AIPIS 146 - Real Estate Investing in Detroit and Self Driving Cars with Greg Scott

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Welcome to the AIPIS show for accredited income property investment specialists and those who desire to be. This is your host, Jason Hartman. We talk about increasing your income, your productivity and just generally having a better life while serving your clients better with America's most historically proven asset class income property. We have a great interview for you today and we will be back with that in less than 60 seconds.

Hey, it's my pleasure to welcome Greg Scott to the show. He has been a listener to the podcast for I'm not exactly sure how long, but he'll tell us. Reached out to me after I was in Detroit because I talk so much about it and wanted to give us another perspective on that market and then maybe talk about some of his other investments as well. Greg is also a client, so it's just a pleasure to have him on the show. Greg, welcome. How are you?

I'm doing well. Thank you for having me on the show. Jason, how are you?

Well, it's good to have you. It's good to have you. So you know, I was in Detroit recently, sort of a side mission from a property tour there that we did in Chicago and Grand Rapids. After hearing that show, you reached out and said, hey, you know, you really might want to think twice about some of your thoughts about Detroit. And you know, I love to beat Detroit up. It's probably not fair, but it's just such an amazing story really, of how that was once such a great city and, and what it's become. But like I always say, all real estate is local. That doesn't just mean the difference between Chicago and Detroit or Atlanta and, you know, Memphis. It also means within a city or the suburbs, the neighborhoods, the sub markets. There is quite a bit of distinction, according to you, right, Greg?

Oh, absolutely. Night and day, depending on where you go within metro Detroit.

Okay, well, as some people say, jokingly edumacate me.

Well, first of all, Jason, I want to answer your original question. How long have I been a listener? Actually, when I first discovered your podcast, I could still find episode number one on iTunes. And I'm proud to say I've listened to actually every single episode.

Oh, my gosh. You are my favorite listener of all.

One of the early ones, actually. And I do very much credit you with getting me involved in real estate investing. I had tried to do a flip originally that went sideways, and I ended up having a condo that I had rented out after a bad flip. And I realized that being a landlord wasn't all that tough. And eventually I found you on the web, and that really got me into real estate investing.

Good.

So thank you for that.

Thank you for being a client, too. I didn't know until we had this phone call that you actually purchased five properties through our network. Right?

Yeah. In various Cities. I have two in Indianapolis, one in Atlanta, one in St. Louis. And then actually, I had. The first investment property that I sold was one that I bought in Arizona with you. And after two years, it had gone up about 60% in value, and I decided I could put the cash to more investing use rather than just sitting on the cash flow.

That was probably a very good decision. We have been in and out of Phoenix over the years, and in and out of a couple different markets that, you know, they just get a little too frothy for us, and then we get worried. We're just too scared of making a bad decision. But when did you buy that Phoenix property? How long ago was that? Was the first one you bought through us?

No, no, actually, my. I live in Detroit, and I was just starting to get into investing, and I was a little nervous to go too far. So my first property was in Indianapolis with you. That was further down the road. And I don't remember now the exact year I bought it, but I remember looking at the charts on Zillow, and with that one, we just got super lucky. We bought it right at the bottom, and then we hit a little plateau. Two years later, we sold it and we turned it into other real estate investments. So it was a good deal for us.

Yeah. Yeah. Good for you. That was. Sounds like it was a perfect decision. But when you look around the country, it sounds like you played the Phoenix market very well, because that's kind of a hybrid market, and you've lived in Detroit all your life, and you've been listening to me all these years, beat up on Detroit, and you still a client. I appreciate that. Thank you.

In real estate circles, I know Detroit is kind of the poster child for a bad real estate market, and the bankruptcy proceedings certainly didn't help that reputation.

But that actually might Help the city, though. You know, like years ago, I was saying the best thing California could do would be declare bankruptcy, although it's never happened that a state has done that. But, you know, it's a fresh start. I mean, that's why in the US Our system is so forgiving to people. And, you know, many people say, oh, it's not fair. Those deadbeats get away with murder type stuff. But there are a lot of stories in the US about people, you know, entrepreneurs specifically, who went bankrupt and they got their fresh start and did something great after that, you know, and the same is true for a municipality. If you wipe the slate clean and start over, a lot of times, that can be the best thing ever.

