2303: Navigating Today's Real Estate Market: Insights for Investors, The Housing Shortage and Your Investment Opportunities

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Do you want more real estate in your portfolio? Maybe you just want to get around folks that are really doing the thing. Well, you need to be at Empowered Investor Live with my friend, Jason Hartman. Hi, I'm Robert Helms, host of the Real Estate Guys radio show. And I noticed that people that are successful come to events like this. They meet other people, they get their questions answered and they network like crazy. I'll see you at Empowered Investor Live. You know, people are busy and stuff's expensive and all that. If you're thinking about coming, stop thinking about it and come. You won't regret it. It's been said that we regret the things in life that we don't do a lot more than we regret the things that we do. So check it out and come join us.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your financial Independence Day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors. Look at the unfair trade practices that we have 50% from the European Union on American dairy. You have a 700% tariff from Japan on American rice, you have a 100% tariff from India on American agricultural products, you have nearly a 300% tariff from Canada on American butter and American cheese. This makes it virtually impossible for American products to be imported into these markets. And it has put a lot of Americans out of business and out of work over the past several decades. So it's time for reciprocity and it's time for a president to take historic change to do what's right for the American people.

The key word there, of course, is reciprocity. Why doesn't it go the other way? So reciprocity would be okay? We're going to have this either the same tariffs each way or no tariffs.

And thus there's more of a free trade system.

Greetings, empowered investors, and welcome to episode 2303 we've got a continuing discussion of our show from last week and I think you'll really, really enjoy it. But first I just want to share with you an updated chart. And remember the super, super important thing I have said so many times and that is if you want to have a housing crash, you must have billions of financially distressed homeowners who become millions of distressed home sellers. We've shared the statistics on how cheap the mortgages are, the impetus for the lock in effect, why people don't want to give up their cheap mortgages. But here is an updated chart. Yes, this is updated on the share of homeowners who are mortgage free. And this is the percentage of owner occupied housing units without a mortgage. Okay, no mortgage. And this is according to the US Census Bureau. So back in 2010, okay, so let's go back 15 years. We had 32% of the people had no mortgage. Today it has been steadily increasing over the years and today we have 40%, well, to be exact, 39.8% of the country, no mortgage at all. 24% mortgage add or below 3%. 65% mortgage add or below 4%. The only potential distressed people in the housing market. Because I just shared on our empowered investor pro zoom meeting, our monthly zoom meeting yesterday, and if you're not a pro member, you should be. But I won't belabor that point. I just shared the stats on the mortgage delinquencies. They're going to down. Yes, they are lower month over month and you just can't see the distress in the market. It's just simply not there. Now one place where the market is getting a little oversupplied is of course in the high end. Right? We don't deal with the high end properties, so we don't even really talk about that. Okay. But the one place where it is getting a bit oversupplied is home builders. Home builders ramped up their machine big time when there was big demand and now they are starting to deliver a lot of properties, a lot of new homes. Now most of these new homes are too expensive. They're not properties that we would use as rental properties. But some of them are on the cheaper side. Some of them are entry level housing. And you should reach out to us through Jason hartman.com or call our investment counselors on the phone. Yes, we actually answer the phone. I mean most of the time. 714-820-4200, press 2, extension 2 and you'll be connected with an investment counselor. And they can help you take advantage of these home builders. Yes, you can take advantage of them because they are making deals and we've got some good new property in many different states, many different cities that you can buy and you can get incentives, you can get good prices. It's really a great time to be a buyer. I am personally looking for a personal residence and I am so pleased with the selection I get when shopping and the willingness of these listing agents on behalf of their sellers. Now these are high end homes, okay? So they're not anything we would consider for rental property. But I think it's a great time to buy. And I'm about to plunk down a whole bunch of money on an expensive high end home for myself as a personal residence. And wow, it's just wonderful to have so, so much selection. Remember, there is a value in selection alone. Just having more choices has its own financial and economic value. Look for an upcoming newsletter article on this. I've got a whole big theory about it that I'm, I'm working on. I talked about this yesterday on our Empowered Investor Pro Zoom meeting. But if you're not subscribed to our newsletter, make sure you get on the mailing list. Because we send out these weekly newsletters, we're working really hard on them. You know, if you've been listening for any length of time, that I am presenting innovative ideas. Not the same warmed over crap. You've heard it, you know, countless real estate seminars or books or things like that. These are cutting edge ideas that really look at the world and the marketplace in a different way. So be sure you are reading our newsletter.

