CW 320: The Science of Spectacular Living with Dr. Bob Wright Author of ‘Beyond Time Management: Business With A Purpose’

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 South 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.

Hey, welcome to the Creating wealth show. This is your host, Jason Hartman and we are @ episode number 320 today. And you regular listeners know what that means. That means this is a 10th show and every 10th show we go off topic and we talk about something of general life interest, maybe just more successful living motivation. And today we're going to talk. Our guest today is Dr. Bob Wright and he has written a book on transformation, transforming our lives into the lives we want to live. And so he will be here in a little bit to talk about that. But first I've got Michael here with me. Michael, as you know, you regular listeners is one of our investment counselors and he's a real news junkie. I think that's a fair statement. And so, so he's got some current events he wanted to bring to the listener's attention today. Michael, how you.

Doing? I'm good. Finally recovered from that bachelor party and I was down in Cabo, which you noticed when you said you noticed that I wasn't posting any articles to our company forums and you said there's a little bit of a silence, so I must be out of the.

Country. Yeah, I didn't know where you were because you're always contributing so much to the knowledge base. And we all enjoy your post there because you read like everything. Well, Steve's kind of like that too and I'm like that. But yeah, you always have some great posts. And so you came back from Cabo San Lucas like what, two weeks ago.

Right? Yeah. Really? Even though I was down there for only four days, it took about four days to get back in the groove of life here and working. And we just had such a good time. Waves were great, got a hurricane.

Swell. So you were doing some surfing then.

Huh? Yeah, you might as well while you're down there. The water is just.

Unbelievable. So and the rest of the time, were you wasting away in Margaritaville, as Jimmy Buffett would.

Say? Yes. We danced a few nights till 5am.

That'S.

Fantastic. I remember my first trip to Cabo San Lucas. I've been there a few times. Not a huge fan of, like, Mexico. I really. But I always seem to end up there every once in a while because there's some group trip or something. But I remember going to the Giggling Marlin. Okay, is that place still there? The Giggling.

Marlin? Definitely still.

There. Okay, that's classic, because this must have been like 20 years ago, right? And. And I was at the Giggling Marlin, and they have this T shirt that you can get, and it's certified member of the Too Much Fun Club. And you got to drink like one or two or I think two of these drinks. It's called the Skip and Go Naked drink. And then you've got to hang upside down, you know, with your feet in these inversion boots. Like the. Like a marlin. Right. And they. They. And I think you got to drink one of them upside down or something. It's just not. That's just crazy. Mexico is crazy. I don't know. I'm too old for.

That. Yeah, that's the signature there. And that. They also love pouring shots in your mouth and then shaking your head vigorously, which, I don't know. I just don't really want my head banged.

Around. Yeah, I liked that many, many years ago. But I'm just. I've outgrown it. Not that interested. But I got to tell you what was so funny is hearing in the O.J. simpson trial, the first O.J. trial, that, like, he and Nicole got that T shirt. And I don't know how that came up in the trial, but, like, they must have gone to Cabo and they got the Certified Member of the Too Much Fun Club T shirt. And I just, like, remembered it and connected the thing. And I just thought that was. That was so odd, you know, What a small world. You'd hear this very famous murder trial, and then you'd hear this thing that came up in the trial about the Giggling marlin in Mexico and Cabo San Lucas. So I just thought that was kind of funny. But then I was in. I was in California last week, and I met with you in Orange County. And, you know, Michael, I gotta tell you, I was pretty amazed, actually, that there's actually some life in California. There's actually a lot of life, more than I am willing to admit sometimes, but some redevelopment. And we went out to that New Triangle Squared redevelopment. Now this, this folks, is a shopping center that has been in bankruptcy, in for foreclosure multiple times over the years that no one has ever made a go of it there. It's just never been successful. Tenants in and out. And it finally seems like now maybe they have it right. This is a real estate deal and that's what we talk about on the show mostly is income, property investing. And this one has not been a success, but I kind of think it might finally work. They've got several new bars and restaurants there and it was kind of.

Fun. Yeah, well, they, for step one was they ditched the old name. So now it's just the Triangle. And I think that was a smart move to distance themselves from the old failures that had been there before. It was a little quiet when.

We went out, but it was a Thursday night. But hey, you know, you had some girl throwing herself all over you. I was pretty impressed with.

That. Hey, they just saw, they're like, there's two really good looking guys. We should go talk to.

Them. Yeah, well, she definitely liked you. She kept complimenting your shirt and all of this. After I remember I left and you stayed a little longer than me. Did she and her girlfriends actually get on that mechanical bull and ride the.

Bull? Yeah, they. The blonde girl, I can't remember her name, she got on and it was pretty entertaining. So for those that don't know, there's a restaurant called Saddle Ranch. There's one up in Scottsdale you.

Said? Yeah, there's one in Scottsdale and one in Hollywood as.

Well. Yeah, so they have the mechanical bowl which lets everybody that's had a few too many drinks make a fool of themselves. A fool of themselves. So I think her friend actually did. Did pretty well on it and, and then we just hung out for a little bit. I will say that we went to that Mexican place across the way before and they give us that complimentary shot. And I don't know what was in there, but I had a terrible headache the next day and I only had that shot plus about two beers. So it was just probably not the best thing to.

