HI 149 – Investing in Landlord Friendly Markets & the Power of the US Dollar

Welcome to the Heroic Investing Show. As first responders, we risk our lives every day. Our financial security is under attack, our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant and we need to take care of our own financial future. The Heroic Investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Hello and welcome to episode 149 of the Heroic Investing Show. This is a podcast for first responders, members of the military, veterans and anyone looking to improve their financial future and gain some freedom with their time. We teach America's heroes how to build passive income, build their startup business and safely grow wealth through real estate and other alternative investments. We help current and prior first responders put protections and systems in place to enable them to build a life where they can focus on their passion, that service or product that they are uniquely gifted to share with the world. Sometimes that's in the world of real estate, sometimes it's something that some cool new little widget that you're creating in the garage doesn't so much matter. What matters is that you're inspired about it and that you have things like rental income properties operating in the background that make money while you sleep to allow you to work on your number one cash flowing asset. And that's you yourself. The thing that will bring the most money into your world is your creativity and your ability to share that with the world and have them turn around and compensate you for it. That's at least my theory. My name is Gary Pinkerton. I co host this show with Jason Hartman and today we're listening with Jason on one of his Creating wealth episodes. And this one's a couple of years old, but the reason I'm doing this one, well, there's lots of reasons. This one is a stream of consciousness from Jason, but there's some gold pouring out of this guy on this episode and it's a compilation, a nice reminder of many of our previous episodes. There's some Ten Commandments stuff in there from him at the beginning. He talks about the values of mastermind groups. He talks about venture alliance, which is one that I'm proud to say I'm founding member of that mastermind and he's actually at a mastermind for real estate providers. So rehabs, new construction individuals that are in the business of improving and providing turnkey properties for others. I have some other very close friends that are members of that specific mastermind and Others like it. I'm a huge fan of mastermind groups. I'm involved in two right now. And surrounding yourself, you know, it really comes, it just comes back to what Jim Rohn said and many others have repeated that you are the sum total of the five people you spend the most time around. And I think most of us, if we think back about it, you know, we'll agree that, you know, you get around somebody who's Debbie Downer and all of a sudden your outlook just doesn't look as good. If you want to always stay motivated, only allow yourself to be surrounded by people that are positive. It has a huge impact on you. I've adopted that. And so if I'm hanging around you, then you probably. That's a signal that I think you're a pretty positive individual and someone who's out there to help improve the world. So that's really what masterminds are about too. But masterminds go beyond that. It's not just about surrounding yourself with winners, that's huge. But it's also being in a room with a bunch of people who can help solve your problem challenge, you know, help you bring your business to the next level. I certainly do see value in them like Jason does. He also talks about in here commandment number nine and you know that is that you should only invest in things that have universal need. Right. And of course it's a little self centering because housing always going to be need for housing. But I agree with him. I believe in the same philosophy. You know, I've tried many different kinds of investments over time but at times there are things that are a flash in the pan and they seem incredible. You know, bitcoin for example, do we actually need that? Well, there's a part of it we absolutely do need the blockchain technology, the ability to be able to do accounting on things, to have a history that's locked in that can't be modified. That's fascinating to make sure that, you know, we took a brief adventure alliance when we were in New York from a gentleman, very fascinating discussion about he's building a company that provides validity to news reporting. I mean how amazing would that be if we stopped once and for all rewriting history? Right. And that would be incredible if we stopped having a world where North Korea could lie to their people and they wouldn't figure it out. Right. It's just amazing that it still can happen in this world. But things like blockchain can keep things like fraud and Ponzi schemes and fake news from happening. And it's possible. And so that's something that we really do need. So perhaps I didn't give a good example there, but let's go with tulip bulbs or what were those little dolls back when I was a kid, I can't remember. But tulip bulbs, at least I remember that one, right? There was no universal need there. There was no need there at all. It was just a craze. And people bought up different colors of these bulbs that happened to be rare and paid ridiculous levels of money for it. And we see it happen all across the industries. It happens in real estate, right? It happened in 2008, but it didn't go to zero, right? Tula bulbs went to zero. Real estate went back down to the cost of replacement, or a little bit below the cost of replacement, actually, for a few years. There