Okay?

It's totally free, so get on our list. Just go to jasonartment.com fill out any web form and you'll be on list for the newsletter. Okay, but this chart, again, if you're watching on video, it just shows you that more and more people have more and more equity. Now what's interesting here, I quoted the mortgage lock, in effect, I told you how many people have cheap mortgages. That's one aspect. Then I told you how many people have no mortgage. That's another aspect. But what I didn't tell you, remember you can't hear the dogs that don't bark. And compared to what? Okay, what didn't I tell you? I always want you to ask, when you're listening to someone, you're reading something, you're looking at a chart. I want you to ask, what isn't this telling me? What dog isn't barking here? Here's the Dog that isn't barking. Okay? Really, really important. It is the amount of equity people have, right? So we talked about how cheap their mortgages, we talked about how some of them don't have mortgages. But how about the ones that do have mortgages? Well, what is their loan to value ratio? And I have shared charts on that over the months and years on the show. Many times I don't have them in front of me, but I'll just tell you, people have a record, record amount of equity hovering around $40 trillion. That's with a T trillion. Okay? Bigger than the GDP of the country, higher than ever in history. The equity is so comfortable, the cushion is so big that the likelihood of tens of millions of distressed homeowners that become millions of distressed home sellers is insanely low. It's insanely low.

Okay.

And if you want to know how to use some of these strategies and apply them and how you can extract wealth from your real estate portfolio and if you really want to design a plan that goes out, you know, 5 years, 10 years, 20 years, join us for our free monthly masterclass. I am hosting this one. I am the speaker, yours truly, and I'm happy to take your questions. It's a zoom meeting, so it's interactive. You can ask questions about anything, about the topic we cover, but about anything else. And you just go to register for the free monthly masterclass. You go to Jason hartman.com Wednesday because it's always on the second Wednesday of every month. Jason hartman.com Wednesday we'll look forward to seeing you there. And let's go to the continuing discussion from last week with Vince.

Here we go. Smaller deals. I've had Some like for 14 unit and 10 unit apartments, little apartment complexes, you know, little mini ones, that's my experience. But the rest is mostly just single family homes. I love single family homes. They're the most proven, most simple, most accessible thing for the average person.

And people say it's very difficult to scale. Is that true or not true?

Well, you know, 10 different mortgages, there are trade offs with everything. Yeah, okay, you can get one mortgage on a whole blanket loan of single family homes, by the way. But the big institutional investors that love single family homes, like invitation homes, for example, I think they own maybe 80,000 homes now or probably more than that. That was two year old data. So I'm sure they own more now. You know, there are many big institutional investors that love single family detached homes and they have scaled that wildly. I mean, in the aggregate, those institutional investors probably own 2 million single family rental homes. Now, somewhere around there.

Wow, that's.

Don't quote me on the number, but it's something like that.

So you would say that single family and multifamily has its purpose for.

Well, sure. I mean, you know, multifamily, you'll be less diversified because you're going to have one big asset in one location. So if that market has trouble or rent controls instituted, you're going to be the victim of that. With single family, we recommend that you diversify into at least three markets, but not more than five. And so you should be diversified a little bit. Now, there's an old idea that I've talked about a lot, which is diversification perpetuates wealth, concentration creates wealth.

Okay.

So a focused concentration is more likely to create more wealth than diversifying, which will preserve wealth.

I see. So you start off concentrated and then you kind of.

