2389: Co-Living Real Estate and the Rent-to-Value Ratio: How to Generate $7,200 Monthly from a Single-Family Home | Q & A Rebel Capitalist

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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 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.

For folks who don't know, this is Jason Hartman. Jason's a good friend of mine. He's a good friend of George's. He's a real estate investing expert. He has a network that supplies, provides services for folks that are into the turnkey investment space for folks who want to dab, you know, dabble into turnkey investing with real estate. That's where I got my start. If you're new to real estate, it's a very overwhelming place to kind of dip your toes. And Jason just makes it so easy with his content, with his, with his podcast and with his turnkey services. And I couldn't be happier. You brought me into a world that I never thought I'd ever get myself into. So thank you for that, buddy. But anyway, it's good to see you and how are things going? I know you're in Paradise Valley, which is, you know, right up the street from me.

So we should probably not too far away here in good old Arizona. And I tell you, there is so much going on in the world. I mean, all I really want to know is when is Pam Bondi gonna start these mass arrests? I mean, you know, it's amazing since Trump took over, thankfully so much fraud has been exposed. We literally, I think we can call this country the United States of Fraud. You know, the usf, it's huge.

Yeah.

And what is she shy? Like, why won't she arrest all these people? Like the Epstein drops? I mean, it's time to start arresting people in mass. It's just crazy what's going on. But hey, at least the word is out. You know, the, the cat is out of the bag, so. Right. And so that's good. You know, you can never go back. People can never unsee this stuff. So whether it be the Somali pirates that should have opened a daycare center, you know, they're doing. Being a pirate is much harder than opening a leering center in Minnesota. But you know, it's just a very interest time. And with our new Fed chair announcement, we are moving into an era of looser money, easier money. I know he wasn't always that way, worse, but that's the way he appears to be now. And you know, Trump tends to get what he wants. So we are moving into an era where you're going to see more money chasing a limited supply of assets, especially on the real estate side. I couldn't be happier about that. So a lot of good stuff going on. We've been through three years in real estate where the cost of money, and real estate's a credit based asset class, the cost of money basically tripled from those Covid era rates, the fastest mortgage rate increase increases in history. They were very sudden and the market just got a chill and it kind of froze for really three years now. Sales volume went way down, but prices kept going up. Even though the doomers said prices were going to crash. They were wrong, wrong, wrong. That just didn't happen. But sales volume did go way down. So everybody in the real estate business has been complaining. If you make money on trading, right, on trading volume, which has been low, you're not happy about that. But that looks like it's going to increase this year. By you know, my projections, about 15%. I think we'll see 15% more volume this year.

Do you think that's a direct result of liquidity in terms of more money coming online? Because we going to have this hawkish new guy that's Going to come in and be super stoked about running deficits up. You know, Trump came out and said that he's not interested in reducing the prices of housing. So that's another, you know, obviously supply is going to remain limited until people start selling. So we're going to have more cash sloshing around in an already hyper liquid environment, which is going to drive inflation up even more. So you said volume might go up 15%. What's that look like?

Well, you know, if we go from 4 million homes to 4 and a half million homes selling per year, that's definitely good for business. And you know, real estate's about 13% of the economy. So a lot of things happen when volume increases. Furniture sales increase, home services of every kind increase, paint sales increase, flooring sales increase, appliance sales increase. People, when they buy a house, they tend to redo things and they tend to just spend more money. And that's stimulative for the economy. Of course, it's all, all good news. But amazingly, Gene, I did a really big project recently and last week on my YouTube channel and my podcast, I went over some of it, I'm happy to go over some of it today where I looked at like return on investment and we see bitcoin has just, I don't know, I don't want to say collapsed, but it's pretty bad, you know, it's about, yeah, it's almost like half of what it was. It was almost twice as high, you know, at the peak. And listen, I own every asset class, basically. I can't think of an asset class I'm not in. Whether it be startups, pre IPO stock, regular stock, crypto, bitcoin, precious metals, of course. Real estate's my favorite, you know, I'm kind of in everything at my age. You got to diversify a little bit, right? It just shows you that income, property is the most historically proven asset class in the entire world, that nothing beats it because it has unique multidimensional characteristics. And the uninformed people, the idiots, you know, they're just focused on like, is the price going up or down? Like that's their whole thing, right? They can't understand that it's multi dimensional. And your return on investment comes from a good six major sources. Whereas cryptocurrency, precious metals, non dividend paying stocks, all strategies, buy low, sell high. That's it. That's the end of the game, right? That's the whole game. You're just a total speculator, total gambler, and with Income, property, you make money lots of different ways.

