CW 871 FBF - Client Case Study with David Porter Income Property Investor from Indianapolis Indiana

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Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Thanks so much for joining me today. Gosh, the holidays are keeping us all busy, aren't they? And I just got back yesterday from Sedona, Arizona and the Grand Canyon. And by the way, as I mentioned on the last episode, we did get that helicopter ride for free, mom and I, because we went to the timeshare presentation and that was quite interesting. I tell you, like, if there is any industry where they have the concept of sales down to a science, it is timeshare sales. I mean, those people are good. It's, they make it difficult to say no. So I would warn you, if you have a low resistance to salespeople, don't go to one of those presentations because you'll probably end up owning a timeshare. And those aren't a very good deal. That's, that's for sure. They're, they're just not a very good deal at all. But we had a beautiful helicopter ride through Sedona and through the energy vortexes and that was really interesting. And then mom and I went to the Grand Canyon and gosh, I'll tell you, it was so cold up there. I'm a wimp when it comes to cold. How about you? I know a lot of our clients live in, you know, the northern part of the country, whether it be the Northeast or the Pacific Northwest, which isn't quite as cold. But, you know, I cannot do that cold stuff. It's just, you know, it's hard.

I think after living in California and Arizona, you become pretty wimpy to cold. So anyway, but the Grand Canyon. Okay, so before we get to our guest today, which by the way will be our client David Porter, who will tell you now, he was on the show a long time ago and he talked about the free lunch metric. Just a very impromptu interview years ago, and he wanted to come back on. So I recorded this episode with him. And I think you'll really like it, him being a guest. And he talks about how he is up about $700,000 on his properties. So, you know, folks, this does work. It really works in real life. I know. Imagine that. Something that can really work in real life. And it's kind of amazing when I think of it, looking back on my career and all the years I've been in the real estate business. I have, you know, I know of no way to exactly quantify this. If I. Believe me, if I did, I'd be bragging about it left and right. But. But I'll bet you I have made thousands and thousands and thousands of people. Well, maybe not that many thousands, but like under 10,000 people. Okay, so thousands and thousands. I guess that would be because if you had the third thousands. Well, that I don't know. Is that still under 10,000? I'm not sure. But anyway, I have made several thousand people a lot of money. And if you multiply the amount of money that they've made, you know, whether it be a hundred thousand dollars or $50,000 or a million dollars on their. Their real estate deals with me over the years, gosh, I mean, that. That's really kind of incredible to think of it. And it, you know, look, it's. I'm not really taking credit for that because I don't deserve the credit. Okay. I mean, I guess I partially do. Maybe I've inspired some people to do deals. Maybe. Maybe I've convinced them. Maybe I've dragged them across the finish line. I've certainly done all of that. Maybe I got them to stop whining about little problems and look at the big picture and stick with the program. So, you know, that's what I'm here for. I got to play all those different roles. And it's funny because when we were in Scottsdale at the Mastermind meeting a few weeks ago.

I was there with Carrie on our team and Sarah and Fernando, who's just joining our team, but he's actually still technically a client. But I think he'll be joining our team here pretty quickly. It's interesting because Sarah said you Know, we were just kind of out with the group having drinks one night, and Sarah jokingly said, you know, I think I need a T shirt that says investment therapist.

You know, we call our people investment counselors, but maybe a better word is investment therapists, because we all need a little bit of therapy sometimes, don't we? We need someone to, you know, get us out of our grungy moment. We all get the grungies once in a while and sort of want to slip back into bad habits or bad behaviors or bad thoughts and not look at the big picture and go with the program. And what does this have to do with the Grand Canyon? You know, I. I know I. A lot of times sound like I'm going off on a tangent, and admittedly I do do that, but it does have something to do with it because there's this fabulous biography of Richard Nixon. Remember, Rich? Richard Nixon, for those of you who are under. Well, I'm not saying you were alive at the time he was around as president, but those of you who are under 30 listening. Richard Nixon.

He.

He was. He's a former President of the United States, the late Richard Nixon. He passed away, I don't know, what, about 15 years ago, maybe. And quite a controversial guy, obviously. He was known by some, by his opponents as Tricky Dicky. Tricky Dicky, Richard Nixon. But, you know, Dick Nixon was in many ways a pretty amazing human being. I mean, look at. I don't know if he was a crook or not. Remember the famous speech where he said, I am not a crook. And then he had the. The checkers speech. That was another famous talk of his where he talked about his dog Checkers and how his wife Pat didn't have a mink coat but had a nice wool coat. You know, they weren't, in other words, elitist. And boy, if you compare it to our. Our emperor today. Oh, Emperor. I mean, our president, Mr. Obama today, you would have to say that the comparison is pretty stark. I mean, you know, that guy lives like a prince, you know, like a king. It's amazing. This is America. We do not have kings and queens here. You know, we do not have elitist here. Well, yeah, apparently we do. We're not supposed to. Nancy Pelosi. We're not supposed to have elitist here. And, and Mr. Obama. Same. Same goes for you. But, you know, we do. And we have people abusing the system on both sides of the aisle. Okay. This is not even a partisan thing, but interestingly, Richard Nixon's fantastic book in the arena. It's really good. Okay. And many years ago I read it and he talked about his. His first trip to the Grand Canyon as a child. And I can't remember exactly how he said it, so I'm not gonna repeat it, exactly how he said it. But, you know, as. As he was ending the book, he talked about all of the ups and downs he experienced in his life and his political career and how you cannot understand or appreciate the highs, the winds in life until you've experienced the lows. And in the great little book by Khalil Gibran, or Gibran. I say Gibran. Khalil Gibran, the Prophet, which is a fantastic little book, by the way. If you haven't read the Prophet, it's an easy read and it's got all these, you know, little short chapters on little subjects, whether that be on, you know, money, on children, on eating and drinking, on what else is in there, on love, you know, on all sorts of, you know, these life topics that are important to us all. Of course, you know, there's a chapter on giving. One chapter in the Prophet is about, I think, sorrow or pain and sorrow. And it talks about how sorrow carves us out and these bad things in life that hurt us. Where we've experienced low points in our lives, you know, that. That carves out a part of our soul, if you will. I mean, I don't know of a better way to say it, and I don't have the book the Prophet here handy, so I can read it to you. But because it is a fantastic book, but.

That carving out allows us to contain more joy. So if we haven't experienced lows, we can't appreciate highs. That's the moral of the story. That's the message. And, you know, I think when we look around at these totally effed up. I'm not saying the word so you don't have to bleep me, Mr. Editor. These totally effed up celebrities, you know, these people who had it kind of easy and all, you know, fame and fortune came to them probably early in life and it probably came rather easily. And, you know, they get addicted to drugs or they commit suicide or, you know, experience this great depression and we're all supposed to feel sorry for them. And it, you know, frankly, I think it's a little hard to feel sorry for them. But, you know, I. At the same time, it is probably quite legitimate, although I cannot relate. I have not experienced this and probably none of you have. But.

