CW 1121 FBF: From Novice to Investor, Listener Questions Answered

Welcome to Meet the Masters of Income Property Investing. I am your host, Jason Hartman. The 2019 Meet the Masters of Income.

Property March 23rd and 24th in Newport Beach, California.

What is the sort of the one trick, the hack, the secret that really empowers people to success? Income property, the most historically proven asset class in the entire world.

Register today@jasonhartman.com masters. Early bird pricing ends Friday, February 1st.

Let's break this down and look at some of the strengths of income property as an asset class. I found that this event is really.

Helpful because I'm totally a newbie to real estate investment and so I picked.

Up so much information. One of the great things about it is that it's so fragmented. Right. Embrace the fragmentation. Jasonhartman.com Masters welcome to this week's edition of Flashback Friday. Your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present and propel you into the future. Enjoy.

Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing fresh, new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self made multimillionaire who not only talks the talk but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating wealth show. This is your host, Jason Hartman. This is episode number 327. And today's guest we will have on will be Jerome Corsi. You've probably heard his name, he's written many, many books. He's quite a scholar on several subjects. So I think you'll enjoy that interview and if we have time, we'll have a caller on as well. But first I've got Michael here to join me. For the intro portion of the show. We want to talk about some tips for investors. Michael, welcome. How are you?

I'm doing great today. Jason, how are you doing?

Good, good. On your Facebook this morning you said that Newport beach was like Hawaii. It looked and felt like Hawaii. What did you mean by that? Is it hot and humid?

Yeah. I was going to toastmasters at 6:30 in the morning and it was kind of cloudy, extremely humid. So most people would see that and think, man, it must be really beautiful. But it's just, it's more like one of those tropical storms that comes in. And I think you're probably getting hit by that monsoon type weather as well right now, right?

Let me tell you something. Last night it was amazing. It was about 10 o', clock, maybe 10:30. And for the first time in my whole life, I got an alert on my iPhone. It never happened. I don't know how that's generated. Or maybe the National Weather Service or some emergency alert service thing. Anyway, it said dust storm, dust storm warning. And so, you know, we get these dust storms in Arizona. They're not too great, but they're not as bad as it might seem. And you know, as long as your windows are closed. So, you know, about a half hour at, I thought, that's really weird. And about a half hour after that, sure enough, there is this incredible dust storm. And keep in mind, I live like 300ft above the ground in the tallest all residential building in the state of Arizona. And now if you're listening, in New York City in 300ft, no big deal, right? But you know, here, that's a real high rise. And you know, I have floor to ceiling glass almost throughout my penthouse. There's very little wall space. I have a lot of pictures from my last house that I don't have any place to hang because the wall space is virtually all glass. And this storm starts and I don't know how fast these winds were blowing, but it felt like they were going about a zillion miles an hour. And I went outside and the dog would bark and out on the decks and it was just crazy out there. I mean, it was crazy last night. Now I've been in dust storms before and at our last Creating wealth seminar, I showed one that I filmed last summer. And it was in the daytime so you could really see it at night. You know, you can't really make heads or tails of it. But these storms, they call them haboobs and that's the Middle Eastern name for these sandstorms that happen in the desert. And the pictures were phenomenal. I showed them at our Memphis Creating wealth seminar and property tour a couple of months ago. And wow, they're just nuts. But this one, the different thing about this one is it was long. I mean, it lasted, I don't know, I think over an hour. And I finally just, I was so tired, I just went to bed and I woke up about an hour and A half later and it was. It was gone. But it was crazy. I mean, this storm was crazy. It was loud and windy and dusty and things were flying all over the place and. Whoa. I mean, I couldn't believe it. People were. I looked down on the streets and there were some cars out. People were driving a little bit, but it was nice.

I'm picturing, like, the Scorpion King, when the giant. I think it was in that movie when the giant brown cloud of sand starts tumbling in and everybody disappears. I don't know if it's. I'm sure it's a little sensationalized in Hollywood.

That sounds like some cheap Japanese horror movie, like Godzilla or something. I don't know about this. What? The Scorpion King? What's that? I don't know what that is.