You're absolutely right. And I can tell you a few stories about some of the changes that I've seen in Detroit. But before we get too much into that, one of the things I wanted to mention you talked about is that all real estate is local. And certainly the city proper of Detroit has been really run down. And if you look at demographic charts, its population peaked in 1950 and has gone down since then. But metro Detroit actually peaked in the 2000 census. And I think it only dipped because the automotive industry was having a terrible time in the last census. But the automotive manufacturers have been hiring like crazy. A lot of people have been returning from having moved out of state. So it wouldn't surprise me when we get to 2020 if you see an uptick in population again.

Wow, that's amazing. Actually, before we dive into this too deeply, there's one more thing I've got to say. Do you still have my old episodes, like episode number one, downloaded on your computer or your iPad or anything? Or your, well, iPhone or. No, it wouldn't even be iPhone. Ipod.

You know, I may. I had. I recently upgraded my computer, so a lot of that stuff got purged. But I could check if you want them.

No, I actually, you know, I'm embarrassed, so I really don't want anybody to get ahold of that.

Because I think I'm better at this now than I was back then. I hope so, at least.

Oh, I'm sure you are. But you couldn't have done too poorly because you got a lot of listeners now.

Yeah, well, anyway, I just thought that was funny. You may be the only person around that heard episode number one and is still listening to the show, so I don't know.

I love your podcast. I think you educate, you entertain, and I always learn something, even if it's not real estate related.

Well, great. Well, I'm glad. I'm glad. And I. It really is so great to hear that. That's what keeps me going with this stuff. And, you know, a lot of this stuff, I do say, I have to admit, kind of for entertainment value, like, I'll try to be intentionally controversial sometimes just to sort of get people, you know, get them a little huffed up at me, so they'll kind of stick with it. But, well, you know, so what is going on in Detroit? I mean, obviously, it's like a tale of two cities in a way. You know, there's the inner city, which is a mess, and then the suburbs, which a lot of people. Those have actually improved, maybe because of people leaving the city proper. Right. And going into the suburbs, that kind of flight in that direction.

Well, I would say certainly between 1950 and 2000, there was an exodus from the city and the population in the suburbs grew. But, you know, just a little factoid for you. Oakland county, which is one of the suburbs of Detroit, is the 11th wealthiest county in the United States. And people who live in Oakland county would say, hey, I'm part of metro Detroit. But it certainly paints a different picture than, you know, the falling apart buildings and the bums and the garbage.

Yeah, dramatically different picture. So are those values going up, you know, in the suburbs? Are there any places to invest? I mean, are the properties too expensive to have good RV ratios? Is the climate in those areas like a homeowner climate versus a thriving rental market for, you know, for landlords is what I mean.

Of course, I would say again, Jason, just like you always say, everything's local. It depends on where you go. I can take you to a place with multimillion dollar homes that probably aren't good rentals. I have a lot of friends that have rentals in different parts of the city. Dearborn, which is where I work, I have a friend that has six properties there. His wife's a real estate agent, and they're just knocking it out of the park. But there's a lot of homeowners there, too. It's not strictly rentals. You. You can find the gamut. You can find those $500 houses. They're probably not worth $500, but you can also find multimillion dollar properties, and you just got to find the neighborhoods that are in the right zone for renting, if that's what you want to do.

Yeah, I know you bought the five properties through our network in the markets you mentioned, but do you own properties in Detroit area, too?

We currently Only own one rental property, aside from our own residential property. Actually, the majority of our single family right now is in Dallas. But we've been starting to move into multifam. So I have a lot of colleagues that I work with down in Dallas, and they know that I've been getting into multifamily. And they say, well, how come you're not doing multifamily in your own backyard? You've learned enough to go do it. And so I started thinking about it, and at first I wasn't sure, and that's why I actually developed that paper that I shared with you. Is kind of convinced myself that it was a smart thing to do. And that's where I did all the research on the demographic trends and what was happening in the state.

Right, right. Yeah. That was an interesting presentation you sent over. So thank you for sending that. Tell us about some of those trends. I mean, I don't have that in front of me now. Share some of that stuff with the listeners, if you would.

