2365: 465% ROI: Why Single-Family Homes Crush the S&P 500 and Gold | Client Case Study with Jay VonLehman

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Hi, I'm Mike Maloney. I'm here at the Empowered Investor Conference put on by Jason Hartman and boy, does Jason do a great job. I highly recommend this. What happens is you just get a ton of really useful information. Now, a lot of it is geared toward real estate, but there's asset protection and there's just a whole wealth of knowledge. And then on top of that, there's all the networking that goes on and you end up with friends that will last a long time. It's a great event. I highly recommend it. You should come join us if you're not sure if this event is for you. The vast array of knowledge that you're going to get, there's going to be something. So the best investment you can make is an investment in your own knowledge. And regardless of what you do in life, the things that you will learn here will benefit you immensely.

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.

Greetings empowered investors. I am in Pasadena, California in the Socialist Republic of California today. You know, I tell you one thing California has the monopoly on is this great weather. It is a beautiful place, no question about it. The government is a disaster, but everything else is pretty cool. We have got a good show for you today. We're going to do a client case study, so we'll get into that in just a moment, but we just had the Fed meeting and just finished one of our monthly master classes. It was a good one today. Be sure to join us for those every month. By the way, jasonhartman.com Wednesday we don't have the next one planned yet, but you can just go there and register and you'll get the notifications for that. We always want to see you at those masterclasses. Let's Dive into a couple of things before we get to our guest and client case study. First of all, the power of leverage. The massive power of leverage, the money supply is in easing. The money printer is warming up. And what that means for you is that you want to own assets and you want to have debt against those assets because the asset value appreciates and the debt depreciates. That's my trademark inflation induced debt destruction strategy. It is super powerful. So let me just remind you of this. Okay. If you're watching on video, this is a chart showing asset price inflation for the last 10 years. And it shows you the S&P 500 index went up 195%. It is the winner. Well, not too fast. Don't jump to conclusions. We'll get to that in a moment. Gold number two at 117% and the median home price, third place. It only gets the bronze medal, not the gold medal, not the, well wait, the gold medal is the best. Usually platinum is been thrown in there to be the best. But we'll go gold, silver, platinum. Right. And so single family homes are third place, but not so fast. That's if you pay cash for them, if you leverage them conservatively. 20% down, 80% financing the return on investment for only one dimension of the single family home as an income property, which is this beautiful multidimensional asset class. The most historically proven asset class in world history and the most tax favored asset class in America. Taxes being the largest expense most of us have. Your return on investment is 465%. Coming in at number one, beating the S&P 500 by a huge margin, beating gold by a huge margin. And it's just a phenomenal asset class. It's been around and proven for thousands of years. It's not the new kid on the block. Like this shiny object. Sometimes, well, that shiny object is really down and that's the cryptocurrencies, right? But sometimes it's up and it's, you know, it's the shiny object. But very speculative, not proven, very short track record. Just about 15 years or so. So nothing big there. All right. The Fed is warming up the printing press and today they warmed it up a little more. They cut the rate by a quarter point, 25 basis points. And that money has been flooding into the market for a few months now. Business has definitely picked up. It's been pretty slow for a couple of years for us. I've told you about that before. Activity down, but home prices still appreciating. And even after tripling the cost of money, right? And now the cost of money is coming down, so we're going to see more upward pressure on prices. And again, it's a slow moving asset. It's boring. You could never have TV stations dedicated to real estate like Bloomberg or CNBC or all the other lame stream media, mainstream media, I call it the lamestream media because it's pretty lame. You could never have that because there's just not enough to say, you know, it's just a kind of a slow moving asset. But it's so reliable. It's the old fable of the tortoise and the hare, right? Real estate wins the game because it's just so reliable. Income property, most historically proven asset class in the world. Shadow demand. I've been talking about this for, I don't know, a good two and a half years maybe. And here's another study, says that this decade has already seen a deficit of 2.8 million fewer existing home sales than expected. Now I say that number is actually higher. I say it's quite a bit higher. I say it's closer to like 5 over 5 million. But you know, everybody has different opinions. That's my opinion. And how do I arrive at that opinion? I look at the decline in sales since the cost of money tripled and that represents to me a deficit of almost 6 million homes that have not sold, not transacted because housing affordability has been so bad. But anyway, this study, this is Lance Lambert, he's been on the show before. Resi Club, very good guy, has a lot of great data and he says 2.8 million is the deficit. But let's not split hairs over these numbers. It doesn't matter because we only have about 800,000 homes for sale in this country. And as rates keep coming down, we are going to see a lot of these buyers flood the market, competing for very, very limited