Well, with single family homes, you have the best of both worlds. And this is what I mean by that. With single family homes, you can take the most historically proven asset class in the entire world, single family homes for income property. And you can diversify geographically. So you can be in three to five markets, but you're still in the same asset class. And it's the best asset class in the world.

Yeah. So, you know, there's another thing that, you know, you talk about where it's. You call it the best subscription model in the world. What is that?

Oh, yeah, yeah, yeah.

Well, this one, even for me, I was listening. Oh, this is, this is a good.

Yeah. You know, in business, like the favorite business that everybody wants to buy or build is a subscription business because it's really consistent. You know, once people subscribe to your thing, your software, whatever, they usually stick.

And you can get a one year subscription.

Yeah, it's very sticky. Right. And if you think about it, income property is the best subscription business in the world because, you know, it's very sticky once you get a tenant subscribing to your property. Okay. Do you think of it that way? You like your tenant is your subscriber. Right. And they are, once they subscribe to your property, they're going to stay for at least a year because it's very hard to move. It's expensive to move, It's a huge hassle to move. Nobody wants to move. Okay. Moving, everybody would agree, is a nightmare. And so it's a very sticky subscription business. Yeah. One of the things I said at the conference this weekend, although I didn't talk about the subscription thing, I wish you would have mentioned that. I would have talked about it. If you look at the most successful company in the world, they make this, right? This is an iPhone. Okay? Apple is the world's most successful company. I think it's worth like over $4 trillion now. It's incredible.

Insane, right?

And one of the reasons Apple is so successful is that they get you to buy their products over and over again because the withhold the features till the next model. And, you know, it's really incremental. I mean, if they want to call themselves environmentalists, they shouldn't be doing that.

Yeah.

Okay. Because that's totally destructive to the environment.

Jason loves big tech, by the way.

Guys. Yeah, I hate big tech. I mean, listen, they bring great things, but they are abusing their power like crazy. Okay? So Apple is really good at getting us to buy the new model. Okay. You know, it used to be every year I got a new iPhone. Now the phones are a lot better. And I can get every two years, usually, Right? And, you know, I'll buy a new laptop maybe every three years. And, you know, I just spend thousands of dollars per year with that company and lots of people listening and watching do the same thing. Okay? And if you think about it, the key metric is, you know, what share of someone's income can Apple capture? What share of income can the restaurant around the corner everybody goes to capture, Right? And you know, if they can capture a large share of their customer's income, that's a huge success. Right? Well, think about it. As a landlord, as a real estate investor, look at your share of people's income, right? When you underwrite a tenant to rent your property, you'll let them spend 33 to 40% of their income on rent.

Yeah.

That means that the first 12 days of every month, they are working for you.

Yeah.

The first 146 days of every year, they're working for you to pay you.

Yeah.

That is crazy. That is the ultimate subscription business.

Yeah.

I mean, how many subscribers to some great software that everybody subscribes to, you know, pay that much of their income? I mean, there's no other asset class like income property. It's incredible.

That's pretty crazy. Yeah, I did. I did write that down. So if you have 25 houses, you have 25 people spending 30% to help you.

33 to 40% of their income every month is going to you.

Wow, that's crazy.

I mean, think about it. What other asset allows you to. You pick the asset you want, okay. And then you say to the Bank, I want you to pay for 80% of it. I'm only going to put in 20%. You put in most of the money bank, and then you know that's going to create debt. I'm going to have a payment obligation on that mortgage. But you know what, I don't want to pay the mortgage. I'm going to find someone else to pay it. Tenant. And I'll put the tenant in there and I'll tell them to pay the mortgage. And I want them to give me some extra money every month called positive cash flow.

Yeah.

And then I say to the government, hey, government, I'm providing housing. Give me the most tax favored asset class in America, income property. Right. Give me the benefits of income, property, depreciation, non cash write off deductions of all sorts for things you would normally spend money on anyway that you can now deduct because you are a real estate entrepreneur and you have a real estate business. Then when you sell it you can say to the government, look, I know I made a lot of money on this deal, but I don't want to pay tax, forget about it. I'm going to do 1031 tax deferred exchange and I'm going to buy another asset that I like better now, you know, five years later, 10 years later, and I'm going to take all of the proceeds from the sale, the money I made and put it into the new asset without paying the government. And you can do that for your whole life as many times as you want. 1031 tax deferred exchange. It's the most tax favored asset class in America. You know any other asset you pay tax before you reinvest.