When. When all of this is given to us too easily, and when we don't have hardships, when we don't have to earn our way, when we don't have to earn our keep in life, you know, it. That's not good for us. It's not good for the human being. We're not made to deal with that properly, I don't think. Or at least very few of us are. And, and, and so, you know, that's the message, I think, of the Prophet, that chapter in. In that wonderful book, the Prophet. And also in Richard Nixon's book where he talks about his visit to the Grand Canyon. And I believe he said he was seven years old and he thought maybe nothing could be. And I was at the Grand Canyon yesterday. So this reminded me of it, of reading Nixon's book. And he said he thought nothing could be more incredible than looking down into the Grand Canyon from the Southwest Rim. He thought, you know, that that was just incredible, the size, the enormity of the Grand Canyon. I mean, you know, this wasn't my first visit there yesterday. I've been there a few times. But it's just amazing. I mean, it's so grand. It is so big. It. It's hard to comprehend, really. Very hard to comprehend. And Nixon said in his book, he said he thought nothing could be more incredible than that view from the Southwest Rim until he hiked seven miles down. Maybe he was seven years old. Maybe it was seven miles. I don't know. I could be remembering that wrong. Maybe it was both 7 and 7 until he hiked down and looked up.

And when he hiked down and looked up from below, from the depths, then he could truly appreciate one of the seven wonders of the World. And so, you know, that's a good metaphor for. For earning our way, for experiencing hardship, for dealing with hardship and overcoming hardship. I think that's an important message. And Nixon also, toward the end of the in the arena book, quoted Sophocles, the poet, and he said, or the philosopher. And he said, Sophocles, 2,000 years ago said, one must wait until evening.

In order to see how splendid the day has been. One must wait until evening to see how splendid the day has been. So our appreciation, our gratitude for life, a lot of it comes from contrast, you know, And I'm just calling it contrast. That's my word for it. From contrast, from seeing, you know, experiencing highs and lows. And that is a good thing. So when you experience hardship, you know, there's obviously a lesson in hardship. For sure, we can learn a lesson from all hardships. But also not just the actual lesson of what can I learn from this? What can we learn from this? It gives us contrast and it gives us depth. It carves out our soul and makes it able to contain more joy. People who haven't had that hardship, they just usually have a hard time dealing with or appreciating success, don't they? Back to my, you know, my comparison. When I talk about celebrities who got it all too easily and you know, just many times become really effed up. Human beings, you know, sports, spoiled children, same kind of example, you know, don't spoil your kids, it'll ruin them. You know, I definitely was not the least bit spoiled when I grew up, unfortunately. And I always, I always say to my mom, only half jokingly, I said, mom, look, I turned out okay, so, you know, you can spoil me now because it won't mess me up. And so, so anyway, that, that was, was an amazing thing to see the Grand Canyon yesterday and recall Nixon's great insight into.

You know, the depths of life and the, the highs and the lows and the contrast between the two and appreciating victory when we have it. And we can't appreciate victory unless we've had some defeat and some hardship. And Nixon, you know, love him or hate him, think he's a good guy or a bad guy, I, you know, I don't really know. But he was pretty insightful. Pretty insightful, pretty educated, pretty well developed person. I, I can certainly say that. So very interesting comparison there. Okay. Hey, if you don't have your tickets yet for Meet the Masters, get them now. Again, we're almost sold out and you know, we're not selling out as easily this time because, you know, it's the first weekend of January so we probably, or well, the first weekend after the holiday weekend. So we know we've had a few people say that, you know, I can't travel that quickly because I'm going to be away for New Year's that prior weekend and I got to be home for this weekend. So, you know, take advantage of that and still get in on some early bird pricing that normally wouldn't be there pretty late in the game here. And join us for Meet the Masters. We have got a jam packed lineup for you. And by the way, I'm pretty sure we're going to have, although it is not totally confirmed yet, one of the alternative lenders there from either the private lending arena or the hedge fund.

Private equity arena. So that's something you have asked for, you have asked about and we're I I'm pretty sure we're going to have someone there representing that. So if you're looking to refi till you die. Refi till you die. That's one of my philosophies. And if you're looking to do that with your properties, that will be a very good opportunity for you you to learn a lot more about that at this Meet the Masters event. Of course, we've got, you know, the contract for deed stuff. DIANE Kennedy, CPA talking about asset protection and tax shelters and just some really. This is going to be the best Meet the Masters event I've ever put on. And it is our 16th one, so it's sweet 16 and you're just going to love it. It's going to be an awesome, awesome event, so don't miss it. Also, again, many of you been asking, we will be hosting dinner on Saturday evening, not Friday. This is a change from our normal schedule. One of our Memphis area providers is hosting a dinner, I believe, on Friday night for their clients. So, you know, don't feel bad. That's not our event. Okay. That's just coinc. They're just timing it because a lot of people, a lot of their clients will be at Meet the Masters and so get in touch with them or your investment counselor to make sure you get included on that. And then we are having a team meeting on Friday night with our speakers and presenters so that we can make sure we are coordinated and we are putting on an awesome event for you. So dinner on Saturday evening is our treatment. No organized dinner on Friday other than for the Memphis people and our speakers, of course. And we will just start Saturday morning, 8:30am 8:30am on Saturday morning. And we're gonna go pretty late into the evening. We've got just a jam packed lineup for you on Saturday and then on Sunday we will go from 8:30am Till 6pm okay. So Saturday and Sunday all day and you know, Saturday evening a little bit as well. So join us for that. Go to Jason Hartman.com, get your tickets, check out some of the great properties we have there already. Some of you, without even having a show on it or anything at Masters, are purchasing investment properties in some of our new areas that are on the website@jason hartman.com and, you know, available. Talk to your investment counselor, of course, or investment therapist at our office and they'll be glad to help you with those. So let's get to our guest, David Porter, as he gives you an update from being on the show several years earlier about his property Portfolio and how he's up about $700,000 on, on these properties. So I think you'll like it.

Remember, you're listening to Flashback Friday. Our new episodes are published every Monday and Wednesday. It's my pleasure to welcome one of our clients back to the show. He was actually on a long time ago. I think it was maybe, I don't know, five or six years ago when he started investing with us. And his name is David Porter, and it's a pleasure to have him join us today. Dave, welcome. How are you?

Great.

Jason, it's great to be back with you. And yeah, I think it was probably a good five years ago when I last joined you on a podcast.

And I remember that day all too well. I remember that I was rather stressed out sitting in my office and your investment counselor, Sarah kind of came into my door with you and I was thinking like, please don't bother me, I'm so busy right now. And. And then, and then Sarah said, jason, you gotta hear his story. This is David Porter, our client, and you just got to hear his story and it was a really cool story.

Of, I think, your first investment property that you got from us in Indianapolis.

Right, right. Well, you know, it's so funny, you know, since Jason, when you think when we first met, the economy was crashing, right. It was 2008. And yeah, so it's. Some of these foreclosure opportunities were developing and. Yeah, I purchased my first property through you guys in Indiana.