inventory. Inventory that is only about half of what it should be, adjusting for normal plus population growth over the last 10 years. Okay, so we have a housing shortage. No question about it. Don't let anybody lead you to believe otherwise. They are not disciplined. They are not using real data. They are people with opinions about how the sky is falling and trying to suck you into click bait. Don't fall for it, okay? Those are the people that get all the views, all the clicks, but they don't get it right. And that's been proven over and over again. All right? The economy is booming. Booming. This is from Anthony Pompliano's newsletter today and it says Exactly. The American economy is booming. At least that's what the GDP numbers are telling us. The US GDP gross Domestic product, the size of the economy, basically, right, grew at 3.8% year over year in the second quarter. And the Atlanta Fed is estimating Q3 growth at between 3.5 and 3.8%. Historical context is important to understand the magnitude, the magnitude of these numbers. The average GDP growth for countries around the world is approximately 2.9%. And the United States has outperformed for the last 80 years by growing GDP an average of 3.2% annually from 1947 to 2025. Folks, I know there's a lot of America haters and I get it, whatever. You know, my friend Gary who's been on the show, he's one of our clients from many years ago, he lives in China and I think the CCP has gotten to him because he loves to bash America. But compared to what? I mean, eight decades of outperforming the entire planet. Okay, you know, whatever. And we are through another massive boom time with technology right now. And if you think AI is good, just wait until you put that AI into robots. You know, we've got the vast majority of the leading companies in this country that are the world iconic companies. I mean, it's just, it's like the future is so good, I've got to wear shades. Right? You know, it really is. Now listen, I always say it's an amazing time to be alive. And, and I mean that in terms of technology, standard of living, gdp, economy, it's a pretty incredible time. You asked me about the culture war and I'm going to say it's a disaster. Okay? It's definitely not an amazing time to be live. Culturally there's a lot of problems, but that's another subject for another show. Okay, the month supply of US existing homes is trending right now at 4.4 months. Which you gotta ask yourself, compared to what? Well, during the Great Recession and just coming out of the Great Recession, we got up to 12 months. So we are at one third of that number now. And it's in the historically the low band of the historically normal rate of months of supply. And what that means is if you took a snapshot in time and the number of homes for sale now and the existing demand, how long would it take to consume that inventory? 4.4 months. When it was super tight during the COVID era and every house was selling like lickety split with multiple offers, we got down to about one and a half months of Supply when it was a savagely impossible housing market. Now we're in the low band of normal. What's the high band of normal? Just under six months. Just under six months. And again, Great recession, bad market. Or, well, what people would call a buyer's market, not a seller's market. 12 months. Okay, so there's your comparison, right? There is your comparison. Now, I want you to know I published a very classy ad today. There's a funny video that my neighbor sent me years ago. At the time, she was my neighbor. And it was. The F word is the most versatile word in the English language. And, you know, we kind of use it as punctuation. This profanity, I'm not proud of it. I'm just saying it's, you know, it's the way slang has evolved, right? And so this morning I had this friend of mine, a successful friend, call me and ask me about a certain investment thing. And it just occurred to me, you know, why do people overcomplicate all this stuff? And so I made this little ad. Want to retire? Want to get rich? Stop over complicating it. Stop investing in other people's deals. Just buy some houses and rent them out, folks. That's it. That exact thing has worked for tens of millions, if not over a hundred million people in this country. It's worked for probably billions of people around the world. What hasn't worked? Syndications, funds, the stock market, all of these other exotic things. You know, people love to over complicate everything. And I admit, I do it too. I'm guilty as charged. But when you get down to it, just stop investing in other people's deals. When you're investing in other people's deals, they're the ones making all the big money, okay? Investing in a syndication is great for the syndicator. Investing in a stock is great for the seller of the stock. That's the founders of the company, the insiders, the first early rounds of employees that own all the stock in that company. That's their exit strategy. Syndicating an apartment complex is their exit strategy. And it's your lame deal where you're just going to get. You're going to get the crumbs, okay? If you want the real profits, you've got to be a direct investor. I mean, look, nobody ever got rich investing in a syndication except the syndicator, the promoter, the guy who set it up. They get rich, you get the scraps. So stop overcomplicating it. Stop investing in other people's deals. Just Buy some houses and rent them out. Okay, pardon the profanity, but I hope I made the point with the F word there. Buy some houses and rent them out. That works. All right, let's get to our guest today. We're going to do a little case study for you. Here we go. Okay, let's focus on another real estate investor case study today with Jay Von Lehman. He has been investing in real estate for a while. Been listening to the show, and he also has some thoughts about the monetary system and investing in multiple things, not just real estate. So we're going to dig into that. Jay, welcome. How are you?