Drink. I tell you, I am just so much less interested in alcohol as the days go by. I just, just don't like it that much anymore. But, but you know, once in a while a little bit. But yeah, you know, that was, it was just kind to see that there's really, you know, a little bit of development, a little bit of life going on in California's real estate market and you know, as people know in the housing market there in some areas, the housing prices are appreciating pretty well, but we still think it's a gambler's mecca because the cash flow just doesn't work. And it's got to work. Cash flow perspective from day one. Property must make sense from day one. You know my commandment, thou shalt not gamble. And otherwise it just a speculation game. And I tell you, I have seen that cycle play out in the California market, living there for so many years, virtually my whole life, until two years ago, I was going to say a year and a half ago, but it's almost two years now, by the way. It's just about two years and just a few days here of my leaving California. And that cycle has played itself out so many times and there's always someone left holding the bag or thousands of people, maybe millions of people left holding the bag when the music stops because the properties just don't cash flow. And that's the problem. Now on the other end of the spectrum, I know you wanted to talk about an article that you posted and that was kind of, let's just. We talk about it somewhat frequently on the show, but these sites like Zillow, Trulia, realtor.com, well, this is another one, it's called revestor.com and Michael, I couldn't believe it when we typed in some different addresses here and looked at some properties. Pretty mind boggling numbers that can really steer an investor wrong, don't you.

Think? Yeah, so I think they just call it Revestor. And so we did a sample search. I just jumped on, I said, okay, we're in Indianapolis, let me search Indianapolis. And the first property that came up, this is crazy. Is for sale for $5,500. It's a four bed, two bath, 2550 square feet. And they're saying that the cap rate is 181% and the ROI is 4480. And you know, it's just these auto valuations like.

Zestimates. And the Zestimate is from Zillow, by the.

Way. So this is running some sort of auto valuation on market rents and comparing it to the price of the property. I mean, if I didn't know any better, you know, I would be buying these all day long. But it only takes about 10 seconds to think about what the real numbers must be to realize this is just the software is not giving an accurate picture whatsoever. And people really need to do their homework. They need to know where are the rent numbers Coming from what is the real all investment into the property going to be? You know, a lot of these have boarded up.

Windows. So they're giving this.

One. Yeah, they're giving you some sort of premium rent, rental income, but they're not accounting for the fact that, well, this $5,000 property probably needs $10,000 worth of work to make it livable, let.

Alone it's probably a meth lab, which as I've always said, meth labs would be great if you can get percentage rent. But I think then you engaging in an illegal activity. Okay, so obviously that's a joke, but this Property is at 1337 West. I guess you pronounce that Rocher street in.

Indianapolis. Let's just the way it looks, it's probably Roach.

Street. Yeah, I would say Roach, but Rocher. It's kind of like calling Target Tarjay. Right? But this one, it's mind boggling. Okay, this house was built in 1925. And they are saying that this property will rent for $1,010 per month. And you would only pay $5,500 to buy the property. Now this property is listed by Keller Williams Indy Metro West. And the Revestor rating on this property, I assume this is on a scale of 1 to 10. Revestor rating with a C with a circle. You know, they've copyrighted that and that's actually the wrong symbol because that should be a TM or an R. It should be trademarked. And anyway it's 9.8. I assume that's out of 10. And the net cash flow is $810 per month for a cap rate of 181%. This is complete absurdity, folks. I mean this is in a terrible neighborhood. This is a shack. And it's got a shack which looks like an outbuilding, like a garage that's detached or something. That is literally a shack. Okay, I'm looking at the pictures right now. Inside. This place is boarded up. It's a disaster. I'm not saying all boarded up homes are bad, but in Indianapolis, I personally own properties that rent for just over a thousand a month. That cost me like $70,000, give or take. I don't remember what I paid for a couple of properties I have there and they're newer, like built in. I can't remember, but maybe 2005, 2006. Why would someone pay $1,000 a month? Basically the same rate for this property built 80 years earlier.

These numbers are just nuts. And then you go down the list of this website Everybody tries to take and say that real estate is something that doesn't require an actual thinking human being. Or is what we say one of our biggest ways that we do research and evaluate markets is through what we call the ground troops, the people who are actually on the ground in that market who are living with these investments every day. Some people call them property managers, we call them local market specialists. And there's a combination of them and our actual visits to these markets and our actual real life client experiences in these markets. And you look at these properties, and you look at the bottom of the first page of properties, which is like the 10th one down, and here's a property that's $16,000. It's a two bedroom, one bath property, 1650 square feet built in 1950. And they're saying the cap rate is 41.73%. Do you see that one? It's on 35th Street, Michael. Yeah, I mean, so, so look at this.

One. But it's got the revestor rating of 9.49. And I mean, this is just, I don't know, you're saying that they, they copyrighted that term. It's, they may, they've already bastardized their own, their own copyright or trademark because it clearly has no relevance to.

Reality. No, it definitely doesn't. I mean, these are properties where you are. And this is one of the things that we've mentioned before. We have a lot of people come to us and pitch us on recommending properties in Ohio. Toledo is a common market for this all over Michigan, outlying areas of Detroit and other markets that are actually decent markets, they have actually, I should say many markets that have decent sub markets within them that we actually recommend. However, in bad areas of that city, places like even Memphis, where you can buy properties, as a, as an investor, you'd pay maybe $25,000 for these properties. And what you've got to realize is that the promoters a lot of times are paying $1, I mean, I've heard stories about that, to 500 or maybe just $5,000 to buy that property that they're turning around and selling to you for 25 to $35,000. And some of these properties, they can project the rent at even $400 per month for a $25,000 single family home. That wouldn't be a bad RV ratio. But here's the, here's the caveat. If you can actually collect it, and a lot of these properties are, they're just in such bad areas that you cannot actually collect that rent at Least not without a sidearm. Your property manager better have a gun and they better go to the property and try and get the cash rent payment. And then, you know, you've got a problem of the property manager maybe ripping you off if they accept cash as.

Well. So yeah, suddenly they're going to say that they never got the.