Yeah, good stuff. And then you started buying up Indianapolis. You were kind of like quite the real estate mogul there. And I don't really know what you've done all these years. I know Sarah's been in touch with you, but I haven't specifically. I hear about you once in a while, but, you know, tell us how it all went and what you've been doing and so forth.

Yeah, for sure. So, yeah. So let's see, we got started. I just looked at some records before we got to talking here. We started talking late. Oh, wait. I purchased my first property in Indianapolis in March of 2009. And that was an unbelievable. You think about it now because prices have gone up a lot since then, but for $85,000 in that foreclosure market, we picked up a 3,000 square foot five year old home in suburban. Very, very nice neighborhood. Right. And it's, it's incredible that. So that property today is running out for like 1250, right?

Yeah, yeah. That's fantastic. So one of the things that I was talking about on the podcast way back then. And you know, I've talked about it many, many times since then. I'm probably boring my listeners saying the same stuff over and over, but it was the concept of buying below construction cost.

Exactly.

And it was also the concept I've talked about a lot that I call regression to replacement cost. And you, you have a background in financial services and then in the transportation business, shipping and trucking companies and so forth. And, and by the way, I want to ask you some insights because those are really interesting barometers about the economy and global and national trade and so forth. So maybe we'll get to that. But you bought this house. I thought you paid like 89,000 for that house and it appraised or your insurance. No, I think it was your insurance company told you you had to insure it for like what, 240,000 or something.

Yeah. Oh, yeah, exactly. Your memory is very, very good. Those numbers are almost spot on. And, and that was the story repeatedly, because I bought after that, eight more properties in Indianapolis. And when you think about it, at first I was okay, the insurance companies made a mistake. You know, they're trying to charge me too much and all that kind of stuff. But, you know, it kind of makes sense when you think about it, because to rebuild and go out and buy all the lumber and steel and recreate a 3,000 square foot house, it's going to cost you a couple hundred thousand dollars. It doesn't matter what you paid for it. So that's kind of their thinking. And that's what I had to do. I mean, I shopped it around.

Yeah. Wow. And so. So you bought the house for 80, 85,000 or 89,000? Yeah, 85. Okay. And the insurance company told you you had to insure it for 240. Was. Is that.

That's real close. Yeah. I don't remember the exact number, but it was like 240, 250, something like that.

So it first that probably upset you Right. Now you're thinking, why do I have to pay insurance on such a large amount when I only paid 85,000 for the house? But the insurance company was thinking, if that house burns down, that's what it's going to cost us to rebuild it.

Right, Right. Well, as mad as I was, the only thing that would have been worse if they would say, no, we're only going to insure it for 50,000 because you overpaid for the house.

Yeah. That wouldn't have been good.

That would have been good. Yeah. But the way you Put that, you know, was really a great way for me to think about it. And you know, there was blood in the streets at that time. Right. I mean, again, the economy was falling apart. People were very concerned about what was going to happen. You know, I'm telling my friends, hey, I'm buying these houses in Indiana. So I'm here in California and they're like, okay, Dave, you're buying houses in Indiana, that's really strange, you know, and.

So they probably thought you were crazy, right?

They thought I was crazy. Absolutely. And you know, I didn't know, of course, at the time that we were buying these homes over the course of the next, really three years. You never know if you're buying at the bottom or really where you're at. But I had a lot of, I'm a very conservative investor, I don't like a lot of debt. And I felt it was a very conservative investment because based on what I knew the rents were and the rental market was relatively strong despite everything else because everybody was losing their homes and the rental market is still a great place to be even it went down 10% or whatever. I mean, how much more, how much lower could it go? Given the fact that I've got this plot of land in a nice suburban area and relatively new construction and good size. Right. How far low, how much lower could it go? It couldn't go to nothing like a stock, Right?

Yeah, I agree with you. And even if it did, you're still really, I mean, a prudent cash flow investor.

Right.

So cash flow is the name of the game. If you get the capital appreciation, hey, you know, I'll take it, you'll take it. That's the icing on the cake. But you know, either way, cash flow is a pretty reliable thing. I mean, it's, it's not perfect, it does change, but.

Right.

It doesn't fluctuate a lot. You know, these, these investors that are, well, they call themselves investors, I call them gamblers, but you know, who invest in these high priced markets just waiting for something incredible to happen. I don't know, I think they're, they're in trouble. You know.

That'S speculation. Right. And you know, one of, one of the biggest regrets I have in my real estate career is like the first house I bought to live in California went through one of its down markets and I sold it at a loss and wrote a check to leave. And I wish I would have just held onto it. I'm sure you've heard that a million times. Times. But other Than that I've never sold a property. You know, I think that, you know, there's only so much real estate to not make a new real estate. And if you have a property in a solid area, that's a great long term investment. And you talk about cash flow. So my whole strategy around this is really to create a nice income stream, a nice passive income stream to take me eventually into retirement.

Absolutely. Well, I think you're doing a great job at the that. So tell the listeners if you would. Dave, how many properties did you end up buying in Indianapolis or you know, the greater metro area of Indiana?

Right. So bought nine altogether in the greater Indianapolis area.

Yeah. And what gave you, you know, you saw the blood in the streets. I mean, back then you were in the shipping business, so you know, you were in the container shipping business, as I recall, and that was experiencing a downturn. I mean, global trade was suffering. I used to read articles and I remember asking you about this, about how, you know that there were just empty shipping containers everywhere. And you know, it wasn't even wise to run these, these big freighter ships because.

You know, there was just so little trade. I mean, I mean, it was a scary time. What gave you the confidence to invest back then?

You know, it was really, it was the best place to go, I felt at the time, with your money. So I had a career in shipping for about 20 years at that point. And so you learn here I'm not a very good market timer. In 2007, I left the transportation business to go into financial consulting, you know, for investors. We're putting together portfolios of, of stocks, basically mutual funds for high net worth investors. And at the time I heard your commercial, I mean, things were just falling through the floor, you know, Lehman Brothers, everything was happening at that particular time. And I was just kind of, I was just kind of curious. There must be another way, you know. And when I, when I thought about, I learned about the approach and when I saw again these assets.

In some overbuilt markets that had taken just such a hit, but the rents had stayed solid. And my goal was rents. My goal was the cash flow.

If my welfare would be independent of the value of the underlying asset really, as long as the rent's held up. And I really like that idea. Because if you think about a stock portfolio, a mutual fund portfolio, you know, the rule of thumb for advising clients for retirement is you can take out about 4% of your portfolio per year and that'll last you well into your retirement, perhaps even 30 and 40 years. Things like that, they've run a lot of back testing. There's no guarantees with that, but that's kind of safe. So when I looked at the kind of, the kind of income I was going to generate with a portfolio of houses, I would need much more money invested in mutual funds to generate that equal amount of income. So that's the way I looked at it. What would I have to invest in order to generate a certain amount of passive income? And the real estate was clearly the winner at the time. It was just kind of fact based. And I'd seen the market was so beaten up, I didn't see a big downside, even on the, the value of the asset itself.

Yeah, I agree with you. Well, when you were buying the, the properties in Indianapolis and, and I know you did some other stuff too, which maybe we can get to.