It was with the rock and something in, like, the Middle East. I don't think I even saw the whole thing, just a part of it. But, you know, that's a common. A common scene in. In movies, I feel like. Of the crazy Arabian Desert sandstorm that comes in and suddenly, you know, they're drinking tea in a nice little tent set up, and then everything's just blown to bits.

That wouldn't surprise me. Yeah, I gotta get a little worried that, like, the windows could break here or something. But they're so thick. I mean, they're like an inch thick. They're probably bulletproof. I don't know. Probably not. But anyway, so, yeah, no, it's some crazy weather here in the summertime also. Of course, it's hot. So anyway, you've got some questions that investors commonly have and you wanted me to answer them on the show, right?

Yeah, I just thought, let's skip some current events today. And investors want to pick your brain. And I think it'd be nice to get some more of this content going. And just a comment I first made. So let's go back to show 323 with Sarah. And you were talking about her boat.

Yeah, I was giving her a hard time about that, wasn't I? If you didn't. Folks, if you didn't listen to this show. Sarah is a successful investment counselor. She's been working with me for several years. And she bought a boat and I was teasing her about spending her money, spending too much money, you know, and I was giving her a hard time about that. And, Michael, I think you really made a good point that I. Maybe you should have balanced that out a little bit. So.

Yeah.

What is your point?

My point was Sarah practices what she preaches she practices what you preach. She owns investment property. And so in our internal Facebook group that we use, I said, you know, in reality, it's probably Sarah's tenants that are paying for that boat, not Sarah.

And you are right.

Remind all of our investors and clients out there that all these investments are a phenomenal way to pay for things that are not investments. So.

Absolutely. And you know what? You are completely right. And I, I was probably sounded like I'm just getting too frugal at my old age, but I'm really not. I mean, the whole point of this, the whole point of getting rich in real estate is so you can enjoy your money and have the things and the lifestyle that you want to have. And you are absolutely right, Michael, in bringing that up. So Robert Kiyosaki's philosophy is pretty good. You know, he calls things like boats and fancy cars and second homes and things like that. He calls them doodads. Rich dad. Do dad. So it's kind of a funny thing, but what, what his deal is is I think in one of his books it talked about how he was saying to his wife Kim, that he wanted to go buy a new Ferrari. And she said, well, okay, if you want a new Ferrari, go buy another apartment building and just make sure that the income from the apartment building can pay for the cost of the Ferrari. And you know, that's exactly right. If you want to buy a doodad, just make sure that you first buy some asset that creates income first to pay for the do. The whole point here is to get out of the rat race so that we're living on passive income, not active income. And there's no truly passive investment, in my opinion. But real estate is pretty close to a passive investment. It's. It's not truly passive. Nothing really is. In, in a practical sense, I'm not talking about about like the IRS's definition of a passive investment or an active investment. I'm just talking about the practical aspect. You have to pay attention to every investment you have. So you want to buy a Ferrari or boat, get another couple of properties that'll pay for that. Very good point. Completely agree.

Yeah, I see people that pay cash for cars and I think, man, if you just took that cash and bought an investment property or a couple, you could either pay for lease payments on that car and the equivalent for the rest of your life, or you could pay for the loan payments and still be probably putting money in your pocket at the end of the month.

You are absolutely right. So Tim Ferriss, who wrote the Four Hour Workweek, which I. I think was a pretty good book. And I kind of want to qualify that by saying not because it was a great book, but just because the book made me change my thinking about some stuff. And I consider that to be a great accomplishment. A lot of the things in there he says are kind of like, really, you know, I don't know, maybe. Yeah, they are. But I didn't, like, go out and apply all those things. And he's given out websites left and right, and I didn't look all that stuff up. But conceptually, the book just made me change my thinking a bit. And one of the things he talks about is that, you know, one of his goals was to have an Aston Martin. And I think an Aston Martin is like the most beautiful car on earth besides the now defunct Fisker, which the Fisker Karma was a beautiful car too. Literally a rolling work of art. Right? Well, you know, an Aston Martin, is that really so out of reach to have an Aston Martin? And he calculated the payments on an Aston Martin, and they were like $2,200 a month, probably. Plus insurance was probably pretty high on a car like that. So it's not that hard. Five, six little residential properties will probably produce $2,200 a month for you. So if you want in Aston Martin, go out and generate $2,200 a month in income, property, relatively passive investment income. And heck, go drive around a really snazzy Aston Martin that's going to depreciate like crazy. Fine with me. I mean, I don't think it's the best use of your money, but everybody wants a few luxuries and really cool material things in their life. Think about your goals that way. I think that's just fine. No problem.

