2248: Refi Till Ya Die & Other Strategies that the Ultra-Wealthy Use

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com.

Thank you, Jason. I would not have as much money today if it wasn't for you. You know, Sissy and I both made a ton of money and you know, thanks to you and your guidance and your show and everything, it's been great. And now cash flow for all your clients on top of it. Not only appreciation, but cash flow. You made a lot of people rich, my friend. You're a good man. Thank you, Jason.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful, successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your financial Independence Day. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Hello, empowered investors, and greetings from beautiful Bali. I have been here for several days and it is really nice, but the past couple of days it's been kind of gray. You know, we've had some big, big rains here, like torrential rains. Reminds me of Florida. Anyway, it's, it's been great though. I tell you something, the more I travel and now we're up to 98 countries, some of them many times over. The more I travel, the more I realize something that many of you have real long before I did, but that is that the quality of life in the good old US Of A. Which look it, I don't want to be one of those like, America bashers because I think America really was the greatest country the human race ever saw, right? It changed the world. I mean, ever since about 1890 when it became such a giant force in the economy and over a hundred years before that, its constitution just changed the whole, like, vibe around the world of how governments should treat people, or better yet, how people should treat governments.

In other words, the government is here to serve the people. That's the idea. But sadly, over the past several decades, the good old US of A. Is really just collapsing under its own weight, its weight of crazy left wing ideas which, look, I'll Be the first to say not all left wing ideas are crazy. You know, I'm not like that radical of a person either way. A lot of people send me messages and stuff. Oh, Jason, I'm so glad you're, you know, so conservative. Know, not that far as many of you are, frankly. I mean, I'm a libertarian. I just think freedom is the right way to go. Right? Just freedom. As long as you're not hurting anybody else, do your thing. A lot of this stuff, you try and legislate, it's never going to be legislated. You're not going to change people's minds. Get over it. I think if you largely just fix the money, and a lot of things in society, in the world and in government just kind of fix themselves after you fix the money. Because money is, is the context in which we live, right? And well, really before that context, the bigger context is politics and laws. You know, I get these nasty reviews from idiots. You know, I got one like last week or so, maybe the week before it was, you know, one star. Because they don't like my political stuff. Stick to real estate. Are you kidding me? Do you think you can operate a real estate investment portfolio without being aware of and thinking about and talking about and hopefully lobbying for the right political ideas? Yeah, your mind, you know, this is. It's like the whole context. Look, fish live in water, and living in water dictates their entire life, right? Fish will never go to the mountains, okay? Because they live in water, they live in the sea, right? Now, I know you're gonna say someone's gonna write, well, there's a lake on the mountain. Okay, fine, you get the idea, right? The context, the political context and legal context in which you live dictates everything, okay? If you were born in Ethiopia, you just don't have the same opportunity as if you were born in, you know, a rich Asian country now rich Middle Eastern country, or the formerly rich Western countries that are now on the decline, sadly. But we'll see how it all works out. It's. It's all interesting, but the one thing I want to say that a lot of you have realized a long time ago that, you know, I kind of realized, but I realize it more and more with all my travels, is that the quality of life in so many of these other countries is really just better than it is in the United States. Now. It hasn't always been that way, but the last couple of decades, really, you know, as I always say, the peak of civilization was 1990, okay? Really? Since then, as the US has really been on a steeper and steeper decline, it is just more and more apparent that you can just live a better life. In a lot of places around the world, you can live it more expensively. I mean, you know, I'm in Indonesia, Asia right now in Bali, right. And it is amazing. I've had this terrible shoulder but, well, dual shoulder injuries. Both of my shoulders got injured about four and a half months ago and one of them, this one, really bad and the pain has been just awful. And when I was in the U.S. you know, the healthcare is a disaster. It just sucks. You know, I go to my expensive doctor with my expensive healthcare policy and I can't get an MRI until I complete a whole round of physical therapy. And I'm like, well, I can't do that. I'm going to be out of the country traveling, right? So never got an mri. But what I did do is I went to a couple different physical therapists in different places and you know, that helped a little bit. But I'll tell you what really helped is I went and got a massage that I would call like a physical therapy massage. This one massage therapist who doesn't speak much English, who I saw the last two times here, she just worked on my shoulder and helped more than anything, like really more than anything. It was more helpful than the physical therapy. And certainly I don't want to take the stupid painkillers the drug pusher doctor in the US prescribed. I mean, I did take a couple at the beginning, but I just don't want to take pills, pharmaceuticals, try to avoid them if at all possible, like sometimes you need them, but just sparingly. Anyway, she really helped. And so the first time I saw her was two days ago and I was paying the bill using Apple Pay on the way out and I gave her a very generous tip because she helped me so much. And you know what the bill was for my 90 minute massage with like really a physical therapy session too because she was like working my shoulder around and doing all this great stuff for the 90 minute massage, plus an extremely generous tip. You ready? 