Sure.

But when you were buying those, were you paying cash for them or were you getting financing on them? I can't remember. I think you may have mentioned it on the, on the show we did a few years back, but.

Well, it was a combination of the two. And at the time I went into this, Jason, I had zero debt in my life. Zero debt. And honestly.

And you met me and you got into debt, right?

I have done my job, yes.

But I'm still conservative. My cash flow has paid off several of these properties. But what I did is I honestly, I just had some other property that was owned outright. And basically, if you were credit worthy at the time, you know, they were throwing money at you at very low interest rates.

Right.

Historically low. So I did take out a loan and I'm paying on it still today. 3.49% fixed interest for 30 years.

You know, until recently, Dave, you have been getting paid to borrow that money for sure. Yeah, I mean, I would say, and I have to admit, as much as I don't like admitting this or even. Even having it be this way, that inflation is actually pretty darn low the last year. Now, it was definitely higher in the last few years, but it's, it's calmed down. I'm really surprised, and I don't. Do you listen to the podcast regularly?

Not regularly, but sporadically. I've listened to a couple dozen of them over the years, though I haven't heard any recent ones.

Yeah, yeah. And, you know, I'm just. I'm just surprised inflation isn't higher. I'm surprised interest rates aren't higher.

I am too.

I think that inflation is coming back, though. I will tell you that I don't think, I don't think we're going to see it low for very long.

It's, it's not going to last forever. You know, I did hear you interviewed Richard Duncan, and he's one of my favorite. He is my favorite economist. And even he, as bright as he is, and he does his full time, you know, are we going to die a death of icy deflation or hyperinflation? Right. I mean, it's, it's hard to tell. And neither one of those scenarios is very good. But clearly what we're doing isn't sustainable. So, you know, I don't know.

I don't know. Who the heck knows? I mean, you know, it would be sort of possible to really predict economic scenarios with some accuracy if it wasn't for central bank and government intervention.

Yeah.

I mean, you just never know what they're going to do. You know, you can, they, they just interfere with the markets and they pervert the whole thing. So you can't, you, you just can't predict stuff very well because of, because of them. I mean, you can think what would they logically do? And you can sort of predict that. But it's, it's still, you know, it's, it's difficult.

I don't think we're operating in a logical world right now. And Richard Duncan puts it real well. And I think he said on your podcast.

And this is really what broke my heart. When I was in the financial services industry, I was with a very good firm. They were thinking about things. They weren't speculating in stocks or penny stocks or any of that kind of thing. It was a pretty conservative approach, but people would like to think that they're investing in capitalism, but they're not investing in capitalism. And as Richard Duncan says so. Well, it's statism. And that's to your point.

What'S the government going to decide to do with the banking system? What's the reserve requirement? What are they going to do with interest rates? All these things throw stocks for a loop. And it's what you're taught in school. And I have an mba, I'm a finance major. That's my training. They tell you that you evaluate stocks by the value value of the earnings of the company. Well, I wish that was the case. It's not the case. That's part of the equation. But the bigger.

It's more by the story, right?

Yeah, it's the story. And it's what the government decides they're going to do with their policy and how that's going to impact a particular industry.

Yeah, that's just ridiculous.

And there's no way to factor that into a spreadsheet.

Right? I mean, I agree with you. So what exactly was your background in financial services? I mean, were you, were you an advisor? Did you work with clients and help them invest their money?

Yes, I was. Yeah, I was a registered investment advisor. And yeah, so we dealt with high net worth clients and we put together portfolios of index funds. So within the world of investing, that's a pretty conservative, reasonable, well diversified way to go. We had all types of portfolios that would be in alignment with somebody's age and risk tolerance.

Basically, ladies and gentlemen, what we have here is a defector.

I still have a foot in that camp and I, you know, I'm glad.

You came over to the other side.

Yeah, yeah, and I am too. And, and so, you know, going back to, you know, my investing in real estate story, what I came to realize largely with your help, and I can honestly say if I hadn't.

Attended some of your sessions and had some of the conversations and read some of your material, I wouldn't have thought about it this way. But having untapped ability to borrow, having that ability to borrow and not utilizing it is kind of like sticking money under your mattress.

Maybe it's even worse than that because you don't even get the money. What I did is I took that ability to borrow and I put it to work in a very, very, very conservative way. And it was clear to me that my income stream would more than pay for any debt service that I would have. In addition, you get all the benefits of what our tax code allows us to do with those interest payments. So it really helped me a great deal. So I don't borrow as much as I could borrow, and I'm comfortable with where I'm at. I'm still in a very conservative position, but so what I did is I took some money out of property holdings I had and paid cash for a number of properties in Indiana.

And so you didn't really completely follow my plan. I mean, I would have said lever everything up, you know, because, because it's kind of counterintuitive, you know, like, I think the more conservative position is actually to be the borrower, you know, And I know, I know that goes against the grain of what a lot of people think. I completely get it. You know, I used to, in the old days, think pay everything off. And, and you know, I remember having this conversation with a friend of mine. We were on the board of a A cancer charity in Orange County, California, where I used to live. And, and her name is Catherine. And I remember that, you know, her parents were, you know, had some financial hardship. And I remember, you know, thinking, gosh, they were losing their house. They had this gorgeous home and in Mission Viejo area and they were, they were going to foreclosure. And I remember thinking that, you know, the thing to do is to just pay off your own home, so at least you own that. And you know, all the other investments could be leveraged and you, you might lose them, but you'll never lose your house. Right. But the reality is, you know, we have a perpetual lien on all our properties called property taxes and in some cases maybe a second lien called a homeowner's association. And you know, those, those agencies or the, their investors, because people buy tax liens as a tradable asset. You know, they look at those in a predatory fashion. If you've got a lot of equity, you're a target, you know, so I don't like having big equity in real estate, even though, you know, I do own some properties with, with equity. But if I could lever them more, believe me, I would.

So you, you've taken. So, you know, I'm kind of in between where I was and where you are now, but I've moved the needle a little bit. You've moved a lot, really, you know, so it's worked out well. So. And then also with, with Platinum's help, I went into Arizona.

That's a different market, right? You tell me. At the time that I went into Indiana, you said, Dave, you were cautioning me, you need to get more diversified. You've got too much in Indiana.

And you said Indiana is like a bond, you shouldn't expect a lot of appreciation there. But it seems like the rents are pretty stable and so it's good for that if that's what you want to have. And that is clearly what I was looking for, the income, the stable long term income. But you know, the Phoenix market, as you well know, and you've taken good advantage of, got beat down awfully hard. And I think the dynamics of that market are that, you know, you've got the weather there and a growing economy and it attracts people. And if you look at the demographics of North America, I knew that people were going to be coming back to Phoenix again. And so we bought a couple of properties in suburban Phoenix Gilbert and those have worked out extremely well. So not only from a thing I love about Phoenix or Arizona is property taxes. Are low, the insurance is low. And I did get some really nice appreciation on those properties as well.

