CW 321: Investment Decisions & Risk Tolerance with George Walper President of the Spectrum Group

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.

Welcome to the Creating wealth show. This is your host, Jason Hartman. And this is episode number 321. 321. Thank you so much for joining me today. I am coming to you today from Kansas City City, Missouri and I am here in the office of our local market specialist from St Robert. Although they are based in Kansas City, we've done business with them for many years in St. Robert. And many of you listening, I know are clients who have purchased in that market and have had some very good experiences. And we are going to talk about St. Robert a little bit and the property management scenario there with the person who heads up the St. Robert Property Management and that is Jessica. And then we are going to talk a little bit about the new project that they are launching here in Kansas City and we're pretty excited about that. A lot of you have heard about that project.

I went out to look at it.

This morning and I think you'll hear some fantastic things on this. And after the intro portion with Jessica, we will have George Wolper with the Spectrum Group on to talk about some economic issues. And here we go. Jessica, welcome. How are you today?

I'm good. How are you?

Fantastic. Tell us a little bit about the overview. Just give us a little overview on St. Robert. We haven't talked about it on the show lately. You do a fantastic job running the property management in St. Robert, kind of what's going on there lately and then we'll talk about Kansas City.

Well, St. Robert is located near the Fort Leonard Wood military installation there. So it's 98% military personnel that are staying with us and the other 2% are probably working at the base. So it's kind of a nice mix of tenants there.

Fantastic. And in terms of the property management, I mean we've talked before on the shows. We've had Zach on to talk about purchasing there and the market and things like that. But I really want to dive into property management with you, which you say is boring. And I say property management is critical. Maybe getting a good deal, that's exciting and so forth, but good old property management, it may be a little less exciting, but it is critically important to have a dependable, good property manager. And as I've said to our clients and listeners so many times, there are several markets around the US that we actually like quite well, but we are not recommending them because we they haven't found a good provider or a good local market specialist there. And the team is every bit as important as the market itself. So give us a little overview on what you're finding there in terms of how properties are, leasing vacancy issues, any collection issues, you know, is it landlord friendly? And then also, you know, your fee structure and so forth, which is really clean and nice. I really like that a lot.

Well, exactly. So property management. I think that's why I kind of shy away sometimes with this subject with people, just because I feel like other people might think it's really boring. To me, it's really interesting and I've really dove into this industry. I love it. So thanks for letting me talk about it.

Well, you didn't want to talk about it because you said it was too boring, but it's super important, so go. I'm glad you like it so much.

Okay, so I guess going through and simplifying it, I kind of look at property management into three different divisions of importance. Especially if I was looking for property. These are the kind of questions I would be asking a property manager about their company. One is fund management. So exactly how are they structuring their accounting system? You would think that it was really simple about collecting the rent and then dispersing that over to the owner. It's actually very complicated accounting. So I would say, hey, what kind of accounting software are you using? And exactly, you know, what's your time frame? Because as we've gone through the processes with different accounting softwares, we actually get a strange reaction from sometimes the salespeople. They're like, you seriously get your funds out between the 10th and the 15th? And we're like, yeah, our owners like to see their money. And they're like, that's kind of unheard of. Normally we see it between the 20th and the 30th. I'm like, no, we're really fast. We're really progressive with that. We know everybody wants their money, so we're quickly receiving those funds. In and making sure they're calculated correctly, because that's a huge, huge point of that. And making sure that our owner statements are easily readable. So maybe asking a property manager, hey, can I see your owner statement? Just to see what it looks like and making sure that it's something that you can understand.

Absolutely. And having clean and simple statements is one thing, but having clean and simple fee structures is another. I mean, some of these property managers, they tack on, they just nickel and dime you to death. So tell us about your fee structure. I mean, you charge a percentage every month and many managers charge lease up fees and many managers markup repairs and maintenance issues and things like that.

But kind of dive into that if you would.

Well, I like simplicity, so I kind of think everybody else does too. So we do not charge a leasing fee. That's complicated, I think. And in some situations it's not always really fair. So we just do a flat percentage fee off of the rents that are collected. And that's, you know, your base rent plus any pet fees, we'll take off the pet rent, we'll take a percentage from that. Other than that, you're not going to get any other fees.

