AIPIS 77 - Eavesdrop on Real Estate Experts Jason Hartman and Pat Hiban

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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 where 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, I wanted to invite you to eavesdrop on us today. Yes, you can eavesdrop because this is kind of an odd format. We don't really have a show host and we don't really have a show guest or I guess you could say we have two hosts and two guests at the same time. I'm here with my friend Pat Hyben who interviews real estate rock stars and we just wanted to invite you, the audience, to drop in and listen to us. And by the way, I'm Jason Hartman. We're going to play this on both of our shows. Hey Pat, how you doing?

Hey Jason. This is a cool idea. I'm excited.

It's a weird format, you know. So you got me Jason Hartman, you know, you got Pat Hyben and we're gonna talk about real estate and investing and all that good stuff. So Pat, tell everybody how you got started and more importantly, maybe why you got started. What attracted you to real estate?

Yeah, well, I think the main thing that attracted me to the real estate game was that I knew I wanted to work for myself and I wanted to be my own boss. And at that point I became a real estate agent and then through real estate agency I found that I didn't want to be a false prophet. So I started buying houses on my own and then I started building wealth through real estate and eventually I moved out of the day to day real estate agent activity to a point where it's about 2000. Over the years I bought real estate and, and I played the Monopoly. I played two games, one Monopoly and two Kiyosaki's Cash Flow. So I played Monopoly where I bought the Little green houses and traded them in for big red hotels. Then I played Cash flow, where once I got out of the rat race, I started investing in small private companies. So about 2008, when the market crashed in our area, I kind of got sick of real estate commissions and started putting my money into private companies. I now am a proud owner of 14 private companies, anywhere between 1% and 51% that about half of them pay regular dividends. And so anyways, Jason, that's, that's my story. And now I'm just kind of an investor and I just live off the passive income that all these investments and all these little real estate pieces pay me.

So, Pat, when you say private companies, do you mean are those companies basically real estate investment holding companies that hold investments, or are they companies that, you know, I distinguish it of? Like an operating business is sort of a different company than a real estate investment. Like if the company owns an apartment building, it's not passive, but it's, it's not like managing an actual business business the way I think most people think of a business.

Right? No, yeah, the opposite of that. I mean, basically, you know, the story is 2008 came and, you know, I was running a big real estate operation. We were doing about 41 settlements a month and 41 commission checks a month I was bringing in. And suddenly it went down within a six month period to about six commission checks a month. And.

Yeah, and I just became really discouraged at that point. So a friend of mine said, hey Pat, I know you're bitching and complaining about the real estate world. I. And he had a pay, he was a payroll salesperson. He sold payroll for another company. And he said, you know, I have this book of business, this 15 year book of business, and I want to start my own company, but I need some money to start it. So I basically took 200 grand and, and invested in him. And that company, Infinity HR now does, you know, some 8,000 paychecks every two weeks and they're in about 45 countries, I mean, 45 states.

And, and, and that my ownership in that company is, has paid off multiple times of what I put in. And, and since I hit the kind of a small jackpot with that one, I started becoming a magnet for other small companies. And now I have interest in a green energy company, I have an interest in an infectious disease control company, I have an interest in two marijuana dispensaries, and the list goes on. So, so that's, that's, that's what I got going on.

Yeah. Okay. So those are operating type businesses then. And by the way, I gotta laugh. The marijuana dispensary, you know, you might be, you might be onto a big trend there. It looks like the legalization is the direction everything's going. So we'll see, you know, more than just a couple of states.

Tell everyone about, about your investments.