Good, Jason. Thank you for having me.

Good to have you. And you're coming to us from St. Petersburg, Florida, One of my favorite places, right?

That's right.

Good stuff you discovered, I think my podcast back around five years ago or so, right?

That's right. Around 2020, during COVID era.

Were you interested in real estate investing before that or did you start investing before that?

Yeah, I bought my first property back in 2013 and have acquired, you know, about one every other year or so since then. And yeah, I've been listening to your show and really enjoyed it.

Great, Good stuff. Well, thank you for listening. And back in 2013, were you in the army then?

Yeah, so I, I went to West Point and graduated into the 2012. And then I was stationed at Fort Lewis, Washington, and pretty much, you know, right when I got there early 2013, I bought a house as soon as I could because read Rich dad, poor dad when I was younger and just knew that acquiring assets that produce income like real estate would be the way to create wealth.

Yeah. Yeah. Good, that's great. So what do you do in the army?

I was an engineer officer. Combat engineer.

What does that mean, a combat engineer?

So we deal with explosives, demolitions, route clearance. So whenever the infantry or whatever units are in the Middle east or moving from one place to another, the engineers lead the way and make sure that the roads are safe from ied.

And so what you're doing is you're like jamming IED signals and things like that, right?

Correct. Or, or blowing them up.

Yeah. Oh, so you, you, you can sense them, your sensors, what do they do? Follow the signal and then you blow the, you blow it up sometimes.

But we also have vehicles that go. That are able to take the impact from the IDs. So they will drive along the road and sometimes just set off the IEDs and on purpose.

That's that, that's that really heavily armored, like V shaped Vehicle. I can't remember what it's called. Right, Husky. Yes, husky. Yeah. And so what that does is it directs the explosion outward from the vehicle in that V shape. That's. Yeah, it's. It's truly incredible. I mean, you know, I don't think any of us really appreciate it enough, but so much technology comes from the military. A lot of people would say it's such a waste to spend all this money and have such a big military budget. But what they may not be realizing is that they. The military budget for the actual military ends up being much lower than it seems because of all the innovation that comes out of military. You know, when you're creating life and death technology, it's just gotta work, right? And it's just gotta, you've gotta push the limits of technological progress and capability at any given time. I was watching a YouTube video the other day about this new device that basically just defeats weaponized drone swarms, you know, with electromagnetic pulsing. And it's just incredible. I mean, if it wasn't, you know, the old saying, necessity is the mother of invention. Right? And when it's military, it's a necessity. And so much comes out of that. I mean, gps, you know, the same with the space program too, right? You know, and it may well be NASA's PR machine, I don't know. But, you know, I remember when I was a kid following the space program reading that for every dollar spent on the Apollo program, $24 were generated in GDP. So, you know, that's an investment, not an expense. If, if true, you know, you know, my listeners, I'm sure we'll get some comments below this video of, oh, that's not true or it is true or whatever. So feel free to chime in and enhance our knowledge about that, listeners and viewers. But yeah, thoughts about that.