Okay. So when the property is vacant and you initially lease it up, or maybe one tenant stays a year and then you lease it up again, you don't charge to lease up the property. Whereas many managers will charge 50% of the first month's rent, 75% of the first month's rent, sometimes an entire first month's rent for, for the initial lease up. And then I believe you charge 8% per month, right?

Yeah. And that depends on the type of property.

Okay.

So that varies a little bit. And you really see I'm a pet lover. I love cats and dogs, especially dogs. I have a dog of my own and pretty much always had dogs and I like them and I'll rent to them. However, I've never seen a pet actually improve the value of a property. Maybe they improve the lives of the owner. But do you really see people collecting pet rent? I, I try to get it. I get it on a lot of my properties. I suggest that our clients ask for it. And what amounts of pet rent do you see people getting?

Well, what we do is a non refundable $250. So that goes into your pocket on your very first owner statement. After that, every month they actually pay $20 per pet.

Fantastic. So pet rent Fido has to, has.

To pay 20 bucks a month. Okay.

And if there's two Fidos, then it's 40amonth and 8%. Now, tell us how repairs and maintenance issues are handled, if you would.

That's something that we have really dove into the past two years and gotten it down to a pretty exact science because we are developing all of our properties. We do have access to a big labor pool and also materials. And since all of our properties are kind of cookie cutter, it's all the same, we're able to pass on those savings to our owners. So we do have an internal maintenance company which we can then control cost. Obviously, there's sometimes outside things that we're unable to repair, and we do have to rely on an outside vendor. We always get all their costs up front before we do proceed to help control those costs.

And what's going on in the marketplace in general, are properties leasing quickly? Is it an owner's market or a tenants market? And what happens in terms of collection issues? With military tenants in St. Robert, I.

Know the collection isn't much of a.

Problem compared to other markets because you've got some leverage there. And tell us about that.

Right. With collections, we've only gone through six evictions, which is really crazy because of this.

Wait, wait, wait, wait.

Six evictions ever?

You, you, you must be kidding.

Let's talk about how many doors you.

Have under management and how long you've been in the management business.

And I am amazed. I didn't know it was that good.

And actually, the, the funny thing with that, I can only really say that's just really four, because two of those, as we got to the court, they actually ended up paying us with money orders. So we were actually still able to receive the funds. Yeah, it's kind of interesting. We do have about 360 properties. Some of those are storage units, and some of them are single family homes in the area that we help either military personnel, you know, that are moving or whatever we try to rent their homes for. And that's over four years with just six evictions.

Incredible. That is literally incredible. Those stats.

I mean, that's amazing. Totally amazing. I got to hand it to you on that one.

So that's the military angle and St. Robert. Now, how fast are properties leasing and how long are people staying? Everybody's concerned with military tenants. The thing they're concerned about is base closings, base size reductions. Military tenants are allowed to break leases if they're redeployed into another location. You know, any of those issues you.

Want to talk about.

And then let's switch gears to Kansas City.

You know, it's one of those things. Any type of investment that you go into, you have to identify the cons and you have to identify the pros. And obviously military personnel, I mean just with the evictions and our kind of our track record there, they're really great tenants. They are really amazing. Yes. You do have the risk though that they do get PCs out.

What does PCs mean?

That's when the military personnel actually gets restationed. So there's a couple different things. Especially with Missouri and federal state laws. You do have to let your tenant out of their lease if they get military orders. And that's either restationing or they get deployed or if there's some sort of issue where they need to go back on base. So those orders we take very seriously and we do have to let them out. You get 15 days notice. Usually though, with our tenants we see between 30 and even up to 60 days notice that they do give us. But in some cases they don't even know. Sometimes they have to be out immediately. So we do get 15 days partial rent there and then we put it back on the hot sheet to get that leased up quickly.

And what are the leasing techniques that.

You'Re using there that are, that are working?

I mean, things lease pretty quickly. You've got a captive audience. Maybe just speak to that for a moment.