was still value there, though. And the only places where it went to zero are like Detroit and areas of Detroit where new construction homes were put up in places that didn't support it and it became dangerous. Right. And so the reason those went to zero and got bulldozed is because. Because of safety and rule of law and things like that. But housing has a universal need. If you have a safe, good house in a neighborhood appropriate for the neighborhood, it's something that will always be used by others. And they will pay you because you're providing a service that they absolutely need. They don't have to have a car, they have to have food, shelter, and in some climates, clothing. So those are the things of universal need that Jason talks about with that commandment number nine. I'm a huge fan of that commandment. And he also talks about some other great nuggets. You know, he talks about there's not being such thing as truly passive income. Yeah, you have to work for your rental properties a little bit. There's a few bumps in the road when you're operating rental properties, right. There really are tenants and toilets. But if you can keep that level, if you can keep that all in perspective, the rewards are tremendous in this industry. As an investor. And then he kind of reinforces that the way in which his company looks at inventory is landlord friendly markets. I have a friend who purchased in Chicago, have a lot of friends who purchased in Chicago. I grew up in that state of Illinois. I didn't want anything to do with it because I saw the power that Chicago was taking, bankrupting our state. I tried to provide a little backup or a little forceful pushback. I wasn't too successful with that. And so I learned some lessons on that and apologized openly in front of everyone to my friend because I didn't push back too hard. But it was just a nice reminder that you have to stay in landlord friendly places. And we all make mistakes. The network made mistakes going into that industry in that town to begin with, in my opinion. So keep that in mind. Keep in mind, invest in places that have universal need and remember the values of Mastermind. We're going to jump right in here with Jason. As I said, he's at a Mastermind event and he kind of starts off with that subject. So a little bit shorter introduction on this one, but I want to jump right in and talk about these nuggets of wisdom coming from a guy who's been in this industry for quite a few decades. Here we are with Jason Hartman.

I'm traveling, I'm at my Mastermind group here in Tampa, Florida and just been learning so much the past couple of days. It's amazing, truly amazing the power that happens when you put a bunch of bright people, myself excluded. I'm being humble for once. A bunch of bright people in a room together and let them brainstorm on things. For example, and this is what I'm really excited about with the Venture Alliance. And by the way, thank you all for your interest in the Venture alliance, which if you're a new listener, the Venture alliance is the new mastermind group I'm launching. And the tagline is your financial friends. Your financial friends. And I want to solve really one of the biggest problems that relates to commandment number three about why you should maintain control, why you should be a direct investor and solve that problem by putting bright people in rooms together who have resources, including financial resources and connection resources and knowledge resources and getting them together so they can do things together. They can evaluate deals together and do big deals. So yesterday I met my real estate mastermind group. I proposed the idea here. I'm with a bunch of people in a room that are all in the real estate business. They're in the trade, not consumers. I guess that's probably the way to refer to you, our listeners, as the consumers who are investing. And these people are also investing, of course, but they're also in the business of providing inventory to investors. So they would be this would be like a business to business meeting, if you will, versus when I talk with you, it's mostly, and I know not completely, it's A, B to C, a business to consumer type of discussion. So I'm in this meeting yesterday and I suddenly think, gosh, you know, look at all of the resources in this room. Look at how much real estate all of these people, about 30 of us in the room are responsible for. And I did the math and, you know, just taking some educated guesses, and I came up with the 30 people, or not the 30 people in the room, but all of the different people, which adds up to about 80 in the entire group. Not all of them were there. And from my calculations, it looks like we are all responsible for over $700 million per year in real estate moving around. Okay. And being transacted maybe a lot more than that. That's probably actually a conservative estimate, but it's somewhere near the $1 billion mark. And I'm thinking, you know, I. I've been thinking about starting a crowdfunding company and, you know, I always go back to my commandment number three and think, you know, that's not really what I want to do. But if you can put some controls on it and make it more workable for the investor, it has some possibilities. I'd much rather be looking at something like that from people I know like and trust. Okay, Than sending my money to some Wall street criminal. Right? And criminal is used in the loose sense. What they're doing is mostly, but not always legal. But it's still a crime in my eyes because the investor just gets so ripped off. So just wanted to clarify that definition. And you know, it's amazing what you can do when you just put the resources of people together. So anyway, that's where I am. And I guess