Yeah. The most wealthy people on the planet are real estate investors.

You know, I mean, every person's a real estate investor at some level. You know, they might say, well, I'm a techie. But they're always, you know, they're always in real estate.

Yeah, yeah. So with respect to real estate investing, what have you been experiencing, you know, lately since we last spoke, in terms of like your net worth network, the opportunities that are out there for folks who have the extra cash laying around to get put 20% down on something. What do the numbers kind of look like, you know? Can you give us some feedback on that?

Sure, sure. Business has been pretty slow for us for I'd say the better part of two years. And the cost of money tripled about three years ago now. But, you know, it kept going for us for like another year after that. And then it finally started to cool off. I'd say about five or six months ago now. Business started really increasing again as, you know, rates were getting a little bit more tame and the cost of money was going down a bit. But also, you know, we've had this phenomenon of the mortgage lock in effect. Now, I predicted this would happen way early in the COVID era, but I didn't give it a name. The media gave it that name. The mortgage lock in effect, where people had these super low covet era interest rates and they just didn't want to give them up. You know, they just, they were such a good deal that they, the whole country, if not the whole world, realized the mortgage is not a liability, it's actually an asset, especially if it's a really low rate. And of course, you know about my inflation induced debt destruction strategy and all that. We can talk about that a little more. But you know, people didn't want to give those mortgages up, so they just wouldn't sell their houses. And they were very, very comfortable keeping them. And at some point, you know, people just want to get on with their lives, right. Even if it costs them more. And that's what's been happening over maybe the past almost a year. I'd say it's been noticeable that the mortgage lock in effect is starting to deteriorate a little bit. It's not as significant. And here's what I mean by that. Just take an example of a hypothetical, say a couple, right? They own a house, they either bought it or refinanced it during the COVID era. They've got a mortgage rate of, you know, 2.75% or some ridiculously low mortgage rate. You know, we're just not going to give this up. And then they think, well, our family's growing, we want to move, there's a job opportunity in a different area. You know, we want to have kids or more kids or whatever, we need more space. And they finally, even though they don't want to give up that cheap mortgage, they just sort of realize we're just going to bite the bullet and do it anyway. And you know, rates are on the way down. We'll buy the new house now and then we'll refinance it later.

It's funny you bring this up, right? I, I quickly showed you a question because this is the exact question that you're addressing right now. This is exactly.

We can go to the question if you want and.

Yeah, let's do that. Let's do that. All right. So, so this is from Adam. And Adam asks. So he has a sister, mid-30s, combined income, 300k, 50 owners in six, cash flow positive single family homes. They're doing well. Their homes are an investment, you know, in northwest Indiana. Good spot.

Yeah, great, great spot.

Yeah.

Markets.

Yeah, yeah, yeah. So they know what they're doing. 2.87 30 year fixed on the primary residence that they're living in and they're thinking about doing exactly what you're saying. They're like, it's time to move on.

Yeah.

So the question is they're renting in Illinois and oh, they're, they're prop. This is the caveat. Now they're in Illinois and we know that's not a landlord friendly state. So the question becomes, should we rent it or should we just get rid of it? Renting in Illinois is very unfriendly to landlords, but they want to keep this dirt cheap. 2.873 year fixed rate mortgage. So do you think the risks of owning a rental in Illinois outweigh the benefits of keeping the sub 3% 30 year fixed rate mortgage? Is there anything you do to protect the house against unfriendly. An unfriendly state? You know, in terms of landlord stuff, they have 400k in equity in the place. So I mean they, it's a 650k home, you know, so it sounds like they only owe about 250 grand on the thing, you know.

