2211 FBF: Income Property Investing and the National Housing Market Myth

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.

This show is produced by the Hartman Media Company.

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Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some real 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 multimillionaire 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, episode number 173. This is your host, Jason Hartman. Thanks so much for joining us today. I have here in the office with me Brittany. Hey, Brittany. You haven't been on for a while.

I have not. Thanks for having me.

How you been?

I've been pretty good.

Have you been swanky?

I have been very swanky.

Swanky is good. Before we get into today's show, let's talk about what you want to talk about.

I want to talk about some of our events that we have coming up. We have our Creating wealth boot camp on July 31st and that location is TBD.

Last show I mentioned that we were thinking of LA. We didn't get any feedback on that. So we'll just stick to Orange county probably.

Well, stay tuned for our location on.

That in the OC It'll be either in Costa Mesa or Newport Beach, I'm sure, which is an easy deal if you're coming from out of town. Last event we had people come from Hawaii, from the east coast, all over, and the Pacific Northwest up in Oregon. And so easy, you fly into John Wayne Airport, we will pick you up. One of our people will come and pick you up at the airport. You don't even need a rental car. You can come in and stay for one night at the same hotel where we're conducting the event. And it's just really easy. I mean, any of these hotels are within five, maybe 10 minutes of John Wayne. Orange County Airport and the airport code for that, if you're traveling in is sna sna. And it gets one better.

Brittany and Jason, are you going to tell them about if they have to hop on a plane to get here, how they get their tickets for free?

If you have to fly, we'll comp you.

What a deal.

That'll more than pay for the cost of your hotel. You can stay in a nice hotel here this time of year for two nights for less than that. So we'll comp you. So that'll be good. You and a guest come and join us. Bring your significant other and join us for that.

Brittany.

Yeah, we're looking forward to that event. We had a great turnout last time and we're looking for another great turnout this time on July 31st.

Yep, that'll be good. So that's Saturday, July 31st. And I have to tell you, I was at another event today, another event, and I just. It is unbelievable to me the number of events out there that are charging people absolute fortunes. This event was $6,000 per person that I went to today. I attended it. I got in for free because I'm in the. I'm in the biz. But it was amazing how little content was presented at that event. Just unbelievable. If you like content and you don't want me talking about my family and my dog for the whole day, which I don't, you will get real content. You won't get a big sales pitch on products or upsold to the next event or anything like that. We have real content creating wealth in today's economy. We've had several thousand people come through that course and we've got just rave reviews. And it's $300. It's less than $300. Do yourself a favor, come to that. You will really, really be pleased. The other thing I wanted to mention is I'm looking at a property that I got from a commercial real estate broker. And the reason I bring this up is because this property, and Brittany, there it is, is a Blockbuster video store on a triple net lease. And I showed this and talked about it a little bit at my last seminar. And every time I get this same email, because I'm on their email list. I email the broker and he never responds to me. And I think that's really lame. And I simply, very courteously asked this question. I said, hi, what was his name? Brad. Yeah, Brad. I said, hi, Brad. Just out of curiosity, who would buy this and why would they buy it? Blockbuster is basically closing down. Everybody knows DVD rentals are a Thing of the past already with technology. And if you lose this Tenant, you are 100% vacant in a property that is $1.3 million. Now this is advertised as a 10% cap rate. I don't know who in the planet would be stupid enough to buy this property. Now this is the kind of thing that a commercial broker preys on to sell to investors who usually think these triple net leases are really simple deals. You've got an A credit tenant, Blockbuster Video, I agree with that. And they have over, listen to this. They give their stock symbol on the NYSE, which is BBI. They have over 9,000 stores in 25 countries and they show that they have revenues of more than $4.6 billion. And this is just crazy. This store, I'll bet you. Now I could be wrong, it could be converted to something else, but I bet you this thing's going to be vacant in a couple of years, if not sooner. So 10% cap rate. We've got properties with cap rates better than 10%. And because you get better leverage and better tax benefits on housing, they're just far better investments. I mean they're just far better. Hey Brittany, let's go back and I'll stop my rant here and tell them about the Masters Weekend product. This is a great product, folks. And there are two products you really need to purchase out of the store@jason hartman.com.

Well, we do have our Masters weekend live event coming up, Jason, on October 16th and 17th and you can sign up for that on our website right now. It is $647. It goes up, I believe by 50 or $100 on June 15th. So go ahead and purchase your tickets right away so you get in for that early bird special. And we also have a deal where you can get this event. It's kind of the best of Masters Weekend is what we like to call it. From years past that we've done this event. I believe is this our eighth time we're going to be doing this event.