that was already the first tangent of the show because what I was going to talk about is how when I walked out of my hotel room, of course there is either always a copy in the hotel of USA Today or the Wall Street Journal. Well, this morning it was the USA Today and the front page article says, bad advice costs billions. And then it says, Obama calls for new rules for financial advisors. Now here's the problem, okay? Whenever there's a new rule, it always seems to backfire and hurt the people it intends to help. One of the examples that I've cited many times, and most people, you know, they can't see the big picture. Most people are always just looking at the micro picture. The people that are getting something from government who have the entitlement mentality saying, well, you know, government should do this for us or it should do that for us, or it should give us free health care or it should raise the minimum wage. Well, on the micro picture for a short time, you know, that usually Works out very well and it's a good deal for the recipient. But on the macro picture, in the long run, it always works out poorly. So minimum wage, that's maybe a good example. All of the minimum wage increase pressure, which, by the way, you know, I'm all for people earning lots of money, but people really decide what they're worth in society. They decide whether they want to sacrifice a little bit of security for a little bit of opportunity. And they're always weighing that balance or they, you know, will improve their skills and get better jobs. Right? And so all of this is always at play. But I mean, you can see it. As soon as that $15 minimum wage thing happened in Seattle, all of the talk was, you know, McDonald's is experimenting with more robotics to make burgers and, you know, the robot never gets sick and it never sues you for unlawful termination. And, you know, all of these things and it always hurts. And then, you know, on the other end of it, the minimum wage increases always cause inflation. They always create inflationary pressures. And so, you know, you've got all these things at play. So here we go with, you know, Obama calling for new rules on financial advisors. Now, you know that I think the financial services industry is basically corrupt, okay? And he does, you know, he, in the article, they did quote Obama a few times, point out some good things here, and I'll just share a little bit of it with you. It says, Washington, President Obama called Monday for new rules requiring financial advisors to put their clients interest above their own. Now think about that. How can you make a rule about that? What kind of rule could you possibly quantify, delineate and enforce that would do that? I mean, this is human nature. You know, if, if people want to take advantage of someone, they're going to figure out a way to do it, okay? But it says, especially when it comes to retirement savings plans, quote, there are a lot of very fine financial advisors out there, but there are also financial advisors who receive backdoor payments or hidden fees for steering people into bad retirement investments that have high fees and low returns. Obama said in a speech to supporters at the AARP headquarters. Now, aarp, they lean to the left, so you should know that, okay? AARP headquarters in Washington, Obama said that, quote, conflicts of interest in retirement advice results in annual losses of 1 percentage point for affected persons. It can cut your savings by more than a quarter over the course of 35 years. Now that is amazing because, you know, that shows the compounding effect of investments. And the compounding can be positive or Negative. And it really is, when you play it out over time, very, very significant. So when you're looking at investing in income, property, and you're thinking, gosh, you know, I've got to make some sacrifices so I can buy a few more properties, is it, do I want to do that or do I want to go on a nice vacation or do I want to buy a new car that will depreciate, or do I want to make some sacrifices today for the longer term? Delayed gratification, greater good for the future. I say that it's appropriate to live a somewhat conservative lifestyle so that you can do something bigger. Capital formation has got to occur. That is how all wealth is created, through capital formation. Okay. And it's either your capital formation or it's somebody else's capital formation. And how does capital formation occur? Well, almost always, but there are a few exceptions. Through savings, through delaying gratification. That's where capital formation comes from. And so we've got to have capital formation. So, you know, I've given maybe the metaphor of the telescope before. And if you're, everybody's looked through a telescope and maybe you're looking at the moon, and if you just accidentally hit the telescope and knock it off the moon when, well, you're, you know, zillions of light years into interstellar space, right? And that's the same thing that happens, you know, because of that lever. The same things Archimedes talk about when he said, give me a lever long enough and I will move the entire world. It's the concept of leverage. So that's what happens when you form capital. When you delay gratification, you increase leverage. Don't be a spendthrift, because spendthrifts never get anywhere. However, I want you to balance that with this concept. And that is the balanced concept of rewarding yourself with small, reasonable rewards along the way of your journey. Make things a celebration so you've acquired one more property. Have a small celebration. If you want to buy yourself, you know, know, a swanky pair of new shoes, then buy yourself a swanky pair of new shoes. You know, you want a new