Yeah, I agree. And the human capital as well, you know, I think a lot of my friends have gone on to be very successful contributing members of companies and done very well in the economy.

Yeah, yeah, that's fantastic. So that just grows the economy a lot more than people think. It's. It's not a zero sum game. That's what we've all got to remember when it comes to, you know, some expenditures, they really are investments. Good, good stuff. So, okay, so you got your first real estate investment in 2013. You've been investing since then, buying a property about every other year. And you've got properties in, I believe, three different markets that you mentioned before we started the show. And so that's Great. So tell us about, you know, like what attracts you to real estate or really what you look for for in any investment.

Yeah. When I was in the army and then after I got out of the army, I had a few sales jobs. And I'll talk on my, talk about my current job now. And along the way, yeah, I would always save up as much as I could and purchase real estate. I think that the philosophy comes from, I think the Federal Reserve is going to continue printing money and devaluing the dollar. So if I can get as much money as possible into real assets that will appreciate and benefit from government or Federal Reserve actions, that's the way to do it. And then if I can combine that with producing income, that's the golden ticket to wealth, in my opinion.

Yeah, And I think you have certainly been right about that. I mean, look at your timing with your real estate investments. You know that inflation is going to happen. You know that our dollar is going to keep being debased further and further. It just has to be that way. I don't know how it would ever not happen that way. You know, I'd say that the bet of shorting the US dollar is like a 99.9% sure bet. You know, granted there will be little ups and downs along the way and there will be, you know, different degrees that inflation is debasing our dollar. But the macro trend is, I mean, I don't know how anybody can doubt it, really. So you like real estate and you also like gold and you happen to be an employee.

Yes, that's right. I work at Monetary Metals.

Yeah. And so you were, you spent about a year in Brazil, I think, traveling around, right?

Yeah, As I mentioned. Yeah. Before the show, after I got out of the army, had a few sales jobs and then lived down in Brazil for about a year. And when I was living down there, I was looking for remote jobs and a company that I had already invested in and really liked their product, Monetary Metals. I started working for them.

Yeah. So you. So you actually invested with them back in 2019. You had about six years in real estate investment and then you decided to do some precious metals with them back in 2019 and later took the job, right?

Exactly. Yeah. So I've been investing with monetary metals since 2019, as you said, and yeah, it's been great. So when they had an opening, I decided to apply and have been working there for about two years now. So pivoted a little bit at that time from real estate into gold. I think having bearer assets like bitcoin gold and things that you own that aren't really dependent on third parties is much really a responsible way to preserve wealth and continue increasing.

Yeah, I think so too. So there's really two trades there that we should talk about. One is the inflation trade, shorting the dollar or really whatever country you're in short, that country's currency. Because the history of the world is that with fiat currencies it's a race to the bottom. They're all going only in one direction in the macro trend. Right. There might be little day to day ups and downs along the way, but the macro trend is definitely a race to the bottom. So with that, you want to invest in things that benefit from that or at least hedge it. Right. And we all know about inflation induced debt destruction thanks to my teachings. And for thousands of years before me, precious metals was definitely the way to not debase. Right. And you mentioned the other thing, and that's really the second part of the trade lesson I think is bearer assets. And you know, from listening to my show for the last six years or so, I always talk about commandment number three. Three, thou shalt maintain control, be a direct investor, own the thing you're investing in to whatever degree possible. Right. You know, you can't always do it. We all do lots of things. I get it. You know, at different stages of our lives, we're, we're doing different things because of, you know, the time and dedication we have to one thing or the other. Right. It's a moving target. But largely you want to be a direct investor and own the actual asset rather than leave it in the control of somebody else.

Right, Exactly. Totally agree.