It's kind of like in dieting, a nutritionist that I follow, real smart guy, he says there's nothing you shouldn't eat. Just better times that you should eat things. So you should eat carbs after you've been at the gym or immediately before. So this is kind of like you shouldn't necessarily go spend all your money on these things, but there's a better way to buy it, and that is with assets that will pay to buy these other items that will depreciate, but then these assets will appreciate and generate income for a lifetime if you hold them.

You got it. That's exactly the plan. So very good point. So we got. Remember, you're listening to Flashback Friday. Our new episodes are public every Monday. And Wednesday we got the doodad Thing we've come to some balance on that, right? Instead of me just teasing Sarah about her boat and listen, I used to have a 48 foot boat and let me tell you, that thing was such an expense. The old saying about a hole in the water you throw money into. It is true with a boat for sure. The other one is the two happiest days of boat owner's life. When you buy it and when you sell it. That is also true. So anyway, just a little balance on that. But try to keep your spending on that kind of stuff in check. Ultimately the goal is create wealth and buy things that will create wealth for you rather than things that give the appearances of wealth. If you don't save and you don't form capital so you can buy assets that produce income, then you can never afford the appearances of wealth. And you want to be able to afford those comfortably when you have big giant cushions where they're not going to break the bank and become a stressor to you. The important thing is to keep money and material things as the servant where you're the master and they're the servant. Not let them run your life, not let them own you. Right?

Yeah.

Good. Okay, so let's talk about some investor tips and questions.

All right, we'll take a couple. These are questions I hear from people constantly. They want to know what would Jason say? So I'll take three of these that I'd post posted. Let's just start out. What would you do, Jason, knowing what you know today, if you were a brand new investor, try to give us the the quick and the dirty of what you would do to get going and to get from novice to your first property as quickly as possible.

Okay, so first of all, that's a great question, Michael. First of all, understand that we have clients that are all over the board. Some of them are just trying to get their first property and get it rented out and turn it into a good semi passive investment. And some people are buying dozens and dozens and dozens of properties and some people are wanting to buy big apartment buildings and things like that. So we've got people all over the board and I love that because the beginning investors keep you in touch with a certain kind of thinking and the sophisticated investors that are purchasing many, many, many properties keep you in touch with a certain kind of thinking and we've got everything in between. So if I were just start and I was a total novice investor who was just looking to buy my first property, first of all, I'd have to know that I'VE got to save up enough money and do enough capital formation to acquire that first property, to save up for the down payment on that first property. And then after that, I've got to put myself in a position where I'm doing things right. Okay. I've got to make sure that I'm also preparing my credit and managing my credit score, doing that in advance of that first purchase. So there are certain things that you can do, and we've done shows on this in the past that you can do to improve your credit score and improve your likability to a bank and make sure that you look like a good borrower. So that's something that you have to do. Once you've done those two things, then all you have to do really to be a very good investor in large part is Simply follow my 10 commandments of successful investing. We've done shows on that. I harp on one or two commandments, usually on every show, pretty much. But you need to buy a property that makes sense the day you buy it. So that's commandment number five. Thou shalt not gamble. Don't be a gambler. If you live in a gambling oriented place, and what I mean by that is a state like California or New York, New York City mostly, or any sort of expensive urban area, Boston would be one of them. Several areas in the Northeast would qualify as that. Many, many places in the state of California qualify as that. Don't be investing in places like that. Those are places where you can get in trouble too easily. You've got to be investing in properties that make sense the day you buy them. So what qualifies as making sense? Well, cash flow. Does the property produce income based on a reasonable down payment from day one? That is what makes sense. Is the RV ratio or the rent to value ratio a sensible number? Can you get about 1% every single month out of that property? Well, that's the first thing I would do. And even before that, when you say investing, we're assuming that someone wants to invest in real estate and income property. So the first thing I'd say even before that is commandment number three, Invest in something that you own and you have direct control over. Be a direct investor so that you don't get ripped off, so you don't get some manager of the deal, taking a bunch of your money, skimming the profits off the top. Be a direct investor. So that's all really embodied in my 10 Commandments of Successful investing. If you're new to this show, type that in the little search engine on our website@jason hartman.com There's a little Google search bar there that allows you to search all of the stuff on our site and that will help you a whole bunch.