suit, get a new suit, whatever, whatever it is, you know, the, these small, reasonable rewards along the way so that you set up your psychology to interpret things the way you want it to. We, you know, we need to trick our mind a little bit sometimes, don't we? So we need to reward ourselves so that we will keep doing the behavior of that we want to encourage. And we know that delaying gratification is important to Long term goals. So just a thought there, on current events there, Obama is seeing that people are getting ripped off because of bad advice. And that's one of the problems, you know, with the Wall street investments. There's so many layers and levels and you got to peel back the onion and look at it in all these different facets. So it's not just the financial advisors, that's just the front door. Okay. Once you go into the house or go into the building, okay. When you're past the financial advisor, the front door and you know, if they haven't ripped you off, well then you've got all of these middle people. You've got to get past the high frequency traders, you've got to get past the investment banks that underwrote the stock. You've got to get past the board of directors that is always trying to reward themselves above the shareholders and get past all those conflicts of interest. You've got to get past the conflict of interest of the executives after you get past the board of directors, right, because they all want to pay themselves huge bonuses and they all want to spend money on corporate jets and all of that stuff just whittles away the investors profits. You've got to get past Steve Jobs, you know, the late Steve Jobs, right. I mean everybody thinks Steve Jobs was this great guy and I do too. I mean I love Apple products and he's obviously a visionary, but the experts talk all about his options backdating schemes and all of this stuff he did that wasn't kosher. There's just too many conflicts of interest. Be a direct investor, you know the drill, right? Okay. Another thing I've predicted and I've been talking about this for many years and it goes back, it harkens back to commandment number nine. I know, I'm always talking about commandment number three. Thou shalt maintain control, be a direct investor. Don't have the three major problems. You might be investing with a crook, you might be investing with an idiot. Assuming they're honest and competent, they take a huge management fee off the top. But what's the other one? Commandment number nine, that's another one. Well, there are 10 of them, obviously. Actually there's 20. But of the first 10, commandment number nine. Thou shalt only invest where there is universal need. Thou shalt only invest where there is universal need. And where is their universal need? Remember Maslow's hierarchy of needs? Remember the old saying that people need three basic things? What are they? They're food, clothing and shelter. So I say Let them buy or rent, because we're really long term buy and hold investors. Let them rent that shelter from you. I've talked many times about how office space is less needed because it can be outsourced overseas. I know lots of people that are engaged in the Filipino outsourcing movement where they're outsourcing to workers in the Philippines. And just as a side note, I have not had any success with that. I have tried it many times and you know, the offshoring thing has not worked for me. Okay. You know, I do know people that do it. They say it works. I'm not totally convinced, but whatever. We know that a lot of office jobs have been outsourced and offshored to India and the Philippines. Right? No question about that. But we also know that a lot of this office space demand has been outsourced to people's homes as people have home based businesses. I mean, I remember I was at a national. I used to be a member of the National Speakers association, otherwise known as the NSA, which is located in Tempe, Arizona. I was a member of NSA for 10 years. I remember I was at one of their meetings or their conferences and one of the speakers was asking a question of the speaker who was up on the podium, up on stage and they were saying, well, you know, when I'm running my speaking business, I just don't know what to do. I mean, you know, I'm sort of ashamed of saying I work out of the house. And it's funny how things change, isn't it? Because that was probably 15, maybe 18 years ago that I remember someone asking that question of the speaker, thinking like, what do I do? Do I go to. I think back then it was mailboxes etc or something, not the UPS store. Do I get a P.O. box or do I just not print my address on my letterhead? Like anybody even uses letterhead anymore. See how, see how things have changed. And she was really, you know, concerned about her image and about how this might be perceived by potential clients now. Like, you know, half the population probably works out of their house. You know, it's, it's amazing. I mean, I work out of the house. You know, three and a half, four years ago I gave up our last office and made my company virtual. And everybody likes it and it works great and there's lots of technology to support that type of thing and it's changed so much. But there's an article here on the Newser app and Newser website. It says you're losing your office space and so this is another factor, and this just plays into the market of office space investing. So we didn't even talk about industrial properties or retail properties. And those are under huge pressure too. But it says the American workplace is getting smaller. In 2010, there was an average of 225 square feet of office space per employee in North America. In 2012, that figure was down to 176 square feet, according to the New York Times. And this is