Yeah. Any more thoughts on that? I mean, you mentioned bearer assets, which I really like that term. You know, they used to have bearer bonds in the old days, but I think those are pretty much outlawed now because that was a form of currency. So the government didn't like it. Right. They didn't like someone having the value of a bond just by holding it in their hand. They wanted that to only be the US dollar or other countries, whatever currency they have. Right. It was just too easy. Right. And that's the other reason I've always said that the government's present administration excluded. They don't like bitcoin, they don't want to see crypto succeed now. Maybe it's just too big a thing and they can't fight it and they've given up. I don't know. But would love your thoughts on that. It sounds like you're A bitcoin investor as well, right?

Yeah. I have some bitcoin as another way to kind of diversify. Yeah. My personal opinion on that, it seems like the government is kind of in on it as well. Now they've kind of bought in USDT and Tether and bitcoin. The US Government has decent holdings in bitcoin, so it looks like they've accepted that it's not going anywhere.

And they also have very large holdings in gold. So, you know, even though they like you and I to use their dollars, look at what they're doing, not what they're saying. Right. Or not what they're promoting. So that's interesting. But when you look at cryptocurrency, I think what Trump did recently was brilliant. It was really. He may not even have realized how brilliant this was, but with his recent crypto bill and all of the support of crypto, what he really did is strengthen the dollar and make it an even more convenient global currency as a stablecoin. That might have been accidental, but it was brilliant because now, you know, people use dollars all over the world and they, you know, it is the reserve currency of the world and, you know, people stuff it under their mattress in foreign countries. They collect it like they, like they do precious metals. Right. You know, they just view it as much safer than their country's currency in the vast majority of cases. And so having the stablecoin regulation really just. It's just another form of the dollar. That's all it is. And it just strengthens it and increases its use and reach. Right?

Yeah, that makes sense.

Yeah. Yeah. Cool. What else would you like people to know about your thoughts on monetary and fiscal policy and precious metals, real estate, whatever.

As you've very eloquently described many times on your show, I think the best way to really create wealth is through real estate. And that's where most of my investments are in most of my net worth. But don't want to be all eggs in one basket and don't have any dry powder on the side. So when I think of other ways to keep some wealth on the side and ready for more real estate deals potentially in the future, think earning an income on that is makes the most sense. So I don't really know of any way with Bitcoin. Maybe there's some small ways.

There are ways you can earn a return on bitcoin, but you know, that's kind of stuff gets pretty risky. I mean, bitcoin is already a risk asset for sure. So you're even making it more risky with doing things like staking and loaning and all that kind of stuff. But it can be done, you know, it can be done kind of similar to what you guys do. So that's, that's interesting.

Yeah, true. Yeah, Staking. I, I'm a bitcoin maximalist, so I don't, I don't have any that, that I do staking or anything like that, but.

Yeah, right, right. Good stuff. What are your goals with your real estate portfolio and what are your thoughts going forward as to that asset? I, I think we're looking a lot of upward pressure on rents as this affordability crunch just continues and continues.

I plan to continue buying single family homes or two to four unit, you know, multifamily units. And I, I personally haven't seen with my properties in the areas that I own, my properties. Rent going up recently?

Yeah, it has been soft. And that is, you know, the reason I've explained on the show is because of so many apartment deliveries. The apartment market of a large institutional multifamily market is siphoning off a lot of our prospective tenants right now because their deals are so good. I just talked with an apartment complex literally maybe 45 minutes ago, and they were offering two months free rent for a one year lease. In downtown Phoenix, there are apartment complexes offering, if you can believe this, four months free rent on a one year lease. It's absolutely crazy. So it's hard to compete with that. But folks, let me tell you, that is going away because those apartments are getting absorbed and that market is equalizing. And when it does, as long as the affordability crunch is still with us, right. Unless we see, in other words, unless we see much lower interest rates, rents are going to start skyrocketing again like they did during the COVID era. So I mean, maybe not that much, who knows. But there's definitely a lot of upward pressure under the stock surface that most people can't see. But I can see it because it's just obvious numbers, you know.