Well, as I mentioned, the Detroit population peaked in 1950, and I think you actually hit it right on the nose in some previous episodes. There was a lot of social programs that impacted that. The unions became very, very strong, which drove some of this as well. A lot of corruption that happened in the city. I had a friend that about 10 years ago was trying to start a restaurant in the city, and he said he had so many government officials and religious leaders coming to him for handouts after spending about $50,000 trying to get up and going, he just said, I can't make it work here, and pulled the plug. Yeah, I mean, it's hard to do business when you got everybody's hand in your pocket.

Has that toned down? Has the government kind of gotten under control a little bit more? Because what's interesting is you look at a place like Pittsburgh, you know, which is a Rust Belt area, we haven't done anything in that market at all. But we've certainly been looking at it for several years now. And, you know, it's kind of having a bit of a renaissance. I mean, I'm not gonna say it's. It would be on par with Atlanta, Memphis, Dallas, Houston, you know, any of these other cities that we. We like. But these areas do change over time. I mean, it's pretty long periods of time, but that pendulum is always swinging. In other words. Right. Things will be on the right side of the political spectrum, then capitalism will flourish, job growth will happen, and then everybody gets really complacent and comfortable and they Start moving to the left, and then they get really bogged down. Too many regulations, too many taxes, and business starts to subside and job growth subsides. And then ultimately it might get even worse than that and really take a downturn, and then, you know, it might swing back years later. Right?

Mm. Well, you know, actually I have never been more optimistic in my entire life than I am right now for the city of Detroit. And I'm not talking the metro area right now, but the. Just the city proper. I do think that the bankruptcy proceedings, which cleared out a lot of bad debt and cleared out a lot of departments that should have been cleared out of the city a long time ago, as well as the Fed's recent corruption charges that put a number of people in jail, really changed a lot of things. I used to work downtown, downtown Detroit, and you get about two or three blocks away from the shiny buildings, and it would just be bums and garbage for miles. I went down there last summer and they built a new walkway along the river. And as I'm walking in the place where there used to just be bums and garbage, I see young couples jogging with the baby strollers and people biking and people hanging out in the sun. There's now bike paths where there used to be, just deserted streets. And my son's actually going to go to college this fall at Wayne State University, which is right downtown. And 10 years ago, might not have let him, but I'm down there a number of times and it's really looking nice. There's some. He got excited about buying real estate there, so that's good. From all the things that I've been sharing with him, he said, I want to go buy something down there. Dad went to look, and there's a one bedroom loft within a couple blocks of the university there for 500,000 bucks. Yeah, I think it's a little too pricey.

It's a little pricey. I don't think I want to spend that kind of money. But tell us about, you know, in this area that you were impressed with, tell us about, like, the type of property an investor could buy in that area. How much does it cost? What will it rent for? I mean, what does the whole picture look like? It sounds like you think the area is coming back, and that's great. But tell us about a sort of a typical deal one might get.

Wow. Well, some of those neighborhoods are really transitional, so you gotta be very, very careful. If we're.

If we're talking, I would assume it's very spotty. Yeah, right.

Yeah. And in fact, I'm still would be nervous unless I really knew a neighborhood well and I knew what was going. I have a friend that's completely rehabbing an apartment now that's probably 100 years old, but he's in one of the areas that's really seen some redevelopment where there's already tall buildings and such. But literally, you go two blocks over and you can be in an area of complete blight. You got to know what you're doing. But there are other neighborhoods around metro Detroit where feel super comfortable. Like I mentioned Dearborn, where my friend is buying. You buy houses very much similar to what you see on your network. They tend to be a little bit older, so they might be 1920s, 1930s built, but they'll be about 100,000 bucks and rent for thousand 1100 bucks a month.

Okay. So that's like a little better than a 1% RV ratio, which is great, you know, but you can do that in other markets that don't appear to me to be as risky. I mean, just trying to be really objective. Of course, Detroit's your hometown, so maybe you're going to be a little partial, but, you know, why would you do that in the Detroit suburb versus doing it in Memphis, Atlanta, Houston, you know, any one of a number of markets that we might recommend.

