Now this, this effect didn't happen very much over the past 20 years. It happened before that that the den density dramatically increased and builders got much better at building for higher density too. So the quality of density improved. But I'm just pointing out that all things are not equal and they are not as they seem on the surface. So inflation has had a huge impact on our lives and some people haven't even had a raise. I mean, have you had a massage lately? Okay, spa services, there's an example luxury item, right? So the price of a massage is not really gone up in many, many, many years. And I'm thinking, well, don't these people get a raise? Don't they get a cost of living raise? Doesn't my housekeeper get a cost of living raise? Actually no. And if you look at typical corporate jobs, the same is also true. So this has been a huge problem for people. And we on this show, we learn how to fix this problem and how to solve this problem, how to actually make it benefit us as prudent income property investors. So this last chart that I'll talk to you about is inflation, Adj. Mortgage payments. And this one is particularly telling. It goes from 1992 to 2012 and it's in $2011. $2011. So what it shows is back in 1992, your mortgage. Your typical mortgage payment in America was about $900. And then it went up and it went down. And during the boom times, you know, when things were crazy, 2006 era, it went up to 11 over $1,100. Now, that same payment in 2012, get this, this is amazing. I mean, think about what this does for your cash flow. What I'm about to tell you. 20 years ago, the typical mortgage payment, $900 boom times. Typical mortgage payment, I'm going to say on this chart, just kind of guessing, it's about 1100 and $20. Now it is 570 dollars. 570 dollars. If you are not jumping out of your chair to buy good prudent income property right now, you are completely missing the boat. Okay? You are totally missing the boat. An incredible opportunity we have now. And of course, you can learn a lot more about this by joining us for the Meet the Masters of Income Property event. And that is March 24th and 5th in beautiful Irvine, California at the Hyatt Regency in Irvine. By the way, many of you have registered already, so thank you. We look forward to having you join us. Let me give you the airport code. You don't need to rent a car. The hotel is literally five minutes if that from the airport. But it's a. It's a gorgeous hotel. And the airport code is SNA for Santa Ana. Sna, Orange County Airport, John Wayne Airport, Santa Ana Airport. It has about three names to it and it's a beautiful airport. The transportation is super simple. There's a shuttle from the Hyatt Regency you could take a taxi to. Cost you nothing, basically. So join us for that. And there's still early bird pricing. It's now $597. And that will cover you and a guest. Be sure to join us for that. I increased the size of the room block and we were able to extend that $99 rate. But I can't say when the hotel will cut us off. It's sort of illogical how these hotels act. They extend the rate, but then when the room block sells out and they still have rooms, they won't sell them for $99 anymore, which is a quite a bargain price. So the early bird gets the room, the early bird gets the worm, too. And so join us for that $597 and $99 room rate while the room block and the early bird pricing last. And that price will escalate again pretty soon. So register@jasonhartman.com two days. It will be filled with all kinds of great info. So join us for that. Now, one of our vendors, and this kind of irks me a bit here, one of our local market specialists, or LMS as we call them, they have set up a fund, a realty fund, a distressed realty fund, and they have been sending out solicitations to our clients who have purchased from them in this market to join this fund. Now, look, folks, you know me. I don't like pooled assets. I have a quote that I say, pools are for fools. I think we should all be direct investors and we should not relinquish our financial future to anybody else. In my ten commandments of successful investing, what is commandment number three? You've heard me talk about it before. It is, thou shalt maintain control. Because when you relinquish control to somebody else in a pooled asset mutual fund, this distressed asset fund that they're setting up, stocks, bonds, whatever, anything else that someone else has control of besides you, where you are not a direct investor, you leave yourself susceptible to those three major problems. And look, folks, you can make a lot of mistakes in your investing career, but if you just don't make this mistake, you'll stay out of a lot of hot water. Be a direct investor. That is the commandment. Number three is probably the most important commandment, but the others are important too. So three problems. You might be investing with a crook and you'll lose your money because they'll just rip you off because they're graft and corruption. Number two problem, you might be investing with an idiot and you'll lose money because of their sheer incompetence and stupidity. But assuming they're honest, assume they're competent, they take a huge management fee off the top for managing the deal. So why would you leave yourself susceptible to that? Be a direct investor. And speaking of direct investment, boy, business is booming. We got a good case study coming up, not only on this show, but on another show. I rarely take on clients of my own, but, you know, we have investment counselors to do that. But a larger client was referred to me a couple of months ago, and I've been working with them on this 1031 exchange. And let me tell you something, they are going to profit so handsomely from this. And we're going to do a case study, a show about this because it's a great case of highest and best use of any asset you have. And basically, this particular client had a beach home in the family. An expensive beach home was worth about, I think, $2.7 million produced very little rental income. And they've turned it around and they've been buying property through us all over the country. They just bought 10 properties today in Atlanta, Georgia. Last week they signed up for 20 in Dallas. Although I don't think they're going to do all of those Dallas deals. They purchased some in Phoenix and in St. Louis as well. And it is really amazing. I mean, folks, the cash flow will be improved for these people more, more than tenfold easily, from what they had to what they will get when this exchange is finished. And people all over are coming out of the woodwork, buying dozens and dozens and dozens of income properties because this opportunity is so impressive right now. So take advantage of that. But here's one I don't want you to take advantage of. And this is from a competitor. And you know, I actually like this competitor. Some of my competitors I really like and I really do respect, but I can't say I agree with them on everything. And this one I definitely do not agree with. And they're offering properties in Nicaragua and they're saying, oh, it's the next Costa Rica. And folks, we have so many people pitching us on this. Belize, Costa Rica, Nicaragua, all of this stuff. And I don't know the details of this deal. I suppose I could be wrong, but I bet I'm not. I'm a world traveler. I've been to 64 countries. I have not been to Nicaragua, although I have read a lot about it. I subscribe to international living. I've met with real estate brokers in numerous countries around the world. In Eastern Europe, in Central America, in South America. And I look at real estate pretty much everywhere I go. Even if I don't meet with a real estate broker, I'm still checking out the real estate market because it's just fascinating to me. In Ukraine, I mean in Russia, I've done it everywhere, okay? I am not a novice at this stuff. And I have not found one international investment anywhere on planet Earth in 64 countries. And some of those countries I've been to numerous times that makes anywhere near the kind of sense American real estate makes. And I've got friends that have purchased properties in Costa Rica. I've got friends that have purchased properties in all different places around the world. And clients, I hear about their experience. And let me tell you something, folks, this doesn't make sense. In my opinion, you want to purchase property that produces income. Now on this sheet from my lovely competitor here, it talks about how you can get oceanfront condos and non recourse 0% financing for 20 years. Well, why are they offering 0% financing? Because they're building it into the price. The new Costa Rica prices start at 70,000 bucks basically. Okay, and who is your renter here? Are they American tourist or European tourist? Are they vacation rentals? I mean, these places don't have much of an economy at all. And if they have any. And I tell you something, when I was in Belize, I was going to just jump over to Nicaragua. I was with one of my investment counselors down there and we were looking at property and we were looking at banking and thinking of, you know, I had actually opened up a Belize bank account and I didn't fund it yet though. I just opened the account before I left, actually several months before the trip. And then I went down there and I went to the bank and going around the country, I was so completely unimpressed. I couldn't believe it. It was the. Some of these places, folks, these are totally third world countries. Well, I read the Lonely Planet guide, which is one of my favorite travel guides by the way, about Nicaragua, and we were going to go over there. Instead we went to Guatemala from Belize, but Nicaragua was right there. We were going to go over to Nicaragua and they talked about the crime, the crime, the crime. I don't know. Last time I was in Costa Rica, there were bars on every window. I mean, granted there's a couple of nice beaches. So what, what are people thinking when they do these investment. These are not even called investments. Yes, they can own properties there. Sure. If you want to check out a society and check out a civilization and go lay on the beach somewhere, fine and dandy, that's one thing. But to consider these investment properties where you have employment and rule of law and good infrastructure, I just think you got to be out of your mind. American real estate is a steal right now. People from all over the world are lining up to buy it. I talked to one of our vendors, he said he's got a group in Egypt that buys properties from him. 30 at a time, 30 single family homes at a time. Just in one shot, every several months they come back and they buy another 30. Unbelievable. Shouldn't you be doing that? Yeah, you should. So. So stay away from these distractions. Belize, Costa Rica, Nicaragua. Listen, if I find one of these deals that makes any sense, I'll be the first to tell you about it. But I haven't. And I'd say the closest thing that makes any sense in my opinion in Central America is Panama. I did go to Panama I looked with a broker there and that one was sort of interesting. I'd say it was, it was the closest, but it did not beat anything we have in the United States that we recommend through my network and on the website@jason hartman.com okay, join us for Meet the Masters. Let's get to our case study here and we will be back with an actual client talking to you about life and retirement and college and investing and all of that good stuff here in just a moment.