Rent. Yeah, exactly, exactly. And actually one of the property. I just heard a story about one of the property managers that I'm in a battle with in Kansas City over the same thing results. Property Management is the company. Quentin Carney is the, the owner and Ken Logan, he owns it with him. And I've been fighting with these guys for a couple of years now. And I had someone call and say that they paid them cash rent and they're the tenant and they said that they never collected the rent. And so, you know, these people are probably getting completely taken for a ride. They filed an eviction notice against them. And some people, they just don't know enough. You never pay in cash. It's just dumb. You don't have tracking. But, but anyway, moving on here, you want talk about Texas first or the new Carfax of real estate? Let's talk about that one.

First. Yeah, let's hit that real fast. So this is, I like to try to find things that people might use for due diligence because that's a big part of investing in real estate is finding out about the property, figuring out if it's going to be a good investment from your perspective or not, and knowing what you're really buying. So I'm not totally sure. This is a new site I came across and it's called, it's on propertyrecord.com so basically they have a database where they can pull public records. And so they're going to try to find anything related to housing inspections and some of the other information that would have been recorded publicly. And they also make, they, they say they make a really good attempt to really price the property and find the true value of the property. They feel better than a lot of the other valuation models. So I'm not sure the extent of the value of this. We're calling it kind of like a house Facts, a Carfax type report, because I just know we both sold houses and we know older homes, typically they may have a ton of problems, but the probability that a city inspector actually came out and flagged something and.

Recorded that the fee is pretty low. Yeah.

Yeah. I mean in Newport beach where we both worked, you could. There was a mandatory city inspection that you could, that you could decline as long as you paid the fee for.

It.

Right. So most of the time those defects weren't detected. But I still think I can't. This public, this propertyrecord.com I think it's like a buck a report. And for a dollar I think I would, I would just take a look and see what kind of data they're gonna throw at me and see if anything was recorded in the history, if there's any issues with old permits that may be.

Outstanding. The same thing with this, you know, and I'd say that's especially true on an older home. On these newer homes that are built after 2000 and even after 1980, they're in like traditional subdivisions. Most of those. I don't know that this is going to find anything, but it is one more source for due diligence if you're wanting to really take an extra step here. Might be, that might not be bad. But on much older properties, one of the places where this comes up, and you mentioned Newport Beach, Michael, is where they have these bootleg units. Like you'll have a house that's zoned R1, meaning residential one, and it's just one unit, or even R2, meaning it's a duplex, but someone will somehow stick a third unit in the garage or a second unit in the garage. Laguna Beach, Corona del Mar, exactly, those kind of places. And these are older properties that are usually built like pre 19, maybe 1960s, before the 70s. Yeah, usually. And those kind of things do get kind of flagged by inspectors sometimes, those additional units and that kind of stuff, it doesn't apply very much to what we're doing very often, maybe rarely, but it could. But the take home point in this discussion really of Revestor or Revestor, whatever you want to call it, Zillow, any of these Trulia, any of these valuation models, any of these sites that suggest rents like Rent O Meter or rent range or propertyrecord.com is that you have to realize as an investor that you're dealing with a highly fragmented asset class. And one house across the street from another house is a completely different thing in many cases. And I look at my old neighborhood and we were just talking about it before we started recording this episode. Michael. I lived in this property and I had far and away the best home in this tract. I had a huge yard by California standards and I had a fantastic city lights and sunset view and the ocean in the bit of a distance. You could technically call it an Ocean view, but it was a little bit far. Okay. And this property that I sold two years ago, I sold it for $911,000. It was my personal residence. Not the most expensive or largest home I've ever owned or nicest home I've ever owned, but I don't know, I just kind of felt comfortable there. And I stayed in it a while and I ended up selling it through my company at the time, Open Door Auctions, and which by the way has its own podcast, although I'm not really running that company. But I wish I could find a leader that would really take that thing because it's such a brilliant idea, if I don't say so.

Myself. Well, this is the right market for.

It. Yeah, well, I think, I think anything's the right market for it. I think it works in either market. But whatever the case, check that out. OpenDooctions.com if you're interested. I just never had the time to really get that little business off the ground. But maybe someday. But anyway, I sold my own property with that and I sold another rental property that I had in Irvine with that. And it's amazing. Like. Like my house that I lived in versus the house next door or across the street. Totally different thing. Hundreds of thousands of dollars of difference in price. You just can't do that with a computer or a software program. You got to have a human make an actual judgment on that. Because all of this is a highly fragmented asset class, which is good if it could be streamlined and institutionalized like that, as I've said many times before, that would limit the opportunity for our investors and our people who are the ground troops with the boots on the ground that can really evaluate this.

Stuff. Well, it was just funny that that happened to be the exact neighborhood that I was bringing up to you to say when I was speaking of a specific case where the valuation was off by like.

40%.

Sure. And it's just. It's because those neighborhoods, when you have two neighborhoods with, well, they're both three bed, two bath homes, but one has quite a bit different. The Summit in Turtle Ridge. Bigger clubhouse, a little more exclusive, bigger lots. The valuation model just wasn't taking into account some of those little details that really add up to.

Value. It's a totally different thing. I mean, it's just a totally different thing. And by the way, before you mention that, did you know I used to live.

There? I did, but I just. It just happened to be. The funny thing is, I think I was looking at it. I had a couple of clients that lived in there and some friends in that same neighborhood. So I was really paying attention at the time to the Zestimates from Zillow because that was such a thing where people thought, oh, well, I can just type my property into the site and it's going to give me a better number than a real estate agent. And we were just saying, look it, it's actually the opposite. It looks like a fourth grader was throwing darts at prices in this.