17. Yes, 17. And before your massage they might give you a foot scrub. And it's just grows like the quality of life is so much better, you know, it's just amazing. It really is. And it's so inexpensive. It's unbelievable. And that's true of many European countries and those are definitely on the decline, most of them, it's true, except Eastern Europe, which is on the upswing fortunately, and the Middle East I mean, I just couldn't believe it. When I was in the UAE and in Doha. I mean, I did a little video about Doha just because I was so radically impressed with it. And this incredible Fairmont hotel I stayed at, I mean, it was just shocking how great it was. The people just, they wait on you hand and foot. They're so polite, they're so helpful. And I am adjusting, by the way, just like the consumer price index adjust for what they call hedonic indexing, which I've talked to you about. I am adjusting in my mind. Like, look, hey, Jason, you're traveling, right? You're spending a lot of time around the hospitality industry. And you know, your attitude is different, right? You're different when you're there. I mean, and when I say this, I mean me, I'm different, right? I guess I am sort of. I don't know, sometimes I'm grumpy, right? And you know, the people are just so nice. They, like wait on your hand and foot, like Indonesian people. They are just kind, like, just kind, kind people. You know, I noticed that any country that has a lot of Buddhism, the people are just incredibly nice. I mean, they're just so peaceful and so nice and helpful. It's. It's amazing. You know, I remember we did that show a couple of years ago with the author of a book, she wrote a book called. And she did a couple TED talks. I, I think the book was Talk like a Buddhist or something like that or Communicate like a Buddhist. And you know, it was, it was really good. Go check out that interview. I think that was the name of it. I can't remember exactly. But anyway, just wanted to share that with you because it's interesting. You know, just keep an open mind about your life and your lifestyle and just know that there are many, many options. It's a big world and there's a lot to offer and a lot of you can work remotely now and you can just do a lot of things. And people say, like, what languages? Look, a long time ago, I gave up on ever trying to learn other languages. I know that may sound like ridiculous. The arrogant American who expects everybody to speak English. The fact is everybody does speak English or wants to, and just totally easy to get by. You got Google Translate on your phone. You know, it's just never a problem. The language thing is just not a big issue. 98 countries. I'm saying that. Okay, all right, so keep an open mind about that. Speaking of foreign countries, I just had one of my one on one coaching calls. I love doing those with you folks. By the way, thank you for all of you who signed up on our Black Friday special. That was kind of like a whole slew of new coaching clients, and I appreciate that. And so I just had this great call with a really nice gentleman from Israel. He has a bunch of properties in the US that he started buying after the Great Recession and then some in Israel. And we talked about his portfolio, and he was kind of saying, well, I thought I would have more cash flow by now. He's about 11 years in to the investing, the real estate investing, and he said, I thought I'd have a little more cash flow by now. And so I examined his portfolio with him, and we went over the value of the properties and the loan balances, which. The loan balances are way too low, okay? And with those super low loan balances, of course, you're not getting the return on your properties. Look, people, you got to remember this, okay? Income. Property is the best investment. It is the most historically proven asset class in the entire world. Now, it's a great investment, but it's kind of a lousy bank. It's just not good at being a bank. Okay, what do I mean by that? What I mean is when you get too much equity in your properties, they become like, de optimized. They become suboptimal performers. They kind of get sleepy and they just get lazy. And you get what I call sleepy equity or lazy equity. I've been talking about that for 21 years, okay? You've got to constantly engage in equity stripping with your properties, okay? So we're going to be talking about that a bit more in a bit more detail. Now, I brought Rick Edelman, the famous financial planner and author who's written a bunch of books. I brought him on the show a few times to talk about that. I'm going to dig up one of those old interviews and I'm going to just play some clips from it for you. Not on this. Not today. Not today. Because I got a different one I want to play today, okay? I want to go way back. I know it's not Flashback Friday, okay? That's why I'm on here with you doing the monologue portion. But I want to go back and I'm going to play you some clips from a very old episode, number 408. Okay? And when was this? Probably really Scottish. I don't know. That would have been maybe 2007. I'll just guess that it was about 2007. I don't know offhand. It's old stuff. And it shows you how this stuff with income properties just, it's timeless, you know, it's just timeless knowledge. And we're going to do that today and we're going to do a little more of it on Wednesday because I really want to bring back around the refi TDI strategy. This is the way you get the return on investment. Now let's model what the ultra, ultra rich billionaires do, okay? The Elon Musk and Jeff Bezos, even though they hate each other, right. They still do the same plan. If you know anything about the ultra wealthy, you know that they tend to generally be people who started some business that became a unicorn business or a, you know, mega unicorn. What do they call the trillion dollar businesses that's, you know, a unicorn is a billion dollar like startup business, right? But the super businesses like Amazon for example, right? They start those businesses, they have a whole bunch of stock.