So.

Yeah, what do you think here? I mean, to me I would keep it and just bite the bullet, just find the best tenants I could. Just. Yeah, right.

You know, it depends on a few things. And they didn't say exactly where their house was in the state, I don't think. Right.

I don't think so. A rated suburb of Chicago.

Okay, got it, got it, got it. Okay, so this 2.87 very desirable mortgage asset, not liability asset. Okay, that's great. But the balance on it's only 250, I believe.

Right, that's, that's the way I interpret it.

So, yeah, I think the balance, yeah, 650 house, but 400 equity, so that's 250. So if the balance were higher at the low rate, I would be more motivated to keep it. The other problem you have here, besides the fact that you only have 250 at that low rate rather than 600 at that low rate. Right. Is that the value of the house is pretty high and the rent to value ratio on a 650 house is not going to be very desirable. In other words, it's going to be desirable for the tenant, not the landlord, because your rent value ratio is much better on cheaper houses. So I don't think there's a strong need to keep this house. Although it is nice to have that low rate mortgage. It's a little too nice to be a rental. It's not in a landlord friendly environment. It's in a very tenant friendly environment. If the house was cheaper and the mortgage balance in proportion to the house price was higher, I would say strong desire to keep it. But in this case, I think maybe you just take your 400,000, you go to jasonhartman.com, you click on the properties page and you let us find you some good rental properties that can return way more than that 2.87% mortgage.

Yeah, you could probably purchase a couple of houses, two or three with that. With a. Oh yeah, the cash you.

Get from this, you can buy eight houses with 400.

And there's a lesson there too, with respect to the type of environments in which you'd want to invest. You know, I know you talk about linear markets and hybrid markets and the cyclical markets like California and New York that are just absolutely off the table. And I imagine this a rated suburb of Chicago is probably a hybrid market or a cyclical market. Right. You might explain in that for folks that are kind of new to the real estate investing game, what you mean by these three different areas to consider when.

Yeah, so all real estate is local. That's the first thing to understand. You know, there's no such thing as a nationwide market in a country's large and diverse as the US but you can sort of narrow down into three types of markets. Linear markets, cyclical markets, and hybrid markets. I don't have a visual handy on this. It would be nice if I did. I definitely got some great slides on this you can see on the YouTube channel and so forth. But if you're looking at a chart of appreciation and depreciation over time, cyclical market goes like this. It's ups and downs like a roller coaster. A linear market has small ups and downs, but overall it's just got that nice upward trajectory. And a hybrid market is in between the two. The markets that get all the attention are cyclical markets. Those are the markets the news media covers that you hear about all the time. But most of the country and most of the world for that matter, is a linear market. Just kind of boring, slow and steady, just does its thing, has good cash flow, usually landlord friendly, where the laws and regulations are in your favor as the landlord, as the investor. Those are the markets we like the best. If someone was to go to Jason hartman.com, click on the properties page and look at the different markets we're recommending at any given time, they'll almost all be linear. Some might be hybrid that are in between the two as the name would imply, but mostly linear markets because they just make a lot more sense. And Gene, I think you're absolutely right that the property they're mentioning is probably hybrid because you know, it's in an A rated suburb. Not in a great state obviously, but you know, a nice suburb. So that's probably a hybrid.

And you guys are, where are you guys at these days? I know you're in north, you're right there where these guys are at. Right. North Indiana, northwest Indiana, Alabama.

Alabama is very popular right now. Florida is spotty. You know, Florida's gotten out a little over its skis, so you gotta be a little careful. In Florida at the moment we still recommend some Florida markets, Arizona. And what we're really doing, you know, a big focus on now is co living because the, the cash flow is off the charts. It is so good. And that type of housing is so needed because it really solves the housing shortage problem. It is just.

You have one here, don't you? Don't you have one or two or a few of these things?

No, we have, we have several co living properties in Phoenix metro area also the Atlanta metro area is pretty good and we've got some others as well.