Well, for me personally, my wife and I both work in the automotive industry. At one point, in the deep, dark days of the recession, we looked at each other and said, oh, my gosh, this is kind of scary because we could potentially both get laid off. And at the time that our house was completely underwater. So that was 2007, around the time we started getting into real estate investing. And we actually made a conscious choice at that time that we actually wanted to invest out of state, which is how we ended up discovering your network. And so most of our investing has been out of Michigan. But now that we're looking at multifamily, and that's not something I want to do long distance. We're kind of coming back home and there are opportunities here. We've been out looking, and like I said, there's just depends on what community you're in. Some are more stable. Only 40 minutes from my house is the city of Ann Arbor, where the University of Michigan is, and a lot of medical businesses. And that's a very, very stable market. So there's still a lot of opportunities in southeastern Michigan, right? Yeah.

Okay. Okay, good. Tell us what you think about the future. I mean, you mentioned you and your wife work for Ford. And initially, I think you were making a very smart decision in that you did not want to have your investment portfolio tied to the same industry your income from your job was tied to.

Right, Correct. Yeah.

Very, very wise, by the way. But now that you're diverse, diversified in terms of your properties, you know, that's not as much of a concern. You could have some properties that are in your area that are. That are tied to that industry, right?

Oh, yeah. Well, and it's certainly depending on where you pick, too, because there are neighborhoods that are far more susceptible to a downturn in the automotive industry. As I mentioned, Ann Arbor is very close by. Even the neighborhood that I live in right now isn't as highly correlated to the ups and downs of the automotive industry as some neighborhoods where you'll have. Like Dearborn is where Ford Motor Company is headquartered in. And it goes very much up and down with the automotive industry because so many people want to live near where they work. Therefore, if there's any layoffs or there's a lot of hiring, the real estate values go up and down accordingly, right?

Yeah, they do. Well, I found your PowerPoint presentation. I just thought maybe we could take a look at some of this stuff. This is a great presentation. By the way, who are you showing this to?

So far, I've only showed it to a handful of friends. And you.

Why did you go through the effort looking to raise money for deals in Detroit or. What do you.

Well, as I mentioned, I've joined a few other people, actually, mostly in Dallas, which is where I've met a lot of folks. I'm currently in two apartment deals, and we should close on another one here within 30 days. And, you know, I heard you talk in a podcast about be careful of syndicated groups, and I absolutely agree with you. I've had some friends forward me some from other people, and they're. A lot of times they're skimming all the profit right off the top.

A lot of times. It's almost all the time. But not always. Yeah, yeah. Okay.

And I've seen somewhere they come and they say the syndicator gets 40% of the profit. So, like, okay, well, what's left for the person that put their money.

Oh, but wait a sec. It's worse than that because that's only the disclosed share. And then they'll. You're right, they've got all these. All these other little fees that would be disclosed, probably, but then they've got all these relationships that they're getting all this favoritism with that adds to it and it gets worse. And. And then they've got whatever they're doing that is not above board. You know, if they're doing that. And a lot of them are, because a lot of these things are kind of like gray areas. You know, that's why I just, oh, gosh, be a direct investor. But you're doing this anyway. At least you're jumping in, eyes wide open.

You know, I've heard you talk about your venture alliance group, and it surprises me how much what you're describing is similar to this group of people that I've gotten to know, because we work together to find deals, and it's amazing they're not these big syndicators like Wall street or trying to just grab as much money as they can.

And that's the kind of moment we want to avoid.

Yeah, yeah. So they're mom and pops that get 10 people together and say, hey, if we all pull our money, we got enough to buy an apartment, I'll run it. And, you know, they get a little bit of extra kind of bonus, I guess you'd call it, because they're doing all the work.

Right.

But it's a small group of people. I usually know all the other investors that are in there with me, and after doing a few of those, the people that was with me, how come you're not doing in Detroit? We're all down in Dallas, and we'd love to be a little bit more diversified. If you find something up in Detroit, we might be interested in going in with you. Oh, okay. And so again, I came back to this presentation. I was trying to convince myself that I could do it because my immediate thought was, anybody I approach out of state is going to have the same impression that you hear on your podcast and some of the other ones, like Detroit, who the heck would ever want to invest in Detroit? So I wanted to see if there was a compelling argument there, a counter argument to say, well, look, yes, there are some issues at the city proper, and you can see that in some of the demographic data that I've put in this presentation. But there's also some big upsides, and there's some areas that are doing very well. And actually, some of the information may surprise you, because as I mentioned, actually the population of metro Detroit kept growing through the year 2000, and I'll bet you it'll be bigger again as we hit 2020.