I think that's episode 216.

Oh, gosh, no, 216 was a rehash. But there was the original episode of the Ten Commandments on there somewhere. Probably like episode number 15 or 18 way back in the beginning. And we've talked about them through the course of the last 326 shows as well. But you know, I'm just saying where they're all embodied in one place.

Okay, let's say you were. You figured out what market you want to go to. There's two houses that your investment counselor sent to you. How are you going to pick between the two houses?

Yeah, good question. So I don't know. No, I do know, actually, but I'm going to say I don't know because I'm not looking at two specific houses. First of all, I'd say that don't be putting yourself in a position where you agonize the deal to death where you don't do anything. Okay? You got to do something. Wisdom in action. Ready. Fire. Aim. Right. But assuming you're going to really do something and you're not going to let the deal pass you by, if you're looking at two properties, you obviously are looking at the numbers. We format all our data in the same exact way. So when you look at the properties@jason hartman.com properties, all of those have the same format. So if you learn how to read that single page, you do not have to be a detective. You can see all of the numbers. And we just did a members only call last week actually on how to read a Performa and how to analyze the numbers and the metrics on a deal. So if you're not a member, please become one for a whopping 120 bucks a year. Okay. And you can go in on the member site and you can hear the recording of these, these member only calls that we do. But if they're the same numbers wise, say for example, one property has a projected return on investment of 30% annually and so does the other property. Well, then you'd look at things like go to Google Maps and look at the satellite view of the property and look at the street view of the property, if it's available. Most of the times it is. And which street looks like a better neighborhood. We did a show a couple of years ago where one of our clients who was buying many, many properties in Indianapolis. David was his name. And he was looking at what he called the free lunch metric. And we kind of joked and made out of it, you know, if there's a lot of free lunches in the school district of that property, then he didn't like it as much. He likes a low level of free lunches that the government is giving out these free lunch vouchers because to him it meant that it was a better higher income area.

But then we kind of debunked that one, right? Or somebody did. They just said a lot of people realized they could get a free lunch, so they jumped on the bandwagon and it made that metric a little less telling of the true economic status of the area.

Fair, fair enough. It could be. Look at everything. Everything could kind of be debunked here and there. Okay. And some people love like section 8 government assisted rentals, and some people hate them. They're just different strokes for different folks type thing. You know, the great thing about government rental assistance through like the Section 8 program is that, you know you're going to get paid every month. Right. The government's a pretty reliable payer, even if the money is in depreciated dollars. So. So there are some things like that. But which house simply looks better, which house has a, you know, a better neighborhood, which house is newer, which house is older? Those are some things. And this is why this can't be done by a computer. It's not an airline ticket, it's not a stock, it's not a ticket to a concert. A lot of that stuff can be done by a computer, but with income property, because every house is a little bit different. You actually need to make a judgment call and form an opinion. And if I was looking at two specific proper for this question, Michael, I could probably go a little deeper into this. But looking at Google maps, look around the neighborhood, I mean, does it look like there's any adverse thing that might affect the property? Maybe a landing strip, meaning an airport's nearby, maybe a big industrial facility, maybe a railroad track, Maybe it's maybe a prison, maybe it's in the flight path of a landing strip. Right. So these are things, they're not things that would instantly say, no, don't do the deal. But it would say the price or some mitigating factor needs to be in place to make me want to do the deal.