Nice. Yeah. And this is basically like an eight room house that's kind of built for co living. You get your, your room and then you share the, the bathroom. Maybe you share the living room.

And I mean our best models, like eight bedrooms, three bathrooms, a $400,000 house can bring in $7,200 a month.

Yeah, you're getting RV ratio back. Yeah.

And because of the dynamic of the co living properties, they usually work extremely well, where everybody's kind of keeping an eye on each other rather than having some single tenant that can do whatever they want to your property. So these are good. I mean I would recommend that every investor have some in their portfolio.

Are you buying these, these co living homes as like brand new builds or these things just renovating a big old house and starting, starting there with.

They're really pretty much never new properties. And we don't want to buy property. Most new properties have HOAs and we don't want to be in an association and have that to deal with. You know, they tend to be a little bit older properties and maybe they were originally a three bedroom house and then our partner will add to the properties and make it just perfect for co living. So it's really good. And you know, Jean, the thing about this, I looked at this about six, well I guess now, seven years ago, and I just, I'm like, that's interesting. But I'm just gonna wait. I want to, I want them to work the bugs out. I want them to get past the point of acceptance. It would be like thinking, you know, okay, 2008 Airbnb. Who would have thought that would have worked, right? I mean, it doesn't work very well at the moment. Okay. We don't like short term rentals. Okay. But you know, it had its day.

Okay, well, let me hop into one of the questions we have over here. I'm not sure if you're going to be able to hit this one because it's an Australian asking it. So he goes, hey, Jason. My country, Australia's property investing is basically a religion where people will buy blindly believing in the mantra that prices only go up and any surplus monthly outgoings on the property are excusable as they are ultimately tax deductible. However, having lived overseas for some time, I noticed that many other cultures view capital appreciation as a bonus and cash flow is king.

Yes, thank you.

There you go. So number one, have you ever or would you consider investing in real estate that does not cash flow? If you were to consider it, what criteria would you need to see, this.

Is a confusing thing to think about here. It's confusing and people have a hard time peeling the layers on this. Okay, that is not the right question. The right question is not if the property cash flows. Because you could get some really good leverage on a property. And remember, you're just paying for the property later. You haven't paid for your investment yet. Okay. When you buy a mutual fund, a stock, precious metals, cryptocurrency, okay, you pay for the whole thing in cash. I mean, I know there are things you can do, but the vast majority of people just buy for simplicity. Yeah, if you want a hundred thousand dollars worth of stock, you pay a hundred thousand dollars and you own your stock. If you want a hundred thousand dollars worth of real estate, you might put 20% down and pay and not pay for 80% of it. Okay? So you have to just understand that it's really. Cash flow is not the greatest metric. What is a better metric is rent to value ratio. Okay? And I want you there because cash flow doesn't account for how you finance it. Right? If you could get 100 financing, I would encourage you to do it. If the rate was reasonable, you'd be better off to put no money down and you'd probably have negative cash flow or what I call deferred down payment because all you're doing is deferring the down payment. That's really what's happening. So cash flow is not the good metric. Use rent to value ratio and other metrics and we can look at some performance and look at that now if you want, Gene.

But yeah, can you just explain a rent to value ratio for folks who've never heard that before?