Neighborhood. I agree. Couldn't agree more. Couldn't agree more. Well, hey, before we jump to the next topic and our guest here, I want to just mention some upcoming shows. Our next episode we're planning to have George Wolper from the Spectrum Group. We're going to talk about investment outlook there. And then on episode 322 we will have an analysis of policy that is very interesting as it affects investors. And then we'll have Doug on 323 talking about various advertising schemes and a lot of these things that are just too good to be true. They really are too good to be true many times. And we've got some callers that will mix into these future shows. And then we've got a show coming up where we're going to talk about micro lending and how it affects the greater economy and what they call in the abundance book, the Future Is Better Than youn Think, where we had the co author on Steve Kotler several episodes ago, they call the Rising billion, which are the rising billion people around the world that will be online here in the next several years and contributing to the idea pool, contributing to the economy and sucking up assets. And that affects all of us as investors in a very positive way, in my opinion. So we got a lot to talk about in upcoming shows. But before we get to our guest, let's also Michael, talk a little bit about one of the big, big places that people are moving to and a lot of them leaving California to go here. And that is good old Lone Star State. You know, don't mess with Texas. We've got an article here talking about 10 reasons. This is a BBC article about 10 reasons why so many people are moving to Texas. Do you want to share any thoughts.

Here? Well, do we want to just rip through that list real.

Fast? Yeah. Well, the first one is jobs. You know, that's easy. And one of the things I've been saying on the show, the best thing you can have on a resume is mobility. So I recommend, especially if you're younger and you're not really established in A career. Don't go running out and buying a house. Buy some rental properties. Buy some income properties which are an asset rather than your own home, which is a liability. And rent your own house and have mobility for yourself so you can go where the opportunities are and go where the jobs are. So that's one reason, the number two reason, it's just a lot less expensive to live.

There. Yeah. They're saying that somebody in the article did some sort of calculation based on income and cost of living and they said that Houston basically has the highest effective paycheck in the country. So that counts for a lot. And we know from when we've looked at the markets in the past that a lot of the, like Dallas, some of those people like to live a pretty posh lifestyle on not too big of a.

Budget. Right? Right. It's the city of the $30,000 millionaire. And I'll just tell you what all the girls say here in Scottsdale, they say Scottsdale's the land of the $40,000 millionaire. So even the gold diggers have it. Right. They know how to judge economics. Right.

Yeah. They're looking for real wealth. They got to cut past the rented.

Lamborghini. Yeah. And I'll give you one more example of that that's kind of funny. Everybody may remember about, what was it about four or five years ago, there was a famous Craigslist ad by a girl who lived a. She self proclaimed that she was gorgeous and she lived in New York City and she was looking for a guy that made at least half a million a year. And you know, she explained it in New York City, look, if you want to live a decent lifestyle, you got to make about a half million a year. And you know, this was at the time, so it fluctuates a little bit, but. And then some investment banker guy replied back and he might have been with Lehman Brothers, he's probably out of a job. But he replied back with this killer reply and just taught her a big lesson. And it's just the funniest thing. That's actually we, we did a blog about that a few years ago@jason hartman.com. you can go look it up on the website. Just type in Craigslist Gold digger. It's just funny because in New York City, you know, in an expensive place to live, that's maybe the land of the, if you're faking it like that concept goes of the $30,000 millionaire or the $40,000 millionaire, there you really got to be $100,000 millionaire. You got to make 100 grand a year to act like you're a millionaire.

Right. Oh, man. I think the homeless people in New York make 100.

Grand. Well, maybe that's why the rent to value ratios are no.

Good. Yeah, I mean, you want to rent a house in the Hamptons, it's 20,000amonth on the low end.

So. Wow. Yeah. Crazy. But yeah, talk about some of the other reasons if you were.

There. Okay. Well, of course it's cheaper. So they talk about homes and I would have liked to have seen them actually pull some real data for this article. A lot of it just seems like it's kind of off the cuff comments without giving any statistics. But obviously they say land is cheaper and less like rules and regulation. It makes it a lot easier for them to get permits, which makes it. Homes are faster and cheaper and easier to build out.

There. Yeah, that's true. And some people have claimed that's one reason to avoid Texas, especially places like Houston. I disagree with you because our investment strategies are based on really owning the commodities. The sticks and the bricks, the copper wire, the glass, the petroleum products, the steel, all of the stuff it takes to build a house. We're not really land investors, we're packaged commodities investors, or another one of my trademark phrases, not just packaged commodities, but assembled commodities investors. So the land is pretty much free. You're buying at or below the cost of construction and that's what you're investing in. But you're getting all the treatment of a land owner and you're making it the most debt friendly or the most debt favored asset, the most tax favored asset and all of the other ideal characteristics of an income property investment. By the way, I just looked it up@JasonHartman.com it was Rob Campbell at JP.

Morgan. It was.

Hilarious. Right? So if you want to find this thing and read about it, it's just so funny, go to Jason Har and type in Craigslist. It comes right up as the first result. So there you go. Anyway. Yeah, so low taxes, not property taxes, but no income tax. Okay. And low taxes for business, the homes. Pick your own big city. You got a lot of choices, a lot of diversity in Texas, don't.

You? Yeah, that was an interesting comment. That basically, if you want to be in a big city, they actually have six of the country's 20 biggest cities. So it gives you some flexibility. And I think the neat thing, I guess most places, each big city tends to have a different personality. But I think they're pretty, they're very diverse in Texas, where Austin is definitely liberal and funky. Dallas can be a little glitzier in areas definitely more traditional, more conservative. So there's some unique personalities to each of the big cities. But if you want to stay in Texas, you have quite a few options. You know, I want to be in a big city, but here's. Here's the way I like to live. Here's the kind of people I want to hang out with. Here's the food I want to eat, the neighborhood I want to live.

In. The one thing I love about Texas and Texans in general is I love that they're all proud of where they live. And, you know, I sense that years ago, way back in the 90s, I remember being in California thinking, I want to live in Texas. Every person I would meet from Texas is, like, proud of where they live. And so many people that I would meet from California. As the bloom was off the rose, if you will, in California, you know, was starting to just die. People just weren't that. It was. It was just a different thing. When you have a place where the cost of living is low, the people are just happier. I mean, I look at it around here, around Phoenix, and this is not all low cost of living in Arizona. You can spend 10, 12 million bucks on a home in Scottsdale if you want. But overall, people aren't that stressed out here. Like in California, even if you're rich, other people around you are struggling because they're all house poor. And I just. I don't know, that's just my own opinion of how I want to live and where I want to live. I don't like being in a place where it's just super expensive to.