Yeah. You know, Phoenix is a very desirable city. It's kind of. It's. Now that I've lived here for a little over three years, you know, it's kind of a gem. A lot of people don't know about it. When I, you know, people from California that live in Orange county, where I used to live, and la, where I. I grew up as a kid, they think I'm nuts, you know, but I'm not. And I asked them, like, when's the last time you were actually here? You know, this is a really nice place. We've got super swanky restaurants and, you know, all kinds of nice things here. It's, you know, other than. Other than three or four months when it's hot, but it's a dry heat, it's a pretty nice place. Although right now, it doesn't make sense from an investment standpoint. It's just too expensive. It's a, It's a hybrid market. You know, it's. It's not like Indianapolis is a linear. Virtually the whole state of California. And you're in Southern California, right?

That's right.

Yeah. You know, that's, that's a cyclical market. So Phoenix is in between the two. But right now, you know, we've moved in and out of Phoenix a couple of times, and sometimes it just gets overvalued and. Or at least maybe I don't even want to call it overvalued. I just want to call it where the cash flow isn't good enough for us. Exactly. And now is one of those times.

Yeah, but I'm holding on to those properties there, and I think that your.

Basis is low, so.

Yeah, and it's, It's. It's worked out very, very well for me, so. And then on top of that, we have a couple properties that I've held for a long time in, in California. So. Yeah, so I'm a happy real estate investor.

Good for you. Good for you. Well, one of the things I wanted to go over was that concept that you were talking. Oh, gosh, forgive me, I can't remember. I'm having a senior moment here. See, I can finally say I'm having senior moments.

Are you over the. Are you over the line now?

No, I'm not over the line. The AARP is still a long ways away, I'm glad to say.

Oh, good for you.

But, oh, gosh, it was something that you just mentioned, and it was the concept of debt or. I don't remember. I'll remember after we finish the talk here today. Yeah, but, but what, what are your thoughts, you know, with. Now you're in the, you're in the trucking business now, right. And so do you, like, what do you do exactly, in the, in the truck?

Yeah. So the company that I'm associated with in Southern California, we do local trucking. And a large part of what we do is taking domestic shipping containers to the railroad from all the warehouses that are unloading all these containers that are coming in from China and Vietnam and Japan and Korea and so forth. Right. So we do a lot of local trucking, shuttling goods essentially from the harbor to the railroad most of the. The time. And then we also do consolidation, deconsolidation, some, some warehousing work as well.

Okay, so you have your bit. Your industry has a really good barometer on the economy. I mean, you know what the volume of trade looks like, where it's coming from, where it's going to. Are there any thoughts that you have or ideas that you just want to share and maybe we can just hash them out? I'm just interested. Yeah, I guess.

You know what I'm noticing? So we deal with a lot of the large retailers from all over the country because the goods that we're picking up here, they wind up in Chicago, New Jersey, Atlanta, Dallas, Memphis, wherever for the large retailers. And it seems to have been a strong retail season. I mean, at least they ordered a lot of stuff. I don't know if it's going to sit in a warehouse on the east coast somewhere or not. But I can tell you, in previous years, we haven't seen this level of activity. This, what we call peak season in shipping is a season from basically Labor Day up until just after Thanksgiving, leading up to, you know, Black Friday there and all the shopping that gets done that is the busiest time of the year. And this peak season was. It was unbelievable. It was extremely busy. I haven't seen it as busy for many, many years.

And are most of these goods coming from good old China?

Yeah, yeah. Well, especially in California here, you know, our, our manufacturing zone is called Tijuana. I mean, that there are. Nobody's making anything here, right. What ships out of here is brought in from overseas or just over the border in Mexicali or Tijuana?

And then we can thank NAFTA for that, for better or worse.

Exactly. Yeah.

And the, what are those called? The maquiladora zones.

Right, exactly.

I remember Ross Perot talking about Them in the giant sucking sound.

Big sucking sound. Well, he was right about that.

He was, he was right about a lot of things. I, I wish he would have been elected. As nutty as he seemed. I think it would have been the only guy that would have actually shaken things up and made something different.

Well, you know, it's funny. I voted for him the first time and then I voted for him the second time and he kind of got a little off kilter there with some of his theories about the Republican dirty tricks committee trying to ruin his daughter's wedding and all that. I'm like, you know what? Even if that was true, I wouldn't say.

Makes him sound like a paranoid freak. Right, Exactly.

Yeah.

Well, very interesting. So, you know, there's a lot of talk about how China is really beginning to slow down and they are, they are suffering and, you know, years ago you used to hear people like Peter Schiff and others like him, the sort of the doom and gloom committee, talk about this concept of decoupling, how, you know, China will decouple from the United States, meaning that they will create their own middle class and their own consumer base and they'll have countries around them that trade with them and they won't need us anymore. And when they don't need us, they'll stop buying our treasury bonds and our interest rates will skyrocket and we will be dead. But the exact opposite has happened, oddly. You know.

Right.

It's, it's, it's, it's, it's really interesting because they just have not been successful in creating their own middle class or in their own consumer base. Right. And, and the, the people with money there are bringing it over here.

Exactly. And that's great for this real estate situation we're talking about.

Great for this everything situation.

Yeah, yeah. And the stock market as well, so. Yeah. And for what I read about their real estate market, you know, things are, you know, the bubble is finally. At least some air is coming out of it now. Right. Yeah. So it's interesting. I mean, my view on that, you know, Peter Schiff, he's interesting. I like, I read his books. But, you know, I think maybe he's a little bit. Got too much invested in that gold camp.

Yeah.

And all that type of stuff.

I agree, I agree. The gold camp really has gotten it wrong most of the time.

Well, you know, they're going to be right. You know what they say, broken clocks. Right. Twice a day.

Yeah. Right. I love it.

I don't discount entirely. I think that over time, I do I would not be surprised to see all that come to fruition over time. I don't think it's going to happen by 2020 or anytime real soon. I mean, we just heard some statistics recently how China, their GDP is going to surpass ours earlier than what everybody had expected prior to 2020. Some measures of their economy would show that their economy isn't fact larger than ours right now. So I think that over time you can kind of see how the trend is going and what the direction is. But nobody wants to piss off their largest customer, and that's us.

Yeah, right.

And you know, it's, it's for better or worse, it is kind of hard to bet against the United States in the long run. I do have some very serious concerns about, you know, this house of cards we have with the, you know, our debt situation and all that. I don't know how that's going to play off. But again, going back to Richard Duncan, I hate to keep quoting him, but this could continue for much longer than what most people would think. It could continue. Japan has shown that, I mean, their economy is not like the model economy or anything, but people would certainly rather hold yen than, say, rubles right now. And people thought Russia was the way to go not long ago.

Yeah, I know, I know. I just think, I just think that as illogical and unfair as it may be, the United States finds itself in a really impressive place in history and has benefited from a lot of that. So I, you know, as mismanaged as it is in so many ways, I think they can kick this can down the road for decades long.

That's exactly right. You know, and so to prepare your entire life for something that, hey, it could happen. China could make some nutty announcement next year. I kind of doubt it, but it could happen. But I would tend to agree with you. Sometime after 2020, we'll be well into retirement and who knows? You can't live your whole life in fear.

