(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to the Business Credit and Financing Show.
Each week, we talk about the growth strategies
that matter most to entrepreneurs.
Listen in as we discuss the secrets to
getting credit and money to start and grow
your business.
And enjoy as we talk with seasoned business
owners, coaches, and industry leaders on a variety
of topics from advertising and marketing to the
nuts and bolts of running a highly successful
business.
And now, to introduce the host of our
show, financial expert and award-winning author, Ty
Crandall.
Hello, and thanks for joining us today.
I'm super excited you could be here because
today we're talking about the key strategies you
really need to know to create long-term
wealth with real estate.
So maybe you're just trying to break into
real estate investing.
Maybe you're already doing it right now.
And to have this conversation, either way, I've
brought the foremost expert on what's going on,
where we're going, and on really how to
tap into this the right way to create
significant wealth for you in your life.
And this is Jason Hartman.
So Jason is actually a successful real estate
investor, entrepreneur, and educator with a proven track
record in his industry.
Having been involved in thousands of different real
estate transactions and owning properties across 11 different
states and 17 cities, he has created the
complete solution for real estate investors, which is
a comprehensive system that provides investors with education,
resources, and tools to be informed and make
great decisions and build wealth.
Now, Jason began his career at 19 while
still in college, quickly becoming one of the
top 1% of realtors in the United
States.
He went on to purchase and expand an
Irvine, California brokerage, which was later acquired by
Coldwell Banker.
Now today, as CEO of Empowered Investor and
Real Estate Tools, he helps investors identify and
acquire income properties in the best U.S.
markets using the area agnostic approach.
Now, through his Creating Wealth podcast and educational
events, Jason has empowered hundreds of thousands of
people worldwide, sharing insights on financial literacy, real
estate investment, and personal empowerment as well.
He is passionate about breaking the cycle of
financial independence and helping others achieve financial freedom
through smart real estate strategies.
Jason, welcome back.
Hey, thanks, Ty.
It's good to be here.
Yeah, it's good seeing you, man.
It's been a while since we've seen each
other.
But I know you're down hanging out in
Miami right now, and I appreciate you making
time to talk to us.
Yeah, my pleasure.
I do keep up with you on Facebook,
though.
I appreciate it.
Yeah, we don't see each other as much,
but it's still good.
That's what's nice about social media is we
still get a chance to catch up about
what each other are doing.
So what do you think?
You have a big audience that you teach.
What are some of the, where do you
kind of get on the starting point of
building wealth with real estate?
What do you think is one of the
points that keeps people back?
Because we all know real estate's a great
way to build wealth.
So many people don't do it.
What do you find is a barrier with
people starting to use real estate as a
tool to build wealth?
I think the biggest barrier is really the
mindset of the person who is the potential
investor, who wants to build wealth.
And I find that the biggest hurdle, the
biggest setback for most people is they keep
trying to time the market.
And there are always reasons, at any time
in history, in every asset class, there are
always reasons to go for it and reasons
you might not want to go for it,
you know?
But what people need to realize, Ty, is
that income property is the most historically proven
asset class in the entire world.
And trying to time it is just really
a fool's errand.
There are so many doomers out there, and
those people, those doomers, have the highest ratings.
If you listen to Peter Schiff, if you
listen to any one of a number of
doomers, right?
They have the big audience because the human
mind is trained to hone in on negativity.
And that was a survival mechanism for eons
before our discussion today, because we lived before
the Industrial Revolution in an era of scarcity.
And when the Industrial Revolution came along, it
created an era of abundance.
And then the information revolution came after that.
And now I guess you could even argue
we're in the AI revolution, which is also
information, but kind of a new variety of
it.
And we live in a truly abundant world.
And it is something that people just need
to understand.
They need to overcome their own psychology.
That is the biggest issue.
That's the biggest hurdle.
And also they need to realize that income
property, unlike most investments, is a multidimensional asset
class.
So in most investments, the whole game is
buy low, sell high, right?
End of discussion.
Whether it be precious metals, non-dividend paying
stocks, cryptocurrencies, that's the game.
And then some, say a dividend paying stock,
it's buy low, sell high, get some dividends
in between.
But income property has at least six dimensions
to it.
And so you make your money in a
lot of different ways and you can adjust
your strategy depending on the type of market
you're in.
You are one of, if not the most
well-renowned educators in the space to investors.
So what are some of the core principles
that you're teaching your students when they're kind
of going down this?
Because there's a lot of options, like just
asset classes within real estate investing itself.
There's so many options.
I think it is almost overwhelmed.
So what are some of the core principles
that you're teaching your child?
Yeah, so we like single family homes.
That's our favorite.
But I would broaden that a little bit
to say just housing in general.
Obviously apartments have been pretty tough for the
last few years.
A lot of people got in sort of
over their head with apartment complexes and so
forth.
But I think they've probably bottomed out or
they're close to bottoming out in terms of
that market.
Obviously the office market is absolutely terrible.
You know, that we've all heard about that
because the remote working era.
And we just like housing because at the
end of the day, housing cannot be outsourced.