Live. Yeah. You know, outside of a few unique neighborhoods and, you know, and I can't remember what the neighborhood is in Austin where, you know, like, Michael Dell lives there and some other big wigs, and then there's obviously some fancy places in Dallas. But Austin as a whole, when I was there, I'm, you know, from Newport Beach. This is the Mercedes capital of the world. Everybody drives a Porsche, BMW, Mercedes. When I was in. When I'm in Austin, you barely see any BMWs. So it just. People, you know, they're not. They, like. I would say the women like some material possessions, but it's. It's almost more just because they want to look good and for personal enjoyment than rubbing in somebody else's face like that. I could afford this. You know, everybody just really wants to have a good.

Time. I think it's hilarious whenever people Tell me that Scottsdale is snobby. They call it snobsdale and they say Dallas is snobby. I think, hey, I'm from Newport Beach. It's not snobby there. Trust me. Newport beach is very much that way. But some of the other reasons here, family friendly. Texans are normal people. They had to put that one in there. I thought that was funny. And they're not going anywhere. Native Texans aren't leaving the state. They say it's the stickiest state in the country. Now, if you're a tech person listening to this and you're into Internet marketing, one of the big things you want about your website is you want stickiness, okay? You want a sticky experience so people will stay on the website a long time. And Texans, they're not leaving. Even John Steinbeck of Days Gone by, he wrote, texas has a tight cohesiveness, perhaps stronger than any other section of America. So it's a great place. I love Texas. I've never lived there, but I'm a fan. I got to tell you. And speaking of which, before we got to get to our guest here, but do you have a Texas property you want to talk about.

Today? Yeah, let's just look at that. Cedar Park, Texas home sounds good. We just had Kevin on from Austin. So, you know, he's, he is hunting down deals left and right looking for properties. So, you know, he throws a lot up. And that's probably because of his. His business model is a little different where people are actually going to be making offers to the bank. So he operates a little differently. But this one in Cedar park, you know, I just liked it. It's. This one is 1395 square feet. The purchase price is. Well, he always puts a purchase price for the pro forma, but in a comments, he tells us to offer less. So he's saying that it's 130,000. Total investment is 38,180 for down payment and closing costs. And the cash on cash return is 7% with a total return on investment of.

32%. So that's not okay as a cash on cash, but it's not.

Impressive. It's. It's not compared to, not compared to our other stuff, some of our others, you know. But this is, I like this area of Austin out in Cedar park to Leander and Round Rock is really.

Where I own in Pflugerville. So I'm right.

There. Yeah, I've made a few trips out there. I've driven around with local agents that are friends of mine, you know, And I can just see these are the areas where Apple just put their huge campus out there. This is where a lot of the big business starts, big businesses are heading. So I like that area from the perspective that most people want to be fairly close to work. And these neighborhoods, this is a, you know, it's a brick house. So it's going to be solid.

Good looking property for sure. I'm looking at the picture right now. So this one, $130,000, about 38,000 to get into it, subject to qualifying with a 20% down. And then cash flow projected at about almost 2,600 per year. $2,600 per year, almost. And overall return on investment projected at 32% annually. Like I always say, if it only goes half as well and you make 16% annually, still pretty good.

Huh? Yeah. And this is, we're running a 6% appreciation model for, for Austin area, which everybody knows, I don't know what it was last year. Appreciation was probably 15 to 20% last year. So this is, is very conservative on the appreciation side. Obviously we like to buy for cash flow, but you are going to get a bump on total return. I think if you look at a total five year analysis, the investor is going to do well on something like.

This. Yeah. One more thing I want to say about this one before we go to our guest is the debt coverage ratio, which we talk about on the show to some extent, but we don't talk about it a lot. It's not a primary indicator, but it is kind of interesting if you are a very conservative investor, if leverage scares you, if, if you're the type of person who thinks you're still kind of playing by those old rules, or you still have those old rules that maybe your parents or grandparents kind of put into your head. When the game was different, when it was before 1971, when we were on the gold standard, the game has changed, the rules have changed. And I think leverage is a wonderful thing when it's on assets that produce income and produce wealth, like income property. But here the debt coverage ratio on this property is 1.42%. So even on an expensive property, and we call Austin one of our expensive markets, this is $93 per square foot. This is not cheap, it's not super expensive, it's not overpriced by any means, but it's not cheap compared to some of our really inexpensive markets like Indianapolis, Memphis, that kind of thing. And so here you're looking at, you've still got a debt coverage ratio of 1 point.

And the debt coverage ratio really ought to be called how likely it is, how likely is it that I'll ever get into trouble with this property? That's what the debt coverage ratio means. So at 1.42% it's pretty unlikely. You'd have to have a string of some fairly long vacancies. You would have had to not listen to my rule of having at least 4% reserves in the bank. And it'd be pretty hard for you to get into trouble on even this more expensive property with only a 1% RV ratio which is fine, but it's not the highest RV ratio we have. Austin is a market that's more geared toward the future and its appreciation.

Potential. Well, and that's I guess the from commercial financing, they call it the dscr, the debt service coverage ratio. So really most banks are going to look at any property over a 1.25. So and as you get over a 1.35, those are loans that commercial lenders would loan on all day.

Long. Right? Right. They'll give you the loan because the bank thinks it's a safe deal.

Absolutely. So that's just so people have that little tip of or added insight into how commercial financing operates. That's always something that they bring up when I talk to my friends that are in the industry is hey Mike, bring me a self storage facility if you have a 1.25 or higher. We'll probably be good to.