Correct. Okay, you know, you've talked about self management before. Can you give some basics on how somebody. Some thoughts that they're going to have if they're going to go down that road of what they're going to be getting into and what has made it that you've done. Easy for you.

Yeah.

You have 20 properties that are self managed, is that correct?

No, no, no, no, no, not that many. So basically I like self managing my properties and I think that it can be done. It's been amazing to me and I, you know, this is like a one hour discussion. Okay, but look up self management on the search bar@jason hartman.com and search it because we've done shows on that that go into great detail about self managing your properties. And my story is basically this. I have a property that I still own in San Antonio and my property manager a few years back, he wrote a letter saying hey, I'm getting out of the business. And I had Karen searching around for another property manager for me because we weren't actively selling in that area at the time. And so she was, she was looking around for a new property manager and she found a couple and one that she really liked and you know, she was just kind of assisting me and otherwise I would have done this myself. And I've done it myself too. And I never got around to signing up with that property manager. And suddenly for this property I've never seen and this tenant that I've never met, suddenly I just didn't get around to signing the forms and hiring the new manager. And a check arrives in the mail from the tenant with a nice little note that says, hey, I guess the property manager's out of the business. He said to pay you directly now. And so the tenant's name was Tony. And for several years I just self managed that property and it worked out great. Now if you asked me if I could self manage a Property that was 2000 miles away from my home that I have never seen with a tenant that I have never met occupying it, if that were possible, I would have told you you were out of your mind. But now that I've done it and I'm now doing it with several of my properties, you really can do it. The only thing you definitely need the real estate agent for is to lease the property to a new tenant and handle the walkthrough when the tenant moves out. And it's funny you should ask this question, Michael, because my property in Athens, Georgia that I self manage just the tenant just moved out literally about two days ago. And last week I hired a, an agent to lease the property up for me. I didn't sign up for Property management. I just signed up for leasing, he's charging me, I believe he's charging me 50% of the first month's rent to do the lease. And he went over, he met the tenant, he took pictures, he sent me the pictures, he said this and that. A couple things need to be fixed and he is getting quotes to fix them up and he's going to send them to me and he's going to lease the property to a new tenant, but he's not going to be the property manager. After he does his initial one time service. Handle the walkthrough with the current tenant, advise me on how much of their security deposit to keep, if any, how much to give back, if any and get the repairs done, get the property ready for the new tenant, lease it up to the new tenant, do the walkthrough with them, get all the documents signed, check their credit, screen the tenant and so forth. He's out of the picture. I'm the manager and you know what, it works pretty darn good. I've got to say. I really like self management. Now on the other hand, if I have a great property manager in that area that does a fantastic job and doesn't mark up the cost of repairs or I feel that they're doing a good job and they're not ripping me off here and there, I'll keep the property manager. I do it both ways and basically what decides for me is how good the property manager is. If they're a great manager, I'm going to keep them. Like on my Austin, Texas property I've got a fantastic manager, I'm going to keep them. If I have a bad manager, I'll get rid of them and I'll self manage.

Okay, do we have time for.

How about one more? Yeah, let's do one more.

Let's just. What question should people be asking property managers when they're now got the the house I want and I'm talking to the local market specialist who's probably the property manager. What should I be concerned with who.