So basically my story is I grew up in Los Angeles, California. I was rather poor growing up and I didn't like it very much. And when I was 16 years old, I saw a infomercial with the typical real estate guru promising the world. It intrigued me. I went out and got the guru's book and read three chapters, put it down, my mom picked it up, read the rest. I was only 16, you know, and two years later, I'm about to graduate from high school, I'm 18 years old now. And my mom says to me, you know, hey, Jason, you got me interested in this real estate stuff. I've been going to seminars the last couple years and reading more books and learning more about it. There's this big conference in Anaheim, right by Disneyland, and it's this weekend. Why don't you come along and check it out? So being a typical 18 year old, I couldn't do anything by myself. I rounded up nine of my buddies from high school. Friday night, I got them all to the seminar and by Saturday morning, only one was left. By Sunday afternoon when the thing finished, I was the only one left. And I just, you know, I remember hearing Earl Nightingale, who I discovered about a year earlier when I was 17, say on one of his cassette, yes, cassette tapes. That's how long ago it was. He was saying, at least it was an eight track or a record album, you know. And I remember him saying, you know, you want to get rich in real estate, learn the business first. So I thought, that's good advice. I'll go get my real estate license. I enrolled in Century 21 Real Estate School for 99 bucks. About a year later, or I don't know exactly how long later, but it was basically my next school year. It was my first year of college. I was going to Long Beach City College. I got my real estate license and I just started selling real estate part time for Century 21 in Anaheim. And it all went from there. A few, a few months later, one of the properties I had sold to an investor, it was a little crappy one bedroom condo in Huntington Beach, California. That investor came back to me and said, you know, I don't really like this property. Why don't you List it for me and find a buyer and sell it. His name was Jim. And I said, you know what, Jim? How about if I buy it myself? And that was my first investment property when I was 20 years old.

That's great. And so how many doors do you own now?

Between just myself and partnerships that I'm in, I've got about 150 doors now. But I guess really with the development I'm doing, you could add a part of another 70 to that because I'm developing for the first time 71 homes now. That's in Kansas City. I've also got, I've got some limited ownership in a couple of other apartment complexes too as well that I'm kind of not counting in that mix. And then I do hard money lending, private lending on deals as well. And I like that. That's kind of my second favorite. It's not as good as the actual real estate, in my opinion. It doesn't have any tax advantages. It has taxes which aren't good. But for simplicity and ease of use, I do like the lending fairly well. It's got scalability to it.

What's your foreclosure rate on that?

Zero.

Oh, really?

I have never lost money on originating my owned first trustee or first position hard money loans. They've all worked great. And now a long time ago, I did do a couple of seconds many, many years ago. And two, well, one of them didn't work out so well. I had to do a workout on one of those many, many years ago. That was a long time ago. Then I got another one that they defaulted on payments and I sort of never did much about it. I actually bought a second and. But I'm gonna collect on that one. I just found out. I'm really happy. I sort of, I sort of didn't do anything about it for years. And I called my loan servicer and I said, hey, you know, why don't you put this in your. They have like a special department where you pay, you pay a little bit more every month than the typical $20 a month servicing fee. And they'll, you know, do collections and foreclosures and all that good stuff. And they said, you know, this property's got a ton of equity. I mean, you're, you're, we're going to collect for you. So I thought, great, that's awesome.

That's awesome. So what kind of returns, what kind of rates do you get on your, your mortgages?

You know, I'll get anywhere from 8 to 12 and a half percent. Sometimes I'll get some points, sometimes I won't. You know, it just kind of depends on the deal, but that's the range. Yeah.

What so on these investments that you look to, to buy. Well, first of all, let's say, let's, let's talk about a typical, a rental for someone in the audience who's maybe just buying their first one or looking to buy their 8th or 9th like house.

To rent out, what sort of returns do you look for? Do you recommend?

Well, you know, that's a lot of, a lot of times when I quote these numbers and, you know, nothing is guaranteed. Of course, every investment is different. Every situation is different. You know, on my website@jasonhartman.com I've got performers of properties that are all around the country. I really like being a nationwide investor. I like diversification and I love single family homes. They really are, I think, the most historically proven thing for most investors. Apartment buildings. Those are great. They're my second choice. They're definitely more complicated. But you know, if you've got big money and you want to do bigger things and you want to apply some work and some creativity to them, you know, apartments can be fantastic. But just for the typical investor, I just think you own, get yourself 10 or 20 single family homes and heck, you're going to, you're going to do great. Okay.

And we're talking detached houses.

Yeah, detached homes. I don't like condos, I don't like townhomes. I like single family homes. You know, because you have that whole other risk path of the home homeowners association. And some single family homes do have homeowners associations. But I call those like HOA light versus HOA heavy. You know, I don't mind the HOA light where you've got association fees of 30, 40 bucks a month. Those actually can be beneficial, I think, where they keep the neighborhood nice and so forth. But you get these HOAs where you've got condos and everybody shares sharing common walls and, you know, if the other guy's plumbing leaks, it floods your house and if the HOA gets in a lawsuit or they file bankruptcy for whatever reason, then none of the lenders want to do financing of any properties in there, then your values go down. It's problematic, man. I would just, you know, unless I'm going to own the majority of the condos in a complex, where I'm going to control that hoa. If someone said to me, me, hey, Jason, you want to buy, you want to buy 40 condos in a 70 unit building. I might say yes to that one.