You know, the criminal Bill Gates would.

Be another example of that. They start these businesses, they have a whole bunch of stock. And if they were to stock, they would have to pay capital gains tax on the sale of the stock. Doesn't matter if they reinvest because remember, they don't have the advantages we do as real estate investors. They can't do a 1031 tax deferred exchange, okay? So they don't sell their stock a lot of times. Now, you know, of course they do all of this stuff, but I'm talking about like one of the main strategies. Don't tell me. Oh, Jason, I know. Jeff Bezos just sold a bunch of stock. Or Elon did you know, or Bill Gates did. I know. Bill Gates used to be like back in the day a big seller. He would like religiously sell, sell off Microsoft stock. Okay, but whatever. A big strategy that they use also, yes, they do all of these things, right? It's like saying, what do I do? Right? I invest in a whole bunch of things. I mean, I mine bitcoin, I buy it. You know, I bought some XRP the other day. This is just fun money, folks. Like if it goes to zero, well, the bitcoin's a little more than fun money, but, but if XRP goes to zero, you know, I'm not even gonna blink. It's just not enough money to worry about, right? But if it goes up and I have a big rise and I'll be really happy, right? So it depends where you are in your journey, whether you can do more stuff or gamble more. But back to the billionaires, okay? One of the big strategies they use is they borrow against their assets, namely their stock. Rather than sell it, they keep it, but they equity strip it. They refi till you die. Just like I'm telling you to do with your real estate. The way to make your real estate sing or hum, right? Whatever. If you want to make it hum, if you want to make it purr, if you want to make it sing, whatever the right word is, okay? If you want to make it optimized, what you do is you constantly keep leveraging it up, okay? You leverage it as much as you can when you buy it. The limit on the leverage is what the bank will allow, what the lender will allow. That's the answer to that question, okay? Take as much as they'll give you, you, and then the asset performs better. And then as it increases in equity by the tenant paying down the mortgage for you and by appreciation. And then of course in the background you've got this beautiful inflation induced debt destruction that's always working for you. That's why I trademarked that great term, okay? What you do is you equity strip it. You are constantly mining the equity out of your assets. Stock appreciates Elon and Jeff Bezos, they go and borrow more money against their stock, right? Because there's no tax on borrowed money. The this is the most tax efficient way to extract wealth from your properties. So you constantly lever the properties and what do you do? Well, you could take that money out in this example with a, with a great guy I was talking to, right? I said, what if we got you a million dollars out of your just, you know, some of your portfolio, right? Just this was just part of his portfolio I was talking about. What if I, we got you, we refinanced that, we got you a million dollars out of it. And then he says, well, I'm going to lose those super cheap loans that I have, right? You know, I've got these real old mort that are really low rate mortgages. And I said, yeah, that is true and that's not good. But your loan balances are so low that you're really not losing that much. Remember, we're looking at the mortgage not as a liability, we're looking at the mortgage as an asset. Okay? The mortgage gets inflation induced debt destruction. And if it's got those super low rates, the assets better. So if you had a really high mortgage balance on the portfolio, you would really not want to give that up because you'd be giving up a lot. You have low rate, high balance. Ooh, you want to Keep that as long as you can. Right? That's a great deal. But if you have a very low balance, yeah. You're going to lose a little bit by actually refinancing to a higher interest rate. Like, why would anybody want to do that? But it's not enough to worry about. The benefit of getting another million dollars out of the portfolio outweighs keeping the super low rate rate. Okay, the super low rate is good, but the problem is the balance is too low. You know, one of the things that I have struggled with as an investor, and I think maybe you are struggling with this, but you don't even know it. Okay, here it is. As I've grown wealthier and wealthier over the years, I still kind of fool around with a lot of things that don't move the needle enough. You know, you got to do things that move the needle. Needle, right. I mean, if you're a billionaire, right, you can make money flipping houses, but it's just not going to move the needle.