May or may not be the property manager? Well first of all you've got to. When you get your property management agreement you've got to actually read it folks and you've got to understand what this manager is proposing here. Are they reasonable? Are they charging 10% per month plus an entire one month fee to lease it up? If there is a late fee involved, do they keep the late fee? Do they split the late fee with you? And that means when the tenant pays the rent late and there's a late fee. What happens with these things? Do they mark up the cost of repairs or do they do the repairs, manage them at cost? And what I mean there is, if someone has to go out and they have to call a contractor out to replace the garbage disposal on a property, do they say they just pass that through at cost or do they charge you a 15% markup? So if that's a $200 cost, you're going to pay $230. Now, I don't object to that outright. Here's what I object to. When all of the fees are high, if they want a 10% management plus a one month lease up, plus they keep all the late fees, plus they mark up the cost of repairs, plus this and plus that, that sounds unreasonable to me. But on the other hand, if they only charge me 8% management and they only charge me 50% lease up fee, and they pay all of the advertising costs and they split the late fee with me, if the tenant's late, then it gets a little more reasonable. You see what I mean there? So you have to look at the whole picture. It's not one thing or the other. It's what does the holistic view of my relationship with this property manager, what does it look like? The other thing is. Now that's probably that manager is probably the person that we referred you to, which may or may not be the local market specialist that sold you the property. Well, you should always check with another property manager and do some of your own due diligence. Check with a completely outside property manager and compare these things. And also get a sense of how the properties are leasing, how quickly they're leasing, understanding of that market from an outside source who is not affiliated with us. Now, you can use whoever you want to manage your properties. You can do it yourself. You can use a manager that you find. You can use the manager that we refer, it's your property or direct investor, so you get to make the decisions, which is a really nice luxury. However, the one thing I must mention to you is that when you use the manager that we refer you to, then you've got the ability to have leverage over them. And that leverage is a very powerful tool. See, we refer these managers dozens, if not hundreds of accounts and you might follow one of my ten commandments that says thou shalt diversify. And you're buying maybe two properties in each market or one property in each market, so you don't represent a big account to that manager. Or if you go outside and you use your own manager, the one we didn't refer then, you don't represent a big account to that manager and you don't have leverage over them. But through us, through my company, you have leverage over that manager because we refer them a lot of business. So if you have a problem with them in the future, if their service isn't good enough, if they're trying to stick you with a little extra fee here or there, just call Michael, call Sarah, call Steve, call Ari, call your investment counselor, call Dave at our company or email them and say, hey, this doesn't seem right with a manager. And we'll email that manager, we'll get on the phone with that manager, and we will help you sort through it and get better service. So you have a lot of leverage because of the volume of business we send that manager. And that really, really is a big help to investors. It's probably one of the biggest benefits we offer.

Absolutely. So, and just for our audience, we're going to be really expanding on all these topics in the member section. So it's on the agenda. You know, we encourage people to sign up to get some really deeper level look at some of these topics.

Hey, for 10 bucks a month, it's about the best deal going. But listen, you don't have to become a member. You get all the services from our investment counselors, regardless of whether you sign up for the membership or not that we offer@jasonartman.com but there's just some additional resources there for you. And not the least of which I want to mention this again. A couple of years ago, I did a show with Garrett Sutton, who is the author of, I think now, two of the Robert Kiyosaki Rich dad books about asset protection and making sure you're getting all your tax advantages. He's a great lawyer that has written some great stuff on this topic, and his interview is in the member section. And I mean, just that alone is a phenomenal resource for you. It can save you an absolute fortune in terms of how to structure your entities, if you're doing any entities, why you should do them, what's involved. And, you know, we touch on that on the show as well. But, you know, again, he's the attorney. We're not an attorney. Okay? None of us are attorneys. None of us are CPAs. So there's some great additional resources like that in there. So join, get a membership and get full advantage. Just a reminder, you're listening to Flashback Friday. Our new episodes are published every Monday and every Wednesday. Michael, was there anything else before we go to our guest, I don't think we have time.

Okay.

Yeah. You wanted to do a current event, right?

No, I was going to hit a property, but.

Oh, yeah, no, we always got time for a property. Let's just do it real quickly. Where's this one?

This is in Memphis and it's in the lower end. It's only 46,900 purchase price.

That's one of the least expensive properties we ever have in that range. Yeah. Wow.

So the pro forma actually puts it as a cash purchase because the loan amount would be 35,000, which actually I think we can. I've talked to a lender that would go down that low and it makes the numbers a bit better. But even as is, not many lenders.

Will because it's just too small a loan amount. When the loan amount is like $36,000, that's like a car loan. Okay. It's smaller than a lot of car loans.

Yeah. So this is $36 per square foot. And it's mostly brick, which is pretty amazing. And let's just hit some of these numbers. 1304 square feet. It's a two bed, two and a half bath. And the cash on cash even being purchased cash is 10%, which I think is absolutely phenomenal.