Have you listened to the Creating wealth series? I mean, from the beginning? If not, you can go ahead and get book one that shows 1 through 20 in digital download. These are advanced strategies for wealth creation. For more information, go to jason hartman.com.

My pleasure to welcome Patrick to the show. He is one of our clients and he has been to many, many of our events, Meet the masters, creating wealth, etc. And he wanted to talk today a little bit about his experience with investing and planning for your own future. None of us is going to retire with a gold watch anymore unless we're a Wall street insider that's basically ripping off the middle class, which is what Wall street seems to be so good at. And you know, we're just living a great state of insecurity nowadays. But insecurity breeds opportunity at the same time. So as long as we plan and act correctly and view the situation correctly, the opportunities really, in many ways have never been greater. But for those living by the old rules, you're going to be sadly, sadly surprised at how things do not work out. So that's what we're going to talk about today. And Pat, welcome. How are you? All right?

Not too bad. How are you doing today?

Good. Hey, thanks for joining us on the show here. And first of all, let's just get a little background, tell people you don't have to be very specific, but just maybe what industry you're in, what you do for a living.

I'm in the aerospace industry in an engineering field and currently manage people and work on various military type programs.

Fantastic. Well, I'm sure you can give us all the details about those military programs, right?

Yeah. Not today.

Top secret. So now, how long ago did you, I guess you first found out about us through the podcast, Right?

Right. Yeah. First I guess I have to thank Apple and then I have to thank you for doing the podcast. I've learned a lot.

I'm sure.

I've listened to all your shows and that was probably back in 2008. And the one thing I always think of, I kind of Maybe listen to them in the wrong order because I was in the middle of purchasing a house locally. And in the end, after I closed escrow and then a few weeks later finishing the podcast, I wish I would have not bought that property here locally.

Well, sorry about that. They're not in any order. But speaking of locally, you're in Southern California, right?

Yeah, I bought the house in Lancaster, California, which is probably 80 miles north of LAX. And at the time I thought it was a good deal, but since then it's probably declined some. And I had to come in with a lot of money and could have really used that money to have better cash flow in other areas. But I look at it as a learning process and I want to keep pushing through and learning more. And sometimes it costs you money, sometimes it doesn't.