based on data from a real estate association. The group expects the number to drop to 151 square feet by 2017, according to Time magazine. Okay. And in New York City, things look even tighter. Now there you've got a very expensive real estate market, obviously. A survey of 10 new office spaces cited by the Times found that the average amount of room per worker was 120 square feet. Okay? With the maximum at 178 square feet and the minimum at 93 square feet. So this may not sound like a big deal to you, but think of the percentages. Remember how I talk about how everything should be quantified in relevance in a relative matter in percentages? So if the average size is just five years ago, this is only five years was 225 square feet per employee, and now it's 176 square feet. That's a huge difference from a percentage basis. So if you were an investor in office space properties, you would see how employers are just not tolerating big office expenses anymore. I mean, that's what that says to me. The trend is moving away from office space. It's moving toward the mobile virtual worker. And listen, I understand this is not exactly news, I get it. But when it's quantified in these types of numbers, it's really interesting. I mean, you know, 93 square feet per employee. Wow, that's a big difference. So invest where there is universal need. Invest in housing. That's where a lot of this office space need has been outsourced, besides being outsourced to India and the Philippines and other offshoring locations and other less expensive real estate locations around the US So very, very significant. And don't forget, when it comes to retail property, the other type of investment, and I love talking to these commercial real estate people, you know, oh, I'm very sophisticated. So I'm going to buy some shopping centers or some high rise skyscraper office building, you know, and right in front of you, you have the most historically proven asset class. The good old humble but lucrative single family home. Right? Housing, housing, housing. I love housing. Okay. And, you know, of course, people make money and all sorts of real estate. I understand that completely. Apartments being my second favorite. Mobile home parks being my third favorite. After that, it gets kind of murky. Okay, so let's talk about the humble US dollar, the one that I'm gonna pick on them again. Peter Schiff and all the doomsayers predicted would just die, you know, and all the people I interview on my holistic survival show, they just predicted that the dollar, the end of the dollar, you know, the dollar crash, the dollar complete dollar debasement, and all the gold bugs and all the bitcoin people, they all say the dollar is doomed. Really? Well, according to Business Insider article just a couple of days ago, it says the US Dollar is the most crowded trade in the world. Hear that again. The US Dollar is the most crowded trade in the world. It says, going long on, the US Dollar is the most crowded trade in the world. And over the last several months, this has been among the best trades in the world. So here's a quote in that article. It's by someone named David Rosenberg, and it says, there are certainly plenty of reasons why the greenback should be the world's currency darling. But at some point, all of the news is in the price. In other words, it's priced in to the asset, okay? Whether it be the dollar, whether it be real estate, whether it be a stock, whatever, that concept of being priced in the news is already priced into it, whether it be up or down. We may well be there. In terms of the US dollar story, which looks long in the tooth, even if not totally over. So. So now it's interesting, right? This guy is saying that, you know, long in the tooth means it's old, right? It's old news. And he's saying that that doesn't look good, okay? And it's just too far. It's a bubble. Maybe it is, okay, maybe it is. But still, the dollar, I mean, just think about it. The dollar is backed by the most powerful military the human race has ever known. And if people who are gold bugs and bitcoin believers and bitcoin bugs and cryptocurrency and alternative currency and cyber currency, you know, call it by whatever name you wish, think that the US Government, the US Military, and the central banking cartel, which is led by the US Central banking, you know, the crooked cartel, we have the Federal Reserve, right? If anybody is silly enough to think that these most powerful entities on earth will stand idly by while people destroy or allow their currency to be destroyed, they are out of their mind. I mean, you. I love how the bitcoin people and the gold bugs talk about this. They say, oh, you know, they can't control it. You know, the government doesn't know how much gold anybody has. It's stashed away in safe deposit boxes or under the mattress or buried in the backyard. And using the midnight gardener thing that Howard Ruff when he was on my show talked about, these gold bugs have been basically wrong for decades. And you know, I totally see their arguments. I completely get it. I've entertained their arguments for years now. And then they say, well, the government can't control cryptocurrencies. It can't control bitcoin. Are you kidding? It can just make it illegal. I mean, you know, oh well, bitcoin's got such unique characteristics. It has this cool technology called the blockchain. So what? The blockchain is open source. The government can make a new cyber dollar tomorrow. It can put a blockchain in it, and it can have all the characteristics that make bitcoin so great, theoretically. And they can stamp the label on it, you know, call it bit dollar or cyber dollar or whatever they want, or just call it the new dollar. And boom, there it