Also, you know, just doing any repairs or improvements on property is becoming so much more expensive.

That's another upward pressure on rent and the insurance crisis that is softening. That's not as bad as it has been over the last couple years. But you know, the insurance rates have actually fallen a little bit. But all of those upward expenses, they all become pass throughs and the owners charge more or if it gets too expensive, there are just fewer landlords. You just reduce supply and then the existing landlords benefit from that because of that Upward pressure on rents. So it's a lag time. And this is the tricky part. For many years, you know, we'll go back to gold and silver, for example. For many years they did nothing. I mean that just sat there and like hardly appreciated. And then suddenly we've seen this run up. Right. I mean not that suddenly, but you know what I mean? Right. For a lot of years it was just sort of boring. And that's kind of where real estate is right now, kind of boring. Not a lot exciting happening. But you can see all those pressures building on both prices and rents.

Yeah, absolutely. And Jason, I also just want to mention the. I manage all of my properties remotely. They're all over the country and, or yeah, several states as you mentioned. And part of the inspiration for that to not get professional property managers has been from your show, a lot of good, good tips and advice. And sometimes it's easier to manage yourself than deal with. It's extra hassle to deal with the property manager in my experience.

You Jay, you are absolutely right. I mean that's what I say. When you take the third party out of the equation, the manager that has their own agenda, their own separate agenda. Okay. When you take them out of the equation, it just goes better. I love self management. It is the way to go. You get tenants that they pay more, they stay longer, they maintain the property for you. Whereas when you have a manager they're just oh, I saw an ant send out a pest control company. Like it's ridiculous. You know, my self managed tenants, they're just easy as pie, you know. And I know there are some bad tenants out there, but the vast majority of tenants are, are just great people that just want a good home to live in. Yeah.

And another bonus I've seen or advantage is having a personal relationship with a lot of my tenants.

Yeah.

Imagine you have a lot more tenants than I do. But to the degree that I'm able to just having some personal relationship with them, no question pays back very well in terms of them taking care of the property. If, if they say I'm going to be a week late. Yeah, my, my kid had to go to the hospital and I had some extra bills and I say okay, that's fine. I build some goodwill in their eyes and then later they'll notify me if they see a crack in the wall or you know, a potential future issue, they want to let me know right away because they, they like me and they want.

And a lot of times, Jay, they just fix things for you, you know. Literally, it's amazing how great it is to be a self manager. You know, get rid of your property managers, folks. If you're listening to this and you've got, you know, 20 properties or 15 properties or whatever, right? Just try it, try it with one property and then if you followed my advice and you're in three to five markets, get all the properties in that first one market. You know, start with one, okay? And then convert all. Say, for example, you're in Indianapolis or Memphis and you've got these properties, right? Say you've got four properties in one market. Try it with one. Try self management with one, and then convert the rest of them in the same, same market. Because you'll have the resources in that market, all of the help you need, right? And then go to another market and do the same thing. And just eventually you'll just be self managing more and more of your properties. You'll have more control, you'll have better return on investment, you'll have longer tenant stays with less turnover. And it's just great. Like, I don't know why, why we haven't completely disrupted the property management industry, Jay. Yeah.

And with the Internet and everything, it's not that hard. If we need a plumber, look online, find 10 plumbers in the area.

Go to Thumbtack, go to TaskRabbit, go to Angie's List. It's so easy. Go to Yelp. Yelp has great tools now that really identify the exact job you need and will send out a request for service to multiple vendors. I mean, these tools are so handy nowadays. You know, the secret is, the dirty little secret is your manager's using the same tools so you can just use them directly. And it takes like minutes. It's just so easy. Yeah. Good stuff.

So I appreciate your advice on that. That's definitely helped me.

Yeah, my pleasure. I'm glad you are self managing. All right, Jay. Hey, thank you for sharing your thoughts on real estate, cryptocurrency and precious metals with us. Thanks for coming on.

Yeah, yeah, thank you.

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