Okay.

You got to do something that's going to matter, that's going to be meaningful. Okay. And that's the thing. Yeah, you give up maybe a low rate, but the balance is so low that it just doesn't matter. What will move the needle is getting another million bucks out of the portfolio. And then I said, well, hey, what if you take that million dollars and say you just invest it in a crappy way? Okay. You don't optimize it. You just stick it in an S and P fund and say you earn 8% on that. That'll be $80,000 a year. And the typical financial advisor would say, well, live off just the return on the investment. Don't touch the principal. Well, that depends. How old are you? What's your health like? What else could you do? And one of the things I think I'm going to talk about out at our upcoming event, I know it's a ways away. It's not till April. Okay. But save the date for Empowered Investor live in Orange County, California, at our favorite venue. Okay, this is our favorite venue. We got. It's all remodeled, gorgeous. It's beautiful. You're gonna love it. We've got the best room setup ever. The last time we did Empowered Investor live, I was not that happy with the venue, and I was not that happy with the room setup either. But we took what we could get. In the post Covid world, there were very limited choices for hotel venues, why everyone was hosting a conference because everything opened up again and they were just overpriced all booked up. Now the supply demand thing is leveled out a little bit and we got a really good venue this time and a really good arrangement. So anyway, we'll have tickets available for that, you know, somewhat soon here, but it's April. April. You know, mark off the days on your calendar, April 3rd through the 2nd 7th, okay. For empowered Investor live in Orange County, California. So mark that on your calendar right now. Did you do it? Okay, Save the date and we will see there. Anyway, one of the things I'm going to talk about is the Die with zero Concept. Now, the title is just a title. It doesn't really mean that. Okay, it's just a title. But there are some very interesting things in that book by Bill Perkins and I have added several layers of my own thinking to it. And I'll probably talk about that at Empowered Investor Live. But you just want to get the highest ROI on your wealth, on your money. And it's not always in money. There are other forms of roi. You probably know where I'm going with that. But more to come on that later. Anyway, say you got $80,000 a year on that million dollars, right? And you spent 100,000 of it a year in principle. So that would last 10 years. And over that 10 year period, you still own the property. The properties are still going to be working for you just like they did the last 10 years. So the properties are still going to appreciate. The rents are going to go up. You're going to get, you know, tax benefits, positive cash flow, inflation induced debt destruction. Now you get more inflation induced debt destruction because your loan balances are higher. You got an extra million dollars working for you in terms of inflation induced debt destruction, where inflation is paying off an extra million dollars. Free. Free. Right. That's an incredible deal. So you're getting all of these great benefits and you just gotta realize that this is what the bigwigs do. And it's what you need to do too. Refi till you die. Equity stripping. Pull the equity out. There's no tax on borrowed money. Live on it. You still own the properties. You did not cannibalize the asset. You still own the asset and the asset is still going to be working for you. Or in our case, many assets. You know, in this case it was, I think, 13 properties. Okay. Yeah, that's the basic idea. So let's listen to the first part of this episode and then on Wednesday, I want to play another important clip of this episode for you as well.

So here we go.