Yeah. What I would recommend if anybody wants to be a good investor, just go to propertytracker.com, create a free account, cost zero. Okay? I have been using this company for 23 years now. Okay? So just go get a free account here. You can do these performers yourself and this will make you a really good investor. It's propertytracker.com okay? And this is what the one page performer looks like. But let me cut this up so it's bigger. I'm just to going blow up the top and the bottom half. And here's a property that you could buy today. This is real property that we have on Jason hartman.com. it's $264,000. You'll need about. If you want to put 25% down, you need about 75 grand to buy it. Projected rent is $1,800. That means your rent to value ratio. And Gene, we've added this, we've improved the Performa and enhanced it Rental value ratios right here on performa now is 0.7%. And that's about the lowest I usually want you to go. Okay. I'm guessing. And he didn't say where in Australia the property is. But listen, I've been to Australia, it's beau place. And most of those markets are very expensive because they just haven't built enough housing. They've allowed all these new immigrants to come in. You know, it's the typical let's destroy the western world mentality of Canada, Australia, Europe, and to a lesser extent thankfully the U.S. but you know, we're, we've been doing it too, sadly. So these rent to value ratios have gotten out of sync in the past. I would have said, ideally I want you to get 1% per month, meaning if you pay 260 for the house, you're getting 2,600. Okay. So the lowest I want you to go most of the time is 0.7. So this deal's okay? There's no problem with this deal. It's pretty good. So we've got our rent. We make assumptions that there's going to be a 6% appreciation which over the last 54 years has been a little, slightly higher than 6% actually. You're going to have 3% inflation and you're going to have vacancy of one month per year or about 8% is one month per year. No property is occupied all the time. There's going to be vacancies. We recommend that you self manage your properties, but if you don't, it'll cost $86 a month for management fees on this one. And it's a brand new turnkey house. It's brand new from a builder, but we're still going to assume you're going to spend 2% on maintenance. Okay. Which you probably won't spend anything for the first couple of years. But we just.

If you self manage it, you won't.

Yeah. If you self management, you'll miss out.

Yeah.

And you probably won't. Okay.

Yeah.

Okay. Now let's look at page two. So here's all your expenses. Property taxes, HOA insurance, all that good stuff. Okay. Your cash flow is projected at 288 per month with 25% down. And going over here to these financial indicators, cap rate is 5.8%. Cash on cash is 5%. Return on investment is 26%. That's the projection there. Okay. And then return on investment with iidd, that's inflation induced debt destruction genie.

There you go.

Now it takes it up to 34%. Now, how do we calculate inflation induced debt destruction? So for those who are new, this is my trademark strategy. I've been teaching it for 22 years. And it is the hidden wealth creator that is absolutely incredible. Let's go back to this page and look at our loan amount. When we bought this property, we financed basically $198,000 over here. Okay, you see that? So if inflation is 3%, rather that be CPI inflation, the government's official number, which we all know is understated. George has taught us that many times and of course I have too. Or we go with a real inflation rate. Let's just call it 3%. Mostly. I'd say the real inflation rate is significantly higher than that. It's probably about 5%. But whatever the government tells you, you can probably double it. Okay. And that's the real inflation rate. So you know, we can haggle about that, but we're just going to pick three. If you get a free account@propertytracker.com you can just put in your own number. You can put zero inflation, you can put 10%, you can do whatever you want. Okay, but here we're making the assumption of 3%. So we take this loan balance of almost 198 and then we take 3% of it and that's $5,940 per year annually and that equates to 495 per month. So inflation, because we borrow the money at today's dollar value and pay it back at tomorrow's lower dollar value, inflation is debasing or reducing the balance of that debt.

Yeah, yeah. 30 year fixed rate mortgage. A 30 year fixed rate mortgage. You know, you're paying the same fixed monthly amount every month for the next 30 years.

You know, it's incredible. And think of the bouts of inflation we'll probably have that'll be much higher in the future with $38 trillion in debt. Right. So 500 bucks a month is free money. It's inflation paying down your loan balance. It's just incredible, folks.

And what's really important too that people need to understand is the reason why we can get away with this is because we live in the United States of America and our, our government is what's backing these, these mortgages for the most part through Fannie Mae and Freddie Mac. Right. So, and then they bundle them up into mortgage backed securities and then sell them on the stock market to all the crackheads. So this is how we get it. This is how we get away with it. You're not Going to find this in Australia, you're not gonna find this in Canada, you're not gonna find this really because we financialize everything because we're crackheads.