What we've kind of found there in that area is there is a lot of training. It's a huge training installation. So we're picking up on that temporary population that's there. And that's where a lot of our marketing is directed towards, is making sure we get those students, especially the career captains courses. Those tenants are really awesome. So we definitely try to go after them. We get a lot of word of mouth because we are one of the only apartment area or apartment complexes there that offer furnish units and also short term leasing, which is really interesting for that area. No one else has done that so.

Well, it's been a fantastic investment for me and for many of our clients. I'm a partner in an apartment building there. But you have single units, duplexes, four plexes, 10 unit buildings. So there is some variety of what people can get and the properties will typically have. You can find them on our website of course@jason hartman.com in the properties section. But the returns are typically projected at somewhere in the mid 20, even a little over 30% annually. And so you can see the full performas in the property section there. And let's switch gears and talk about Kansas City. If we can. You recently acquired a subdivision that was unfinished by a builder that went under and it's a subdivision of triplexes where some of them were built and a lot of them were not built. So you have finished lots, roads. And I toured it this morning and tell us a little bit about that if you would. And this isn't officially on the market yet. It'll probably come on our website@jasonhartman.com in about two weeks. But give us some background.

Well, I'm super excited to have a project here in Kansas City. I obviously live here, so I'm definitely a huge advocate of Kansas City. The project is going to be located in Johnson county, which is like the best county in Kansas City, especially if you're wanting to go class A. So it'll be a class A type tenant that will be searching for this project. On the property management side, this, this will be comprised of triplexes. So there'll be two and three bedrooms and high end finishings with stainless steel and granite and hardwood floors and fireplaces.

Fantastic. And the ones that are built there now, I mean they looked very nice. You know, you could drop those into some more expensive cities in Southern California where especially the Irvine Company. I'm from Orange county, so I know.

All about the Irvine Company in dealing.

With them for so many years. But they're extremely picky about the elevations of their properties and the, the architecture and so forth. And I was really impressed with the looks of them. And so you'll be building your properties, the new units to the same sort of level and appearance. So they'll match the existing units that are there. And what was interesting is the cost. I mean Kansas city's, it's not St. Robert. It's definitely more expensive and the units are quite a bit nicer. St. Robert is very bread and butter. And these are I guess $397,000 per triplex. So you've got three units there and people can get one loan or they can get three loans on them. Potentially the one loan is probably going.

To be the better way to go.

But what's interesting is some of the higher costs in constructing these. When I was out this morning touring the development, I learned about tornado shelter that needs to be built in each home. That's code requirement that adds about $2,500 per unit.

So $7,500 per triplex to the cost.

And in addition to that, the sewer hookups and the water hookups and so for utility hookups, about $9,200 per unit. So there you're looking at almost $28,000 per triplex. But that's something you're not really used to in St. Robert. It's much more expensive to do business in Kansas City.

Right, for sure. And especially in Johnson County. And they can ask that because they can.

So very desirable area. Anything you want to say about the area in terms of what tenants will enjoy in living there? You know, employers, shopping, schools, transportation, amenities, anything like that?

Definitely, definitely. Class A for sure. And Johnson county itself is really desirable because of the school district. So there are some new or even expanding companies and some of the other counties where, because of where this is located with just the interstates, people will be able to jump on. It's very centrally located, be able to jump on the highways there and get to work within 10 minutes. So that's why it's so desirable to live out there. And you have shopping and you have basically everything around you. So.

Yeah, and I saw all those amenities and about eight minutes away you have a whole bunch of destination type amenities. You have a racetrack and just all kinds of things, you know, water park, etc. So it looks like a pretty neat development and congratulations on it. How long have you been in the development business?

For about five years.

So you've gone through really, you got.

Into it at the tail end of a high cycle and most of the time that you guys have been doing it has been a down market and you know, of course it's coming back now. But that's interesting. You got your experience at what some would consider the worst time in seven decades.

Yeah, somewhat. We've kind of looked at it as kind of a saving grace or a blessing because it's taught us to be very conservative and watch our companies very closely.

Good, good. Well, anything you want to say in closing?

Thank you for having me and letting me talk about property management.

