AIPIS 204 - We're in a 50 Year Rental Peak

This show is produced by the Hartman Media Company. For more information and links to all.

Our great podcasts, visit hartmanmedia.com.

Welcome to the AIPIS show for accredited income property investment specialists and those who aspire to be. If you're a real estate, mortgage or financial professional, this is the place for you. We'll explore innovative investment analysis, sales, marketing and income generating strategies for the most historically proven wealth creator income property. Learn from the experts as they show you how to build a better business and a better life.

This is your host, Jason Hartman. And greetings from my very impromptu trip with which is technically a layover, a rather long layover. I am now in Helsinki, Finland. I've been here before, didn't plan to come here on this trip but you know, I got a ticket to go to Gdansk, Poland and of course Gdansk is a very famous city. You know what it's famous for, right? Well, l. The revolutionary, right, who really changed the whole course of history and communism and Poland and everything, you know, and that's, that's a wonderful, wonderful thing because you know what? Communism sucks.

It's a terrible thing. And you know, having just spent a week in Riga, it is amazing how you still see the vestiges of communism. And of course Europe is very socialistic so you have all sorts of problems from that because socialism is a disaster as well. So anyway, it's great place to visit but boy, I'll tell you, it still lingers unfortunately that toxic, toxic ideology that has really. It's responsible for the deaths of about 150 million people in the last hundred years. I mean few things could be more evil than big government and communism. And to a lesser degree it's. It's younger, younger brother that's not quite as ugly called socialism. They are all disasters in any, in any one of their permutations. It's just a matter of degree as to how much of a disaster it is. It's great to be talking with you here today. I've got to catch my plane here on my long layover and get to Gdansk and I have not been there before so I'm excited on this trip. I have not increased my country count at all. I hope I can fix that. There's a couple new countries I want to go to but just haven't gotten there yet. And my country count stands at 81, 81 countries so far. And you know one of the things that's interesting and of course this doesn't have a lot to do with real estate investing but we'll get to that. In just a moment here. One of the things that's interesting about this is I think it's very important to travel, obviously broaden your mind, look at, look at the way other people do things and just these subtleties, these incredible subtleties that you notice that are hard to explain, what, like, real immediate value they have to you, but they all kind of get into your brain and into your thinking and they really, really do change you and improve your life for the better. You know, I've often said that I think every, everybody who wants to run for political office should be required to travel the world and own their own business and be responsible for the livelihood of other people. You know, when you've got to have that stress of, of making payroll, of pay, there is just no way you will understand how the world works until you really do that. You know, understanding that, that, that is like a real responsibility. And of course, you know, having children or caring for your family, maybe your elders, same thing. But, you know, doing it on more of a strict economic level, I think is very, very important. And it kind of brings to the fore some of my thinking when I. When I get into these debates with people on social media and so forth, political debates and so forth, there's a few things that I think are important to think of. One is, is think about the concept of time and the concept of age, right? And if you are 10 years older than somebody else, and if you are an active, engaged, curious person who is engaged in life, who is seeking knowledge and seeking experience, think about it. Every day you got up and you read articles, and every week or every month you read books and you listen to podcasts and you have conversations and you go on trips and you have new experiences and new thoughts that expand your mind. In just 10 years you have, or that other person has over you, whichever way you want to look at it, if they're 10 years older than you, 3650 more days of experience. So, yes, this is a message to respect. Our elders also point that out to younger people who are younger than you are, because it is incredibly important. Now, certainly there are lots of human beings, unfortunately, these sad souls out there who live the same day 3650 times over and over again, and 10 years go by and they've learned nothing. They haven't grown at all. They are basically the same person they were 10 years ago. And that is a sad, sad state of affairs. The other thing that I think that's interesting and important as a student of life, that hopefully we all are engaged students of life is a long time ago when I was maybe 17 or 18 years old and I discovered audio learning and I discovered Dennis Whateley, Zig Ziglar, Earl Nightingale and Jim Rohn, the four, you know, big mentors that really changed my life. When I was a teenager, Starting at age 17, I remember Earl Nightingale talking about the importance of vocabulary. And I remember I bought the entire Earl Nightingale library. I saved up for it. In fact, it was cassette tapes, of course, from Nightingale Conant. This Earl Nightingale library was a, you know, came in a big box and it was a whole bunch of these cassette programs and I just couldn't wait to listen to them all. And I remember Earl Nightingale talking about how, how important vocabulary is and how each word that we learn is a whole nucleus around which all these thoughts are built. And when, when I'm traveling around in these foreign countries, it's so fascinating because, and I'm no linguist, you know, I don't, I'm no expert at this. It's just, this is just a very layman's point of view, understand that? Just, just a kind of student of life type of view, you know, I'm not an expert, but you know, of course you notice that all of these words are so similar and even if you don't, you know, speak the language of the given country, you can still many times interpret the words and know what they mean, right. Just by looking at a sign, you can kind of figure it out. I'm not much of a language guy, you know, I don't, I don't spend any time trying to learn a language when I go to a country anymore. I used to many years ago and I, I don't know, I just. Language isn't my thing. I'd much rather spend my time studying the economy of a country, the history of a country, you know, the geography, meeting the people and you know, I hate to say it, it sounds like the ugly, over entitled American that what I'm about to say, but you know, most people speak English anyway, so, you know, and granted I'd love to learn some other languages, but I just don't think it's the best use of time. I think it's better to learn about other things now. That's the way I look at it. And you know, everybody looks at it differently, of course, but it's interesting how you can figure out what things mean because the English language has adapted so much from so many other languages. It's, it's really one of the richest languages on earth. If not the richest. It has, I think, what, 6, 700,000 words in the English language, whereas French, Spanish, German, Italian have about 150,000 words, I believe. And that's because English just, like, adopts all these other words. We just kind of steal them from other languages. So it's kind of funny. But, you know, you think about that for a moment, right? And I talk when. When I was doing my opening talk for Meet the Masters a year and a half ago, our Meet the Masters of Income property event back in La Jolla, California, in San Diego area, many of you were, of course, there. You'll remember. My opening talk was on how you can't hear the dogs that don't bark. You can't hear the dogs that don't bark, Right? And if you think about it, that language thing is kind of the dogs that don't bark, right? So we look at people who know a lot of languages and we say, wow, that is really impressive. And it is. It is impressive. I'm not taking anything away, you know, I'm just saying it's a. It's a question of how you're going to allocate your time and your effort in this sort of pursuit of knowledge and this student of life thing. And if you spend your time learning another language, then that means you can't spend your time learning something else, right? So you can't hear the dogs that don't bark. Melania Trump, our first lady, I believe, speaks six languages. She's clearly not an idiot. Okay. Love or hate Donald Trump, you know, whatever you want. I mean, he's not an idiot, and neither is she. He. Although admittedly, Donald Trump sounds like an idiot a lot. Just where does he get some of that stuff? He says, like, seriously, Mr. President, please grow up. This is not a reality show. You got a huge responsibility here. The biggest responsibility of any human being on Earth is the American President. No question about it, Right? But, yeah, you know, you can't hear the dogs that don't bark. So if you close one door or you open one door and you spend your time, say, learning a language, for example, then there's something else you didn't learn because you could have spent that same time learning that. But that it's very important. Like, when I was younger, I studied vocabulary. I had vocabulary cassette tapes in my car. I remember in my first year of college at good old Long Beach City College, lbcc, I took a vocabulary class, and it's just interesting to see how each word is built on another. So I guess my point Here is, I'm just echoing what Earl Nightingale taught me years ago is that if you want to gain more knowledge, if you want more tools with which to think, then increase your vocabulary. That's really one of the fastest ways to do it because every word has this whole bunch of thought built around it. And with, with a small vocabulary, you have a small number of tools with which to think. Okay, like, like some languages don't have much in the way of.