Go. Yep, good stuff. Well, hey Michael, we have got to wrap up and we've got to get to our guest. This is a 10th show where we're going to go off topic. We're finally going to go off topic here and talk about some general life success principles. So thank you for joining me today and I will talk to you soon, Michael and let's get to our guest. We'll be back with our guest in just less than 60 seconds here.

Be sure to call into the crating Wall street and get your real estate investing and economics questions answered by me personally. We'd love to have you call in, share your experiences, ask your questions and a lot of other people listening have those very same questions. So be a participant in the show at 480-788-7823. That's 480-788-7823 or anywhere in the world via Skype. Jason Hartman ROI that's Chasen Hartman ROI for return on investment be sure to call into the show and we are going to enter all of the callers in a drawing for some Nice prizes as well. So be sure to call into the show and I look forward to talking with you soon.

It's my pleasure to welcome Dr. Robert Wright to the show. He is the author of a couple of books that I think you'll find very interesting. One is the Science of Spectacular Living, and we recently had his lovely wife Judith Wright on the show, and we touched on that book a little bit. But also today I want to talk about his other book, which is Beyond Time, Business with a Purpose. Bob, welcome. How are.

You? Great. Jason, thank you very.

Much. Well, it's a pleasure to have you on the show. And I always like to say where our guests are coming from. And you're coming to us from Chicago today.

Right? Looking at Lake Michigan as we.

Talk. Well, let's start where you like. You know, maybe since the individual is really the foundation of their business, and you know, I just want to kind of make the point that even if someone is not in business for themselves, technically we're all in business for ourselves. If we have a job, we're basically selling our services to our employer. So certainly time management and transformational living can be valuable in either case. But maybe let's delve into transformed a little bit, because it all starts with the individual, doesn't.

It? Well, sure, we work with a lot of entrepreneurs and they're forced into transformation. Very few entrepreneurs, when they started out in business, planned on being salespeople, and some of them continue to deny the fact that they're salespeople. That's one transformation that pulls things out of us that we never dreamt we would have to encounter. Then there's the leadership transformation where I have to get my work done through others. So business is the coolest tool of.

Transformation. Yeah, it forces people into transformation just because of the pressure of the marketplace. That's an interesting perspective. But what is transformed? What is the science of spectacular.

Living? Well, transformed comes off of our study of people who actually transform. And one of the key characteristics of transformation is you're doing something you never dreamt that you would do. And we love watching people stretch and go from being shy accountants to becoming national policy leaders. It's a great joy to work with an executive coming fresh out of their MBA and then becoming a C level executive in a public.

Company. Okay, so you studied these people and watched their path as they were going through this transformation. But what can the individual do? I mean, what are some of the take homes as to what they can do to move forward in their business or.

Career? Well, for starters, we're all scanning the environment to know what we need to do to take our business to the next level. Whether we're employees or entrepreneurs. What we don't know how to do is to scan our inner life and take the one tool over which we have the most control, which is ourselves, and develop it. So the key element is to begin to notice my inner world while I'm noticing the outer world. We call it identifying your deeper yearnings. And then to learn to engage more and more in your life in a way that causes you to learn and to grow and to actually strategically develop yourself as you would your.

Business. So taking this on from a really a businesslike perspective, then, I guess, is what you're saying. But what are some of these steps in this transformation that occurs? I mean, the biggest obstacle we all have is overcoming ourselves, isn't.

It? Yeah, absolutely. Let me give you a story, and then I'll identify the steps that went into the story. So an employee of one of the largest human resources consulting firms in the world came in to see me and said that he wanted to become an Outward Bound instructor because we all have these magical solutions, and if I can find this thing or that thing, it's going to make me happy, which is total hogwash. It's really about me engaging fully in whatever I'm.

Doing. Sure, sure. And I just want you to explain, Bob, for those who most people know what Outward Bound is, but just.

Briefly. Oh, he was going to go to the wilderness and teach people about wilderness survival as opposed to doing human resources.

Consulting. Right. Quite a difference. Quite a.

Bit. 180 degrees. And when I dug into it, I found out that he had just gone over $100,000 over on a $100,000 job. And the partners were unamused. And they told him that he was no longer on the partnership track because they considered that $100,000 out of their pockets. And as I dug into it, I found that he wasn't really winning at work. Not only was he not winning at work, but his wife had found another apartment. She was going to move out and divorce him, telling him that she did not want to bear his children. So his life was really a mess, and he wasn't really addressing it. So the first thing we did is we taught him to start identifying his inner world with his primary emotions, which awakens your deeper yearning. So fear, hurt, anger, sadness, and joy are very important elements of business that most people don't know how to identify and tap. Well, he started noticing his emotions engaging more fully in meetings at work, he became what they call a net giver in the firm. He had been criticized as not really helping other executives, became a net giver, learned how to sell. As we worked with him, he was back on the partnership track. He was recruited by the elite firm in his field to teach that firm how to sell. And he went from being an mba, cpa, mousy kind of accountant to the point where today he is a national policy leader in his expertise. He is back together with the woman who is going to divorce him, and their daughter is studying overseas right now. So he's written defining books in his field and is just looking at ways to take his field to the next level beyond what most people are even considering possible. That's a significant transformation that began with him becoming conversant with his inner world. So that's the first step, is to recognize your deeper yearnings to then engage more. As we engage, we become aware of that's the third step is we become aware that we're all programmed and our limitations and we all have them are programmed in. Then we begin to assault that program and we begin changing. The thing that most entrepreneurs face is learning to be salespeople. There's all kinds of programming against asking for things that are required of effective salespeople. And so we begin to assault that program and we begin to actually reprogram. We call it rematrixing. And then we've really begun changing, and then we have to dedicate to maintain those.