And what she really means is thank you for twisting my arm and making me come on the show.

Okay, well, Jessica, thank you very much.

For joining us today. And we will be back with our guests talking about some economic issues here in just a moment. Less than 60 seconds. We'll be back.

Here's your chance to catch up on all of those creating wealth shows that you've missed. There's a three book set with shows one through 60, all digital download. You save $94 by buying this three book set. Go ahead and get these advanced strategies for wealth creation. For more details go to jasonhartman.com it's.

My pleasure to welcome George Wolper Jr. He's the President of the Spectrum Group and they do some very interesting research and consulting on the creation of wealth, investing, economics, etc. Etc. I'm sure he will add a lot to that list. But, George, welcome. How are you?

I'm fine, Jason. Thank you very much.

Good. I always like to give my guests.

A sense of geography.

Where are you located? Today?

We're located in Chicago.

Okay, fantastic. Obama land. I don't mean to make it political right away.

Obama land in the land of late spring blooming here. We're tired of cold weather.

Yeah, that's for sure. Well, tell us a little bit about the Spectrum Group and what it is you do.

Spectrum Group is a market research and consulting firm. And the primary focus is we spend our efforts talking to investors throughout the country of all different levels of wealth from Main Street America to millionaires to the very, very wealthy. And we talk to them about their attitudes, about their economy, how they're investing, how they are worried about the next five years, what they're thinking about for their children. So we have a pretty good pulse on a monthly basis about how Americans are feeling about financials in general.

This is almost like a consumer confidence index for investors.

It actually is. We actually publish the last Wednesday of every month the Spectrum Affluent Investor Confidence Index. And we've been doing that since 2004. And it very much parallels a lot of the attitudes you see in some of the consumer confidence index. But we do see some significant differences between very wealthy American and just general and then wealthy American, which is only affluent.

And what are you seeing now? I mean, what is the mindset of investors nowadays? When we look at the stock market, you see all of the mainstream Wall street folks and of course the cnbc, they're cheering new Dow highs. But if you adjust those for inflation, investors are still behind. I mean, they've got to be. The way I did it is based on official inflation statistics, which, you know, in my opinion are dramatically understated. But just going with the official official numbers, the Dow would have to hit 15,800 to be the same as the last peak. But of course, most people don't notice that.

Well, there is a lot of excitement because the market is trending upward and near all time record highs, as you point out, not accounting for inflation. But what we see with very wealthy Americans and also Main Street Americans is a pretty significant dichotomy between they're feeling good about the market being positive. They're equally concerned about continued bottleneck in Washington. And this has been an issue for them now for almost three years. It got a little bit better in January after the tax increases were passed towards the end of the year, not because people were happy with their taxes being increased, but because they felt they knew what was going to occur finally. But now here we are in March and we're kind of right back to confusion about the economics in the country, the budgets, et cetera. So what we're really seeing is it's been a proxy since 2008 that the stock market is an important factor for these folks. But what they really feel is critical as a marker about will the economy be better and are things on the road to recovery is all about the unemployment levels, which they stated back in 2008, and they still say have to drop to about 6%. So we're still a long way away from those folks feeling as if things were 100% better.

Yeah, that seems to be about the case. It's interesting that you say investors are concerned about the gridlock and the bureaucracy in D.C. and I think certainly executives are very concerned about that. And that's affecting, I guess I want to say decisions, but really lack of decisions in the corporate world and, you know, Main street, small business as well. People just don't know what to do because they don't know what's coming next. They don't know what. What fiat is coming that's going to affect them. And it's kind of a crazy time.

I think that's very true. You see it visibly for public companies, as you said, senior corporate executives, but the rubber meets the ground in this country with small business owners, and they're the ones that continue to be under enormous stress coming out of the recession. We did some interesting research last year with business owners, and this was in the summer months of last year. And there was an interesting theme that came out of that research, and that was they survived the fall in 2008, the economic crisis and the recession subsequent, but they spent everything they could spend in terms of borrowing any money, any reserves, and they said they couldn't handle one more downturn. And at the same time they felt frustrated with Washington getting back to your gridlock. And that is that they didn't feel as if Washington really understood small business owners, the tax implications of small business owners. They didn't really feel as if they understood what s corporations were, where it was all passed through to the business owner. And so we typically don't see over the last 10 years, we don't typically see what's happening in Washington as a major concern other than during the few months before presidential election. But it's been a major issue for the last three years, as I said.