Well, yeah, that's true. You know, we all live and learn. And I got to tell you, it was interesting because just when I was driving on my way to do this interview with you, I was listening to a real estate show on the Phoenix radio here, and they were talking about doing short sales and there were two guys hosting the show. And one guy says, call us today because your house is your greatest asset. And then the other guy says your house is your greatest liability. And you know, for a long time I didn't look at it that way either. And you know, Robert Kiyosaki says that, he says your house is usually your biggest liability. And I think we've got to just change our mindset slightly, not completely here. And of course you have, and I have too, you know, in the past several years, whereas when I moved out of my house, living at home with mom, okay, When I moved out, moved into a brand new condo that I bought, and I remember that was a condo in Irvine, California, and it was not my first property, but was. It was my first residence that I actually lived in. And I bought that for $102,000 and 11 months later I sold it to a buddy who, well, wasn't a friend at the time, but now has become a very good long term friend, and he bought it from me for $160,000. And 11 months later. And I thought, yeah, and then Patrick, it gets even better than this because I borrowed the money for the down payment from my grandmother. So my. I wanted to calculate my return at being at about 600% in 11 months, but it was really infinite because it was someone else's money I used for the down payment. And that is the beauty of income property. And I have made some Money on the houses I've lived in over the years and I've rarely ever been a renter all my adult life, only a couple of times. One time when I was building house in Newport coast and had to wait for the construction to finish and I rented then and I'm a renter now as I mentioned on a few, a few shows ago. And it's great to own property. Income. Property is far and away the greatest asset class. It's the best wealth creator there is. But owning our own home, not necessarily. So your home doesn't produce income for you, it just costs you money. And if you're going to live in a upscale area, you can usually rent for so much less as a percentage of value than owning. And so when you get into a more upscale property, the rent to value ratios become so in favor of the tenant. And that's, that's a reason really why as an investor you shouldn't invest in these expensive or even median price areas of say Southern California or New York City or you know, any high price market you want to, you want to serve the masses and dine with the classes. As the old saying goes, buy low end, low end and medium low rental properties and you can rent your house.

Yeah, I mean where I live now, I mean our house, you know, right before it all blew up, it went to as high as about 600,000. And I, you know, talked to my wife and said hey let's, we should maybe sell it. And it's, I think there's an emotional attachment sometimes. And now I think my house, I'd be lucky if I could sell it for 250. So it's, it's really been depressed and you know, in my industry now we're going through some downturn with the government, you know, not being able to spend the money it used to. And what I've seen is the people that can't move and part of it is they're upside down on their house so they can't move. And the ones that are getting the jobs are the ones that are actually mobile and able to go move 50 miles or move 200 miles and they can get the job. The people, some of them are locked in where they have these houses that they've bought that now they're upside down, they can't short sell them or get rid of them without a credit issue. So I think being a renter gives you that mobility that you've talked about before. And I have talked to several people and there's some people that just like Owning a house. But I agree with you. Like in the South Bay, down in Redondo beach or Manhattan beach in Southern California, you could rent a house for 3,000amonth. And that same one, to buy it, you'd have to come and buy with a couple hundred thousand dollars and then, you know, end up having a payment of about 5,000amonth.

Right? Yeah, no, you're absolutely right. And you know, what we're going to do on our discussion today is really challenge some of these old ideas that people have. And we're going to talk about college and retirement planning, and we're starting out with this homeownership thing. And you know, I have said that on the show, the best thing anybody can have on a resume nowadays is mobility and being able to move to where the jobs are, where the, where the business climate or the jobs climate, it's friendly to those who want to work. And so that's a very important factor that you just mentioned. Houses tie people down. The United States is the most mobile society in the world. You go to Europe and you go to South America. These people, they live in their houses forever. They don't move. And I say that that really costs their economy a lot of money because it reduces efficiency, velocity in the economy when people can't move to where jobs are. And being mobile is a stimulating factor to the economy. And as investors, that's what we're here to do, is to provide that mobility to our renters, to our tenants, and in turn, they're going to make us wealthy by doing it. So it's just a, it's really a win win deal for everybody concerned. Okay, so you found the show, the Creating wealth Show back in 2008. And then what happened?

Well, then I. Sarah worked with me over probably six months. I was in the middle of an escrow on the house that I bought here locally. And then I kind of decided to go purchase a house in Indy just because at the time, to be honest, it was the cheapest one and had the least amount of risk. If I lost my money, it would have been less than maybe buying a Dallas property. And that one, in the end, your team really helped out because of about two weeks before I was supposed to close, the original lender I went with decided he wasn't going to make enough money on the loan and didn't want to do it. And Sarah scrambled and worked with her team to help get me the mortgage. That one, it's been a good house. I've had it turn it one time and that cost me about $1,600. The people had been there about two years, but the numbers you said it would hit, they've hit. And I always put my own little margin in there in case it doesn't.

But that's a good point. Assume it's not going to go as well as the Performa or the projections say, because life happens. If it goes that well, great, but assume it won't. Assume it'll go worse. Yeah.

And one of the things that I think when I've researched these other markets and I like kind of looking and diving in a little deeper than maybe most people, is we make some assumptions here. In California, when I buy a house, I pay taxes based on the price I paid for it. Well, in Indy, you buy a house based on the value that I think it's worth, not what you paid for it. So you have to kind of factor that in where the taxes may be a little higher. The other big thing I think is that I've learned from you is keeping that reserve. I have money set aside to handle that. I could pay payments on all my mortgages for about six months. And I was really tested. Earlier this year. We were going on a cruise to Alaska, spending a lot of money there. My daughter's getting ready to go to college, and then all of a sudden I had four, four of my houses go unrented, all at the same time. I didn't think it would happen, but it was literally with all within about a month and a half. And the initial reaction is maybe to go sell everything, but I really just kind of said, hey, I put this money aside, I saved this for this reason and started dipping in that money. And eventually we got everything taken care of and rented. But what I've learned listening to you is I got to do my planning and then stick to my plan and not change it just when something bad happens.

Well, a couple comments I want to just say before we go on. First of all, you said Indy, and I want to make sure listeners know that means Indianapolis. And then you also referred to turning the house or turning. What you meant is turning the tenants the tenant turned over. So in between, that cost about $1,600 to do that turn. And then the new tenants have been there for two straight years with no vacancy right now. Why did it cost you $1,600?

Well, and I guess I gotta correct that. I did get some of that deposit back, basically.

Of their security deposit, you mean?