Okay, so what would you say to this? That, you know, we have a guy.

That I know here that buys condos that are in distress, say for 60 grand and with a condo fee of say 250amonth. Okay, so he's getting a 60 grand condo, maybe putting 10 in it. He's going to have 70 G's in it and a 250amonth condo fee. But he rents them section 8. Okay. Housing assistance. Government housing assistance for 14 to 1500amonth. What do you say to someone who's getting those sort of returns?

I say that's pretty dang good. Wow, I don't like that $250 a month HOA fee. You know, the. Basically you said if he's getting 1400, you lop that right off the top, assuming you don't have any special assessments in the future, which could make it even worse. But hey, from a cash flow perspective, that's not bad. Where's it located? Tell the listeners that.

Columbia, Maryland.

Okay. And now, is that in a tough area or, you know, Baltimore suburbs aren't known to be the best.

Yeah, yeah. It's not a, you know, the city itself is not bad, but it's probably the, one of the worst neighborhoods within a decent city. So, you know. Yeah, I mean, it's not, it's. I wouldn't live there. And this, and this is happening. I mean, he's, you know, he, he just bought one last week. I just stalked him yesterday. That exact same scenario.

So essentially what you're saying, if the returns are like bombastic like that, you might consider them, but for the most part, for most listeners out there, they're not going to get those returns and they ought to stick with the more traditional detached homes.

Yeah. So here's, here's something I, I talk about, you know, whenever we're in a Wall street type investment, a pooled investment like that. You know, I don't like Wall Street. I call it the, the modern version of organized crime. Okay. So I have no love for Wall Street. But you know, one of the things there is we have that counterparty risk, right? We have the per. On the other side of the transaction, the entity on the other side. So, you know, it could be your broker in a way, is your counterparty, because they're not necessarily doing what's best for you, they're doing what's best for them. And you've got, you know, the, the other, the buyer or the seller of that stock that you buy. And then you've got all the management, they're skimming all the profits off the top. Right. And all that kind of stuff. But you know, in a, in a condo complex, you, you have this other type of risk. You have that homeowners association, which can always go bankrupt, it can get into litigation, all of that kind of stuff. It just, I'm just not keen on it. I've, I've seen too many horror stories over the years, you know, so single family man, that's my, that's my favorite single families.

Now, a lot of people live by that. You know the old 1% rule, which is, you know, the one you buy for 100 grand, you want to try to get 1000amonth and, and ran out of it. What are your thoughts?

I love it. I think it's awesome. I think the 1% rule is a great RV ratio or rent to value ratio. Try to get close to 1% per month and you're probably going to do pretty well. Now if you're in a real high tax area or if you're talking about a condo with HOA fees attached, you have to adjust your thinking for that. So if you bought $100,000 condo, for example, and you had like that example you gave in Maryland, $250 a month HOA fees, you need to rent that for 1250 per month just to be even with a guy that rents for a thousand per month in a single family.

Right, right, absolutely. Or more. Well, where do you think the, where's the where. Where are you seeing the, the, the good return on investments now for real estate?

Oh, you know, Pat, I tell you, last year we opened Little Rock, Arkansas, you know, good old Bill Clinton's hometown. Right. And, and you know, I have learned that Arkansas is literally the most landlord friendly state in the entire country. It is the only state, admittedly, it has kind of these old laws where tenants can actually go to jail for not paying rent. I mean, it sounds like medieval.

Yeah, yeah, no, it's Ireland. It's like they do that. You know, that's how it is in Ireland. Yeah, you. Matter of fact, if you, if you declare bankruptcy in Ireland, you're not allowed to leave the country.

Oh my God.

Like literally you can't leave the country for like 10 years.

Oh, wow, that's crazy. That's crazy. That's just crazy. They want you to pay your creditors and you know, listen, I'm not saying that as a landlord, I would even push to have my tenant jailed for not paying rent, but just the fact, I mean, I think that's kind of medieval to tell you the truth. Okay. But just the fact that they think that will get them to pay their rent and be good citizens. So that's okay with me that they think that. Right.