Scientific terms in their language. And so these whole cultures are behind in the realm of technology because their language just doesn't have words for things. And so if you don't have words for stuff, then you can't know it. If you can't, if you can't name it. Right? So, so interesting. Now let's talk about real estate a little bit here. We are way into the episode already and we haven't even talked about income property, the most historically proven asset class in the world. Well, hey, today from Helsinki, Finland, I've got an offer you can't refuse. Are you ready for an offer you can't refuse? Here it is. So recently we have revamped the property tracker website. It has a beautiful update to it. And of course those of you who use Property Tracker, I'm sure you are enjoying the new look and feel and the new navigation of that program. It's, it's really nice. And, and Fernando has led that project and he's done a great job on it. And Zach, our customer service person, is doing a great job helping customers. And Michelle, who you heard on the show before, one of our clients, she worked on it as well and she worked really hard and did a fantastic job. So this has finally come to the fore. It has arrived. It is here and we want more people to get on board and use it. So here is the offer you can't refuse. You ready? Are you ready? The offer you can't refuse is this. Sign up for Property Tracker. And when you do that, you will get a free one hour onboarding session with Zach. Okay? You'll get your first month free and then it's $27 a month, I believe is the current pricing through our affiliate program. And yet to do this, by the way, you have to go to Jason hartman.com and you have to click on the resources page. Okay, we got to make this a little more obvious. It's a little hard to find, but, but you go to Jason hartman.com resources, okay? And then you just scroll down and on the left side of that page it says platinum property Analysis and tracking system. You know what? I'll get our web developers to put something on the front page too. But when you sign up there with our affiliate membership, you get the low cost of $27 a month or 247 per year. And again, you can cancel at any time on that monthly program. But the hardest part for most people is just getting it started. Once you get it started, it's really quite easy. It's just a beautifully simple program to use. So go do that. Go to jason hartman.com resources scroll down on the left hand column and sign up for the platinum property tracking and analysis software. And you will get a one hour free onboarding session with Zach. So he will help you get your properties into the system. And once you get into the system, you will be hooked up. It is great. It is a fantastic, fantastic system. And before we get into a little more how to stuff, I wanted to also tell you about another offer you can't refuse, which you may already know. This one, it's not a new one, but it's of course our very high odds of winning the Amazon echo@hartmaneducation.com that's Hartman Education.com contest. Hartmaneducation.com contest. Go ahead and enter that for the Amazon Echo, the full size one. And gosh, I just use Alexa all the time. Alexa is the voice of Echo and the brain of Echo. So let's see what she says today. Alexa, tell me a joke.