Yeah.

Sell your bitcoin, pay tax, then reinvest. So your business pay tax, then reinvest. Sell your stocks, pay tax, then reinvest.

Yeah.

Income, property, sell it, reinvest it all.

Yeah.

And tell the government to, you know that tough luck, we're not paying you.

Yeah, yeah, it's a really good method. You know, I have the, I have another question. Let's see your thoughts. I think I already know, but this is a very common thing you always hear online is buying a primary residence is not an investment and it's a liability.

Yeah.

Thoughts on that?

Well, I mean, you know that's true.

Because it doesn't produce income, right?

Yeah.

You know, anything that costs you money instead of giving you money is, is a liability, not an asset. But you do need to live somewhere.

You're paying for that anyway. Right.

So you're going to pay to live somewhere. So, you know, if it's better to buy the property based on the rent to value ratio in the market you're looking in, than buy it. And usually that means if the property is below currently in this number will change over time, obviously. But today, if that property is, you know, below maybe $450,000 in value, it's going to be better to buy it than it is to rent it. But if it's over $450,000, because the way the RV ratio works, or the rent to value ratio that, this is a concept I teach, you're going to be better off renting than owning okay. Your own home. It's just going to be a better financial deal. But I, you know, I understand not everything roommates, you know, not everything's about money. Okay. You know, so, you know, if you want like stability for your family and you want to live in this neighborhood forever, you know, but I say, you know, and you want to be able to like, you know, knock down walls and change the house a lot, you know, renter is not going to be.

Able to put in a studio, you know.

Yeah, well, you could probably do this in a rental.

Yeah, well, it won't be as fun. But you know, the, the thing I wanted to say, you know, you probably get this is, you know, we have, when you buy a property, you use leverage, you know, put 25 down so it increases 5%. It's actually 25. Right. But when you buy a primary, you're only putting 5% down. Let's just say for fun.

Right?

Yeah.

You're making 100% on money every year till you die.

That's insane. Well, no, you're not necessarily making that. But the point you're making is you can get more leverage. Right. And so, yeah, on a primary, you do get more leverage. And that's definitely a benefit.

Yeah. I mean, for this house.

And you get inflation induced debt destruction on a primary residence as well.

Yeah, you do that. I mean, for this house. I don't remember how much I put, but it wasn't a lot. Let's say it's 150 grand or something. This property has gone up by like 100 grand a year.

Yeah.

That's pretty crazy. Right?

Right. But it could also go down.

It could also go down. Well, but unless I sell it. Yeah.

Well, before it goes down.

Yeah, before it goes down. Yeah. Is there anything else you wanted to chat about?

Well, I think we should just talk about the market dynamics.

Yeah, let's do it.

So three Years ago, we saw the fastest, most historic interest rate increases in history. All of the doomers said the market would crash. They were all wrong. I said it wouldn't and I was right. Logan said it wouldn't and he was right as well. And the reason, you know, this is just my own thinking on this. I never heard anyone else say this. It's just my thinking. But I believe the reason almost all of the experts got it wrong is this. They looked at new buyers entering the market and they said housing affordability is the lowest it's been in 40 years. They were right. That's true. And so new buyers won't be able to afford a house. And they thought because of that the market would crash. But what they didn't consider is the people that control the existing inventory. There's about 140 million housing units in the country. 341 million people. 140 million units, give or take. And right now we have under 700,000 units for sale.

It's pretty low.

We have half of 1% of the inventory on the market. The normal amount is at least 1%.

Now, how many people out of the 140 million have mortgages?