We are going to talk today about refi till you die. And what I'm actually going to do is just play a live clip from one of my live events, one of my live conferences where I talk about refi till you die. And this is one of those core four fundamental strategies. And I'm going to share some statistics with you before we get to our quote, guest unquote today. These will blow your mind when we talk about the importance of refi till you die. And I was talking with one of the lenders today that I will soon have on the show for you to talk in more detail. Who is filling the gap with what? Fannie Mae and Freddie Mac. And the conventional financing market is not doing very well at all. And that is financing investment properties. And this is such a big market, of course free enterprise is rushing in to fill the gap. They can't compete with Fannie Mae and Freddie Mac on rate and price directly because of course Fannie Mae and Freddie Mac, just like Obamacare, has an unfair advantage. They are backed the only agency in the country that can legally counterfeit money, money, the government and the Federal Reserve. I put those two in one because they really are one. Even though technically the Federal Reserve is supposedly a private corporation, but it's not very private on one hand, but on the other hand it's not very federal. What some of my guests have said about the Federal Reserve before is the Federal Reserve bank, our central bank, like the ecb, the European Central bank or any of the central banks banks in any other countries. Our Federal Reserve is about as federal as Federal Express, but it still is definitely in cahoots with the government and the Treasury Department, especially in setting monetary policy. So they have an unfair advantage in the conventional market with Fannie Mae and Freddie Mac financing because of course they can lose money and still offer loans on properties that are really below the range rates they should be. They're not market interest rate loans that are artificially low. But if you're one of those people like me who has more than 10 properties and can't get financing, or if you're one of those people who wants to finance through an IRA or some kind of retirement plan that's self directed, or if you are a foreign national like so many of our clients that is really, really wanting to buy American real estate, and rightfully so, the deals are fantastic here. If you don't fit into one of these boxes where Fannie Mae and Freddie Mac can finance you, then you've got to look for other alternatives. And I'll tell you the Other alternatives have never been great. They've never been able to compete with Fannie Mae and Freddie Mac in the conventional financing world. However, they are getting much, much better. A few episodes ago we talked about B2R financing, which is one of the big private equity groups out there that offers financing. There are two other major players in this market. They're starting to get better and better. You know, at first when they came out, you know, they said they would do loans, but they really didn't in practice. And you know, some of our clients can tell you this firsthand. And I'll have some of these clients on the show hopefully to talk about this too. It really wasn't very easy to get the financing offered. See, it's one thing thing to say, hey, we've got all this financing available, but it's another to actually close a loan. And we know there's quite a difference there sometimes, unfortunately. First of all, I want to talk to you about the size of the marketplace here. And then I want to talk to you about some specifics in terms of financing available. And then of course, on a future episode, we will have more and more of these people on to talk about the financing they offer. So you can hear it right from the horse's mouth. Doesn't it make you wonder where some of these sound sayings come from? I know there was a movie with Ed the talking horse or was that a talking donkey? An old black and white movie or television show anyway, before my time, thankfully. But I remember seeing like a rerun of that or hearing about it at some point. The size of the market there are approximately. Now these are all very rough numbers, of course, but they're approximately 3 trillion. That's trillion with a T. $3 trillion worth of single family rental properties out there in the market. That's not all single family homes, that's just the rental properties, about $3 trillion worth. This is about 14 million properties. And yes folks, I tried to actually do this on my calculator, but Even my trusty HP12C, the good old fashioned calculator for those of us old timers that Learned on the HP2 12C many years ago, even my trusty HP12C, which is a fantastic calculator and has a lot of zeros, it doesn't do trillions.

You know, the new version of the HP12C because the government bailouts and so forth and now and the deficits, we talk in trillions nowadays, not millions, not billions. Those aren't enough. We got to talk in trillions. I Tried to do the math for you because I wanted to know the average price of those rental properties. And I'm sure I could do it if I learned how to use my calculator a little better or went online and found one. But what is 3 trillion divided by 14 million? Because I was dying to know what's the average price of those, those rental properties? So I do not know that. But I'm sure one of our dear listeners can tell me the answer to that question or spending just a couple minutes on it. I'm sure I can figure it out myself. So, $3 trillion worth of single family rentals, 14 million properties. And guess what? This is unbelievable. And that is why I wanted to share this segment on refi till you die, my trademark phrase about how you should manage your investment portfolio over time. 80% of those properties are free and clear. Wow, that's a big number for folks. That is a big, big number. 80% of them are free and clear. Now these people who own those free and clear properties, I think they are either really wanting to change that or they are just really uninformed people that don't know that they should be refinancing those properties as a way to use their wealth better through the process of what I call equity stripping. Income Property is the best investment in the United States. It's the most historically proven asset class in the United States, bar none. Nothing holds a candle to income property as a wealth creator. You know, when you look at the stock market and compare it, where are all the stories of the people who started with $10,000 in the stock market and made a fortune? Guess what? I've never heard one. And I bet you haven't either. That's because they don't invest exist. You know, where are all the clients? Yachts, as they say. It's, it's an insider's game. It's a scam. It's the modern version of organized crime. Then you look at other investments. You look at starting your own business. That could be good. It's certainly a lot more complicated. You could get into the business of real estate. And I want to make a distinction here. The business of real estate is different than investing in real estate. And I've alluded to this many times before in prior episodes. But, but you know, some people confuse what my firm does. Okay? And let me just say what we do here@jason hartman.com. what we do is we help investors. Those are typically entrepreneurs or business owners or corporate people who are professionals that have a day job and Many of them want to leave that day job and become financially independent, and they want to use real estate investing as the way to do that. They want to build a strong portfolio of income properties that make sense so that they can ultimately retire, but not really retire. As you know, from what I said on the prior episode, I don't really believe in retirement completely. Now, you might believe in it, but I think retirement, if you will, is really about doing what we want to do. That's what success in life is. It's, you know, to me at least, it's not about laying on the beach working on my skin cancer.