So Arkansas, so you're getting the 1% rule in parts of Little Rock, Arkansas, no problem.

Huh? Right now our hottest markets are Little Rock, Arkansas, Atlanta, Georgia, Indianapolis, Indiana, Columbus, Ohio is pretty good. We've been in and out of Columbus over the years, not too bad. Memphis, Tennessee has been great for cash flow. Birmingham, Alabama is pretty good. Kansas City is pretty good. And then you won't believe this because I move from the most landlord friendly to this next one. I'm going to tell you, it's the least landlord friendly we offer. Now granted, if you're in Maryland or you're in New York or certainly in Washington D.C. or the socialist Republic of California, you know, those are terrible markets for landlords. They, this one ain't so. Ain't ain't at the top of my list. But the numbers are fantastic and I think the appreciation's pretty good.

It's Chicago suburbs, really like Naperville, that sort of thing.

We like Dalton, you know, we like, there's several suburbs we like. And you know what, they're working pretty good. I mean the numbers are like $120,000 house that rents for 14 or 1500, single family home, no association fees. And you know, the reason you get this is that there are high incomes in densely populated cities and the people do this thing, they commute until they qualify.

Commute until they qualify. Wow. Interesting.

Yeah, commute until you drive until you qualify. So that's, that actually pushes up the homeownership rate in some of these areas. And we like that. You know, we like a lot of homeowners alongside with our rentals. Wow.

Let's talk some juicy stuff. Let's talk bubbles. Two things, you know, a lot of people are saying, Austin, Texas, San Diego, California, cities like that are.

Looking at a popping bubble. And as you know, the real estate trends, if you look at the, the real estate cycles, you know, they, they last about seven years. If you look at the last three, four, five of them, you know, obviously the beginning of a cycle was about 2009. And if you add that, you're looking at 2016. A lot of people are saying, man, that's when the bubble's going to burst. What are your thoughts on this?

Yeah, you know, I, I don't know that you can go by that. First of all, it's, it's all local. It's not really national. I mean, even though we had that huge financial crisis a few years ago, the Great Recession, the worst economy in seven decades, there really, if you look at it, there really haven't been, except for that one, and the Great depression started in 1929, there really haven't been any real national downturns. Okay. So I'm not too concerned about that thing. I'm more concerned about the general fake economy that's built on this mountain of debt and some other things like that. I just think if cash flow is pretty reliable, if you don't invest for appreciation, then you're going to be in pretty good shape. Okay. You know, cash flow is always what's going to get you through a storm. So if there is a storm and you don't have to expect values to go up, just if you got cash flow, you're good, you're good.

I never bet on appreciation at all. I mean, I've been lucky to hit it, but, but yeah, I never bet. Everything I do is cash flow. You know, what kind of return can I get? And, except I'll be honest with you, some of these private companies that I got involved with are more equity plays, especially if they're in the beginning and they don't plan to distribute the first four or five years. You know, but that's, that's more recently.

Those are more speculative type investments. But, you know, they're speculative based on, you know, based on some smart thinking too. So, yeah, that, that's, that's kind of a different conversation. But. Hey, Pat, tell us what you're doing in real estate now. You've got some apartment deals going and some interesting stuff, right?

Yeah, I have three in Texas, I have two in Macon, Georgia, one in Lafayette, Georgia.

One in South Carolina. And these are all syndicated.

Deals that I put together with anywhere from 15 to just three other investors. And we basically are looking at C type properties, you know, properties built in the 60s, 70s, that, that, that need work. We, we put a decent amount of money into them, increase the rents, increase the occupancies, and then either refinance them and pull some money out and, or.

Dispose of them and sell them. A few of them, actually. The Texas ones we're looking at potentially selling at the end of this year just because, like I said, those markets seem frothy. What.

Are you selling anything, Jason, or you just hold on to stuff forever?

No, I, I really do believe in holding on to stuff forever. But with that said, at the risk of I don't want people to think I'm a hypocrite, I do believe in moving stuff around sometimes. So. For example.

Oh yeah, same thing.

Yeah. I mean I'm not, I'm not. It's not like I'm actually decreasing my holdings. I'm actually increasing them.

Oh, I got.