What's the projected, when you're looking at the perform there, what's the projected overall return?

So it's only 16. Because it's the cash.

Because you're buying with cash. Yeah. If you leverage that, it'd probably be like 40%.

Yeah. With leverage it's 41%.

Hey, that was a pretty good guess on my part, wasn't it? Wow.

So, yeah, it's got tremendous numbers. If you wanted to try to explore it with financing, talk to your investment counselor. We'd be happy to see if we could make that work. If you're looking, if you have about 50,000 cash and you just want to buy something cash, this is right there in that range.

So if you've already got 10 properties that you've used up all of your Fannie Mae loans and you've gone above that limit and spouses can each get 10. Okay, so that's 20 properties. But if you've done that and you're just now buying cash for all your properties past your first 10 properties, then a little inexpensive property like this is great because it won't consume too much of your capital. And Michael, what is the cap rate on that property? I'm curious.

It's a ten and a half.

Ten and a Half cap. I was telling Steve on an intro I recorded with him that I looked at a Sam's Club deal today. You know, I'm on the list for all these commercial real estate brokers. They sent me a Sam's Club. And this is what your brother in law does is retail properties like this. It was $18 million and it was a 6 cap, a 6% cap rate. I mean that's just terrible.

That's actually a pretty good cap. Well, for $18 million investment.

I know, obviously. But the point is it's kind of like counterintuitive. People think if you've got a bunch of money and you can do big deals that you're going to get a better deal like a better cap rate. It's actually counterintuitive. The cap rates go down on those bigger properties, our little cheap investment properties. They're great. I mean they get. The returns are so much higher on our little single family homes than they are on a big apartment complex or Sam's Club, you know, or any kind of big commercial property. Just this is, this is, this is why the opportunity is here for the small investor. The numbers are better on our deals than they are on the deals the big institutional players get. I love it. It's just awesome. It's totally awesome. Michael, is that awesome?

It's phenomenal. The little guy gets to win.

Yeah, you really do. And this is the way you can win with direct investment in good income properties that follow my ten Commandments rules. They're diversified, they make sense. The day you buy them, you're a direct investor, you maintain control and it's the most tax favored asset in America. It's the most debt favored asset in America, meaning you can get the most leverage on it. Unless it's a $35,000 loan amount. You may not be able to get a loan that small. But some, some phenomenal stuff here. Let me mention our next show is with Senator Byron Dorgan. And then episode 329 was with James Altucher. 330 is with Robert Greene who wrote all those great books like the 48 Laws of Power Seduction. Some great stuff. 331, we've got Meredith Whitney. She called the banking crisis before anybody else did. We've got les Leopold for 332 talking about some hedge fund crookery. That's really interesting. So really some fantastic shows coming up. So a lot to look forward to. But hey, let's go to Jerome Corsi here, Michael. And thank you again for the questions today. And, and we'll keep doing some stuff like this and answer some more investor questions on the show. So and if we have time after Jerome Corsi, we'll take a caller as well. We will be back with Jerome Corsi in just about 60 seconds. Now you can get Jason's Creating wealth in Today's Economy home Study course, all the knowledge and education revealed in a nine hour day of the Creating wealth bootcamp created in a home study course for you to dive into at your convenience. For more details, go to jasonhartman.com. Hey, it's my pleasure to have Jerome Corsi on with us for just a moment here to just talk about a single quick issue. And that is Obama's plan to take away or take control of people's 401ks. We've talked a lot about this on prior shows and Jerry has been on some other shows talking about some other topics and books that he's written. And it's great to have him on to talk about this. Jerry, welcome. How are you?

I'm doing great, Jason. Good to be with you again. Thank you.

It's good to have you back. And I know this is just a quickie discussion here, but what are your thoughts on the possible power grab of our 401 s and IRAs and retirement funds in this country?