Okay.

You know, it's about. It's about doing something and being actively engaged in life and what we're passionate about. So maybe if you have that corporate job, if you're a cubicle dweller, you want to use income property as the vehicle to set you free from that so you can do something you're passionate about. Maybe it's a charity. Maybe you want to get involved in politics. Oh, God, I don't know about that one. Maybe you want to start a business that is more in line with your passion, and maybe you want to start that business in a way that you're not pressured to make money from that business. Maybe you want to start it as a business that's more of a social entrepreneurship venture. You know, maybe you see something in the world that you want to change a cause. You know, whatever it is, an income property is, no question about it, the most historically proven vehicle to do that, that in America, if not in the entire world. We've got 80% of these $3 trillion worth of properties out there, these 14 million investment properties that are free and clear and only about. By the way, we've talked a lot on prior episodes, and I know there. There have been a zillion articles on this topic, and that is about how institutional investors have come into the marketplace. And, folks, I think I'm going to be right about another prediction. You know, I've been right about, like, every prediction I've made, except one, and that is interest rates. I have been wrong on interest rates, and I like to freely admit and be totally transparent. If you asked me five years ago, I would have told you I thought interest rates would be higher today. Actually, I thought they'd be substantially higher. What is the reason I've been wrong about this one prediction and right about everything else? The reason is it's illogical and it's not about the math. And all of these people that I interview on this show and a lot of them on my holistic survival show and maybe some on the American Monetary association show, they talk about the demise of the dollar. Well, you know, I used to kind of believe in that line of thinking too, but I don't really believe in that. I think that it's not about math. I don't believe really in the demise of America. I think it's going in the wrong direction. I think the dollar is going in the wrong direction. But do I think America is going to collapse or the dollar is going to collapse?

No, not really.

I find these theories very interesting. I love talking about them. One of the reasons I'm single, because monetary policy is not exactly the best first date conversation, as I like to say. You know, I love talking about this stuff. I, I think it's fascinating stuff. There's a lot of interesting theories about there, but it's not about the math. If it were just simply about math, the dollar would have collapsed by now. The United States would have collapsed by now. We would have 20, 30% interest rates on home mortgages by now. I did say that correctly. 20 or 30% interest versus 4.5% interest. And you know, we saw this due to the Jimmy Carter economic disaster. We saw very high interest rates. People with home mortgages in the late 70s and in the early 80s, before Reagan kind of fixed the Jimmy Carter hangover, who had mortgages anywhere between 16 and 20% on their home. So that's certainly possible. And if the mathematicians were right and all the economists out there who just believed in math, that's what we would have now. We would have 20 to 30% interest on a home mortgage. Mortgage rates would even be higher than that for credit cards and auto loans and other types of financing, student loan debt, the next big bubble that will probably pop in some way or another. We would have hyperinflation. But the fact is it's not just about the math. It's not just about what is the amount of the deficit, how much is the Fed pumping into the economy, what does QE mean? Quantitative easing, AKA money printing, money creation. It's not just about that. A long time ago I had Chris Martinson on the show and I've asked my guest bookers to invite him back on the show. Super smart guy, very interesting to listen to. But he's, he's been wrong so far about this topic. And you know, it's not just Chris, I don't mean to pick on him, I like his work. But so many economists have been just massively wrong. About this because it's not just about math.

Math.