Yeah, I mean, so it probably total cost me maybe 600 out of my Pocket. I'm just thinking of what I had to pay the contractor, but it was carpet paint people. Some tenants are dirtier than others. And once again, to all honesty, I've never been there, never seen the house. I do have a house in Phoenix that I got on my own. Not through your network, but I've never actually been my house.

With a realtor. So, you know, I've never been to Indianapolis. So you're really relying on your team and their property management. They've done a really good job. You know, they communicate well with us and you are paying a little bit more. Every time I talk to somebody about this, they always say, well, I could fix that faucet for this much money or you know, save $50 here, but I really don't have the time. So I think when I look at it, when I have my house here locally in Lancaster, when I have to go change a tenant out or do something, it costs me a lot of my personal time. I have to go over there to get bids. When I do this one in Indianapolis or Atlanta, you're paying a little bit more money, but you're really not doing any work.

What I'd like to say about that is if you've got a good, honest property manager, they're great. They're really not making much money. But if you've got a dishonest property manager and you got to watch out for them, they can cost you some money. But not nearly as much as something in a pooled or traded Wall street style investment where you don't notice all the costs, they're just skimming all the profits off the top and you don't even know they're doing it, so. Right.

Yeah, I mean, I am doing self management on the place I have in Phoenix and actually I bought that. I partnered up with another guy and we've purchased. We're in escrow on one right now in Indianapolis and we have a total of three. And then the one in Phoenix, we're self managing and so I'm trying that. And what's nice about it, you know, it's. It saves me about a hundred dollars a month. The real challenge is getting to know all the different contractors. And we've had a few little issues that we were able to resolve, but we're trying to maximize our return on investment on that. Plus, like you said, when you have a really great property manager, to me it's worth the money. When they don't do a good job, it makes it more complicated and more work for you anyway. So you might as well just do the work yourself if you can.

Yeah, that's a good point. One of the things I wanted to mention about, that you alluded to earlier was about sticking to the plan. And it just reminds me of a great quote that I've always really tried to live by. At times when I'm indecisive, I'll try and remember this quote. And here it is. Successful people make decisions quickly as soon as all the facts are available and change them very slowly if ever. Unsuccessful people make decisions slowly and change them often. So you see the difference in that when a successful person, they look at all the facts, they make a decision, they don't agonize about it, and then they stick with the decision and they stick with their plan. Now, that doesn't mean being so unaware that the whole environment has changed around you, which is actually one of the things we're going to talk about today when we talk about the business world and college and so forth, and you just keep following the old plan. I mean, but when it comes to doing these properties, I think that quote really applies well, because you're going to feel the bumps in the road here and there. And it's just important, you know. Real estate is a game of staying power. It seems the people that stay in the game always make very, very nice profits. But the people that are jerky about it and indecisive and get hung up on little issues that when you look at them in the rear view mirror, they're really very minor. Those are the people that really, they just don't do well. They don't do well with business or real estate or relationships for that matter. They don't do well with much of anything in life that I can think of. Yeah.

And the people around me too, you know, it's there. There are people that are going to support you and there's people that are going to want you to fail. And the funny thing is, when I lost some of my tenants this last summer, you know, there were several people that's like, oh, you should sell. And they were almost happy that it wasn't working out.

Yeah, right. And some of those people can be your best friends. Ironically, it's just sort of an ugly part of human nature.

Right. And like I've been to many of the Masters events you've had and you know, I think there should be maybe a frequent flyer program for that. But I've been to some, so many of them, really what I enjoy going back is the networking because you're around people that are passionate about doing this and wanting you to succeed, where even the people in your own life, they're just too negative and they don't understand it. I mean, I've invested. I mean, I've listened to every one of your podcasts. That's a lot of investment in you, and not just your creating wealth one, but the Solomon success stories and other things. So there's a huge investment and I've gained a lot of knowledge. And just by me talking to somebody, I really can't convey that. And when you, when you tell people, hey, go, go check this out, and they don't do it, and then they wonder why things don't work out for them and they don't understand how to do something, it's. It's not real hard to understand why they're not being successful. But I agree this is about staying power. And I. It's important, I think, for anybody to make sure they have their reserves and have a basic plan. And I hear a lot of people saying they're going to go out, buy 10 houses in a year. And I've partnered up with another, you know, one of your clients that I introduced Sarah to, and we've had our LLC formed now for a year, and we're on our third house. And, you know, it's. It's hard when you're working and you got to get the funds together. But to me, if I could buy one house a year, I always tell these younger people that are 25 or 30, you know, if you could have 10 houses by the time you're 30, you'd be set when you're 60.

Oh, yeah, you'd be very well set when you're 60.

And also where to buy. I mean, like I said, I've bought here locally. And I think the thing that I wanted to say about that is that with California, we have earthquakes. And I know for a fact my house is Indianapolis is covered for a tornado, but yet my rental house here is not covered for a earthquake.

Yeah, and one of the things about earthquake insurance is that a lot of people think that when the big earthquake comes and it will inevitably come, it has to. Nobody knows exactly when, but it will come. And when it comes, they. They just think the earthquake insurance, it won't be able to pay. There just won't be enough money to pay the claims because it's, you know, earthquakes are so devastating to a whole area, just a huge, huge area. And the claim will be so major that they just don't think the money will Be there. And that's why I say is counterintuitive as this sounds and as maybe sounds a little ugly, but the best insurance is a high loan balance. Yeah.

And I've, with folks at work, everybody, you know, they keep saying they want to pay their mortgage off. And to me money is not that important. It's, you know, what can you get for the money you have? So to me it's about the cash flow. And I think on my first house that I bought here when I was kind of listening to your podcast, I don't lose money on that. I kind of break even. But I really bought it for speculation that in the future it would go up. But now looking at the economy and where we're at, you can't fix the housing market till you fix the job market. And I think we're five to 10 years away from having recovery, at least where I live. And I bought that house based on the fact that one day I could sell it for maybe twice of what it's worth. But I, you got a lot of inventory, jobs are moving out of California. So you know, to get into that one house, you know, it's a, it's a beautiful house and it was really big, but I probably spent 64,000 to get in that. And I could have bought a couple houses in other markets that have maybe gave me $300 a month each. And it's really just using that cash flow to maintain your lifestyle. I still argue with a lot of people on this when they say, hey, I'm going to go out and buy a car. And I go, why don't you go buy two houses in Indianapolis or Atlanta and then use that money to pay for your car payment.