Yeah, it sure has. What is the investor outlook in terms of terms of inflation? We have unprecedented levels of debt. We have massively irresponsible government. There's no end in sight for the spending. This latest fight over the sequester is not whether there will be spending cuts, it'll just be reduction in the growth of spending. And the amount that they're arguing over in the big picture in the overall scheme of things is a joke. I mean, it's like arguing over pennies. It's just nothing.

Well, one of the questions we asked recently was we didn't publish the results, it was kind of an informal poll. But we asked folks what percentage of the federal budget was impacted by the sequester. And people said, well, 10% and 20%. And when you pointed out to them, when you pointed out to them it was two to two and a half percent, they all looked at it, they looked at it as cross eyed because they couldn't imagine that that's all we were talking about. And I do think that they're frustrated because they don't feel as if they're getting the straight information about what needs to be done to fix the country. I mean, these are folks that understand what it takes to run a business and what it takes to run their own family financials. And so they're wondering the government could cut 2.5% of their budget easily if they would focus on it.

Yep. If people ran their household the way the government runs its books, they would be completely insolvent with no, no ability to print money or have a bailout from anybody.

But speaking of bailouts, we'd be remiss if we didn't talk about what's going on in Cyprus right now. This is an amazingly scary situation where you're just looking at an outright confiscation of wealth. You know, I don't know what the latest is. I'm not maybe a day out of date, but it's either nationalize the pensions, confiscate 6 to 10% of the money on deposit. I guess people that are looking for offshore banking haven't really better watch out. But I think Even in the U.S. you know, we run this risk too.

Well, you recall a couple years ago and for the previous 20 or 30 or 40 years, the insurance for bank deposits was $100,000. Right. And now it's 250. There's a lot of folks that have A lot more than $250,000 in banks. And I wonder about the Cyprus scenario. If people are now sitting in the US saying, wait a second, you know, we have more than $250,000 in these interest bearing accounts on some of these banks and they should be scratching their head about, they should be moving money between institutions to take advantage of the insurance. But that issue hasn't really been dealt with much since 2008 and 2009 in this country and they're very much linked together. It is interesting that the solution in Cyprus sounds like, as you point out, that call it what you'd like, it's sort of a reduction in someone's account balance that was at the bank to fund the problem.

And usually that's just confiscation of money in banks is just done through inflation. But here it's just an outright grab, I guess, I guess they can't, they don't, they don't have the ability, obviously being part of the eu. But even if there was a concerted effort to inflate, and I'm just talking conceptually with any government, it'd be hard to inflate that quickly and steal the money that quickly.

Oh sure. And you know, the EU had to solve this problem because it was sort of the backbone of the European Union. If they didn't solve this from an economic standpoint, and that would have huge impact on the U.S. markets.

And right behind it we've got Spain, Italy, Portugal, Japan.

It's an amazing time in which we live, huh?

Well, and then you think about what the country, US has done so well because of the economy in China and that economy is slowing down. And so you do take it back to the US has to fix its own niddy here, mind its own knitting and solve its problems. And that's going to mean that where the jobs are changing. I mean, there are lots of jobs in different parts of the country, but it might mean that people have to move and that's hard on families. But if you go back over the last couple hundred years of the country and people move to seek where the jobs were, that's how the sort of western part of the country got created in the 1800s. And we're a little bit at that way at this point in time. And I think people have to evaluate their own scenario and say, gee, there are better jobs in different communities than I live in.

That reminds me of a really interesting article about a year and a half ago, I believe in Time magazine talking about how the high homeownership rates actually hurt employment because they tie people down. And it's odd that I say this because, you know, I have a real estate background and we deal with investors from all over the world that are buying properties in numerous markets around the US And I say that owning a home is kind of a bad deal in a lot of ways because the best thing you can have on a resume is mobility. And own investment properties. Sure, provide that mobility to other people so that they're not tied down as well. But the United States is the most mobile population or at least the most mobile advanced population. There might be some nomadic tribe still in Africa that, you know, doesn't apply. But we're a very mobile people and that's what people have to do. They have to go where the jobs are.