I think it's the seventh time. Lucky number seven this time. And this Masters Weekend home study course is $497. And it has 22 speakers on everything from best practices in property management, market profiles of several markets, tells you how to analyze properties, my economic outlook and monetary policy outlook, property evaluation and tracking, how to properly structure legal entities for maximum asset protection, how to get cost effective legal services, the client panel. There's so much more here and you don't have to waste time. You get a digital download of all the Audio, you don't have to travel for this and you don't just from this morning's experience. I'm so I tell you, I go to these other events and it really makes me feel good about what I'm doing. I'm gonna pat myself on the back. You know, our stuff is good content and I'm being objective folks. I really am.

And let me tell you, I was on this team of putting this product together and it is loaded with content.

Yeah, it is. Hey, just the materials kit that comes with this, the Masters Week in Home study course, Audio plus materials kit. And the materials kit I believe is about 500 pages, right Brittany?

Yeah, I believe it's 499.

Actually.

499 pages if you count the COVID it's 501. How's that? Front and back. So anyway, look at get a copy of that. You'll really like it. There's one more product that you really need to get.

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.

And that is the one that I'm going to give you a free sample of right now. And that is my Financial Freedom Report newsletter. So we gave this one away as a freebie sample. So we figured we'd also podcast it. And what you get is you get the 20 page. It's usually about 20 pages PDF that's in full color and it's really beautifully illustrated, has charts, graphs, proformas with examples with call outs. It has articles, there's a lot of text in it every time, a lot of articles, a lot of action, steps of action, actionable things you can really do to improve your wealth through online businesses, through home based business, through real estate investments, predictions on the stock market, predictions on the economy, all kinds of great stuff. So get a hold of the Financial Freedom Report. It's a subscription. It's $197 a year. You get the PDF copy on every issue and you also get the audio version of the the newsletter. And you are about to hear that right now. Look forward to seeing you on July 31st at the Creating wealth in Today's Economy boot camp and hopefully also at the Masters weekend in October. Let's listen in to the Financial Freedom Report. Here is a free issue sample for you. Be sure to subscribe and you can get all of this stuff@jason hartman.com.

Jason provides an extremely unique service Deal evaluator. Are you interested in a property outside of our network? Need a second opinion? No problem. Let our experts evaluate the deal. Find out more about it@jason hartman.com the price is only $50.

Welcome to the Financial Freedom Report, Volume 10 issue number. Welcome to Five. I'm Penny Hanes.

And I'm Rich Roswell. And in this issue we're bringing you the three steps you need to create your own economic recovery.

We'll talk to you about the four pillars of wealth and just a hint, none of them is money.

There's also something new, a financial freedom case study, plus online business advice, the secret to property investing, and much more.

So let's get started. Rich I realize that most of us could really use a bailout, but we all understand that no such thing lies on the horizon for us.

Well, you're absolutely right Penny, and that's why Jason has chosen to start us off with a type of self bailout.

Yes, he has Create your own economic recovery One of the most common editorial themes in the news media is a consistent search for signs of economic recovery. Every gyration in housing sales or consumer demand is viewed as a possible sign of rejuvenation by those who are desperate for signs of life in the economy. The intense microanalysis that accompanies every release of information from the Bureau of Labor Statistics or the Bureau of Economic Analysis has consistently missed two key insights. These insights are that a real market recovery cannot happen until more people are able to pay their bills, and that the recent increase in near term spending is being financed by borrowing. Key points to real market recoveries only happen when more people can pay their bills. Markets are dynamic and the only real forces that push them up or down are an increase or decrease in the number of people who supply or demand products and services, with demand being assumed to mean willingness to pay versus simply demanding that something be given to you for nothing. The way that this dynamic effect works is that people specialize in the area of their job and produce an income that is paid by their employer as compensation for their part in creating a product or service. This income is exchange for products and services produced by others. In this kind of system, everyone enjoys a higher standard of living than could be created if completely self sufficient for the necessities of life. Many pioneers in the Old west were self sufficient out of necessity. However, their lifestyle is not one that many people are anxious to emulate. This perpetual exchange automatically elevates the best products and services while diminishing those that are either inferior, cost prohibitive or not suitable for the current marketplace. However, this exchange only works correctly if people are actually producing something of value to exchange with other people in the marketplace. When a high percentage of people rely on subsidies and entitlements, it skews the marketplace toward those who have political connections instead of those whose ideas and products are the best. The current marketplace is not producing any discernible growth in people that produce enough to finance their consumption. This is resulting in a marketplace that is manipulated by government policy and moving further away from a real recovery with each passing month. The remnants of free markets are likely to produce some form of recovery over time, but it will be very long and slow in coming. Short term spending that is financed by borrowing does not create wealth. One of the great deficiencies of the Keynesian GDP formula is that short term consumption, government investment and net export spending is added together, but no allowance is made for increases or decreases in debt. This means that a massive influx of borrowing that is used to finance large amounts of spending will look like growth when it actually is just a perpetually increasing mountain of debt that has not yet come due. The most troublesome form of debt is the public debt that is being racked up by countless countries across the globe. The reason for this is that sovereign nations have the ability to print money as a way of financing their spending. These increases in the supply of money have the effect of devaluing all currency already in circulation and driving price inflation or hyperinflation. The current trend of presenting debt financed consumption as legitimate demand is not new, but is currently being done on a scale that was never dreamed of before. This is hurtling the nation on the fast track toward inflation that will impoverish those who are dependent on the government for subsistence. Since it is painfully apparent that a market recovery is not currently underway, astute business people must go about creating their own economic recovery. The best way to turn this strategy into a reality is by following three core 1. Create immediate free cash flows Most opportunities require investment capital. It is difficult, although possible, to go from nothing to something all at once. Most people need to build a base of capital before they can begin a program of investment. One way that free cash flows can be created is by reducing your spending. This is something that can be done immediately and will have an instant effect. Another method for creating free cash flows is with a small business that you operate in your spare time. In either event, the item of paramount importance is the creating of positive cash flows.