No, they don't get it. They don't get it. Unsuccessful people, they spend money on the appearances of wealth. Successful people spend money on the things that create wealth. And there is a big, big difference. So if you want to buy a liability and you want to enjoy those things in life, those material things, those little perks like that, like a new car or whatever, just buy some assets to counteract it, that pay for it and have, have the liabilities paid for by the assets and then you're out of the rat race. That's the way you want to be. So in what cities do you own properties now? You've got Phoenix, Indianapolis, Southern California, where else?

So I have a, let's see, I have two houses in Indianapolis. One I bought with my 401k rollover. I did a self directed IRA. I bought a house in Atlanta, that was the $7000 down deal. And, you know, if I look on the return on investment on that, it's been, you know, really great. I mean, I still make about a, you know, 150 bucks a month on that house.

And with only 7,000 down, that's an awesome cash on cash return. Yeah.

And, you know, so far there, the market, you know, the, you know, the rental market, it's hard to predict. I'm glad I'm a little diversified because I know if I stick in one area, other areas may do better. And I have a condo in Long beach that I bought from my brothers and my father passed away, and that one is kind of a break even. And then I have the house in Phoenix. I partnered up with a friend of mine and we have an llc. We bought that one and we have two more, and Indy that we bought together.

Good, good. Well, so what do you think when you look out at the landscape and you talk to the people with whom you work and you've got a daughter that's going to college, what do you think about retirement planning? What do you think about college? And really this, it's not even new, but I want to say the new economy and of course the rules have been changing. But I'd say that for purposes of this discussion, a few major shifts that were just huge, huge, mega shifts in our world is, number one, back in 1971, we came off the gold standard. Number two, we really became a globalized economy. All these free trade agreements, China, etc. Outsourcing to India, China, other countries. And then to really, really even magnify that trend, it was NAFTA when Clinton signed nafta. So a lot's been going on. I mean, and you know, I guess the other big mega trend I'd mentioned would be automation and the Internet. And it's really causing a lot of job insecurity nowadays. And things are changing quickly. You know, they say we live in alchemic economy alchemy, where things change really quickly. We've got to be very nimble. We can't depend on any company or any job or even any line of work or profession, because sometimes whole professions are just imagine, think about it. Imagine if you were a successful Travel agent in 1998. Where would you be now? You wouldn't have a career. I mean, there's virtually no travel agents. It's a very small industry compared to what it used to be. So things, they are a changing, as Bob Dylan said.

Yeah, well, I just was. I almost Took a picture of it and sent it to you. I was in Denver last week and I walked by this big, you know, shopping center and there's this big Blockbuster Video that's all boarded up and it looked like it was pretty fresh. But if we think back maybe five, six years ago, everybody went to Blockbuster Video and you would have invested money then and thought it was a great deal. Now with technology, it's put Blockbuster, at least a segment of it where you actually go pick up the movies, kind of out of business. So with industry, I think it's changing so, so fast. And then also all the companies are lining up where they're not giving the great pension programs. To me that's a disservice. I mean, I'm no financial planner. I'm not a big stock market person and don't, you know, couldn't give anybody advice on that. But the issue I have is that companies have shifted people from pensions to 401ks and they tell them to go manage their own money and it's going to end up hurting people in the long run because they don't really know how to do it.

Yeah. And I'll tell you something, we're going to do a 401k show and it was inspired by a client that I spoke with just the other day in Atlanta, Mario. I asked him to look up on Google the video I just said, type in 401k jail and you'll see a video we produced about that. And these 401ks and IRAs that aren't self directed, the ones that are in very liquid, very mobile things like stocks and Wall street style investments, I think there's a big fear of them being nationalized. And you know, I've talked about that on the show, especially the interview with Doug Casey a few shows ago. And I tell you, Patrick, I think that's what's coming next, that's going to be a big, big shift is the nationalization of retirement plans. And if you're, if you're, if you either don't have a retirement plan in the sense of a 401k or an IRA, or if you've got a plan that's self directed, where the assets are immobile, it's going to be very difficult for the government to nationalize those assets in that way and that's your protection. There are two ways you can protect yourself against that possibility.

Yeah, and unfortunately, like, you know, I'll be 47 here in a couple months and you know, I'd like to retire when I'm 55. I mean, look, what's changed in the previous 10 years, what's going to change in the next 10 years? And you really, you know, you kind of make your financial plan for what, what's going to happen 10 years from now. But I don't know that you can really count on it. So that's why I've chosen to take some money and put it into these investment properties. The thing I look at sometimes is I wish I would have done it sooner or understand it better, but I don't think there's any better time. I keep hearing people saying, well, everything's bad, don't do it. But it's. Interest rates are low, housing is below construction costs. If I look back in the past 20 years, I don't think there's been a better time than right now to actually go do it.

I don't know if there is either, given the combination of all things. Now I hate to say it again because I'm always saying it, but the housing market on a national basis, if you're looking at Case Shiller, is probably still in decline as far as a price issue. But again, real estate's a multi or income property is a multi dimensional asset class. So you have the cash flow from it, you have the tax benefits from it, etc. And just from a cash flow basis in the markets that we recommend, who cares if the property goes to zero? I doubt it ever could or would because you're already buying way below the cost of replacement or construction, but you're very protected. But the problem is you look at the stupid Case Shiller index and it's only got 5% of the nation's market, only 20 cities and 14 or 15 of those cities, I wouldn't touch them, those are overvalued cities that are still going to decline. So I, you know, I just can't stand it when people talk about housing as though it's one monolithic thing instead of a bunch of little diverse markets. All real estate is local, of course.