Well, and you touch on the American dream that baby boomers were brought up under. The concept that you buy your house and you sell the house and buy another house and you'd be hard pressed to argue a better investment in the 80s and 90s than your own personal residence.

You are absolutely right.

But now the question is, is it really something you purchase with the expectation that you're really providing a roof over your family, but you're not expected to make much money in the next five years or so? And that's a whole different outlook. And the baby boomers, it's very difficult right now for baby boomers to determine what to do about selling their house. And you're right, job mobility becomes tied to how can someone move from a depressed urban area to where the money is out west and some of the central part with oil and gas exploration, if they're sitting there trying with their biggest asset and a loan exposure with.

Their primary hospital is tying them down. So I say participate in the real.

Estate market for sure.

Own lots of income properties, but when it comes to your own house, especially if you have a, if you're, if you've got enough money to have a nice place to live, renting a high end house is a phenomenal deal because there's just no rent elasticity. The rents just don't go up that much. You know, you can, you can rent it and a stunning house for a very low rent to value ratio. And then you can buy other properties that you rent to other people that are lower end on the spectrum and those rent to value ratios are very.

In favor of you as the investor.

So you really get a double arbitrage.

Well, I'm sure you've seen the last five years that there's been A significant amount of buying activity by folks who can afford to buy investment real estate because it's been underpriced the last five years.

Absolutely.

And it was, you know, my business partner, Kathy McBreen and I wrote a book back in 2007 called Get Rich, Stay Rich, Pass it on, and was based on the research we did that showed there were two ways that wealth was created in America the previous 50 years. One is owning a small business and being entrepreneurial. And the second is having investment real estate. And investment real estate doesn't mean that you buy the largest office building in your town. And sometimes it means you're, you're owning a duplex and you live on one side and rent out the other. And you could rent that out. Now if you have to move across the country for jobs that works, let alone, as you point out, commercial income producing real estate or apartment buildings.

Yep, very true. Well, tell us more about your research and what investors are thinking. What are their concerns and what are the opportunities that they're seeing?

Well, one of the things that I think surprises a lot of people is when we ask Americans of all levels of wealth, from Main Street America to very wealthy, sort of, what are your top three or four concerns in your life? And of course, it's always their own health, their spouse's health, and of course, more importantly, the cost of health care in retirement and down the road. But we are starting to see a little bit of a difference now. The very wealthy Americans are very concerned about the future of their grandchildren. We hadn't seen that really before, but they're concerned about their grandchildren, meaning the future of the country, and can their grandchildren live the same life that they had? Again, this American dream theme comes up, that folks are concerned that the future of the country is not going to be quite as robust as it was the past 40 or 50 years. Anybody who's close to retirement or in retirement, of course, is worried about income in retirement and will they have enough to live in retirement. And the unknown is, is the cost of health care. There are some good things about the new legislation around health care, and there's some things that will have to be changed because it won't be affordable or.

At least may be affordable for the lower end of the economic market because it'll be government subsidized, provided. But if you want quality health care, you're going to have to pay through the nose for it.

It's getting expensive. Even the last couple of years, premiums have really gone and lots of friends and I'm sure you do. Who are in the medical industry and medical fields, who are doctors and they're on the other side of it saying they really can't afford to be in practice anymore. Between the cost of their own liability insurance and what they're allowed to charge patients for and get reimbursed.

It's a business that has its challenge.

Yeah, this whole healthcare thing is just such a disaster. I mean, it's not a hundred percent solution, what I'm about to say. But I tell you, it would solve a lot of the problems. It is the only service that anybody buys where they have no concept of the cost. You know, when I take my dog to the vet, oh, we want to do this procedure, that procedure. Okay, how much does that cost? I actually am engaged in the process and making decisions. When I go to the doctor myself, I have no idea what they charge. They don't even discuss price.

It's the only thing in the world.