So yeah, listen, if you saw the movie the Big Short or you read the book, there was a guy in there named Louis Renari and in the 80s, he was the guy that massively expanded and really created the mortgage backed security. Like this whole idea of having an easy, very liquid secondary market to sell these assets off was Lewis Renary. He made that happen. He changed the world. Like the guy, you'll never hear his name in a history book, but he just changed the world. And this makes the United States, like you said, a very special real estate market in all the world. Okay, you, because you can get way more inflation induced debt destruction here than you can anywhere else. It's phenomenal. So to answer the question asked, rent to value ratio is key. And I would guess if you're anywhere in any major Australian city, whether it be Melbourne or Sydney, of course is insanely expensive. Or you're on the Gold coast or you're in, over on the other side in Fremantle, in Perth, all those markets are pretty darn expensive. Okay. And your rent to value ratio is probably below 0.7%. Yeah. Okay, so you really probably don't want to do the deal. We have many Australian clients, we have clients from all over the world that buy us real estate. That's usually the best thing because the US real estate market is just a very special market and we certainly could recommend and sell international properties through our network. There's nothing stopping us from doing that. But we just haven't found anything that is that compelling properties.

It kind of reminds me of like during COVID everybody's looking for a plan B, you know, and the rest of the world is trying to get into the United States. And then all of us in the, in the United States are trying to get out, you know, and people, it's like we're the, we got the best states in, in, in all of the world when it comes to trying to survive this thing.

And we're just human nature, you know, everybody wants what they don't have, right? If you know, if you got straight hair, you want curly hair, if you got black hair, you want blonde hair, you know, everybody wants what they have. It's just human nature. Right?

If only I were taller. What is the basic checklist of must haves that you apply at the earliest stages of your due diligence process? So when you go into a new market you know, you're thinking about buying a place or, or selling, selling some turnkeys to your clients. Like, what are the things that you consider as you kind of work through that process?

Well, broadly speaking, we want a government friendly environment. We want the government to support us. We want to be in landlord friendly markets. That's an important factor. But we just want to have the numbers work. You want newer houses, unless the deal is much better than maybe an older house. You know, we want single family homes, by and large. Occasionally we'll recommend a townhouse, but that's kind of rare. Look, everything is fine at the right price, okay? Everything's a deal at the right price. So it's just got to make. The numbers have to make sense. And we know this, this because we empirically do the performa that I just showed you and we use property tracker. We put the numbers in, we play with assumptions and we see how it comes out at the other end in terms of overall return on investment. And you know, remember that example I just showed you? Okay, first year return on investment here is projected at 26 annually without inflation induced debt destruction. When you add that, it's 34. And look, we're both real estate investors, Gene, you and I both know things do not always go like it says on the performer, you know, especially property manager. Yeah, sometimes it's better. Okay, Sometimes things go way better than this. I mean, during the COVID era, If it were 2020 and someone was looking at a performer, they bought a property from us in two years, the property appreciated by like 55%.

Oh, yeah.

I mean, returns through the ceiling, okay? You know, it's way better than this. But what I always say, just be conservative, is assume it only goes half as well as expected. Cut the numbers in half, okay? Then you got 13% annually and 17% annually. Nobody's complaining about those kind of returns on a very conservative investment, a very conservative low risk asset class that has been the favorite asset class of the entire world for literally thousands of years.

Yeah, and I think, you know, I think another thing, and you kind of touched on this earlier, is the fact that you're putting 20 down, 25 down on an asset, a hard asset, and you have a tenant in there paying off the mortgage. It's not you paying off the mortgage, it's. It's your tenant paying off the mortgage. So, you know, it's like.

And inflation paying off the mortgage too.

And inflation paying off the mortgage. You know, it's like, like, I mean, it's been a while, but I remember having a friends who, whose parents bought a big ass house back in the early 90s and their mortgage is like 400 bucks a month. I mean, when they bought it, it probably sounded like a lot of money, but you fast forward 25 years or whatever and you're like 400 bucks a month. I mean, come on.

That's exactly what he's.

400 bucks, you know. Yeah.

So when I was, I remember my mom bought her first house. Okay. And I remember overhearing the conversation she was having with other adults as I was a kid, kid. And she was so worried about her. 416amonth mortgage payment for a house in West Los Angeles. Yeah. Okay. West la, where I grew up. And you know, all she had to do is wait three, four years. That payment felt like nothing because of inflation induced debt destruction. It just felt like no big deal. It wasn't a big burden.