You know that I could actually in the market where I live right now, it's kind of unique where the, you know, we can get a single family home for probably anywhere from 100 to 150 and make a return on investment. So it's, it's different everywhere. And then what I, what I've seen is how people, the news media, sometimes I just want to turn it off because it's just so negative. But you know, there's so many different areas out there and a lot of people say, well, who would want to live in your rental house? And I know you've talked about it before, it's the people that almost every one of our rentals that I've aware of who's in it. You know, some of the ones, I have no idea who the tenant is because the property manager does it. But people have experienced a loss of their own home. And sometimes they get to move into the same size house. They move from their 3,000 square foot house they owned at one time with a $3,500 house payment. Now they're down to another 3,000 square foot house that only has a $2,000 rental payment. So people just kind of shift down to a different class of house. And I'm providing a service. I've argued with a few of my more liberal friends. I'm upset that I don't get more of a tax break because I'm actually putting people to work. When I buy a house in Indianapolis and I go put out $15,000 in rehab costs, I'm putting people to work. And if you would give me more of my money to play with, I would put more people to work. I'm creating jobs, doing what I'm doing. And a lot of people have thought I'm an evil person because I've taken advantage of somebody. But every one of my houses I have somebody's living in that needs a house.

Yeah, right, exactly.

There's no construction going on right now, so you're going to have a housing shortage. And I know on a, you know, several episodes ago, the gentleman mentioned that a 1% reduction in the home ownership rate is like a million renters. You know, my son who graduated from college, you know, who's still at home, is looking for a job and he's here, eventually he'll go out and you're going to have more renters that come online, Especially as the economy picks up slowly, I think you're going to have people that are sharing a house or living with their parents. They'll move out and it creates more demand. But the thing is, these markets that you've recommended, and I will say, working with you since 2008, I've seen you do what you say where once a market doesn't work or a vendor doesn't work, you'll switch to another market. And I don't think you have any favorites. If the market market doesn't work, you switch to another market. That does make sense.

Yeah. That's not exactly great for my business relationships, but I think my customers Love me for it. And I'm in business for the customer. I'm really like, I have a libertarian viewpoint about things, and I really think, Yeah, I don't know, I've just always been in favor of kind of the underdog or the little guy. And rather than support these other businesses, our affiliates, our vendors, or our property management affiliates, I want to support my customers. That's who pays us. We can find another vendor. Customers are hard to find. Customers are the most valuable thing. Customer is number one. So the fact that we have no physical presence or we haven't really spent any real money of any significance in any one market, unlike national real estate firms or even other real estate clubs. You know, like, there's one competing podcast, I won't mention their name, but I know some of you guys listen to it because I hear you tell me that sometimes. And they have groups in three different cities, and, you know, it makes them beholden to those. Those markets. And we're just in and out of things. When they make sense, we try to be there. And when they don't make sense, heck, we get out and we still have a contract or an agreement with that local market specialist in that market. We're just not referring business to them because we just don't think that it makes sense at that given time. You know, we want to go where our customers are going to have good experiences and it's going to be easy for them to invest and do business and the numbers are going to be good and all of that type of stuff.

Yeah, and in the markets, I think there's, you know, maybe two types of investors. When you do an Indianapolis home and you have to do the rehab yourself, it's a little, you know, there's more risk, but maybe the rewards are a little better. But I know you have a lot of markets where you can go in and buy. Like the one I did in Atlanta, it was fully rehabbed. It was very simple, and it didn't take a lot of work. So the thing I think that people need to understand is when it doesn't work, you're going to move out, but you still are supportive. I know when I have an issue, I can call Sarah and she'll do whatever she can. The nice thing about working with you, which at first there's different real estate clubs, like you mentioned, I'm buying the house directly from the person in that area. And I'm not relying on. You're not taking part of my profit, or I'm not giving you a fee to do this. So to me, I know it's on my own. And if I just take the numbers you've given me and I do a little research, I can validate those numbers. I would say I'm a repeat customer. I mean, we're in the process of buying a house. We're in escrow right now. We're hoping to close here in the next week or so. But if the numbers didn't work, I wouldn't come back.

Yeah. Yeah. Well, one of the things is we're attached to the outcome. Unlike someone who's on an infomercial or selling an expensive coaching program or something, we actually supply the goods, we supply the inventory. Not directly through our affiliations, as you mentioned, through our local market specialists that we contract with. But what we say on the show, it's got to happen in real life or we're not going to stay in business for very long.

Yeah, and it's not always perfect either. I mean, the one thing I do say as a. With all this technology, you know, we have caller ID now. So anytime I see one of my property managers come up on my phone, they're not usually calling to tell me, ask me if I'm having a great day. There's usually something wrong and you just got to deal with it. That's why you have those reserves. But I've had bought a house, we do inspections, and then two weeks later the heater goes out and it's, you know, $1,000 or $1,500. And you just got to account for that and deal with it. And most of my properties, fortunately, we've had them rented within a few weeks. But that's when everything works great. But sometimes you just gotta plan for, hey, it could take a month or six weeks to get it rented.

Yeah. So that's why you have at least 4% of the value of each property in cash reserves. That's very important because you never want to be forced to do anything rash. You always want to be able to stay in the game, and that's why you have cash reserves. Let's talk a little bit about what the original idea of this show was. I appreciate you sharing those experiences, but you have a daughter going off to college, and I know that you kind of perked up and were interested in some of the remarks I made several episodes ago about college and about student loan debt not being dischargeable in bankruptcy, which is something I didn't know till recently. And the world has changed so much around us, and planning for retirement, planning for the future, planning for Financial success, financial independence. What are your thoughts on some of this stuff?