If you need office space and you run
a call center, you can move that call
center to anywhere in the world.
And certainly companies have done that.
So that lessens the need for office space.
Shopping or retail property use can be outsourced
to the internet.
And it has been for a couple of
decades now, lessening the need for retail properties.
And so we've seen shopping centers go through
a really tough time.
But at the end of the day, everybody
needs a place to sleep.
They need a home.
And that's why housing is my absolute favorite
asset class.
Now there are many ways to approach it.
And we teach a lot of strategies on
my podcast and on my YouTube channel.
One is inflation induced debt destruction, which is
like this hidden wealth creator.
I trademarked that term many years ago.
And that's made me rather famous.
I created a methodology to mitigate risk called
the Hartman Risk Evaluator, which is based on
what I call the LTI ratio.
We've all heard Ty of the LTV ratio,
the loan to value ratio, but this is
the land to improvement ratio.
And it's a way that people can really
mitigate downside risk when looking at a real
estate deal.
And all sorts of things, standardizing data, how
to read a proforma, why you should use
one specific proforma and not deviate from it.
So you've standardized your data and you're much
less likely to make mistakes that way.
Tell me a little bit more about LTI,
because I think that that's something that people
are really looking at is how can they
get in to real estate investing while minimizing
the risk?
Yeah, so about 20 years ago, when I
was first becoming a nationwide investor, before that
I had lived in Southern California most of
my life and I was just investing locally.
But what I didn't know about Southern California
is that I was basically speculating.
We divide the country and the world into
three types of markets, linear markets, cyclical markets,
and hybrid markets.
And so the markets that get all the
attention are the cyclical markets.
And maybe I illustrate it this way.
If you're looking at a chart with appreciation
or depreciation over time, you'll have a cyclical
market which will have glorious highs and really
ugly lows.
It's like a rollercoaster, that chart, okay?
A linear market though is pretty smooth.
It has very small highs and lows and
it just has that upward progression.
And what I'm talking about here is appreciation
or depreciation.
A hybrid market is the name would implies
in between the two.
So what markets are cyclical?
Well, the markets that get all the attention
are cyclical.
They are places like the West Coast of
the United States, the expensive Northeastern markets, New
York, Washington DC, Boston, South Florida, where I'm
from and where, well, you're not exactly South
Florida, but close.
And so South Florida, very cyclical market, glorious
highs, ugly lows, okay?
And high land values and low or bad
cashflow.
So we like linear markets.
This is most of the country.
What Hillary Clinton years ago affectionately called, I'm
joking, not affectionately, but the flyover states, right?
That's most of the country and most of
the world is a linear market.
These markets are in Arkansas, Tennessee, some Florida
markets.
Some Florida markets are linear.
In Georgia, in Texas, these are markets that
are just pretty reliable.
They have a slow kind of boring upward
trajectory in their pricing.
And it really comes down to kind of
the old fable of the tortoise and the
hare, right?
The hare is that cyclical market that gets
all the attention because there's a lot happening
there.
That's why the media pays attention to it.
There's more to report.
There's a bigger story because there are ups
and downs.
But the linear markets tend to be much
better investment markets.
Around the world, this is also true, Ty.
So if you look at the flagship cities
of the world, whether they be Paris, Hong
Kong, Dubai, places like this, these are all
cyclical markets and they all have very high
land value.
So when you buy a property, you're really
buying two components.
You're buying the land and you're buying the
house or the structure, the apartment complex or
whatever is built on the land.
That's the improvement.
So LTI means land to improvement.
And what you want, the ideal equation here
to limit downside risk and what the Hartman
Risk Evaluator teaches is to invest in markets
with very low land values because those are
more stable and you want high improvement value
as a ratio to the land, okay?
So all of these expensive flagship markets have
high land values.
Cyclical markets are always characterized by that.
So give me an example of one that
has, that would be high or good to
invest in on this LTI scale.
Yeah, so Memphis, Tennessee would be a great
example.
Indianapolis, Indiana would be another great example, right?
These are markets where if you're looking at
a, say a $200,000 property or really,
I should adjust my prices, $300,000 property,
okay?
About 80% of the value of that
deal is going to be improvement value.
And only about 20% will be land
value.
So on that $300,000 property, that lot
without a house on it would be about
$60,000, give or take.
And the house, the structure, the improvement would
be the rest of it.
Why is land volatile and improvement not so
volatile?
That's a very fair question to ask oneself.
And the reason is, is because the ingredients
of a house, so I'm in a hotel
room right now, right?
But if you look behind me, okay, the
ingredients will be drywall, glass, steel.
In the hotel, well, yeah, we've got some
lumber, the baseboards are lumber.
You know, this is a steel building, it's
a high rise.
But we've got those things, we've got concrete,
we've got copper wire in the walls, we've
got lots of petroleum products and the cost
of energy and labor, okay?
And so these things, these commodities are traded
globally, they're not attached to any one currency.
It doesn't matter if money or currency didn't
even exist, people would still need them, the
whole world needs them because they need shelter
and they have intrinsic value, right?