Well, yeah, so 40% of the homes in America have no mortgage. No mortgage, their own, free and clear. 25% of the country has a mortgage at or below 3%. 65% of the country has a mortgage at or below 4%. And I think it's like 85% of the country has mortgage at or below 5%. I might have, I might be a little off.

Yeah, this house is 3.99.

So here's the deal. Here's why the experts got it wrong. Because all of the people that have those existing low rate mortgages or no mortgage, have what's called the lock. In effect, that term was invented, you know, only recently. Okay, maybe a year ago. They're quite comfortable, okay. They have no interest in selling. They love their deal. If they lost their job today. Because here's what the critics have been telling me for two years, right? Or maybe two and a half, they've been saying, well, Jason, the elephant in the room that you're wrong about is that there's going to be job losses and high unemployment and when people become unemployed, they're going to lose their houses, they're going to go into foreclosure and all those foreclosures are going to dump on the market and the market's going to crash. Well, you know why they're wrong too? When they started saying that to Me, I. I did a study on this and I found that on, you know, a sort of typical unemployment insurance income, which currently lasts for six months. Okay. And depending on your state, there are some additional perks. You know, maybe you could qualify for the same mortgage you already have on unemployment insurance.

Yeah.

Okay. I took a typical homeowner. I gave them, you know, a small student loan, a car loan, some credit card debt. And I had one of the lenders we work with open up his underwriting software on Zoom and I recorded the whole thing, okay? And I said, put in this number, put in that number. This is going to be their debt to income ratio. And you tell me, can they qualify for a mortgage? Would you give them a mortgage based on this unemployment insurance income? And the underwriting software put a green checkbox that said yes, they would qualify. Now, of course, no lender is going to give you a loan if you don't have a job. But you don't need a job. You already have the loan. And by the underwriting criteria that Fannie Mae and Freddie Mac would underwrite, you would qualify for the mortgage you have on unemployment.

And most people don't know this, but a lot of the people who buy loans, I mean, by a lot, I mean like probably 90 plus is agency debt. Fannie Freddie Loans and Fannie Freddie Loans have a lot of protections. If you lose your home, you can call them that's forbearance for six months straight out of the gate, even now. So, yeah, still, if you lose your, if you lose your job, and then they will give you that for like, you know, three months, you can extend for six months. By six months if you can't get a job, you suck.

Oh, well, listen, listen. If there's another crisis, they almost always extend the unemployment benefits anyway and make them a year long because they figured.

Out it's much more beneficial in society's interest to keep those guys there, then they all go out and create problems.

Look, you know, just because you stop paying your mortgage doesn't mean you're going to lose your home.

Yeah, okay.

I mean, there are people and it's just really bothers me, okay? Frankly, there are people that have been living in their houses not paying their mortgages. You know, I mean, I saw this back in the 90s, okay, when I was a traditional real estate agent at REMAX in Irvine. Right here. Yeah, okay. I saw all kinds of people that I did short sales for as their agent, okay. They had been living in their house a year and a half. You know, they're living in this great house in Irvine or Newport beach, not paying their mortgage. And, you know, the lender just doesn't get around to foreclosing. Okay? They just try to work, give them a workout, a loan modification. They don't want to take the property back. Okay. So, you know, foreclosure takes a long time, and it's not something lenders want to do.

Yeah, that's true. Because it costs them a lot of time and money, right?

Yeah, absolutely. So, look, the point is that there is no data to support the idea that the market is crashing. Now, that might change. Okay? That could totally change. But right now, the market, there is a massive housing shortage. Okay? The experts say that we are between 1.5 and 8 million homes short in this country, depending on which survey you look at. Okay? And they say that it will take seven more years to. To reach equilibrium. That's just equilibrium.

Yeah.

That's not a buyer's market. That's not a crash. It's not a bad market. We need to build a lot more homes or eliminate a lot of people from this country, because what we have now is every year, massive shortage.

So if you build homes every year, the current rate, it will still take five to seven years.

Eight years. Seven years. Seven years.

Okay, and that's based on, like.

Based on population. Sure, population death growth and home construction. That's what it takes.