Showing items matching sons.

Oh my gosh. Now c. Wasn't that embarrassing? Showing items matching suns. I didn't say that. Alexa, you usually. You're so much better at this. Let's try it again. Alexa, tell me a joke.

Did you hear about the cannibal who was expelled from school? He was buttering up his teacher.

Now that is a sick joke. Oh my God. Let's try it again. Usually they're not sick like that. They're just very, very innocent jokes. You can even ask Alexa to tell you a dirty joke, by the way. But it's not going to be dirty. Just warn you.

Alexa, tell me a joke.

What do you call a wizard in a frat house? An abracadabro.

An abracadabro. Oh, like a bro. Like a frat bro. You can ask Alexa all kinds of things. You can ask Alexa to look stuff up on Wikipedia, to buy you products, to do all kinds of stuff. It's just a really cool app. And by the way, that was Alexa on my phone. Phone, which is not as good as the real Alexa on the Echo device. So there you go. Okay, so let's talk about a couple of things here. So speaking of Amazon, right now Amazon is set to get into the real estate business. People are, people are talking about this. This is the buzz in the industry. Amazon is set to battle Zillow for some online real estate services. We'll see how they do at that. It's just something to mention. I don't know what's going to come of that yet, but wanted to just put that out there. Elizabeth posted an article in our Venture alliance content group which our Venture alliance members have access to. By the way. Our next Venture alliance event is coming up in October in Palm Springs, California. Check out Venture Alliance Mastermind. But this is a very interesting article and this is about the cost of rising home prices and what it means to rents. Now I have talked many times about the three dimensions of real estate, of course, and how rents and home prices have this interesting interrelationship, right. And how the market cycle affects those two sides of the equation. Rents versus prices. You know when, when all of the less informed, ill informed or uninformed people talk about the real estate market, all you hear them talk about is how prices are going up. But they've only got one side of the equation there. They're not talking about the entire picture. So guess what? Rental rates. Rising home prices are pushing people to rent more than at any time in the past 50 years, according to a new report. A new analysis by the by Census Bureau data and the Pew Research center found that more U.S. households are headed by renters than at any other time since at least 1965. According to a Market Watch report, the total number of households in the the United states grew by 7.6 million between 2006 and 2016. So that's an interesting thing to look at. So in other words, there were 7.6 million new households in that 10 year period, 2006 to 2016. And remember on past episodes we've talked a lot about the shadow inventory, but then we've also talked about the shadow demand, the shadow demand for housing. Very significant. So my mother, the extreme do it yourselfer that she is, is currently in California and she is there to evict one of her tenants from one of her really old rental properties. That doesn't make any sense from a rent to value ratio. We've covered this on past episodes. Not going to go into it, my arguments with mom here, but she's there evicting the tenant and she just got him out and they on the lease Said that only two people were going to occupy that house. Guess how many people they had in that house. My mom talked to the neighbors and found out the whole dirty thing. They had 10 people in that house. 10 people. Now, if you actually think the economy is roaring and improving.

It'S not what it seems to be, okay? I have said many times that over the past several decades, the wealth of America is largely an illusion, okay? People always talk about, oh, America is the wealthiest country in the world. Well, let me tell you, a lot of it is an illusion. Not all of it. Not all of it, but a lot of it is, okay? It's built on the central banking cartel and the way they just manipulate money, create money out of thin air, blow up credit bubbles so that there is this illusion of wealth, okay? Now, it's not all an illusion. Obviously some of it is real. But just saying that it has a multiplier effect. Well, hey, that's what they call it. Fractional reserve banking and fractional reserve lending, of course it has a multiplier. By definition, it has a multiplier, okay? That's not a secret anymore. But the thing you've got to understand is that many people are left behind and the middle class is just getting decimated. And, you know, this is one of my big whys. I was talking to Elizabeth about this on Voxer the other day. And you know, the middle class, like, this is my thing, okay? This is really, if you want to know what gets me up every day and why I do what I do is because I want to save the middle class, okay? I don't want to live in a banana republic, okay? I want to live in a country with a large. In a world, Not a country, a world with a large middle class. Because when you have a large middle class, you have stability. And that is a very nice thing. You go to all these banana republics. No, not the clothing store, by the way, but I really like Banana Republic. It's one of my favorite clothing stores, just so you know. And if we have few minutes, I want to get to that packing stuff. A few of you asked me about that. I teased about that on the last episode. But.