Where there's no, the, the consumer has no connection whatsoever to the cost.

Well, what's even. You're right. But what's even more bizarre, think of when you, when you go in and ask how much is it? If you, if you even look, get an answer from that.

The doctor doesn't know.

But the problem is the doctor doesn't know because he or she doesn't know which type of health insurance you have. Because they'll charge $500, but they may only get paid 150 by one insurance carrier and 125 by another. So they don't even know what you're being charged.

Right.

The system. You know yet you can buy a car and know right down to the last nug nut how much it costs to make it and build it and buy it. It's kind of, it's sort of scary.

It is.

It's ridiculous.

But you're not supposed to ask is what you're told.

Yeah, as if it's like tacky to ask.

Right. You're supposed to leave the emergency room because you want to go down the street and get a better deal.

Yeah, exactly. You know, even with my dentist at times, I'll kind of negotiate a little bit because I, most of the time in my life I haven't had dental insurance. Okay, we want to put a crown on this tooth. That's $900. You know, how about you do it for 750?

Why not?

Well, they will too.

Yeah, I know they will, but nobody ever asks. It's amazing.

Right? Well, again, you're trained in life not to ask about those types of of questions. And I think that's actually hurt. That's hurt the whole supply and demand over the last 20 years. And at the same time, you know, there's quality health care where you wouldn't mind paying whatever it costs for you to get quality health care if you have a major medical problem. So you're sort of in a quandary there as to what to do.

It's a real catch 22, no doubt about it. But just share any more kind of important or interesting part of your research lately, if you would.

Well, I don't know if you find spending time with what folks are doing with social media.

Well, we certainly do as a business. But tell us what investors buying Facebook stock.

Well, what's interesting is that most folks assume that social media is only for younger folks being call it young, under 40, under 30. But one of the most interesting, interesting things we found is that one of the largest group of Americans 65 years and over who are worth $5 million and above, so pretty wealthy Americans are the largest readers of financial bloggers in the country because they want to read from a sophisticated writer. Of course they have a little bit more time at that age. But we're finding is that there's more and more comfort with things like Facebook to get information about investing, information about a company not from other Facebook members, but even a Facebook page for an investment advisor. We find that Twitter is becoming an area where again, information that's financial or investing in nature, that they would like to read more on Twitter about investing, etc. And so anybody who's in this industry that's investing money for folks or financial service providers, even though there's some regulatory concern that they have to follow guidelines, social media is something that's here that it's not just about young people. And it's really an important way to position a firm from an investment standpoint to be on social media and use those platforms effectively.

Yeah, couldn't agree more. I think Facebook, as far as that pure social media, not blogs, but actual Facebook, really ushered a lot of that in because it's just so easy to use and so natural that it brought a lot of older Americans into the fray.

The other one that mentioned was YouTube, which is not so much folks going to YouTube, of course, but anybody who's using video content on their sites being hosted by YouTube is now the number three social media platform of wealthy investors because it's easy to learn about something by watching a video. We have a website for investors called millionaire corner.com that is great for consumers who want to learn about what other investors are doing. We publish five or six stories a day based on some of this research. We do a couple videos, two or three videos, probably five or six videos a week, maybe one a day at a minimum. But it's in response to all of our research because investors like to read about what other investors are doing. So here's a great site for them. And the other part that now is there is the ability for those investors to search for a financial advisor. And we're using a video on every financial advisor because the power of a video is really strong.

Yeah, it definitely is. No question about it. There's an interesting story on your website and I don't know if this is just a feed from cnbc. No, it actually looks like your commentary, but it talks about how there are 300,000 new millionaires and that this wealth effect is driven more by homes than stocks. 300,000 new millions. I mean this is an all time high. And once again, I think this is symptomatic of the middle class being very much under attack and the ranks of the poor expanding and the ranks of the wealthy expanding in the middle going away.

It is actually a little bit about the middle going away, which is sort of sad because it's very sad. It's not a good thing for this.

Country, but it's not a good thing for stability.