Everything adjusts except for your mortgage payment. You know, maybe the taxes and insurance change, but you know, the, the mortgage doesn't. Yeah. Remind. Thanks. Even I bought a seaside house and, you know, overlooking the ocean and we were stressing the $1800 a month mortgage on that thing. I'm thinking about 1800 bucks today. I'm like, that is just. I can't believe I sold that place.

It's rent on a studio. Were you, were you in Monterey? Carmel there?

Yeah, yeah, yeah. That's where we were at, you know, Good spot.

Was that a single family house for 1800?

Yeah, it was a four bedroom, three bed, four bedroom, four bathroom. It was a monster house, man. And it was just, it didn't have much of a yard and it was kind of in a, you know, it was one of those neighborhoods I didn't like living in, you know, so I, I had, you know, I was like, okay, let's go, let's go buy some, let's move to Arizona. Buy some houses from Jason, you know, that's what I did.

Yeah. Wow, that's amazing.

Yeah, yeah, yeah. It's a good story. Okay, let's see here. One more for you. Do you approach overseas real estate investing differently than you do US Based investing? Well, I think we kind of answered that question.

I always get that question from this group and I always say the same thing. It's like overseas. I just haven't found anything that compelling outside the U.S. i mean, we would recommend it in a heartbeat. We'd love to. It'd be exotic. We'd get tax deductible trips to the location. You.

Yeah. And you look too. It's not like you're not out there looking. I mean, you know, this is your.

I travel internationally all the time. I've been to 99 countries so far, some of them many times over.

Phil, I see you there. You want to. You have a question? If so, just raise your hand.

Hey, so, yeah, thanks for the call today. Have you heard about the new FinCEN requirements for seller financing on residential?

No. What? We don't deal with seller financing too much because we don't do like the creative financing stuff. I've heard some talk about it, but I don't know the specifics.

Yeah, my commercial broker actually told me about it and I said, well, that's. That's why I only do commercial these days mostly. But I just glanced real quick. As of December 1st of 25, if you sell or finance to a non individual, you have to report it to FinCEN. I think their claim is, you know, money laundering and all that stuff and investing. I'm just wondering if you.

So, so in other words, if an LLC buys your property and you do a carryback or a trust. Yeah. And you do. Or corporation too, probably. But mostly corporations don't do the real estate. It's mostly an LLC. Right. Then you have to report it to FinCEN. And remember a couple of years ago or a year and a half ago, when all those FinCEN requirements about beneficial ownership and they kept going on and off and on and off. All the lawyers were making a bundle by sending out an email saying it's back on, it's off. You know, they what. What happened is FinCEN, you know, to try and have more transparencies into who owns what. They made this rule that was really a pain that you had to take. And every entity, you had to disclose to the government who the beneficial owners were and all this kind of stuff. Right. So now they did this lesser requirement that only applies to seller financing. That's interesting. But yeah, the government won't stay out of her business, that's for sure.

Yeah, well, anyway, I just. Yeah, I just heard about it actually like two hours ago, so I thought I'd just bring it up if people.

Weren'T aware of it. Yeah, thanks. Thanks for sharing that. Yeah, I don't know a lot of the details. We don't deal with seller finance financing too much, so it's just not. Not a thing we need to worry about.

Hey, buddy.

It's good to see you.

You have any questions, Adam, or are you just hanging out in the background?

My question is just a Follow up, how would you recommend dealing with renting in a state like Illinois that's so un. Landlord friendly, you know, is there, if you find a smoking deal, is there any way around it or what do you recommend for that?