A Banana Republic is where you have the very rich, small number of those, of course, and the very poor and a large number of those. And you have a very, very small middle class. And guess what? In places like that, in Belize and Costa Rica and Nicaragua and every other crap hole around the world, okay, you. You have razor barbed wire, you have bars on the windows. And the people with money are basically living in their own prisons. How? That doesn't sound like any fun to me. I mean, think about it just from the perspective of kidnapping. Kidnapping? Yeah, kidnapping. Okay. In the US you can walk around and you can show off your wealth, you can be a conspicuous consumer, and there's not a big likelihood that you're going to be kidnapped. Now, it certainly could happen, but it's, it's not common, right? But you try doing that in some countries.

Try doing that in Colombia, for example. Now, Colombia's cleaned up a lot of that mess, but try doing it in Mexico, okay? You make yourself a target, okay? And you're playing with your life. Very, very dangerous. So a big middle class is a good, good thing. So when you have 10 people living in my mom's rental property, when you have the households that grew by 7.6 million and the rents being at the highest they've been in five decades and 50 years, the homeownership rate declining, which actually I think is just fine. Um, I don't have a problem with that. I think the homeownership rate is still too high. I know most people would say I'm nuts. What, are you kidding me? That's a terrible thing. Why would you say that? Hey, look, folks, wake up. Not everybody's meant to own a house. Big deal. Renting can be a fine thing to do as long as there's some reasonably priced housing available for you. And of course, you see, with more regulation, we get constricted supply. You see that all over Europe, of course, where you've got this. You know, people live in these little tiny crappy flats and they drive crappy little cars and have a lower standard of living than Americans do because more regulation. There's less of it in America, but there's still too much of it in America. Okay? And so that's the battle that will be fought and debated and argued about virtually forever. But yeah, an interesting article. So, percentage of households renting was just over 31% in 2006. By 2016, it had risen to nearly 37%, according to market Watch. Certain demographic groups, such as young adults, non whites and lesser educated, have historically been more likely to rent than others, Pew Research said. However, rental rates have also increased among some groups that have traditionally been less likely to rent, including whites and middle aged adults. Well, hey.

I'm a renter. I own lots of rental properties that other people rent from me, but I rent. I like the flexibility. It's a great deal. Rent a high end home for yourself and own lots of lower end properties that other people rent from you. That's the perfect arbitrage. That's the perfect side of the equation. Given skyrocketing home prices, that's perhaps unsurprising. According to market watch, just 45% of renters can afford the payments on a median priced home in their area.

In really pricey areas like the west coast, Florida, the Northeast, as few as 10, 10% of renters on average can afford mortgage payments on a median priced home. Wow, that's pretty scary actually. Adults. The article goes on to say adults under 35 are the most likely of all age groups to rent instead of own. According to Market watch, last year, 65% of all households headed by people in that age group, meaning under 35, were renting. In 2006, the number was 56%. Okay, so you see in basically 10 years it went from 56% to 65%. That's a huge increase in just 10 short years. Rental rates have also gone up among Gen Xers. Okay, so they're talking about Gen y, the under 35 group, the gen Xers. I'm a Gen Xer. Technically I did make it into that cohort. Thankfully I don't have to call myself a baby boomer. Still a Gen Xer. Okay. Among older baby boomers and other senior citizens, those 65 and older, the rental rate has remained steady at around 20%, Market Watch reported. So folks, I'm telling you, the demographics coming at the rental housing market in the next decade are nothing short of phenomenal. And guess what? I've been saying that for about five years. Back when I started saying it five years ago, I probably should have said the demographics coming at the rental housing market in the next 15 years are nothing short of phenomenal. Because if you ask me, you know, by looking at the age demographics, the economy in general, the gen wires that saw their, their parents get burned in the Great Recession, the rental market's going to be phenomenal for another decade. Okay? You should ride this wave easily until 2027. Okay? It's, it's, it's an amazing time to be a real estate investor and it's also an amazing time to be alive. Happy Investing. Go to hartmaneducation.com.

To enter the Amazon Echo contest. Your odds are very good of winning. So do that. And then also make sure you go to Jason Hartman.com resources and sign up for Property Tracker and get your one free hour with Zach who will onboard you, help you get all set up in Property Tracker and you'll absolutely love it. It's a must for real estate investors. Investors. Anyway, thanks for listening. Happy travels, 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 this show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own, and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you're using and write a review for the show. We would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.