What we found was the population that was is still the most stressed is sort of this middle America. And so think of the following, which are one of the largest groups of mass affluent Americans, which is 100,000 to a million of net worth. Well, you might say that's a lot of money, George. Well, a lot of it is two income households. But the largest segment of that are educators. So you've got two school teachers or two university professors who work their entire life as educators. They actually have done a good job, jobs saving money. They tend to be more conservative investors, they tend to be savers. But that population now who worked for many years is the most stressed relative to their financial situation. They lost a lot in their house, et cetera. And so Main Street America, mass affluent investors are impacted the most. Yes, there's been new millionaires created a lot of that is the advantage that they took, which is they could afford to not leave the stock market back in 2008 and nine or they could afford to buy a second or as you point out, investment income real estate. But the rest of the folks in America couldn't afford to do that they got out of the stock market. You know, this is not a good time today to be putting all your money back in the stock market because of the level it's at. And a lot of people are, we see a lot of cash on the sidelines for the last year or two and now it's starting to say people are thinking they're going to take that cash and go back in the market. So that middle group that's going to to be impacted the most if they buy high and sell low.

Yeah.

And I would caution the everyday investor between Goldman Sachs and the Federal Reserve, it's a bubble machine. And you can almost argue when you look at history since 1913 that it's planned. And this is why one of the reasons, not the only one, but one of the reasons I say that the rich get richer and the poor get, get poorer. And that's because these bubbles that take place, they run up asset prices and most people enter late and then they get stuck, they get burned. We saw this in the last cycle certainly with the real estate market. And then they ride it down and they have to sell somewhere in there. They do the same thing with stocks because so many people invest emotionally or they invest because they don't have, they invest without having adequate quit staying power, proper planning. And who gobbles up all those assets, the powers that be.

Well it also argues why that mass affluent and sort of young early millionaire population really ought to take advantage of a financial planner or financial advisor that could help them understand this a little bit and put together a really solid financial plan or financial blueprint for their life. That that's really important because it could be that real estate's an important part that they should be putting more in or it could be they have a lot exposure, a major exposure to it already. But most folks, especially in that sort of Main Street America, mass affluent, most folks don't even know where to turn to find an advisor.

No question about it. Any advice or tips on that? You can't just say that and let it go.

Well, number one, the advisors, advisors would love to do work with them. That's why a millionaire corner site is perfect, because they can search for an advisor and we're adding more advisors to that every day. But even becoming educated about what an advisor can do for you, how advisors get paid makes them far better off. And a number of those folks are also in their company's or their employer's 401 plan. And a lot of those providers, websites have great information that they can turn to. That's pretty foundational oriented. That could help them.

Yeah. And I hate to be such a, such a cynic here, but I'll just throw it in. Even if you are very educated and even if you pick the right advisor, the problem is you still have all the graft and corruption of everybody beyond that advisor, the investment bank, the market makers, the executives at the corporation which you're investing, the board of directors.

There is a food chain of people making money.

Yeah. That food chain is, you know, people skimming money off the top, even if they're doing it in a legal way by just giving themselves huge bonuses.

But they also, those same people, though, create a lot of jobs. Is a very. It's a very circular problem. You're right.

It is.

So they're the ones that are creating jobs in America, right?

Right.

Yeah, that's true. No question about it.

It's just like it. But that's what it is, right?

Yeah. Yeah, you're right. Right. Well, good stuff. Well, hey, thanks for joining us. I appreciate it. And give out your website. Is that just spectrum.com?

It'S spectrum.com, but the one that's probably more interesting to your listeners is millionairecorner.com okay.

Millionairecorner.com thanks so much and we appreciate you joining us today.

George.

You're welcome, Jason.

What's great about the shows you'll find on jasonhartman.com is that if you want to learn how to finance your next big real estate deal, there's a show for that. If you want to learn more about food stores and the best way to keep those onions from smelling up everything else, there's a show for that. If you honestly want to know more about business ethics, there's a show for that. And if you just want to get away from it all and need to know something about world travel, there's even a show for that. Yep, there's a show for just about anything only from jasonhartman.com or type in Jason Hartman. Hartman in the iTunes store.

This show is produced by the Hartman Media company. All rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email.

Media.

Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc. Exclusively.