Yeah, I agree with you, I agree with you. But the interesting thing is about China, and we don't have to talk about this forever, is that with China, as soon as they start to maybe gain a foothold, say things go really well for China, you know, then they're going to be facing this, this really huge ugly demographic problem. And, and that's the same thing that is, is really behind what's hurting Japan so much, or at least inhibiting their recovery, is that they just don't have any young people and China has just far too big a male population, not enough Females and, you know, the one child policy. In 10 years, they're going to be looking at a really tough demographic problem. So if they ever hope to get any real social safety nets there.

I just don't know that that's ever going to happen. I hope it goes well for them. I mean, listen, you know, it would be nice if the whole world would just prosper and we'd all live in harmony. It'd be great. But, you know, if you're comparing countries and like you say, it's really tough to bet against the United States, I just don't know how you can really do it.

Yeah, it really is. But one thing that is very interesting, and I'm sure you've read about this, how China and Russia are getting away from trading outside of the dollar of the reserve currency of the US So the thing that saved us, I think the only thing that saved us, that can't save a Greece or an Italy. Nobody will allow them to indefinitely print their money and accept it. We've got this, this weird license that allows us to do that. Other people can't do that or they would be fine, too. So I don't think it's that we're so smart or so great or whatever. I think you put it well. We're in a unique spot in history. I think we're allowed to do that. It's kind of a relic of what we used to be. It's not rational or logical. We do get to do that, and it saved our butts. Nobody else gets to do that.

Yeah, I agree. I agree. We're just kind of, kind of, you know, we worked it. We worked our way through the Industrial Revolution and we won that game and now we're just kind of lucky.

So, yeah, let's just hope we could catch up. There are some neat things going on right now. I'll throw out a book to you. Have you happened to have read Ray Kurzweil's Abundance?

Oh, well, that's actually Peter Diamante's. Oh, I'm sorry, Peter.

Thank you.

And so they talk about Ray Kurzweil a lot in there, but. And Steven Kotler was actually on the show. I love that book. It is amazing.

Yes.

And it leads me to another question, but what were you going to say about that?

Well, I was just saying there is lots of reasons to have hope, and there are. With the advances in technology and the speed that things are moving along, people don't even realize, you know, you've got Moore's Law and the technology is incredible, increasing every year and a half or so for the same cost. And we're at a point now, initially we're making exponential gains in what we're capable of doing and what we're going to have access to. And that's going to provide a better standard of living for everybody. And I think that the next 10 years is going to be just an amazing time for us.

I think so too for the whole world. The whole world's going to benefit from this because, you know, now we're in a position where, where we have what I like to call the democratization of everything.

Yes.

And you know, other than the Wall street cronies and the crony capitalism and the unholy alliance between, you know, government and mega business, I'm not even going to call it big business. It's mega business, okay? Whether it be pharmaceutical companies or the banks or whatever. Right. And, and Elizabeth Warren, I'm definitely not a Democrat, but she gave a great, great speech that I just posted on my Facebook page and you know, where she just outed all these, you know, criminals with Citibank and you know, criminals. I'm losing using that word loosely obviously, but just my humble opinion, okay. And you know, it's just a total scam, what's going on. But the technology is just leveling and flattening and flattening the earth. I mean, crowdfunding, funding, 3D printing, all of these things. Gene sequencing. You know, last night I watched a TED talk about this. Have you heard of this Kickstarter project for this glowing plant?

Oh, no, I don't know about this.

Oh, it's mind boggling. Basically what you can do is you can go to a website now and you can do this today and you can design for better or worse. You know, it is scary, I'll admit, it's, you know, Frankenstein, whatever, okay? But you can design your own life form made of whatever DNA sequence you want. You can put your credit card in and you. Basically this website helps you make the blueprint and you can order this life form and the UPS guy will deliver it to you. And, and someone did that and made a glowing plant and it's a Kickstarter project. They raised a ton of money and they hope that ultimately trees will replace street lights.

I mean, just fathom that for a moment. It's incredible. Oh my God, it's unbelievable. Just Google it. It's amazing. It's an amazing time to be alive.

Like you said.

So the, everything is leveling out. Another great example. I was listening. They're talking about this Sony hacking situation with North Korea.

Right. That's kind of scary for, for those.

That I haven't found my way onto it. But you know, this is dark side of the Internet that you can get to to do the darknet. What I heard yesterday was that if you or I wanted to do that, it would cost us about a thousand dollars to find somebody in Russia or China that will do that for us.

Wow.

To take down a corporation for a thousand bucks. When they were starting to talk about this, I thought the person was going to say $10 million or something like a thousand bucks you could do.

So that is mind boggling. Now. Now it, you know, it also might cost you your freedom in your life. Oh yeah, yeah. Wow. That's, that's mind boggling. It really is. Just a reminder. You're listening to Flashback Friday. Our new episodes are published every Monday and every Wednesday. The power is moving to the people and it is, it is really, really cool. Now one thing though, I want to ask you because you've got so much familiarity with shipping is. And in the book abundance. They talk about it and I've been talking about it for years on my show. But 3D printing, is that going to move a lot of manufacturing back to the U.S. you know, and it's not for mass production. I understand 3D printing is for more like artisan type production. And there's a great book I read last year when I was in Europe and it's by Chris, Chris Anderson, who's written three great books that I know of. He's the editor of Wired magazine and I believe he owns TED now the conference. And, and the book is called Makers and It's all about 3D, the 3D printing revolution. And I mean, you know, are those, are those ships not going to be needing to come here quite as much? Because we're just going to print stuff. I read an article yesterday where we basically emailed a wrench to one of the astronauts at the International Space Station. And what I mean by emailed is emailed the design for the 3D printer they have now. And four hours later he had a wrench in his hand made of matter made of atoms.

Is that amazing?

Yeah, it's incredible.

So I've sat in some of these conventions I go to in transportation and logistics and that's a very real thought. I mean, so it's not going to happen real soon, but so you kind of ask two questions. Is 3D printing going to have a big impact on shipping? Yeah, I think it Will in time. I think it will in time. And the second part is a lot of things are coming back again with the dynamics in China. Wages are increasing there. It's, they're calling it near shoring. So it's not necessarily coming back the United States, although some is. But a lot of it's going back to Mexico. Some stuff it was in Mexico and those maquiladors moved to China. Now it's coming back.

Wow. Really, it's really quite fascinating what's going on around the world. I mean, what an amazing time to be alive and to just, just sit back and witness all of this stuff. You know, I mean, certainly we got our share of problems, but, you know, like I say, technology might save us all.

Well, I think so too. And I think that for our kids, I really believe that there's never been a better time to be alive in terms of. There's never been more opportunity for everybody. I mean, you can be the poorest, poor person, maybe not the poorest person, but if you have access to the Internet, you've got unlimited education and access to information and role models and so many free.

You got the Khan Academy. It's free. You can, you can learn. You can get 10 PhDs at the Khan Academy for free. You know, it's amazing.