Right. You know what, though? See that population number, that can be deceiving. I'm not saying it is in your Case. But for example, you look at the state of California and.

It has had for the first time in a long time, in the early mid ish 2000s, I want to say like 2003 ish, I can't remember, but there were actually a couple of years where the population of the state of California actually declined. It was slight. Okay. It wasn't major. Okay. But it did decline a bit. And that is an amazing thing considering that you have the Sunshine State, this area, where of course shares a border with Mexico, and you have that kind of immigration and you have, you know, just a, just, just a place where the population has really just always gone up for the longest, longest time since the west was settled. But the interesting thing is when you really drill down on that population, you got to ask yourself, what type of population is it? Is it illegal immigrants from Mexico or is it people from other states? Because California had this reputation for a long time. Maybe it still does. I don't know for sure because I haven't heard the comment lately that literally, if you're in any other state, especially a neighboring state, and you want to get on the welfare rolls, you want to get stuff for free, California is like the best place.

Just come to California and be a slacker and you'll get lots of free stuff. That was the deal. And so, you know, at that same time, the middle class in California was fleeing. I haven't really looked at this much lately, to be very honest with you. And that's why I say say was in the past tense. Maybe it still is. But for a while there, and when I left California, I was looking at a lot of those stats, you know, in the, in the maybe couple years beforehand. And I mean, it was not looking good even though the population was increasing slightly at that point. You know, what is the makeup of that population? That's the other question you've got to ask yourself. Not just, you know, raw numbers, but what kind of numbers. Right. And one of the charts that you, you talk about is somewhat interesting when you talk about the income profile and you look at like, you know, per capita income comparison, of course, New York, $119,000, Maryland, Fairfax, all that east coast stuff, you got to make a lot of money there because you can't afford to live there. Santa Clara, that's an expensive area too, 66,000. And then you get down to Oakland, Michigan, Oakland county, and you get $55,000 a year. And the Detroit MSA is 42,000. Michigan is a whole 38,000. In the US at 43,000. So that's kind of really not that bad.

Like I said. Well, yeah, Oakland county is pretty wealthy. You do have a lot of the automotive executives live there, but you also have. There were some other big companies Pulte. I think their headquarters may still be up here in Bloomington Hills, Michigan, although I know they were, they were moving some of their operations to California. There were some banks. Comerica bank until recently was headquartered here. They moved downturn down to Texas. But there's still a lot of industry around here. And so there is some money.

Yeah, there definitely is. What do you do for Ford? What do you and your wife do? What kind of positions do you have in the auto industry if you care to share that with our listeners?

I'm in marketing and my expertise is what they call product marketing. So usually I'm working with the engineers to develop the products for the different markets I support. Currently I'm in an export role. So I help support about 80 countries around the world and work on making sure their advertising is getting out to those markets. So we sell a lot of product and then my wife works in finance. Right now she's in the private forecasting group. Tomorrow morning, Ford Motor Company is announcing profits. We're all going to wait anxiously to see what those are.

Well, you already know.

I know nothing.

Well, she knows for sure.

I'm sure she knows.

Yeah. So I gotta just ask you about the auto industry in general. I mean, are you guys talking much about my favorite thing in the auto industry which is the coming of the self driving car, the autonomous vehicle. I know that really the auto companies that seem to be paying a lot of attention to that are Audi, Tesla, Mercedes. Who else is. Oh, Hyundai and BMW are really into the self driving car thing. I don't know how much Ford has to do with it, but you know, what do you think about that? I mean, is that. That just seems like such a game changer on so many levels.