goes. Okay, now why is this important? Why does it matter to us as investors? Because while the dollar may be strong now, the ultimate business plan of governments and central banks has to be inflationary. And I know they're defying gravity at the moment, and they really weren't defying gravity until about one year ago. About one year ago, they started to kind of go off the reservation. And the spending hasn't really seemed to affect the dollar. And maybe it's because of technology, maybe it's because of everything Jim Norman talked about on the show recently in terms of oil, in terms of the futures market, and that being the reason that oil is controlled as a weapon of war. I mean, look what's going on in Venezuela right now. It's a disaster. I mean, Venezuela's new leader, a relatively new leader, I guess, has basically come out and said that he will not tolerate dissent, okay? Frickin dictator. You know, see how long that lasts? You know, these dictators used to be able to do this for decades and decades and decades, but they never even last. I mean, the Soviet Union never lasted. China, you know that. The Cultural Revolution. Don't you love the labels people give this stuff? The People's Republic, the Cultural Revolution, you know, the Democratic Republic of North Korea. It's just hilarious, right? Talk about a total misnomer right. They never last. But in a connected world, and you know, Venezuela is connected, Iran is connected. North Korea not so much. Cuba not so much. But ultimately these whole things will just fall apart. And basically look at what's happening. I mean, Venezuela is falling apart because of the oil prices. Now granted, it was falling apart before, but it's really falling apart now. So, you know, as Jim Norman talked about, maybe deflating oil temporarily is the way to just kill the regime and to ruin it. I mean, Hugo Chavez is gone. I guess he was Obama's friend. Who gives Obama his books. Remember that? You know, I don't know. You know, maybe that's overplayed in the media and the conservative media, I'm not sure. But the ultimate plan is that the dollar will probably remain the reserve currency of the world for many, many years, if not many decades to come, and the dollar will be slowly inflated away unless. And the only thing I think that can really stop that ultimate inflation is an incredible exponential technological revolution that is evenly distributed to all classes in the United States and really all classes of people around the world. And this may happen. This may be the thing that saves us from the inflationary pressure that is totally baked in already. For the real inflation to happen, the government does not need to continue its poor management and its poor spending for the next 30 years. It's already baked in. It's there. And the only thing that can legitimately stop it for the long term is, is technology. So we shall see, you know, how much impact that technology has. It's impossible. Impossible to estimate. I don't know the answer. You don't know the answer? Nobody knows the answer. But whatever happens, I'll bet the dollar is still going to be the reserve currency. That's where I place my bet. And apparently a lot of other people think so too, because it's the most crowded trade in the world. Okay, what else? Gosh, let's just review a couple of these commandments for just a moment. I want to go back to that. So before I go today, let's just talk about a couple of these other commandments because I've been thinking about them a lot lately here. I gave a speech to my mastermind group yesterday and talked about just a couple of them. You know, we talk about commandment number three. Let's review number five. Well, actually number four for a moment. Thou shalt use prudent financial planning techniques. And you know, I haven't talked about these in a long time. You know, maybe. Did we do a flashback Friday episode recently? On the Ten Commandments? I don't think so. I think someone asked for it, but we didn't get to that one yet. So that'll come up, we'll get to it soon. I mean, look, this Ten Commandments stuff, I wrote this ten years ago, okay? This is ten year old stuff. And it's amazing how it's written in a way the Constitution was meant to be written with something called abstract flexibility so that it could apply 200 years later or 235 years later, whatever the exact number is. Our country is, it's got applicability in all market cycles, you know. And so number four is thou shalt use prudent financial planning techniques. So in commandment number three, I talk about the evils of Wall Street. I talk about how Wall street is the modern version of organized crime. But in number four, I talk about something that Wall street brings to us that is actually valid and good, and that is financial planning. The concept of financial planning. So rather than the financial planning being diversify, have that pretty little pie chart of modern portfolio theory. And by the way, two little notes on diversification. Generally speaking, diversification perpetuates wealth that someone already has and concentration or focus not being diversified, bedding the farm, if you will, that is what creates wealth. So diversification is largely considered to be a prudent conservative strategy and concentration is largely considered to be a risky strategy. But I remind you of Dale Carnegie's famous quote, and I think it's a very good one. And I remember when I read how to Win Friends and Influence People, I think I was 17 years old when I read that book, my mom gave it to me. And you know, it's a classic. Obviously it's a great book, they probably need to update one and write it for the modern world because nobody has that much time to win friends and influence people anymore.