And so that's just, that's just tremendous opportunity. And I read where they're predicting within the next 10 years, we'll have our first high school billionaire. Right. We already have plenty of kids that dropped out of college to become billionaires. But imagine a high school kid becoming a billionaire. That's not just because our currency's debased, but because he's creating real value. And yeah, so it's, it's, it's an amazing time. There's unlimited opportunity out there. Yeah, there's problems. But, you know, Jason, you're a little younger than me, but when I was growing up, and you probably heard some of this stuff too, I literally, in my elementary school, my elementary school teacher in third grade told us, you know what? I don't think you guys are going to live to see 30 because there's going to be a nuclear war.

Wow.

What kind of a maniac teacher today.

You would totally get fired for that.

And I think probably justifiably so, because that was a ridiculous thing to say to young kids. But that's the, you know, that's what we're worried about. Nuclear annihilation, the Cold War, all this crazy stuff. There's really, you know, we've got these terrorists and, you know, this type of thing, but not massive nuclear annihilation as a very real possibility.

Yeah, yeah. That's not too likely.

There's always something to worry about.

There's always something to worry about. But hey, I want to. Just before you go, I want to just ask you about real estate for a moment. So do you. Have you estimated your returns on your portfolio or have you been tracking that closely, or do you just like collecting your checks and, you know, you don't think about it too closely? I'm just kind of curious.

Yeah, I tend to do it each year, you know, as I'm getting the taxes done.

I can tell you that, you know, we. Well, just over the last 10 years, which is really kind of my real estate investment timeline, outside of personal residences and vacation properties that we use for our family and so forth.

We'Ve seen, you know, a seven digit, you know. Well, I shouldn't call it that because that can apply up to $9 million, but over a million dollars in just appreciation. And then the return that we've earned, again, it could have been much greater because we didn't choose to use a lot of leverage. But.

I'll tell you this. When I was running my numbers, when we did the. When I was doing my analysis in terms of what I was going to buy.

Routinely, my returns, with a moderate amount of leverage, not very much leverage, was 25 to 30% annually. Yeah. And that was only assuming a 4% annual appreciation. And I have received much more appreciation than that. So I haven't figured it out in terms of what's my appreciation. Really the right way to think about this, I think, is what's your appreciation been, what's your cash flow been and what's your. And think of that cash flow in terms of the tax advantages that you're getting. Because here's the other thing. The great advantage of these properties that we bought in foreclosure, you get your statement from the county and it gives you your assessment and the vast.

Your property tax assessment.

Yeah, property tax assessment. 80% of the value was in the building. Right. So you get depreciation on all that. And so I've had some very nice sessions with my cpa because these properties, I get to depreciate so much. I get to depreciate so much. It's totally legitimate. I'm using the documents that the government's giving me. And so it's a very much a tax advantage return. I'm not paying any taxes, obviously, on the appreciation and on my cash Flow, I'm getting a nice depreciation benefit.

Depreciation is the. Depreciation is the holy grail of tax advantage. It is. It makes income property the most tax favored asset in America by a long shot.

Right.

I mean, I don't know of anything even close because it's a phantom write off. It's a non. You don't pay anything to get that.

Yeah.

Your property could go up in value, have positive cash flow. And the way the IRS looks at it, you're still losing money, which is good in that sense.

You know, I don't want to ruin that. Yeah, it's a, it's a beautiful thing. So if you go back, back to the bond analogy that you gave me all those years ago, it's almost like a municipal bond. Right. I mean, you get those wonderful tax advantages. So. You know, the other thing I want to share with you too, Jason, was, you know, the kind of the experience of being a real estate investor as a person that has a full time job, a family, three kids, and you know, on the go, you know, some people like, okay, Dave, you're buying these out of state properties. First of all, that's nuts. You know, how are you gonna ever see your properties? And my answer to that has been, well, I've had rental properties in California and they are like in the same city I live in. And I very rarely went by there.

If you got good property managers and you're kind of managing your property managers and my management of my property managers consists of calling them when I see I have a vacancy or sending them chocolates at Christmas each year. I don't spend a lot of time doing it.

You send them chocolates, wow. I never give anything to my managers. Maybe that's why they like you better.

You know, my prop. I'll give you a great example. And this was a property manager that one of your local market specialists turned me onto. And again, this was in Indianapolis.

I wasn't happy with my insurance premiums. I out there. And so your local market specialist is the one that turned me on to the property management company. Property management company turned me on to a insurance group that allowed me to package all these properties and reduce my insurance premiums by 50% in that market with. And I wish I could remember right now, but it was, I checked it out at the time. Very high rated insurance companies. So, you know, they can take very good care of you. I want them to like me more than the other landlord that they have. When they have one time tenant and two houses.

You Know where they're going.

To put the fence.

You want them to think maybe we'll get some chocolates from.

Yeah, exactly. Let me get that chocolate benefit. So, you know, it's been. I spend very little time on this because I do use property managers. I've gone the other route and tried to manage them myself.

You did self management from a distance? Because I do both and I'm just shocked that I could even do that. How was your experience? It sounds like you weren't keen on it.

I wasn't.

Well, I tried to be a property manager here on the properties in California, and what happened is when it started to go south, I wasn't going by the properties enough. And then when it started to go south, quite honestly, I didn't quite know what to do as far as this whole taking people to court stuff and all that.

Tell us what happened. What do you mean? Did you have an eviction?

Yeah, I had an eviction. And so what happened is at that point in time, I just found a property manager. I said, hey, get me out of this mess, and then you can manage these properties from now on. And that's what we did. And it's worked out great. I think these people earn their 7 or 8% or whatever it is that you're paying them for me now, maybe if I was a retired guy and, you know, and I like doing that stuff, fine. What I. So the work, I think, with getting these investment properties was really in deciding which ones you were going to buy and doing your due diligence in that regard. Certainly you were a big help. Your team was a big help in helping me to locate the appropriate markets that had the good returns in certain areas within those markets and all that. But even after that, you got to decide, okay, which house are you going to buy? Right?

But I actually really enjoy that process. And again, with all this technology we have, you can drive down the street, you can look in your neighbor's backyard.

You can do it in Google Maps, you can drive down the street. Yeah.

Oh, I do. I did it. Every single one of them. And one of the earlier podcasts I talked, I would look at the schools. What's the whole situation with the schools?

Dave, I forgot. You are the guy that created or discovered the Free Lunch metric.

You remember that?

Yes, I remember naming it that. It was such a good idea. You feel free to tell the listeners. It's on the old podcast, which I'm sure is still posted. You can find it@jason hartman.com and. Or on maybe on itunes. I don't know, those old ones on itunes, I think they drop off after a while. I gotta check that. But, but it's on our website. I'm sure it's still posted. But that, that was a great idea that you did tell the listeners about that. Yeah.