You know, we've done a little bit in, in the Chicagoland area. Okay. And our investors, some of them have complained that it's not landlord friendly enough. And look, if there's an offsetting factor, right, it's okay. You know, it's kind of like Steve Jobs said in that commencement address at Stanford, the, that you've all seen on YouTube. Right? He said, don't be too dogmatic, okay. About stuff. Right. You know, have a little bit of flexibility in your thinking. And so if you got some smoking deal there, just do it. I mean, you know, like, if the deal is good enough, you can put up with other. Okay. You know, Chicago, you know, for all its problems. Okay. And I'm not talking about the hood in Chicago, but the nicer areas of Chicago, Right. You know, you go out on Rush street or whatever, assuming that's still the place. I don't even know anymore, but years ago I was. It's sort of a, like a world class city. I mean, think about it. If you live in Europe or Australia, right, and you're coming to the US what cities are you gonna go to? You're gonna go to San Francisco, Louisiana, Miami, New York, what's after that? Yeah. Okay. And, and Chicago's cheap. All those others are super expensive. So, you know, it's, it's not terrible. Okay. You know, there are, there are exceptions to every rule.

What's, what suburb are you, are you, are you guys looking at outside Chicago though?

So I live in Lagrange. My sister lives in Darien. So Darien's just like a little bit like southwest of Lagrange, but they're all right in the same area, all the west suburbs.

Okay.

My buddy lives in Woodstock. He's got a lot of businesses and a lot of real estate up there. And I have no idea where that is. With, with respect to.

Sure, sure.

Kind of northwest.

It's a cool Chicago.

Yeah.

Kind of close to the airport.

Yeah, it's a super cool area though. It's like the moment you get outside of Chicago, you're like, whoa, I can see why he lives here. And you know, if it wasn't for the government and the politics, you know, I'd probably do the exact same thing, you know.

So.

Yeah, in June, July and August, it's amazing. But you know, like, you Said the government, the politics makes it, makes it hard, but it's easy to make money here, you know, relative to other parts of the country. So that's what keeps you around. That's, that's the unfortunate part.

What, what our people have noticed is, you know, with the northwest Indiana area is it's kind of like an arbitrage opportunity for investors. Because if, you know, a lot of, a lot of our people have been buying rental properties in some of these areas in northwest Indiana and what they're finding is their tenants work in Chicago. So they make like a big city money in Chicago, but they live there, so they don't. Their tax rate's much better and their housing costs are much lower. And you know, they tend to be more flush with cash and like pretty good tenants. Right. Because they're not pressured. They're getting the high income. They're, you know, they're doing an arbitrage and that tends to be pretty good deal. Look, there are opportunities everywhere. I don't want to say never say never, but you know, all things being equal, of course be in a landlord friendly environment. I'd way rather see you be buying properties in Huntsville, Alabama. Okay. You know, that's way better than in Chicago. For sure.

For sure.

I, I have five rentals in northwest Indiana and you're spot on. Tons of people work in Chicago and then just commute. And now though they're just effectively suburbs in northwest Indiana. They're suburbs of Chicago with a whole lot of cheaper taxes.

Yeah. And a whole lot of times they're only going into the office two or three days a week.

Yeah, exactly.

It's not like they're doing it every day. Yeah, yeah.

Well, hey, I appreciate your time. Nice talking with you.

I think we're all done today. Good hanging out again. Thanks. Thanks for, for hopping on, folks.

Go to propertytracker. Com. Get yourself a free account. Do those Performas. The Performa, there's a lot of numbers on there, but it's actually very simple. The first time you input the data in a Performa, it'll take you 10, 15 minutes. The second time it'll take you five minutes. And the third time it'll take you three minutes. Okay. It's just really easy. You get a free account, you do the performing, you change the numbers. What if the rent is higher? What if it's lower? What if the vacancy is lower or higher? How does that impact the return? Return? This is what is going to make you very attuned to the numbers on a deal. And it's going to make you a better investor. Also, if you don't want to do that, and that's totally free, just go to jason hartman.com click on properties and you can see these performance there. They are static performance, okay with our assumptions, but they're all done for you, so you don't need to change anything or do anything. And you know, you can just look at those and you can kind of compare different properties and look at the full performance. And this is the thing that will make you very, very good investors. It'll make you very tuned to numbers. And that's, that's what everybody needs. It's the most important thing. Happy investing. 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, hartman media.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.