Build a reserve fund One of the worst things that can happen to a person is when they need something and have completely run out of financial resources. This can range from a repair to your home or automobile, all the way down to a downturn in your business revenue that forces you to absorb losses until conditions turn around. In either event, it is critical to have a reserve fund of liquid capital that can be used to meet unforeseen needs. Many financial planners recommend three to six months of expenses as a personal reserve fund. The exact amount will be unique for each person, but creating and building this fund is a matter of critical importance. 3. Shift your investments towards areas of opportunity that emerge from greater dependence the economy is currently slipping into a three tiered system where the bottom is populated by a dependent class that requires government subsistence for the necessities of life, the middle tier of income producers that are squeezed by taxes and inflation and a wealth owning class who own income generating assets. This will create many opportunities in the areas of basic services such as housing. The population of people who can afford luxury goods is quickly shrinking and the growing area of opportunity is quickly shifting toward the bottom of the marketplace. Astute business people will recognize this trend and act accordingly. This economic prognosis is not particularly optimistic but remains highly likely if the current economic course is not drastically changed. The good news is that most people still have the opportunity to escape this trap and elevate themselves and their family to the wealth ownership class before the transformation is complete. By successfully implementing these action principles, you will be able to create a life of wealth and prosperity for your family and many subsequent generations. Action Item Immediately begin adjusting your income, investment and lifestyle strategies in anticipation of of a long, slow recovery.

Create immediate free cash flows. Build a reserve fund that allows you to absorb bumps in the marketplace. Shift the focus of your investment program toward the areas of opportunity that will emerge as more people become dependent on the government.

The Four Pillars of Wealth in 1776, Adams William Smith published his globally recognized masterpiece entitled the wealth of nations that conducted a critical inquiry into the basis and origins of real wealth. The book was primarily written as a rebuttal to the prevailing economic system of mercantilism. Now, mercantilism is best described as a system of economic nationalism where nations believe that global output is static and monetary wealth is synonymous with physical wealth. Under this system, nations sought to increase the quantity of capital or gold in their possession. Now the way this goal was accomplished was by restricting trade and imposing tariffs to ensure the capital did not leave the borders of a particular nation. Sound familiar? Well, what Adam Smith rightly noted was that real wealth is not currency or gold. In Other words, money. Since those things are inanimate and don't produce anything that's of value in use, they're simply a medium of exchange, the value of which is frequently manipulated by speculators and governments. The way for a nation to increase its true wealth is by maximizing the amount of products and services it controls through productivity improvements and trade. This is the fundamental basis of capitalism, and its validity persists to this day. As we've seen, wealth is a term that many refer to, but few truly understand. Most people think about their personal net worth and wealth in terms of money or currency. However, money only represents a medium of exchange for products and services. The fundamental building blocks of these products and services are what constitute real wealth. By placing ourselves directly in control of these building blocks, it creates a layer of immunity against currency manipulation by speculators or governments. These building blocks break down into four pillars of wealth. These pillars are resources, media, banking, and technology. First, let's talk about resources. Resources represent the physical things that are used to create other products and services. Securitized resources are often referred to as commodities. But the pillar of wealth is much more expansive than gold or oil. Fundamentally, a resource is something physical that has a limited supply and growing global demand. One way to control resources is by directly owning oil, mining, farming, or forest product operations. This can be implicitly dangerous since commodity prices are highly volatile and there may be market gyrations that create extremely difficult business conditions. In addition to this, the capital requirements for directly entering the commodity business can be extremely vast and most people don't possess the necessary capital to directly enter. The business of controlling resources. And investing in stock carries difficulties of its own since company management may be incompetent and market prices can be manipulated. The most efficient way to control resources is through packaged commodity investing in assets such as rental housing that are built with basic commodities and rented out to tenants. As the demand for building supplies such as wood, petroleum and concrete increase, it will escalate the replacement cost for new housing. This effect will drive up the value of existing housing and create an opportunity for the owner of packaged commodities to realize profits. Action item. Control resources by investing in packaged commodities so that the price inflation benefits you by pushing up the replacement cost of similar assets.