That's huge, Jason. And everybody in the industry is focusing on it. I think the ones you mentioned have probably done the best with the press releases and maybe prototype vehicles. But everybody's working, everybody's working hard on it and you're already actually starting to see pieces of it in the car where they have reverse sensors that beep. The Ford cars now have auto park aid which allows you to say, hey, find the spot and you can let go of the steering wheel and the car will steer itself into the spot for you. You have to manage the brake and the throttle, but otherwise the car will actually Turn into the spot for you. And those are all bits and pieces of technologies that will be added together that eventually will allow you to do it. But from a manufacturer's perspective, it's fairly easy to say, hey, what if a car gets on the freeway and goes from point A to point B? But what you got to pay attention to is all the other things, like, well, what if it's snowing out? Or what if the bridge falls down? Or what if tractor trailer rigs falls over sideways across the road? How does a car recognize those things and keep the driver safe? Or the occupants? Because they're not even driving now. But how do you keep the occupants safe? And I think that's going to be the hardest part, is they're going to have to work through all those issues until everybody's comfortable that it's pretty safe.

I mean, I think about this as I'm driving down the road and, you know, I want to be the total early adopter. I don't like to drive. I think driving is an obligation more than a pleasure, for sure. You know, unless you're out on a, you know, deserted road with nice curves and you can drive really fast. That's fun. And crank up the music, you know, or crank up the Creating wealth podcast, whichever you like the most, you know.

Whatever really gets your blood flowing, you know. But there are so many little funky contingencies. I mean, what if an animal runs out on the road?

What if.

I remember one time I was driving on the freeway and there was a work truck in front of me, you know, some contractor type person, and it was a pickup truck and a pickaxe fell off the truck on the freeway. And I remember that thing tumbling toward me head over heels, quite literally, that axe. And you know, that could have hit me right in the windshield and that, that might have been the end, you know, there are so many, like, little things. I can't imagine that a computer can actually figure all of this out. But I guess we're just about there almost, right?

Well, it wouldn't surprise me if we get there. But again, all the engineers and all the government officials and the lawyers are going to have to figure all that out, I think, before you're going to really start seeing it happen. But we're getting there fast. And I'll point out something that may be of interest to you. There is an automotive association that supports primarily the US based automotive manufacturers that have engineering here in the United States in the city of Ann Arbor. They just built a fake city to test self driving. Cars. There's a bunch of news articles that came out this last week on it. So you can take a look at some of those pictures.

Yeah, yeah. So what would I search for that? I'm just curious. So curious about it.

I bet if you just search the Ann Arbor self driving car test, you'll get popped up. There'll be articles in the Detroit News and the Detroit Free Press for sure.

Very interesting stuff. Do you agree with my thesis on the self driving car in that it may be a real game changer for the world of real estate? Because three cardinal rules we all know, Greg, what they've been location, location, location. And my whole idea of you could live in the lower cost area and visit the higher cost area very easily if you had a self driving car. The example I've used many times is, you know, you could live in Phoenix where I to used. Used to live for four years. And if you want to come to La Jolla where I live now, which is just ridiculously expensive, you could go to bed and wake up in La Jolla, you know, from Phoenix. Now of course the energy costs, you know, you still have to have propulsion that has to stay low and you have to be able to, you know, sleep in a moving vehicle. But I'm sure we can adapt to that. A lot of people can already. You know, it's like when you have a chauffeur 247 that doesn't get tired, you could really live nomadically. I can't wait till they have self driving motorhomes. I used to have a big motorhome and I love that. Except for the driving. That was the only downfall.

I think you're 100% right that if we get those self driving cars. You made some good predictions, but I really have no sense for how dramatically it could change things. Because you've talked in one episode I heard you say, gee, you have all these parking spots in cities and you can move all those parking spots farther away to less desirable places. Oh, wow. Then all of a sudden you can have new apartments there and new restaurants, whatever.

It gets even better. You don't even need parking spots because drive around forever. Yeah, the car doesn't ever need to stop. Okay? The car can run for 24 hours, seven days a week until it breaks down, you know, and then it'll just take itself to the shop, you know. One of the techno futurists that I was reading an article about, Greg, this was fascinating to me as the that this sort of socialistic concept of maybe self driving cars don't actually need to be owned by anybody. The car would literally own itself. Now that's such a weird idea. I can't even sort of fathom it. But the idea is it would be like an Uber car or a Lyft car and it would charge people for rides, you know, that probably be on a smartphone or a watch really, or some kind of wearable computer at that point. And you would just jump in, it would take you wherever you want. And then when the car needed to be recharged with electricity, it would stop. And at a charging station by itself of its own accord, when it need, if it needed gas or hydrogen or whatever it runs on, it would just go to the filling station and fill itself up. And when it needed repairs, it would take itself to the shop. And when it. And here was the amazing thing. And when work slowed down in a city that it was serving, it would migrate itself to another city that was busier.