Well, yeah, I originally had talked to Sarah and why? Because I had kind of lived some similar experiences where in 1986 I finished an associate's degree in electronics. And then when I went into the industry, I got married, I had a job, I was making good money and working overtime and didn't really want to go back to school. I kind of did, but it was expensive and time consuming. And then I got promoted within my organization and to the point where, hey.

We'Ll be back in just a minute.

Did you know that we offer one on one coaching? This includes six months of one on one coaching. For more information go to Jason hartman.com.

I should have it and you know, starting to be judged that I didn't have it. So a few years back you didn't have it.

You mean your degree?

Right, my bachelor's degree. And, and a few years back, I mean I was really struggling with this on a, you know, it was more of a, you know, maybe you don't feel good enough or you should have tried harder. But you know, everybody around me would say, hey, you're doing a great job, don't worry about it. But unfortunately, sometimes it does matter. So I went back to school. It was really tough. I mean, I gave up probably two years of weekends or spending time with my family or watching their sporting events because I was doing schoolwork every weekend. But in the end, I think you have to ask the question is, you know, why are you going to school? What do you want to do? If you want to be a doctor, obviously you need to go to school. If you wanted to be an engineer where you're designing something, they're going to want you to have certain education. But I think if you're in business for yourself, there's other ways where you could learn. And I think what happens, what I've seen, even with people that I know that have graduated, they get out of school thinking that everything is just going to be handed to them. And really what I think is the day I graduated from school back in 1986, I really just didn't know anything. And then that's the day you start learning is when you graduate. You know, school just give you some basic fundamentals. But you know, we should look at life as a continuous process of learning. And I've invested a lot of time learning about the real estate market and I currently took all the tests for my broker's license and I'm going to eventually start study and take that but it's a, you know, a continuous learning to understand. But with nowadays people just go to school for maybe some of the wrong reasons or they get a degree that's not going to do anything for them and then they're left with 100,000 in debt. I mean essentially to go to any, you know, average school these days with room and board, it's about 20,000 a year plus you know, the ancillary, you know, money that you have to, to spend for them to go out and do things. So my daughter is going and I want her to have that experience, but I want her to also look at fields where she's going to be able to get a job hopefully. I think the one thing that we don't teach in high school or maybe even college is how do you become an entrepreneur? Or how do you take somebody that's not motivated and make them motivated. What I see lately with people that are graduating is they find, feel everything's just going to be given to them and that's not the way life works. And also what I've seen also, which to me this not paying your mortgage, to me there's kind of a moral hazard. And I've seen a lot of people, it's almost like a business model where they're just going to not pay and it seems to be okay.

Like the business people that I talked about, a lot of these real estate gurus, they file bankruptcy every seven years. It's just part of the business plan.

Right. But it's to me what I've discovered though is I know a lot of people that have higher degrees and stuff. I think my passion for the real estate or listening to what you're doing runs deeper.

I don't know why it is, but how do we get people excited about taking care of themselves? What I think we've done is we've created a society almost where people feel we've trained them to be factory workers where they can just go in and if you get this job, you'll get this retirement, you'll get medical, the whole like school union mentality where you don't really have to perform, you just have to be there the longest.

And that's an old fashioned mentality. It doesn't play anymore in today's world, does it?

Right. But what I, you know, to me when I go to work every day, I really try to over deliver, do the best job I can because I feel I'm not guaranteed my job. If I don't do a good job, somebody else can do it. For me, and I think a lot of the younger people they've lived in, my kids included, have lived in a world where nothing really bad's ever happened. When you look at other countries, people don't have enough to eat, and here we have too much of everything. Nowadays, a new phone comes out, everybody wants the new phone, even though their phone works just fine.

Well, that's an interesting point that you just bring up, because I was talking to one of our clients about this just a few days ago. Everybody's talking about how we're in such bad economic times and everybody's suffering so much. And I know that there are people out there genuinely suffering. I understand that for sure. However, by and large, you look around and a lot of these people that have been unemployed for a while, they're still buying the newest iPhone. They've got a house full of gadgets and they live in a decent area. And they've got a car that's newer than 10 years old. The family, they've got two, maybe three cars. Folks, we got to just keep this in perspective. I mean, you look at the people lining up for soup or selling pencils on the street corner in the Great Depression, things are better nowadays, there's no question about it, they're a lot better. But just keeping it in perspective, being grateful for what we have and never deciding that we've done enough, always wanting to earn our keep every single day, that's a recipe for success and never feeling complacent. You know, Napoleon said the most dangerous moment comes with victory. So if you have a victory, stop for a short celebration and get right back to it and get your nose to the grindstone. That's what you should be doing. It's good character, it's character building. It's good for you, right?

And I think a lot of people, they, they enter a job or something and they feel that, that something's owed to them. And there's this mentality that, well, I want a brand new car right now and I don't want to pay for it. I want all these great things.

And it's.

If you really think about it, we kind of set ourselves up for failure even sometimes with our own kids, where we give them everything and when they get out of school, what else could they have ever wanted? You know, they had nice cars, a nice place to live, plasma TVs. And this goes back to where I know people are always like beating up on Walmart, for example, but Walmart offers cheap products to a lot of people. And I think it's improved people that don't have a lot of money, it's improved their life. And everybody complains about Walmart, but I always, every time I go there, I always see a lot of people in Walmart. So they must be doing something right.

They must be doing something right. Exactly. I know, I know. I, I mean, look, I'm not a parent. I would love to be a parent. I thought I would have had kids by now, definitely, but just have, it hasn't happened for me yet. Maybe I'm working too much. That's probably part of it. But let your kids have a little hardship, let them work and suffer a little bit. It's, it's good for them, it'll make them stronger people. You know, when I look back at all the hardships I've had in my life, at the time they seemed so difficult, but looking back on them, they seem like nothing. And it's like the world throws something at me now and it's like you can hardly phase me because I've been.