Changes. Rematrixing. Can you dive into that a little bit more? I mean, what is that? Everyone thinks of the movie, of course, probably. But what is the Matrix? You know, I guess it's. There's one that one has now, that program that a lot of times it's a hidden program, and then one that one says they want to have. So what are the differences? Like, because you've got some diagrams in the book and can you give an example of the. Is there a before and after.

Matrix? Well, let's go back to the very beginning. When we're born, we have billions of neurons in our brain that are not connected. This is potential. As we have an experience, we begin having those neurons fire together and wire together with repeated patterns. Let's say our mother is chronically afraid and mom and dad believe that life is a struggle and that there is not enough money to go around, not enough love to go around. Whatever it is, they're communicating that to us in their attitudes and ways of being. And so our neurons are firing together that that's the nature of reality and it's the nature of who I am and what I can expect from the world. So imagine that some of these fire together and they become like a path. Well now imagine that the patterns repeat themselves more as we go to school, as we live our lives. That path becomes a road, the road becomes a highway. Our neural energy, our impulses flow along those highways and define what we call who we are and who we're not. So the matrix is that pattern of highways. So imagine a three dimensional road highway map that's in our skull, that is determining.

Where the energy flows. That determines what we do, what we don't do, what we think, what we feel. So then rematrixing is identifying the places those go that we would like to go and then developing new pathways to go to the places we want those roads to go. Starting with two firing together, then developing the path, the road and the highway, the superhighway. And that's the rematrixing. And oftentimes it requires going against unconscious beliefs that we've built into our.

System. Very good points, Very good points. I guess it's like the old concept of the content versus content, isn't it? Where we all have this sort of system, this belief system really this context in which we all live. We fool around changing the content of our lives, but a lot of times it doesn't really change much because that overall belief system is still the limiting force. It's the backdrop, it's the context with which everything is derived.

Right? Well, absolutely. It's actually even worse than that because we have the illusion that life is getting better. It's called the hedonic treadmill. But the fact of the matter is, if you win the lottery or become a paraplegic within 12 months, your enjoyment of life is exactly the same as your matrix has determined. Now this is Nobel prize winning research. This isn't me making this up. And so the real trick is changing the context as you're putting it is changing my capacity to enjoy.

Life. Changing the capacity? Yeah. The context has a certain size to it and it can only hold so much. But yet I love that hedonic treadmill point you make because, you know, we talk a lot about economics on my various shows and the consumer price index, how they use the hedonic adjustments. So it seems like things are getting better. And that really can cause, with a hedonic treadmill, cause a lot of time wasting, can it? Because people are constantly going gravitating toward the wrong thing, the wrong end. You Know, oh, they think, oh, yeah, this is going to make it work. This is going to make it work. And then months later, they realize, well, things didn't change too much.

Today. If you imagine a horizontal line and then we have a curve that goes up above the line, and then it goes down below the line, equally above the line, below the line, above the line, below the line, the flat line is our enjoyment of life. The way we fool ourselves is we remember the times that it went up and we forget the times that it went down. And that causes us to make up stories about things getting better, when in fact, they haven't changed at all in terms of our capacity to enjoy life. You may even be making a fortune in dollars and cents, but your enjoyment of that fortune is a fixed entity or fixed amount, such as the context. You're taught the context determines what you're doing there. To change that context is personal transformation. Personal transformation requires that I can take the up curve and extend it as far as possible and clip the bottom curve so I eventually can change the slope of that line up. And for people to understand that, I ask them how fast they've driven. And most people in most rooms haven't gone above 150 miles an hour. But no matter how fast you've driven, there was the point at which your fear caused you to take your foot off the gas. And if you really want to change that slope, you have to keep the foot on the gas faster and slow down.

Less. Yeah, very good points. We're masters at deceiving ourselves, aren't.

We? Absolutely. And that's the nature of our unconscious mind, because it believes that sameness is desirable. I'm alive today. It could be worse. So your unconscious mind is planning to deep six any of the good plans that you.

Have. Okay, what else? What's.

Next? Well, entrepreneurs and careers. So work is a wonderful place for us if we. If we awaken to that inner work, to identify where we're afraid in meetings and to step into that fear to learn to do the things we're afraid of. And fear is part of how the unconscious mind saves our life in dangerous situations. But it's trying to save our life in situations of minimal danger. So one of the key things is we need to develop an intimate relationship with our fear so that we can stretch beyond what we would normally do. If you fold your hands and you have one thumb on top and refold your hands with the other thumb on top, it's mildly uncomfortable. Well, transformers learn to live with that level of discomfort. It's the same thing in deliberate practice. Studies that Anders Ericsson, I think was his name, has demonstrated that deliberate practice is necessary. We have to put. Put both time in, and we need to continually challenge ourselves. The same thing is true in my leadership, in my relationship, at home, in my relationship, in a meeting. Do I engage at that next level of discomfort where I'm facing my fear and changing the slope of that hedonic.

Enjoyment? Great points, Great points. So business is a great place for transformation, but you title the book Beyond Time, Business with Purpose. What are you getting to.

There? Well, the people that have a deeper why. So think of purpose as why we do what we do. Most of the world focuses on what rather than how and why. Why I do what I do gives meaning, gives fullness. And it's the why that causes me to go beyond myself. There was the boxing movie with Russell Crowe, Cinderella Man. He was a failed boxer when he was single. He gets married and has kids and he's desperate, and he suddenly becomes a championship boxer. And they're interviewing him, and they said, well, why do you box? You know, why are you boxing better? He says, milk. What do you mean, milk? He says, I want milk for my.

Kids. Right, Okay. I thought that could be a milk.

Commercial.