And, you know, another thing is, you know, Jason, a lot of the people listening, you know, a lot of them are newbies in younger investors or they have a couple of properties usually. So there's always something going on in the market. There's. Do you. Do you remember a year where everything was great?

No.

And then they're like, yeah, go buy 10 houses, maybe. Maybe 2006, folks.

No, no, no, no. Look, there is. Every year. I've been doing this a very long time, okay? I've been through so many cycles now. And every day, every year, there are always reasons that you could say everything's going to fall apart and the economy is going to collapse. But what people don't realize is that every morning, 8 billion people wake up, and their primary driving mission is to improve their situation. That's what every human thinks about all the time. At least me. Okay? And it doesn't mean, you know, it's necessarily super productive. You could be an alcoholic and your idea of improving your situation is the next drink. Okay? I'm not saying it's all good, but what I am saying is that since, thankfully, most of the world now lives under Capitalism instead of communism. The only way these 8 billion people can improve their situation is to improve the situation of somebody else. And the tremendous power of that flywheel is, cannot be underestimated. All of these doomers that think everything is coming to an end, they just don't see that. They don't want to see it. Because if you're a Doomer, you're going to have way higher ratings. I mean, there's this one doomer on YouTube, he's become quite famous. Nick.

Yeah, I hit him up. He didn't want to come on.

Yeah, I've invited him on my show several times and you know, he accepted once and he just never showed up for the interview. Okay. Yeah, but he's got way bigger audience than I do and he's like, every video is doom and gloom. I took screenshots of them and you know, all you have to do is look the date I took the screenshot and the, the it says posted 2 years ago and just, you know, go in reverse. Nothing.

None of that videos after a while.

Some of them do. Yeah. I mean, listen, I've caught a bunch of YouTubers deleting doomer videos when they were wrong.

Yeah, but you know, I mean, people, people like that. Another philosophical question for you. This I get a lot now.

It's like the sky is not falling yet. Okay? It'll fall. Look, every doomer is going to be right. Even a broken clock is right twice.

A day at some point.

Yeah. I mean, there's going to be cycles. Okay. Grow up. That's, you know, so what even Kiyosaki.

Has been calling a recession.

Oh, Kiyosaki is a total doomer.

Yeah, he's gone. He's gone into the doomer. He was right last time. But my question was, a lot of people now, you know, think like, you know, one shouldn't buy housing as an investment because it's a human right. And you're just buying somebody else's houses. Right. Like a single family. What do you say to those guys? It's like, I get this all the time now. What's the question? It's like if you have, if you have two houses, you're stealing a house from my mom because she could have bought that house.

Well, somebody needs to rent a house. Not everybody's going to own a house. Yeah, I mean, the homeownership rates just above 60%. So 40% of the people don't want a house or can't afford a house.

Yeah. Like Kenny says, like it's. What is it? Intentional renting or. Yeah, renting by choice. Yeah, a lot.

I've rented by choice many times and I'm rich. Okay. I can afford a house. You know, I own lots of other houses, but I, you know, I, I.

Ran out of convenience because it gives you more freedom.

Well, it gives you more freedom, but also it's a better deal. Okay. What we talked about before, the rent to value ratios.

Yeah.

If you rent a high end home, that's a great deal. I'll give you an example. A friend of mine has a $3 million house in Manhattan Beach, California. Okay. And he was getting $9,000 a month. He just told me the story Friday morning. I had coffee with him in Newport, in Corona del Mar. Okay. And he was getting $9,000 a month for his $3 million house. That's a terrible deal. Okay, that's, he should be getting 30 grand a month. Okay. We want to get as close to 1% of the value per month as an investor.

Yeah.

Okay. So if I buy a $300,000 house, I can probably rent that house for 2600. Close to 1%. You can't quite get 1% nowadays anymore. You know, you used to, but you know, you had to buy earlier. So that's not a bad deal. Right. I can get a 0.7 or even 0.8. Yeah. Okay. So that's, that's a good deal for me as the landlord. But a three million dollar house is, you know, maybe going to get 15,000amonth at the most, which is 0.5. So as a renter, it's a better deal to rent a high end home and own a lot of low end homes. You rent other people. Yeah, because the rent to value ratio, it's what I was saying before, if the house is under 400,000, you should almost always buy the house if you're going to live there.