Like that's theoretically. Yeah, you could do that.

Yeah.

And one of the things I'm just more shorter term excited about is, you know, if we got to the point where we have self driving cars that are really good at avoiding accidents, we could probably start removing a lot of the safety features that at that point become irrelevant, that are actually way a lot most people don't recognize. But a lot of the safety features, airbags, the side intrusion beams, the roof crush requirements, they're very, very heavy.

Yeah, right.

I mean, we could easily have 50, 60 miles per gallon cars if we didn't have all this weight in it.

Yeah, that's a good point. I thought you were going at the expense angle, but yeah, you're right. The weight, of course that makes the car a lot heavier to make it safe. But also the cost, I mean, airbags have to cost a fortune and they're all over the car now. And you know, those steel beams and all this stuff. Yeah. And the engine has to be larger because the car is heavier and it's, you know, it's. Yeah. Interesting. Very interesting.

Yeah. Not many people recognize, but a huge portion of the cost of cars are regulatory related. And we've talked about, you know, the middle market getting squeezed with income and such. But you're seeing that also in a lot of products from, you know, home air conditioning systems to water heaters to the cars you drive is they're becoming more expensive because the regulations are forcing higher and higher technologies to achieve the government mandates. And that's really squeezing the middle class too.

Yeah, it sure is. It sure is. And that's what government regulation does. But I, I don't know, sometimes I kind of loosen up on the government regulation thing and I think, you know, maybe government, you know, it's kind of annoying and, and you know, most of us don't like it, or at least people thinking right don't like it. But you know, sometimes that just forces people to get more innovative and maybe that does create progress. I don't know. You know, it's sort of hard to tell about a lot of this stuff. But you know, I want to just go back to that one point and I'll let you go. I know we're going a little long, Greg, so I appreciate you sticking with us, but that whole concept of the average city, the space, the real estate in that city, parking, taking 40% of that space, that's an estimate that I saw. 40% of the space of a city dedicated to parking. If nobody needs to own a car and if the car never needs to stop, if it just never parks right, then think about what that does to the price of real estate. Estate in high density locations. And you were mentioning that a couple minutes ago. So granted, you could use these parking lots for apartments. Now at first you might think that 40% number is absolutely psychotic and crazy, but if you really think about it, think of all the parking on streets where the setback of the buildings is required to be bigger because you've got to allow for parking spaces right on the, on the street or the street has to have fewer lanes because of the parking needs. And then there are of course parking lots, both big commercial lots or small lots at each little store. Every little dry cleaner, you know, the little sort of mom and pop dry cleaner down the street from my place in La Jolla here, I'd say exactly half of the footprint of their, their, their piece of real estate is parking and the other half is the building where they actually work and do the dry cleaning. So I mean that's like 50% of that equation is parking. So you could see that it could add up to 40% dedicated to parking. So what does that do to real estate prices in high. It's really affected more. In high density areas, it won't matter. In less dense areas, suburbs, rural areas won't matter at all. But in high density cities, I mean, wow, if you take away all that need for parking, prices of real estate should come down, right?

Well, you think so supply and demand, all of a sudden you have effectively a bigger supply of land. So yeah, it should a dramatic change to the high end. Places.

Yeah. Well, it's interesting. Well, anything else you'd like our listeners to know? Maybe a question I didn't ask you, whether it be about investing or Detroit or the auto industry. You know, we kind of meandered around, as I always do.

We did, we did go around a little bit. But actually wanted to thank you for giving me a chance to paint another picture of Detroit, because I know it gets beat up a lot in the press and particularly in real estate circles, but there actually is some very good places to invest in Detroit. And actually the city itself, which has had a rough time and has been in decline, is actually starting to show real signs of a turnaround. So I'm excited to see what happens here over the next few decades.

Yeah, yeah, I am, too. Would you ever do the urban Detroit? I mean, the really bad areas where you can get a house for a dollar or five hundred dollars, whichever. No.