Now let's look at the second pillar. Media. Media represents the ability to broadcast ideas and entertainment to multiple people simultaneously. The power of media comes from two distinct the first is through influence, and the second is from advertising or product revenue. Influence allows you to become a thought leader and shape the outlook of others by establishing yourself as an expert. It creates a loyal audience of people who are interested in hearing your perspective while showing shaping their own opinions. Influence is extremely useful when you're attempting to create new business paradigms or carve out a new market. Niche Revenue from media is typically produced by income from advertisers or from direct sales of products and services. By creating compelling content that attracts an audience, you have the opportunity to gain revenue from marketing affiliate partners in exchange for access to that audience. The business model of media is built around compelling content that attracted viewers whom advertisers desired. Recent decades have seen seismic changes in media. Because of the Internet, the channels of audio and video media distribution used to be exclusive property of radio and television networks that were tightly held by a smaller number of companies. The old roadblock to media was access to distribution, but with the advent of blogs, podcasting, and YouTube, it's now possible for any person to broadcast their ideas and entertainment to an unlimited number of people. The new roadblock to media is acquiring an audience with compelling content. With the friction between people, providers and consumers of content virtually eliminated by the Internet, there's an unprecedented opportunity available for people who can create compelling content that attracts a significant audience. This opportunity exists both in the sphere of influence and in revenue action. Build a personal media empire by creating newsletters, blogs, and podcasts that are dedicated to communicating content on a subject matter where you possess knowledge and experience. Now the third Banking Banking represents the ability of an institution to create loans from deposited funds that exceed the amount of those deposits in accordance with the national required ratio between loan funds and liquid reserves. The way that banks make money with this model is by charging interest on loans and then paying a lower rate of interest on deposits. This spread between the interest rates is what allows the bank to cover its expenses and generate profits. The reason that banking holds such great power in wealth creation is because of its place of prominence in large investment projects. Since most entities do not have sufficient cash reserves to finance projects such as building new factories, office parks, or shopping malls, they must obtain a large loan to finance the project. By controlling access to these loans, banks are in a position of extreme power over the creation and preservation of wealth. Unfortunately, this avenue of wealth is not accessible to most people since banks are highly regulated and it is extremely difficult to launch a new banking entity. However, there is an aspect of banking that can be used to the advantage of individual people. That unique aspect is the willingness of banks to offer long term fixed rate loans. These loans are especially powerful when tied to assets such as residential real estate and fixed for a long period like 30 years. The power of fixed rate financing comes from its ability to hedge against inflation. When inflation pushes up interest rates and asset prices, people who finance their assets with fixed rate loans will still experience a fixed interest payment.

Thank you for listening to the Creating wealth show. This is Jason Hartman, your host and we appreciate you following the show. We have many, many episodes, hundreds of episodes, and some of the older episodes have been archived and placed in our Members section and that applies to this one. So we include a sample that's about 25 minutes long and then for the rest of the show you can go to our members section@jasonhartman.com Many of the other shows are still in their full length complete version. However, some of the the shows like this one are in our Members section where you can hear the show in its entirety. And again you just need to go to jasonhartman.com and you can get the full show there in the Members section plus a whole bunch of other great members benefits and resources, whether it be documents, forms, contracts, articles, other video and audio content. Just a great resource. So be sure to join as a member@jeffjasonhartman.com and thanks again for listening to the Creating Wealth Show.

This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews. Please visit www.hartmanmedia.com or email mediaartmanmedia.com Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc. Exclusively.