But the point is, he had a why that he hadn't had before. Now we look for an even bigger why for society and for our world. So the business people that tend to transform have bigger whys. They have a why for themselves, which is to learn, to grow, to love more, to be loved more, whatever that is. That's the deeper yearning and transformed. And then they also have a bigger why for the. With the rest of the world. In our book Transformed, we talk about the transformational engagement continuum. Because if you really want to have a great career, a great marriage, great parenting, you have to learn to engage with meaning. And when you have that greater why, then each interaction takes on a new level of vitality and possibility for everyone in the interaction. So that's transformative.

Engagement. It sure is. Yeah. Well, the why is more important than the how. And I couldn't agree with you more on that. Because the why is what will keep getting you through the hard times versus the how. And, you know, that. That really reminds me, Bob. I was interviewing Dennis Whateley about 150 episodes ago on one of my shows, and, you know, I was a big fan of his and still am. And what struck me is that years ago, it seemed like in the. In the area of. We'll call it motivation speaking, we Used to have the big names, the Jim Rohn, the Zig ziglar, Dennis Waitley, etc. And they were generalists, they were motivators. And it seems like now everything is very specific, very how to. And I think we've kind of come away from the why a bit in the past couple of decades. At least that's my sense of.

It. Well, people are getting more and more obsessed with the how as technology.

But the interesting thing in our study is we're studying people that over a period of 20 and plus years, so that we've actually gotten to work with people from before the time their children were born to the time that their children are in college and actually becoming leaders in our programs. So most of those guys are inspirational speakers that get you excited about why or how. Whatever it is. What we really think is important is the follow through. It's practicing day by day, moment by moment. It's learning the skills. It's because. Transformers not only have the why in place, but they have a how that is moment by moment strategically aimed at their rematrixing. So they're constantly stretching into their potential. So transformers invariably have a strong why, and their how is much more specific and strategic. It's not just about getting excited, but it's really about durability. It's realizing that life is a serious marathon, not a.

Sprint. Yeah, it most definitely is. It most definitely is. Well, what else do you want people to know about your work? I mean, you have this just a lot of, of depth to your work. You know, you have courses and programs on so many topics, really every area of human development, it would seem. I mean, you've been doing this a long time. There's a lot of depth here, just kind of freeform to tell people what you want them to know and just any other takeaways you can share, this has been very.

Valuable. Well, we started developing our methodology with consumer research back in the early 80s. I had a two year waiting list. And so we had to develop curriculum to empower people to be able to operate on their own and put together a system. And so Transformed is first of all a study of people that used our system way more effectively than others to do things they never could have imagined doing, such as the one story I told you.

So that's what's really important is people understand that no seminar is going to do it, no coach is going to do it, it's you that's going to do it. And you need great seminars that help you strategize, you need great coaching to help you on your day to day application. And just like any Olympic athlete, you need to be working out with other athletes that are doing it with you. That's why we have all those different disciplines. Because if we have singles, they want to be working, working with other singles who are working on singlehood for transformation or parenting or entrepreneurs or sales. So all of our curriculum developed out of our desire to help people transform in all areas of their.

Life. Right? Yeah, excellent point. I just want to ask you kind of one other area that you might cover before we wrap up here and that is the area of emotional intelligence. I'm not sure if Daniel Goleman coined that phrase or not, but certainly became a popular phrase and you talk about it and address it quite a bit too. First of all, maybe for the listeners, just define it. What does it mean and how can it be.

Used? Well, it's generally referred to as social emotional intelligence. Nowadays. Emotional intelligence is the capacity to know what's going on inside of me emotionally, to regulate my emotions up or to regulate them down. In other words, to get more excited and engaged or more calm and more peaceful. Social intelligence is the capacity to read the emotions of those outside of me and to help them get more excited and engaged or relax at these very important leadership skills. It's proving to be the most important leadership skill and by some accounts 85% of big time CEOs success is social emotional intelligence and so transformed by its very nature, teaches you to recognize your emotions and those of others because that's the first step in tapping your deeper yearning. See, it's about your own journey. It's not about my journey or somebody else's journey. Mine might be inspirational, useful to you, but it's your capacity to follow your inner urges.

Which goes right along with your emotional intelligence that causes you to challenge yourself, to learn to grow, to discover aspects of yourself that you had thought were not you. So emotional intelligence is central to this game. You can't be a transformer by our definition without some degree of emotional.

Intelligence. So that's just an incredibly important thing, isn't.

It? Right now Harvard Business Review says in tough economic times, soft skills go away. The most frequently accessed articles that they have now is the 98 article by Goldman Social on emotional intelligence. And that is a blow away fact to.

Them. Explain that you're saying that the soft skills. Harvard is saying that the soft skills aren't that important. Is that what they're.

Saying? No, they go away. People stop accessing those articles in tough economic.

Times. Oh, and they look for, they look for the technical stuff, right? They look for the how. Oh, right, got it.

Ok. They look for the what. This is the first time that there's been an economic hard time that a how or what is not the most accessed article. In fact, it's an old article in 98 by.

Goldman. Excellent. Yeah, that's good. Yeah, good point. Give out your website and tell people where they can learn more and where they can get your.

Books. Well, bobright.com they can get a couple free chapters and they can get get the book at Amazon, they can get it at Barnes and Noble online or in the stores if it's still there. And we would love to have them come and join us for our introductory weekend where we do a fantastic in depth dive to social emotional intelligence. So in depth that national and state leaders in social emotional intelligence have chosen to take our course thinking it's the strongest one they could they.

Found. Excellent, excellent stuff. Well, Dr. Bob Wright, thank you so much for joining us today and some very good advice for successful living both personally and professionally. And we really appreciate you joining the.

Show. Well, thank you.

Jason.

Have you listened to the Creating wealth series? I mean, from the beginning? If not, you can go ahead and get book one that shows 1 through 20 in digital download. These are addition advanced strategies for wealth creation. For more information go to jason hartman.com.

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