But, but I am kind of, you know, it's kind of like just taking the furniture. Furniture in your living room and moving it around. Right. And so, you know, I got one property in one area that we're not too active in right now and I just don't have a lot of support or a lot of business going on there now. So I'm doing a 1031 tax deferred exchange on that one and I'm probably going to buy two others in another one of our markets. I'm deciding between Little Rock, Memphis or Atlanta probably. I might do Chicago even. I'm not exactly known for being super decisive all the time. So I'm working on it.

Well, you're not going to have a choice here.

I know I'm going to. I got a 45 day deadline staring me in the face with my exchange and then one of my apartment complexes, a big one, one of the bigger deals I've ever done, selling that one and doing a 1031 exchange on that for I don't know what yet. I might, pat, I might just get into my first mobile home park if I can find a deal that makes sense.

Why do you like mobile home? I had a real bad experience in a mobile home park. I actually lost 100% of money that I put into it.

Now I didn't think it was possible to lose 100% on a real estate deal.

Yeah.

You have to tell our eavesdropping listeners why.

Well, you know what it was was this group of people and of course, you know, sometimes there was a lot of lessons in it and this was about 10 years ago, but there was a group of guys and basically they were buy mobile home parks, rehabbing them and then trying to sell off the, the, the, the mobile homes. Right. And then keep, keep the lots. Right. Sell off the mobile homes, keep the lots. A lot of these parks, all the homes were.

Were owned by the park. And then they, it's sort of like dividing an apartment building up into condos. They would divide up the lots of charge ground rent to the owners and sell the actual mobile home themselves or rent them all out and make it a big rental community. And to make a long story short, they they worked real fast and they did about six or seven of them. And I don't know exactly what happened, but the entire company went bankrupt. And we were told that we were going to get some proceeds out from said bankruptcy. You know how they dwindle out A couple of senses some.

Somehow all the executives and the guys who set up the deal, the general partner, they managed to abscond with all the money in some way or another. And all the assets. Yeah.

Every year I get a letter about something, but I have yet to see a dime. And this was. They went under probably four or five years ago. So.

So I would submit to you because, you know, we really want to make this clear to the listeners, and I hope you'll agree with me. Right. I would submit to you that you did not lose money in your real estate investment. You lost money investing in a pooled asset where the guys were probably crooks, you know, they were probably sleazy and they probably just stole the money, right?

Probably. Yeah. Yeah. More or less. Yeah.

I mean, the properties, the property. Think about it. The property is still there. The property's worth something. The property is still producing income.

Yeah. Someone owns it and it's probably making money off of it now. So, yeah, they've. Through mismanagement and probably through them stealing money, like you said, paying themselves.

You know, frothy expenses and salaries and who, who knows, whatever else. So I was, I was not in control.

You know what my. I have. There's ten commandments of successful investing and commandment number three, I swear it's the one everybody gets burned on at one time or another in their life. And it is thou shalt maintain control. Okay? And it just means be a direct investor. You know, when you invest your money somewhere, control it, you know, be where you can keep it, you can keep an eye on it. You know, what's going on. You're in the loop. Because the three major problems people always have is they might be investing with a crook, they might be investing with an idiot. And assuming they're investing with someone who's honest and competent, a lot of times they're taking a big management fee off the top for managing the deal. That's why I don't like Wall street, because Wall street is just famous for that. It's, it's like their whole business model, you know?

Yeah, and I can see that's why you like to buy single family homes and, and small rentals as well, because you, you are in control. You know the old adage abc, like you said, abc Always being control.

When you get into other things with multiple partners. And sometimes it gets, if you want the money, it's certainly not as liquid as if you own the whole thing yourself. And, and so that's the nice part about that.

I mean you can't do big deals by yourself. That's the downfall is that, you know, if you want to do some really big deals, you got to get involved with other people and you got a partner on things and you got to invest on other people's deal. But you know, just make sure you know them and trust them and all of that kind of stuff if you've, if you've got to do it.

And it's nice if they do have an exit plan because at least you know that like some of the apartments that, that I'm in, we have a five year exit plan. So I know I'm essentially going to be ill liquid for five years unless we will, unless we refinance, which we will attempt to do.

But for five years I can count on being illiquid. But if I need to liquidate at the end of five years, that's the goal and that will hopefully probably happen.