Through it, you know, My daughter, I bought her a used car and it wasn't really great. It was like, you know, $4,000. And she, she was upset at me that I, she knows I could afford it. And I think at the time I was choosing to buy another house versus buying her a better car.

Well, my first car, my first car I paid for all by myself, cash. It was $700 and it was a piece of junk.

Yeah, I had a $400 station wagon I brought for my brother and we used the pull up emergency brake because the brakes didn't work.

You know, and you know, Patrick, I walked to school and it was uphill both ways.

But yeah, but my daughter and I, like, I'm not going to be on this planet forever and if I could leave my kids 10 or 15 houses and when they're older, when they're 40 or 50 years old, they see what they have. That's when it'll really benefit them. If I would have bought her one car, she'll get scratched up or it gets wrecked in the parking lot. What good does that do to them when they're older?

You're absolutely right. You're giving them something strong, something that's powerful, something that's an asset that will help them for many, many years to come. Very good point. Well, on the college note, just so people know where I'm coming from on that, I think college is great. I just think it's just massively overpriced and it's the government's fault, largely because the government has promoted student loans and financial aid programs. And the universities in turn, just raise the price because the money is there to pay for it. The universities don't have to compete in a free market where if there were no student loans, college would be priced reasonably. It would have to be. The universities would figure it out. They would just somehow figure out how to offer college for one half the cost or one quarter of the cost. And when my mom went to school, you know, she went to Berkeley, okay, A great renowned school, one of the best colleges in the country, really. And she worked her way through college. No one paid for it. She didn't get student loans. She just paid for it as she went by having jobs, and kids can't do that anymore. It's just too expensive.

The funny thing is all the schools are protesting that the kids shouldn't have to pay their student loans, but yet they could just lower their rates. You know, they could just say, hey, we're not going to charge you $50,000 a year to go to school. And then that'll help the actual students, but they won't do that.

But these, these universities are a bloated bureaucracy. They're just like government. They're just human, hugely bloated with all sorts of pensions and all kinds of people that they really don't need to have there. And it's just a bloated system. It's totally inefficient.

Yeah, I mean, I went to. It was DeVry Institute of Technology. Now it's called DeVry University back in the 80s, and it was like, basically in a industrial area because they didn't have the money. It was, they're there to teach you. And it was. They're a business, so they have to be efficient. You know, they have to compete with, you know, the universities to get a lot of government subsidies. And I will say, like, but they get it.

They get it, too.

They get it, too, in the way of grants and loans and everything too. But the funny thing is, like, these junior colleges and stuff, they just suck the money from the community. But they don't even really produce anything because they don't have to. You know, they can just choose what classes they want to offer without really having any structure. I mean, how many people really graduate from junior college that actually go in there? I mean, the numbers are pretty low.

Folks, if your kids are going to college, do not let them get a useless liberal arts degree. Let them get a degree they can actually use in the real world. Okay, something that'll pay them that the world needs. Not these sort of airy fairy things that just there's no employment for half of these degrees that are out there. It's ridiculous.

Yeah, I think if you're going to work in a corporate setting, you have to go to school and get your degree because that's the gatekeeper that determines what you're going to get paid and how much advancement you get. I've seen in several different industries that they say, hey, if you don't have your bachelor's degree, you're going to be capped at this much salary. But if you're going to go into business for yourself, you could get your education other ways and probably more successful. You know, I do work with people that have Master's degrees and PhD that they're just not. I don't want to say, well, I guess I will say sometimes they're lazy and they think it's owed to them. They don't produce anything. They said, hey, I went to school and I have this degree so I don't have to perform. And that's not the way society is going to work in the future. I think it kind of works that way now, but I think that's changing.

It is changing. It's changing quickly. Well, folks, everybody needs housing. Stock up on some rental properties. Stock up on some very long, low fixed rate mortgages and you'll be a happy camper. What else do you want to just conclude with about, you know, investments and planning for the future? Pat?

I just think it's never too late to start. I mean, I've been talking to a few people and they're 50 years old or 55, and they really don't have a financial plan. And they were getting ready to retire. And I go, it's not really planning, it's more like triage at that stage. I think it's never too late to get started. I think the real thing is a call to action is even myself, I do a lot of things productive, I think, but I also waste a lot of time watching tv. But if people would just take an hour today to learn some of this stuff and spend time and develop their investment portfolio. It's not a big investment, but it's going to pay off in the future. I think the real thing is taking action. I mean, I mean, too many people out there complain and say, what's wrong with the world? But don't take action in their own personal lives to make it better. I mean, to me, the only thing I can do I can't control politics and what's going on. I can only control myself right now. And I'm trying to use the things the government does with attack strategies to use for my benefit in the future. And right now, if interest, I don't agree with what Freddie, Freddie and Fannie are doing with these ridiculously low interest rate loans. But if they're going to do it, I'll try to use them to my benefit because I am providing a house for somebody to live in.

Yeah, well, it's not a time to be an optimist. It's a time to be an opportunist, exploit the opportunities out there. And there are a lot of them. They are great. Good stuff. Well, Pat, thank you so much for joining us today. Appreciate it. And I guess I will see you at Meet the Masters in March, right?

Yeah. I've already signed up and sent my money in or my credit card and I'm ready to go. And once again I enjoy going by, meeting the people. And also I think it's just a good refresher when you listen to it again. And I will say the first few times I didn't always get it, but now even going for as many times I've been, I keep learning more and more each time because it sinks in a little different or you see it from a different perspective. And like I've used Mark Kohler to set up an LLC and use some of the other folks that you have. And you know, I think it's just great how you get all these people together and then the cost to me is insignificant for all the knowledge you get considering what some of these other real estate investment companies will charge to send you to a similar type education.

Yeah, that's for sure. Well, thanks again for supporting us. I'm so glad that you're involved with us and we appreciate your business and appreciate having you on the show today. Thanks so much, Pat.

All right, thank you.

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