So really, what that, you know, everyone has their own view on the types of properties they want to invest in. And you know what, there's a need for Section 8 housing. There's a need for penthouses and there's a need for solid single family residences, which is what I was looking for. And I didn't really want any trouble. So what I looked at was what was the percentage of children in the local school that qualified for free lunch? And so if it was below 50%, it was an area that I was comfortable with with. Now, the houses that we purchased, I always wanted to think of it as, you know, what I would live there or my kids, I would be totally comfortable and happy with them living there. And I'm very proud of our real estate portfolio. I think they're very nice properties and I'm proud to own them. And I think we provide a very nice housing arrangement for people. So that kind of just was one of those tests for me, a litmus test. If less than 50% of the kids in the local school get free lunch, I was happy with it. I consider it to be a reasonably solid economic area.

That's a good metric. So like you said, there's an investor and A property type for everybody. And you like the A properties, kind of the nicer properties. And we have those, we have B properties and we have C properties. Honestly, the C properties, they have the great numbers, but they, they do. The tenants are just more flaky, they're just more difficult to deal with. So the thing I say about C landlords is it's going to require probably a little more of your attention and it's going to require you to manage your emotional state better because you're just going to have more trials with C type properties, you know, and we've got them all. We used to only do A and B type properties. We, we got into the C stuff because just a lot of our clients wanted it. So, you know, they can take their pick and, you know, you've got your pick and your model and it works for you. So that's awesome. I love it.

Yeah, so that's kind of, that's worked well for me. But you know, with the, you know, there were some of these properties that I bought that I Hadn't. Certainly I'd never seen them because they were out of state. I may have driven through the general area and I didn't go to see them for a couple of years after the fact. I mean, that happened.

And I would talk to people about that and they'd say, how can you do that? How can you just trust that everything's okay? Well, I didn't just trust. I did my research. I can walk through the house virtually. I can walk through the neighborhood virtually. I know everything about the schools. I know everything about the crime report in the area. I can pull all. And I did pull all that information up. What I would ask them though, is what about these companies that you're investing in in your mutual funds and that you're buying? Do you know what's going on? Do you sit at the board of directors meeting? Do you know how if they're about to get sued or they're in middle of the lawsuit or they're considering being bought or they're going to buy something or there's some legal problem, or the.

CEO just is about to get nailed for some huge sexual harassment case or, you know, you don't know this stuff.

Yeah, I know more virtually on my fundamentals of the investment on this real estate. If I know, never ever go there. People who goes, if they own Apple stock, they've been to Cupertino and visited with the man, they don't do that. But they'll have no problem putting fifty hundred thousand dollars in Apple stock.

I know.

And so people really need to understand, you know, how they're thinking about things and everyone hears the nightmare land, you.

Know, tenant stories, like the one story, right. That everybody's had discouraged them, you know.

Yeah, but it's a, you know, I don't know my tenants, they don't know me. I've got great property managers. I spend. It's really just the accounting stuff, you know, I spent an hour a month on it, and it's not a big deal, and it's just an investment. I've been very happy with an hour.

A month for how many properties, by the way?

13 rental properties.

So 13 rental properties only takes you an hour a month. See, I tell people, and I know this is high, but occasionally if there's like a problem property, it will, it could suck up a little more time. So I just tell people, assume one hour per property per month. So if you've got 13, I'd say 13 hours a month. But you only spend an hour a month for all 13 properties, huh?

Yeah, I mean, there I've had fortunate good fortune, I guess. I mean, I just don't have big problems with my tenants. I mean, you know, you've got the occasional dishwasher, air conditioner. It's an email. In the middle of other stuff I'm doing, I'd say, yeah, do that. No, get another quote boat. It doesn't take much time. Once you've got them established and you've got the property manager taking care of it, I don't see how it could take me 13 hours a month.

Yeah, I agree with you. I agree with you. I think, you know, as humans, I mean, and certainly I'm sure we all do this. I know I do it. I'm sure you've done it at times. And everybody listening probably has to. We all kind of get in our own way and we sometimes micromanage stuff or.

Yeah.

You know, we get upset, upset about something and then we just get all freaked out about it and.

Yeah.

You know, and it sort of just occupies our emotions and we go dump on other people. It's not exactly a good quality, but you know, we all have to admit we've all done it.

Well, you know, I've, I've been more than willing to pay. Whether it be property managers or in the initial stage, you buy these properties that aren't new properties and need a little bit of rehab now. You know, my brother in law, who is a client of yours, I referred him to you. He kind of had a different approach. He took vacation time, he flew down there, he helped rehab the properties.

He's, he's a hands on guy.

Yeah. A little more handy type guy. I, I didn't want any kind of experience like that.

Right, me neither. I don't like that. Yeah, I don't know, we don't do that stuff.

You know, he slept in the property when.

Oh my gosh, he's like my mom.

My mom's like that, working on it and painting it and stuff. But he likes that. And so God bless, he's. That's what he likes to do and that's, that's what he should do then. But I consider that to be like some type of torture.

And I want to make that, that's called work. And I don't like work like that.

To me it's all about passive income. And so we've developed that and that's provide some nice benefits from paying down some of these. And not only that, but we've used the proceeds to invest in another business which is actually doing Quite well right now and generating more passive income. So it's. It's been really good all the way around.

Good for you. That's awesome. Well, so just to recap, and I. I'm keeping you long here, but this has just been a great conversation, so thank you so much for coming on the show. But you. So you've had. You've made over a million dollars in appreciation. And how many years. When did you start? Would you start? In 2009.

So that would be starting in 2004.

2004. Okay. Yeah, you started with us. I mean, that was your California stuff, right? Yeah, yeah, yeah. See that? Arizona, I take it's, you know, it's hybrid, but you got to be careful you don't give it back. Well, you bought early enough that you'll be okay. But, you know, if someone were to buy Today or in 2006 in Arizona, they could eat it.

Right?

Yeah.

Right, right, right.

California, too.

You know what? And I think you. You say there's no such thing as a bad. You know, there's all these different markets all over the country. Right. And everyone rises and falls, and that's the great service that you and your team provide. Right? Which market makes sense to be in right now based on what your goals are?

Right?

Yeah, absolutely. That's. That's what we do. That's what we watch for people. And, you know, the comparison, though, is those indie properties gave you much better cash flow than the California and even the Arizona properties.

Yeah, absolutely.

Those.

Those are going to be hard to beat from a cash flow perspective. And that's really what I was after, and I've been very pleased with the stability of the tenant base, the economy there. And you know what? Because we did buy at the time that we bought, we've gotten, you know, much greater appreciation than one would expect normally to get in Indianapolis. I think you can still buy an Indy and do real well from a cash flow stand.

Oh, yeah, no Indies. Indy is still good. The prices are definitely higher than they used to be, but. But you can still make your cash flow numbers there, and that's why it's kind of our perennial market. I mean, we've got other markets that are great, too, but, you know, Indy. Indy's been a very good market for us. I've. I've personally made a lot of money in indie myself, buying properties there, so I love it. It's good, good stuff. Well, Dave, that's a very inspiring story, and thank you so much for sharing it with our listeners and coming back on the show again. I really appreciate it and it was just great talking to you.

All right, my pleasure, Jason.

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