So talk to us a little bit more about like your, your investment portfolio that you own directly, you know, your single family homes. Do you like section 8 or you know, government assisted tenants or do you not like them? I, I find it's either like a love hate. Either investors really like them or they don't like them. You know, some, some, it depends.

I have them, I love them for the right areas because the rent's above market and it's a direct deposit right into my account. And they, for the most part, if you have a decent home and you're not a slumlord, they will never move.

Because, you know, they might not be able to get another voucher. They, they, they only move if you're a complete slumlord, in my experience with them. And they rent really fast. So they sit empty, you know, 30 days at the most after I'm done fixing them up and I get crazy rents for them. You know, I, I have places in Baltimore City that I bought for say 60 grand, put 20 into it, and I'm getting, you know, 1400amonth. I mean that's, that's a no brainer. And I can do that today. If I needed to do it today. If I needed to spend the next five days scouring the MLS to find that to do, I could do it and by, by within six months, have it fixed up and rented and attended there. So I like them. I also like colleges. I like, for instance, at University of Maryland, College Park, I have some apart, no, some single family homes that I rent to sororities that sit right behind fraternity row. And everything is rented by the bedroom. So you get a dormitory room there that's close to 800amonth. And if I have a six bedroom house and each person is paying me 700amonth, which is less than the dorm.

But the dorms a lot of times include food and so forth. Right. So, you know, no, that's.

They got to get a meal plan, so they don't. So the outside with the dorms is that you have a roommate, so you got to share a room. If you rent one of my houses, you get your own room. Now, I think there's a security aspect. Some people like the dorms, you know, the parents like the dorms, you know, and it's. You're on campus, you're in that thing, but the kids like to be off campus and especially around the fraternity houses. Because like at University of Maryland, College park, they made a regulation. You're not allowed to bring more than like three beers or something ridiculous like that per person into the fraternity house or, or what have you. So they're. They're all starting to like, move out. And I have two houses side by side that I built. You'll like this. I built them side by side. I paid.

70,000 a lot. And I put a $90,000 house on them, I think, And I rent them. I would get eight grand for the two houses. One sorority rents 12 bedrooms. I get $8,000 a month for a $320,000 investment. And that's a firecracker, I think. I'll never sell those two houses, you know what I mean?

Okay, so how much did you put into them?

320.

And how much are you running them for?

8,000Amonth.

Oh, that's fantastic. Okay, but what are they worth now?

They're worth about 425, something like that each. So there was about 800, there was about 800,000 together.

But you got, you got 800,000. You're getting 8,000amonth. You're getting 1%.

Yep, that's true. If you look at it that way.

That'S not any big deal. Right? That's what you should get.

I mean, it was good because you made, you, you basically made money on the deal, being a developer, but you're not making money. I mean, you're doing fine as an investor, but that's no better than we should hope for on any investment deal. Right. That's the comparison I want to give you.

Yeah, I guess. Yep. That's very good point. I guess that. The thing I like about it though is it's never empty. Right. The same sorority has rented it for about five years and so it's never empty. The lease just renews and I have parents co signing on it and two months security deposit.

So one thing about that, I think fraternity and sorority houses can be a pretty good deal. It's obviously a very niche market in real estate. But one thing about it that concerns the heck out of me is the liability. You know, I would want to have super special insurance that would cover all sorts of underage drinking, you know, sexual harassment, harassment, rape. I mean, you know, I'm like, I'm concerned about getting roped into all of this stuff that goes on at these places. And they're. Believe me, they're pretty bad. I mean college is. It's a scary environment in some ways.

Yeah. Yeah. It's funny you say that like at one time. And I've sold several of these, like moved my furniture around like you said. But at one point I owned eight of them right there in the. In the. Right across from the college. And my insurance company sent me a letter one day, not even called a letter one day saying my policy on all eight was canceled.

And they said they found out they were quote unquote, boarding houses. They don't insure boarding houses.

Which insurance company was.

It was State Farm Insurance.

Yeah. Because I've had some problems with. And some of our clients with Affinity group and. Or National Real Estate Insurance Group, they kind of go by two names and not a good experience with them. So I was just wondering if that's who it was.

Yeah, I scrambled. I scrambled like crazy. And I ended up find. Finding a policy to replace them all, actually. Allstate. But it was, it was a panic mode for about a week. I was like, well, hell, I'm not going to have insurance on any of these. How could you just cancel them on a blanket statement? They. They knew what they were. I mean, they're across the street from the college.