I know. That's just.

I know people that do. But, you know, I've heard you mention another episode sometimes you're going to end up, you know, having. You may find that there's some clouds on the title or you're going to end up getting citations from the city because your property's not fixed up the right way. And, you know, a $1 property is probably not worth $1. It's probably worth a lot less than that.

Well, because it's a negative cost. That's why they want to give it to you for a dollar, because there's a cost and obligation of owning it, you know.

Absolutely. And then usually, you know, the tenant base in that area is really tough. Now, you may get lucky and you may buy that place and end up in the path of progress. And five years later, it's now worth 20 or 30 thousand dollars. But, but your best bet is if you're going to do that, just.

Buy it, maybe knock it down or cement it over so it doesn't get destroyed and then hope that 10 years from now it's gone up. There are certainly better places in the city. You can invest places that actually have some have high values, but there's plenty of other places that have moderate value so you can get cash flow that also have upside.

Yeah, I would say that's probably pretty great advice there from Greg, folks, so thank you for that advice. What interested you in real estate investing? I mean, you've been listening to my podcast for what, nine years now? I mean, really, that long or.

I think I, I think I found you first about 12 months after you had started. So your first podcast were still on itunes. Yeah, so it was about 2008. I first thought, real estate investing. I'm going to be a flipper, like you see on the TV shows. I ended up buying a place in a high end neighborhood called Birmingham. And it was a house that I thought was valued at about $500,000 once it was fixed up. And I bought it for 280 and I thought, I'm gonna be rich. And I closed on it the day that both General Motors and ford announced about 20,000 layoffs in the city. And it took me 12 months to sell it. And the only way I could sell it is if I bought the condo of the guy who was stepping up to a much nicer place. And it ended up being the best thing in the world because I went from a property that I couldn't really lease out, well, that was costing me $3,000 a month, to one that was worth about $100,000 but rented for $1,000 a month. So it had positive cash flow, although it was a condo. So after you throw in the condo association, it didn't rent out too well. But I held onto it for five years. The value went down at first, but then came back up and I sold it last year for about a $30,000 profit.

That's how I got into real estate investing.

Yeah. Yeah. Well, good for you. You made some money on it, so that's good. Did you do stock market investing and that kind of stuff and just decide that that wasn't where it's at?

You know, I have. And at first, when I first started saving money, I thought, gee, if I study real hard and pay attention and read everything I can read, then I'll do really well at stock market investing. And after getting bruised and bumped a number of times, I realized there's people on Wall street that, that sit there and do that 80 hours a week and there's no way I'm going to beat them. And I'm just getting bloodied by the whims of other people. So for the most part, I don't invest in stocks anymore.

Well, let me tell you something, Greg, it's worse than that. The people, the quants that study at 80 hours a week, it's much worse than that because, you know, your other competitor is the high frequency computer that you can't trade better than that. So, you know, that, that, that beats us all light speed, faster than light speed, practically, you know, so, absolutely, yeah, that's an insider's game for sure.

They study in milliseconds yeah, that's right.

And soon it'll be AI and the computer will actually, you know, really know how to make good decisions versus, you know, just. Just algorithms, which it is now. So. Yeah, it's amazing.

Yeah, so I don't dabble in that. Real estate's done so well, and you've heard some of my stories. Some of my properties have. If you take a look at, like, that Arizona property I bought from you, I think it was about $25,000 down, and I ended up pulling about 40,000 out of it when I sold it and not including the cash flow I had in the meantime. So.

Yeah. So you. So your return on investment there was what, like 200% almost or something like that?

Yeah. In two years.

Yeah. Fantastic. Yeah.

And then we turned it into two more rentals, so we keep going.

That's the great thing about real estate. You can use one to build the rest of your empire. So that's awesome. Well, good stuff. Well, Greg, thank you for sticking around longer. I know we kind of made this a little longer than we expected, but you're an interesting guy to talk to. We appreciate your business. Thanks for being a client. And thanks for coming on the show, too.

My pleasure. Jason, again, thank you for everything you do. Like I said, I don't think I would have gotten going in real estate if it wasn't for you and your podcast. And I very much appreciate it.

Well, it's my pleasure. Thanks for joining us.

Thank you.

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