And to be that courteous, it's just not the way the world works. Now there's still some very, very good principles, obviously, and that's, you know, that's a perennial best selling book. And so Dale Carnegie said, put all your eggs in one basket and watch that basket. Put all your eggs in one basket and watch that basket. Well, I submit to you that you can do both, that you can have the best of both worlds when it comes to income property, because with income property, all real estate is local. So you can diversify geographically, yet have all your eggs or most of them in the asset class. Okay? So you can own in Memphis, Atlanta, Indianapolis, and you can be diversified into Three good markets. And it doesn't have to be those three, you know, could be three different markets. You know, could be Little Rock in Dallas, you know, it doesn't matter, whatever markets, but you can diversify geographically in the most historically proven asset class. So that's something to think about. But when it comes to financial planning, we all need to consider our investment goals. Are they appreciation, Are they income? Are they tax benefits? What is the investment goal? What is the time frame for that goal or the time horizon? And then what is your risk tolerance as an investor? So we have lots of investors come to our firm and they will say that they're not sure what they are, you know, they're not sure what the risk tolerance is. And so we never put people into highly risky markets like California, New York, Miami, you know, those are too crazy, too risky, okay? But what we do is we put them into, we take this sort of middle ground and within that middle ground there are some markets and some properties that are likely, we think at least, and we could be wrong, but we think from, you know, vast experience in doing this and doing business in 48 cities nationwide and doing this for more years than I want to even admit doing this for so long. There are some markets that we think will have better capital appreciation potential and other markets that we know right now today have better cash flow potential. And so we'll take the more risk tolerant investor and we will help them design a portfolio of properties that is in this more capital appreciation oriented market where if we have a bump in the market where we have silly, loose money supply inflation, they're really going to benefit. You know, if they're really conservative, we will put them all in the cash flow oriented markets. If they're somewhere on the middle of that scale, we'll put them into a blend. And then we also take into account what I didn't mention here as part of financial planning, but it should be part of it, is the psychology of investing and the personality of the investor. So probably most of you, or maybe even all of you listening to have studied the Myers Briggs Temperament Sorter or the DISC profile or the Colby. And I think that's K O L B E the Kolbe. A lot of people in my mastermind group talk about the Kolbe. I don't know what it's called, Personality assessment test or really character assessment. And so you've taken one of these tests or you know, maybe you just read about your horoscope, something there is probably pretty accurate, right? It's interesting. So you know, are you the investor who likes to roll up your sleeves and doesn't mind getting your hands dirty and wants to, you know, do a little bit of this themselves? Now, when I say that, I don't mean swinging a hammer and fixing up a house because our clients never do that stuff. I mean, all our clients are professionals that are entrepreneurs. They're too busy with, with their own stuff or they're retired and they're just want to build a big investment portfolio and have a bunch of income properties. So it's not doing it yourself in that term, but it's doing it yourself, being maybe more engaged in the process, more emails, more phone calls, more decisions. Or is the personality of that investor the other way where they don't want to deal with anything. They, they just want the done for you program? And so we will try and pick and you may not even know we're doing this, but we are. Okay? We're going to try and assess your personality type as the client and guide you to the markets that we think you will be best suited in. And it doesn't always go right because there can always be an outlier property or an outlier situation. Situation even in the market that is the easy market with the really good, easy provider, you know, and maybe that provider is super great and they make the job of investing easy. And by the way, you know, I want to one of the speakers today in my mastermind group, he said there is no such thing as passive income. And I cheered. I couldn't agree more. It doesn't exist. It doesn't even exist in the bank. It does not exist. True. A truly passive investment is. It's a unicorn. It doesn't exist. Okay? But you can get pretty close with income property. It's about the most passive great investment out there. And you can be as engaged or as unengaged as you want to be. And if you want to be really unengaged, that means you got to have people do it for you. Okay? So we're going to assess the personality of that investor and try and be a matchmaker and match them with the right local market specialist and the right market at the same time doing both of those things. Commandment number five, Thou shalt not gamble. The property must make