What else is it about? It's about the American brand name. It's about the power of the American military. It's about the interconnections in the global economy and the way that China, China would have just basically given us the finger by now on buying our bonds if we weren't their best customer. Think about it. In business, if you're in business who wants to destroy their own customers, that's not going to be good. We're all interconnected in this interconnected world nowadays. That's the problem with looking at just the math and just the empirical, analytical, linear thinking. There's way more going on in the world than what a brilliant PhD statistician could tell you. There's just a lot more to it than math. This huge market of $3 trillion worth of single family home rentals, that doesn't include apartment buildings, by the way. That's single family homes. This is a giant market for refi till you die. Only 2% of them are institutionally owned. That prediction, how I started that last tangent with. I know I tend to go off on tangents, institutional investor thing. My prediction was that the institutional investors, the private equity groups, Wall street, the hedge funds, they will not like our business and they will not stay in our business because our business is very fragmented. And I always say embrace the fragmentation. Fragmentation gives us the opportunity to play in a field that institutional investors don't want to play in. So that's very important. Here is an example of one of these types of loans that is available to you. And we will do a more detailed show on this very shortly where you can basically do the refi till you die plan. And it's pretty darn good if you have. And I know many of our clients listening do have a bunch of income properties. They purchased them through our network and they've been buying over the last couple of years and they've been buying with cash. And they would love to engage in equity stripping. They would love to engage in the refi till you die business plan that I talk about and have been talking about for many years. And they'd love to strip the equity out of those properties, do a cash out refinance and buy more income properties. And that would be a phenomenal business plan. Let me whet your appetite. Here are the rates and terms of these loans. On one of them, and this is for a low volume program. If you qualify for a higher volume program, the rates get even better. But I'm going to give you the worst of the deals. Okay? The better one will come up on a future episode very soon. 6.25 to 6.75% 30 year amortized loan. I know that's not as good as Fannie Mae Freddie Mac, but that's pretty darn good. And you can do this with a 620 minimum FICO score and you can get a minimum loan amount of $75,000. You can finance up to. I hope you're sitting down because this is going to make you fall off your chair, but it's going to make you smile at the same time. Up to 25 properties on this program, you can finance up to 25 properties. And I know a few of you by name who are probably listening to this episode who have 25 or more properties that you bought from us free and clear. And you can refinance those refi till you die. Okay, great business plan. You can refinance them on a cash out refinance chance of up to 75% loan to value ratio. So if it's a $100,000 property, you can get $75,000 cash out on 25 of those properties and you can go buy a whole bunch more properties. Now, by the way, on the same program on purchases, they don't give you quite as high a loan to value on a new purchase. 65% loan to value ratio. And I thought, you know, that's kind of backwards. When I was talking to this gentleman this morning about the program, I thought that's kind of counterintuitive because usually you'll get a higher loan to value ratio on an acquisition, on a purchase money loan as it's called, than you will on a cash out refinance. But in this case, they actually like to refinance the property better than they like to help you acquire the property. And their thinking is this. And it, it does make sense to me. Their thinking is that you've already owned the property for a while and you know the property and you're comfortable with the property. So they're going to give you 10% more on a cash out refinance than they will on a purchase. So I thought that was kind of interesting. And this is the worst deal they offer. They have an even better deal than this if you're financing a higher amount or more properties. So I just thought I'd tell you about that and the refi till you die. One of the, one of the great things, when we were on the Last episode number 407 and I was talking To Matt in the intro of that section as I was doing my moment of stupidity and I didn't really realize that the mic was not plugged in as I was rambling away. You can tease me about that one later. I'm sure I'm going to get some flack about it. When I was talking about that, I talked about the affordability in different markets.

I compared.