Well, but they said they didn't. Okay, so what did you do when they canceled all those insurance policies?

I just got a new insurance policy.

Yeah. Okay. I mean it wasn't hard to get a new one.

It wasn't. I panicked there for about a week and I probably had to interview three or four companies, but I found one.

So that's what concerns Me about the, the college type rental stuff is that. Yeah, I think you have a lot of unholy things going on in those places. In fact, I know you do, and that concerns me. You know, God forbid there's going to be some, you know, some hazing event and some kid's going to die or something. You know, this stuff is just, it's. If that doesn't scare you, I think you should worry a little bit. Sorry.

Am I being too paranoid?

Yeah, I can't. I mean, I don't know how, how I would be. Liability. Now, obviously I got them in llc. I mean, I'm wearing some protective belts, you know, so.

Good stuff. Well, hey, Pat, what one thought would you like people to leave with about real estate investing? I mean, I just think it's the greatest thing. It's, it's the most historically proven asset class. I love it. I love housing. You know, I'm really into housing. What, what would you like people to know as we kind of wrap things up here?

Yeah, unequivocally, it has more benefits than any other type of investment. Right. I mean, and you know, you know, all the benefits. And I think everybody listening knows the benefits. You know, your principal pay down, your depreciation that you get on your taxes, your appreciation, if it goes up in value, which hopefully it does.

You know, your tenants are paying the mortgage payment for it. It's leveraged where everything else, you buy a stock of IBM and you're paying, you know, full value, whatever cash value is. With real estate, you could probably borrow 80% of that. And then, you know, and it goes on and on and on. So it's, and it's definitely a stepping stone, let's call it. They say, you know, marijuana is a gateway drug. I say real estate is a, is a gateway investment, you know, through real estate, through a tiny townhouse that I once bought, my first house that I ever bought, and I rented out the basement and rented out a room and, and stayed in a room and the, the rent, paid the mortgage. Through that, I was able to gateway into other little greenhouses, big red hotels, and then businesses. And so it is, unequivocally, it's a gateway investment. And, and I still, and I still buy, and I still buy the little greenhouses. I mean, I just, I just bought one for 70 grand like a month ago. So.

Yeah, good. No, it's, it's, it's hard not to be addicted to those little greenhouses. They're, they're such awesome investments. You know, Pat, one of the Things that people are always saying and thinking about with real estate is that it's just, it's just pretty simple, you know, if you just, if you just get in the game. I mean, where else, where else have you seen any of these stories of the person who started with like your little townhouse, my little condo that I bought when I was 20, and how you can just grow that into this huge portfolio? I mean, people get impatient, they think, oh, it's gonna take too long. But you know, I have news for you. The time will pass anyway. You might as well have it be on your side. And with real estate, you know, income, property, it's on your side.

Yeah, yeah. I mean, does, I mean, I mean.

Where are those stories on Wall Street? Right? Tell me the Wall street story of the guy who started with $10,000 and parlayed that into a multimillion dollar portfolio and you know, in 10, 15 years.

Right, right, right. And it's so, and it's, so it's very risk averse. You know, it's not a risky. And investment. You know, certainly there's stuff that if you can get into, if you maybe, and also if you do too much too fast, it could be risky. But buying a house a year or, you know, and, and sticking with single families and in good areas and, and things like that, and following the 1% rule, I mean, you're basically as close to little risk as.

As you can get. I think, I think with the ability to move up and get into bigger.

Things, it's about as low risk as you can get. And it's, in my opinion, definitely the most proven thing you can get. Well, hey, give out your website, Pat.

Sure, I got a million of them. Best way is just to Google me. But pathiben.com is one. You can look at my book Six Steps to Seven Figures. It's also in audio now. And.

And that's the best way to.

Find me good stuff. And mine is Jason Hartman.com. that's Jason Hartman.com or on Twitter Jason HartmanROI. And thank you everybody for listening to this. Kind of oddly formatted. Not even interview, just a conversation. Hopefully you got some good ideas by eavesdropping on our little conversation here. We really thank you for listening and Pat, that was. Thanks.

Yeah, it was fun, Jason. I love talking real estate. So this is, this was good stuff. Thanks so much for setting this up and being a part of it and look forward to talking to you again in the future.

Let's do it again soon. Thanks everybody.

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