sense the day you buy it or you don't buy it, period. Thou shalt not gamble. If you're the kind of person listening who is looking to throw the dice and to gamble on big appreciation and have, you know, massive negative cash flow today, then you go by in Orange County, California, where I used to live and good luck to you. That's just not our thing. We just don't do it, okay? It's just not our thing. So we really focus on the conservative cash flow oriented investor. But there is a spectrum within that. Just like I was saying with the financial planning number six, thou shalt diversify. And we talked about that, all your eggs in one basket. Watch that basket. Diversify. Geographically, all real estate is local. And when you look around the country, up until this last downturn, the historic Great Recession, the worst economy in seven decades, do you know there was never actually a national downturn in housing prices since the Great Depression seven decades earlier? That's pretty amazing. There were lots of little local downturns, but there was never a national one. At least from the stats I have. Pretty amazing investment, isn't it, that you could actually say that Number seven, thou shalt be area agnostic, don't get attached to any one area, be willing to shift. And just in closing here, because I do have to go and I've got to get this taped to the editor, I want to just Review the Lucky 13, the Lucky 13 Fundamentals of investing and how these all play in to market selection, property selection, and as a bonus provider or local market specialist selection, okay, Cost of living, transportation, employment and job growth, education, regulatory climate, and that means growth, rent control, taxes, etc. And what I mean by that one, I'm just going to take a moment on that. Landlord friendly markets. We look for landlord friendly markets and if it's not a very landlord friendly market, then there's got to be something big to offset that landlord unfriendliness. So for example, Illinois, we just started doing business several months ago in the Chicagoland area that's not very landlord friendly. You compare that to Little Rock, Arkansas and and you're going to have a much friendlier landlord climate in Little Rock, Arkansas. Because Arkansas is the most landlord friendly state in the Union, bar none. I mean it's far and away the most landlord friendly state. There's got to be an offsetting factor. So what is it in the Chicagoland area? Well, I'd say it'd be appreciation potential and very, very good rent to value ratios. Okay, so you know, you gotta weigh all of these things in the equation. All right, number six, weather, crime, culture and arts, health and health care, fun and recreation, overall quality of life, population density and real estate market trends. And part of the real estate market trends issue and the growth issue, which we kind of touched on in two ways, number three and number 13 is something called the path of progress. Progress is largely considered to be growth in population, which, you know, there's an argument as to whether that's actually progress. Okay? But let's just use this standard definition. You know, growth in the economy, growth in consumption, growth in population. None of this stuff is usually very good for the environment, at least in the short term. But what the environmentalists don't realize is that those people become resources. They solve the problems they create. That's a good thing. They basically recycle in a sense there because they solve problems they create in many ways. So it's not that old Malthusian idea of, you know, we're gonna run out of resources and pollute the world to death because people are a resource, okay? And that's where most of the innovation comes from. I mean, people can think of amazing things and create amazing solutions. And, you know, they always do it for profit, for their own personal gain. And it just shows you the incredible power of capitalism. So the path of progress. This is why areas that are really, really, really deeply blighted just aren't really on our radar screen. And many people have asked, and I always make jokes about it and tease about Detroit, for example. Right. Well, you know, there are some signs of life in Detroit. There are some green shoots. I mean, I'm gonna be there soon, so I'm gonna check it out. Of course, everywhere I go, I'm looking at stuff. I'll let you know. So far, I'm unconvinced, but, you know, all of my theories, for them to work, you've got to have stable or increasing population. That's what I really submit to you. When you have a declining population.

You know, this stuff is all. It all comes up for grabs. It all comes up for question. Okay, well, that's it for today. Go to jasonhartman.com We've got some phenomenal properties up there in the property section@jasonhartman.com Take advantage of those last few Meet the Masters home study courses. They're almost gone. As I've said, they're deeply discounted. It's a physical product. I will ship it out to you and you can have that in just a short time here. So order those last of the Meet the Masters home study courses@jasonhartman.com in the store section. And I will look forward to talking to you on the next episode. We've got Flashback Friday coming up on Friday, and then on Monday, we'll be back with a regular episode. So happy investing, and thanks for listening.

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