Okay.

If it's over 400, 500,000, you should almost always rent the house and live there financially.

I should sell this house?

Well, I mean, I'm just saying from.

A financial perspective, but it does make sense for people listening. We're, we're right now in Orange County. If I rented this home, maybe I can get seven grand tops. Right. It'll cost you at least not. I don't, I don't have the house worth probably 451-415.

Wow.

Yeah.

These have gone up a lot.

Yeah, it's 2,000 square feet, so.

Oh, and you have an ADU too, so.

Yeah. Including that, it's only 2,000. Right. But I'm saying the point is it'll. You can rent this house for six, seven grand easily. Right. You can probably find it somewhere.

Your RV ratio is only 0.5 or so, give or take.

I can guarantee you if you bought this house today, it will cost you more than 10 grand to, to, to Piti for sure.

Yeah, but that doesn't, you know, that's different too.

Right.

People get all mixed up when they start calculating the mortgage payment. That's not the right thing to do. Just look at the ratio of rent to value.

That's it. Right. Simple.

Yeah. Because the mortgage payment varies by the interest rate, how much you put down. It varies on how much you put down and yeah, it's too many variables.

There's too many stuff.

Just look at the rent to value ratio.

So even in this environment, 20, 25, we're heading, we are in April right now, it's still a good time to buy. If the numbers are cash flowing in markets that you suggest.

Cash flowing like I don't know what that means. Doesn't even mean cash flowing is. Again, look at. There is a video on the front page of my website which I recommend everybody watch. And I have a free software. It's totally free, there's no strings attached. People should go to propertytracker.com get my free software. Look, we used to use this software and I bought it. I bought the company because I liked it so much. Okay. You know, he used to charge for it, okay. The prior owner and I made it free. Okay? So just go to propertytracker.com get the free software, set up a free account, no strings attached and you can put the numbers in and do the performance yourself. And on my real estate website, which is my name, Jason hartman.com. yeah, you can go there and there's a free video on the front page of that website which is 29 minutes. Will teach you how to read a performer and analyze a real estate. Like every single number I go over it that is going to be incredibly valuable to people. And it's all free.

Yeah. And just, just this is just right. Super high level for repairs and like Capex. Where do you account? 5, 10.

Depends on the age of the house.

If it's new build, you don't need new build.

2%, 2% older house, 5 to 8%.

5 to 8%.

I mean depends how old the house is. You know, it's 2010, the ranch per month, you know, 5%. Yeah. You know, if it's older than that, you know, maybe 8%.

Yeah.

But but every house. Well, I don't want to say every house because we do have some exceptions and people that want to do their own rehabs. But most of the properties Empowered investor sells are turnkey properties. So they're all remodeled or they're brand new. They come with warranties. And, you know, that's the reason your, Your maintenance expense is projected like that.

Yeah, I. I hear horror stories about turnkey properties all the time.

Really?

I. I do.

Well, they're not really turnkey then. Yeah, turnkey, yeah.

But I personally, the last three I bought were new builds, and I love them because, you know, I called their builder and they just fix anything.

Yeah, nothing.

I. I prefer them over remodeled ones, too.

Yeah, well, you know, look, I prefer a Rolls Royce over a Toyota. Okay, but, you know, I mean, it just depends how much you want to pay.

Okay. I totally forgot to ask you this. I want to ask. You know, I've kept you for long, but it's investing in ABC neighborhoods and properties. Right. I started off in Bakersfield, and I'm being conservative and I say it's a heavy D when I started. Right. There's just so much management. I still made money, but it's a lot of work. And I eventually now moved all the way to A. Now I don't even like B minus. Look, what are you. What are you new investors?