I believe it was San Francisco, Atlanta and Denver in that example, markets that make sense to invest in. Markets that don't make sense to invest in. And I was talking about, you know, why is it that in these very affordable markets, why is it that the rental rates are so high? And by rental rate I mean number of people renting. Of course the rent to value ratios are very high and these good markets as well. But why do so many people rent when it actually would make sense for them to buy? Now there are many reasons for this and many years ago we came up with a big list of maybe, I don't know, ten or a dozen reasons that people rent when they should be buying. And I'll just share two of those with you today before we get to our guest who's going to talk about refi till you die, our guest, yours truly. But many reasons people do this. But let me just share two of those with you today. First and foremost, financial immaturity. Financial immaturity. The first reason that many of your tenants don't buy and financial immaturity is the process of not being willing to delay gratification for a longer term, bigger goal. And that is obviously a bad thing. Now the 8020 rule applies, applies here again because 80% of the people in the world will unfortunately just not get very far in life and 20% will, they will experience real success. However that's defined. And with that financial immaturity issue, if you want to buy, it requires discipline. It requires you to delay gratification. I'm speaking from the tenants perspective now when I say this, you know, they have to say up some money. They have to prepare to buy a home. They have to take a step back to take two steps forward because almost always they can rent something a little nicer than they can afford to buy. So that's the first thing, financial immaturity. The second thing is urgency. There are three basic types of markets out there. When you look at the almost 400 MSAs or Metropolitan Statistical immigration areas in the United States and by the way, the very, very incomplete, woefully incomplete case Shiller index that is cited all over the media only covers 20 of these, nearly 400 MSAs. So if you're using that to make your investment decisions on how the real estate market is, you're going to be very, very uninformed. Case Shiller is a tiny little sample. Well, the three basic types of markets are a linear market, number one, a cyclical market, number two, a hybrid market, number three. So three types of markets, the linear market, those are markets I like generally. I mean, there's more to it than just whether or not it's linear. I mean, Detroit is linear. And I don't recommend Detroit, at least not yet. Probably won't. But you know, I'm constantly monitoring what's going on and some of these markets do from time to time surprise me. Detroit has not surprised me yet. So that's a linear market, but I wouldn't recommend it. Our markets, the markets we like are linear markets. Then there is the cyclical markets. I don't like these markets because they're always too expensive and they always have bad rent to value ratios, bad RV ratios where you don't get enough money per month. Like on the episode with my mom two episodes ago, she was talking about one of the properties, properties she owns. And she has properties in linear end cyclical markets. But her old stuff is from cyclical markets like California. Doesn't make sense in California, doesn't make sense in New York City, doesn't make sense in Miami. Those are cyclical, high risk, gambler oriented markets where you're expecting appreciation to solve all your problems because cash flow certainly won't now a hybrid market. Well, the hybrid market is the blend of both of these markets and there aren't that many hybrid markets. But the market in which I happen to live now is a hybrid market and that is Phoenix, Arizona. Phoenix really was before the last two boom cycles. It really was a pretty linear market. But in the last couple of cycles, as the news about real estate investing became more and more widespread spread, we saw investors going out and buying properties from neighboring states and neighboring areas. And a lot of them jumped into Phoenix because Phoenix was hot, not just in temperature. It was hot in 2002, 2003, 2004 and 2005. In investing, it was getting a lot of appreciation. And on that way up in that appreciation cycle, you could still get decent cash flow much better than say pretty much any market in California. Phoenix was pretty desirable. And so Phoenix was a hybrid market. Now we very wisely pulled out of Phoenix and recommended our investors pull out of Phoenix if they didn't already own and already have a stabilized property. We stopped recommending that they get back into the Phoenix market when that first cycle happened. So, you know, know it ran up and it had the highest appreciation rate in the country in 2005. And then boom, it fell like a rock, just like cyclical markets always do. And so the Phoenix market was in big, big trouble for many years. And then we to our credit, saw that and we saw that the prices were down and it was in a lull and you could get good cash flow and good rent to value ratios again. And we started recommending Phoenix and many, many, maybe to the tune of hundreds of our clients got into the Phoenix market. And guess what? The same thing happened again, showing its true colors as a hybrid market. Prices went up. Our investors made a lot of money on appreciation and they got nice cash flow because they bought in when it was a linear market. Then when it went cyclical on them, they rode the wave up and made.

A bunch of money.

In fact, a few of our investors did. 10:31 Exchanges got out of Phoenix just this year, last year, and purchased properties in other areas that had linear markets that we recommended. So this is always something moving back and forth. If you want more information on this, go purchase the Creating Wealth Home Study course@jason hartman.com in the products section or come to our Little Rock Creating Wealth Conference and Property tour at the end of September and you can register for that@jasonhartman.com in the events section. And we go into all this in depth in a structured format. So we'd love to see you there. We'd love to have you get the Creating Wealth Home Study course and you can learn a lot more about this stuff.

Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own, and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to itunes or Stitcher Radio or whatever platform you're using and write.

A review for the show.

We would very much appreciate that and be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.