Well, I just warn people this is a huge pot of money. It's sitting there, typically sitting in banks or investments. And the government can see it. Now. The Obama administration has made various overtures. They've held hearings, they've had the Department of Labor look into it, public hearings. And they've kind of been around the edges of the topic, which is, well, maybe we should require a portion of these fees to go into a government created annuity. In other words, have you return the money to the treasury with an IOU to pay you something in the future for that money. The reason I'm concerned about it is as soon as the government like the United States under the Obama administration, we've tripled our debt is now at 16, going to 17 trillion from 10 trillion when George W. Bush took over. So we're about to double at some point or other during the Obama administration. Looks like the trend continues. Our national debt in, let's say eight years, that kind of an alarming increase in national debt, usually at some point it's going to force the government. We can't just keep repeating buying our own debt under these quantitative easing programs of the Federal Reserve. Federal Reserve's balance sheet won't absorb this much debt at some point or other. So the concern I've got is that other countries like Argentina have actually gone in and nationalized retirement accounts one way or the other and effectively taken the money. Maybe they've left IOUs or guarantees which may or may not have gotten fulfilled. And it alarmed me too, seeing in Cyprus, when Cyprus was faced with having to get yet another government bailout organized by the International Monetary Fund in the EU and basically the international bankers just confiscated a portion of the savings deposits. Now this can happen in a Western democracy belonging to the eu, then who's to say anybody's deposits are really safe? And again, it's not that I'm saying the Obama administration is breathing down your neck and is going to take your 401k tomorrow. I'm just saying it's something to think about and to watch very carefully because the overtures have already been made by the Obama administration and I take effect the overtures have been made as a serious event.

Do you think that they will orchestrate a false flag event or there will just be a market crash? I mean, how would they lead into this type of thing, you know, and try and make it palatable in some way?

Well, I'm not sure a false flag would be created or any event that occurred as a negative event could be jumped on by the administration. I mean you've seen the Obama administration do this. We get the Newtown shootings or any school shooting and immediately the Obama administration pounces on that tragedy to push a gun control agenda. So any negative downgrading of the United States, any kind of a pulling out of the Federal Reserve in the amount of quantitative easing, the amount of our treasury debt the Federal Reserve is willing to buy. That could result for instance in an increase in interest rates which would make the cost of financing our debt tremendously more expensive. Any of these situations could precipitate the government saying, well let's just take X amount of hundreds of millions, billions, trillions, whatever the government decides it wants somehow or other out of private savings accounts, maybe issue them all government annuities or government guarantees that take the cash and use the cash to solve the financial crisis at hand.

And it never will.

But unfortunately what the western economies are doing is, you know, this is not a recession. This is not a typical Keynesian post war downturn. My analysis has been from the beginning that we are in a structural global downturn precipitated by opening up labor markets to under priced labor on a basis where it was economical to fire higher priced labor in the western economies which undermined middle income workers essentially killed the goose that laid the golden egg. The global economy was being fueled by middle class demand, but when the work went to India and China, eventually the middle class was going to run out of spending power. And that's the structural we today stimulate demand with Keynesian deficit spending. The jobs we create are created in China and India. This has been the problem and it's not going to be solved by deficit spending problems with these massive welfare states we've built. The proportion of the federal debt that is not a federal budget, that's non discretionary spending. In other words, entitlement spending is rapidly growing to over 60% of the budget and it will not slow down just because the economy slows down. That's the problem.

Yeah, very good points. And folks, get control of your retirement plans. At least make them self directed if at all possible because I think the government will go for the low hanging fruit. The easy money to convert is money in brokerage accounts and savings accounts. That's the easy grab. The harder grab is that self directed stuff where it could be you could have some gold, you could have some real estate, some private money lending, you know, who the heck knows. That'll just be so hard to quantify and so hard to grab because it's so fragmented. Any defensive strategy thoughts there?

Well, I think self directed IRAs are good. Diversification may be into some commodities. Certainly diversifying the accounts so it becomes harder to grab your entire account IRA or 401s simply because it's deposited in banks. Deposited in banks as CDs is easy.

To grab, that's for sure. So you want to make it just harder because the low hanging fruit is what they always go for. Hey, I know you've got to go, but thank you for some quick insights on that and appreciate having you. We'll have you again on soon. Okay? Okay.

Jason, thank you.

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