I can tell you, I have seen this pattern. I've been doing this 21 years, okay. And I've had some clients that have been with us forever, okay. And they've been following me for a long time. They listen to my podcast for 10 years before buying one. Putting in their email address on anything we have. Okay.

And.

And getting on our mailing list. And by the way, we have a great newsletter, so put in your email address on our website and we'll send it to you. You know, I see the progression. Almost all people go this way. They start with C properties because the numbers look better. And then, you know, after a few years, they've made some money and they want to trade up to 1031 exchanges to a properties. And that's a very common thing people do.

And you think that's recommended?

Yeah, I mean, some people, you know, love the C properties and they, they just like that style of property. They gets cheaper to buy. You know, the rent to value ratios are better and, you know, they do great with it. It just depends what you want to do. I mean, everybody has a different style. You know, if you're like, looking for a business. Right. So you Want to buy a business? You could buy a McDonald's or you could open up a fancy restaurant. Right. I mean, it just depends what you want to do.

But if they both make the same amount of money or 10, 10 years.

Why they don't necessarily make the same amount of money.

I mean, usually a will appre more, right?

Yeah. So then they, let's see, it will.

Have better cash flow starting and then eventually it even out because it won't go up as much every year. Right.

Well, that doesn't make the cash flow lower. Those low end rents tend to be, you know, supported better by the market, the cheaper rent.

Plus you have fixed debt too. So it's like it gets better, right? Yeah, yeah.

I mean, I'll give you an example on that. Right. So section 8 is considered lower end properties, right? Section 8 is a government housing assistance program.

Yeah.

And so my mom had some section 8 rentals when I was a kid. Okay. And you met my mom this week. Right. It's the thing.

She was singing Billy Joel last time.

Oh, really? Piano man.

Yeah.

So you know, my mom's got like 30 rentals or maybe 26 rentals or something now. You know, when I was a kid, I remember she had these section 8 rentals and at first she loved them because every year the government sent her a postcard and it said, do you want a rent increase? You'd check it the box and.

Oh, really?

Yeah, it's like, of course I want a rent increase. Right, Duh. You know, the government would ask. I don't know, we have to ask. Yeah, but that was what it was then. Okay. Then my mom started not liking her Section 8 rentals. And she said, ah, the tenants were more difficult and they were more sloppy and this and that. And I used to say that my mother complained all the way to the bank. And I mean, there are people that make fortunes in low end properties. Okay. It just, you know, everybody has a different style.

Yeah, I, I had a few in Bakersfield and, you know, during the pandemic, never missed a rent check. Yeah, they always paid. Yeah, yeah. So any last words, Jason?

Don't wait to buy real estate. Buy real estate and then wait.

That's it, huh?

Yeah, yeah. You know, check out my podcast, my YouTube channel for more. Just look up Jason Hartman on any podcast platform or on YouTube. J A S O N H A R T M A N Get a free property Tracker account@propertytracker.com. you know, I just want to give people resources and eventually, you know, most of them call Us. And do business with us.

Yeah. Do you have any new events? Anything coming up?

No, we just had an event, so I'm. I'm tired of events. Yeah, no, no conferences scheduled right now. I mean, I'm speaking at other people's conferences all the time.

You go to, like, bigger pockets. I never see you on there.

No, I don't like that crowd.

Oh, really? They went to corporate, huh?

No, I think they're, like, generally, like, small thinking.

Yeah.

You know, I mean, everybody. There's, you know, a lot of people that are involved in that. Some are great. But. Yeah, you know, I. I just. I. I don't really resonate with that crowd too much.

Everything that's always.

I like big thinkers.

Yeah.

Okay.

So you'll be going to George's Rebel Capital?

Yeah, I'll be speaking there.

Oh, you'll be speaking there.

Cool.

I've spoken at everyone.

Nice.

I'm the one voice of optimism against all his doomers.

They're all doomers, huh?

Oh, no, I'm just kidding.

That's cool. Thanks, man. Thanks for coming on.

All right. Hey, I appreciate it. Happy investing.

Yeah, thanks.

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