A piece of wood is worth something even
if the dollar didn't exist or the yen
didn't exist or the Euro didn't exist.
It's an asset that has intrinsic value because
people just need it.
And so that's why it's very stable when
you invest mostly in improvement value rather than
land value.
So when you've identified that you wanna be
in kind of a linear type market, there's
so many options available around the country.
So I'm sure one of the most common
questions that your tribe asks you in the
beginning is like, how do I even know
what area to invest in?
Yeah, well, maybe this will sound like shameless
self-promotion, but if you go to jasonhartman
.com and you click on the properties page,
you're gonna see the areas we like and
the areas we're recommending at any given time.
And those do change, by the way, because
markets change, they're very dynamic and we're always
looking at different markets, looking for better opportunities.
And some of these markets appreciate frankly too
much and then they start to get into
the hybrid segment and we have to keep
adjusting our strategy a little bit.
But yeah, that's where you can see the
markets we like at any given time.
So if you check that, if you go
to jasonhartman.com and click on the properties
page, today, you will see in a year
from now, you'll see different markets, okay?
But like, I mean, some of them will
remain the same, but there'll be some different
markets as well.
And I like it because not only do
you list the properties, you even list the
factors that really make it like one of
the most desired properties.
So if you haven't already, make sure you
go to jasonhartman.com and then you can
clearly see on the right-hand side, you
can click the menu and be able to
get to the properties page.
Yeah, and then also Ty, each of those
properties has a full proforma with it.
And one of the things I said earlier
is you've got to, as an investor, you've
got to standardize your data.
Standardize, standardize, standardize.
Because so many people are using spreadsheets and
using this thing and that thing.
And look, you've got to just decide that
you're gonna use one type of proforma.
You're gonna learn how to understand that proforma.
And now a quick break to hear from
our sponsor.
Hey, it's Ty Crandall with Credit Suite.
Many of our subscribers wanna get the most
money to grow their business at the best
terms.
Whether you're looking for startup capital, low interest
credit lines and loans, or business credit, we
can definitely help you.
So give us a call at 877-600
-2487 or schedule your free consultation at creditsuite
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money you can get approved for today.
And you're not gonna deviate from it.
So if anyone brings you a deal or
any deal you find, you put it into
the same software.
And I've been doing that for 21 years.
I liked it so much I actually bought
the company, okay?
So this was a software company called Property
Tracker.
And basically I bought it and I made
it free, okay?
So you can just go to propertytracker.com,
create a free account.
It's totally free to use.
And you can do these proformas yourself.
It takes about five minutes or less.
You know, once you get the hang of
it, you can do one in three minutes.
It's just super easy.
You put a few data points in on
the property, the mortgage, the financing, and your
expectations of the future in terms of appreciation,
vacancy rate, things like that, repair costs, maintenance
costs.
And you will get a projection as to
how that property will perform in virtually every
aspect.
Jason, if somebody is just getting launched, it
can be overwhelming.
There's so many things to do, nodes, tools,
resources.
You don't even know where to kind of
go or what to do first.
What do you do first?
If somebody is just getting into real estate
investing, what are some of the first steps
they should take, the first things to consider
to get launched?
Well, first they've got to see what they've
got going on money-wise, right?
And what is their credit like?
What is their money like?
Now, your company can help people get down
payment money, property improvement money, and so forth.
And so that's great.
But understand one's financial situation, certainly.
Then decide that you're going to invest in
conservative linear markets that have good cashflow and
good return on investment.
Maybe go to my website and watch one
30-minute video on how to analyze a
real estate deal, how to read a proforma.
And it's on that same proforma that I
just told you about.
Get the free software and just be your
own best, be your own best advisor, right?
Rather than relying on somebody else, just learn
how to analyze deals so that you don't
make a mistake.
The most common mistake people make after the
first one we started off with, which is
not doing anything, that's the biggest mistake, okay?
That's the biggest mistake anybody makes.
But the second biggest mistake people make is
that they buy a property based on some
big future expectation, usually of appreciation.
And that is a fool's errand, okay?
Yeah, a lot of people lose money that
way.
Nothing extraordinary should have to happen for you
to make a good return on investment.
And that's why we just take this very
conservative path where every month, every year, people
are making a nice return on their investment
rather than waiting for something great to happen
that may never happen.
So you talked about the investment side.
And I think money and money to invest
is something that's always on people's mind.
What are some of the best ways you
recommend for somebody to get money to invest?
What are the ones you like right now?
What kind of loans?
Do you like DSCR?
I heard somebody was talking about 203K loans
the other day.
What are you seeing that you like the
most that you're recommending to your tribe?
Well, once you've figured out how much you
have for a down payment, the best financing
far and away is the common popular conventional
financing that is essentially backed up by the
government.
It's the Fannie Mae, Freddie Mac financing.
Could also be FHA or VA, but you're
not gonna be able to do investor stuff
with that.
You can kind of house hack if you're
really just getting started and move into one
of those properties for a while and then
turn them into a rental property, okay?
But the best financing far and away is
the Fannie Mae, Freddie Mac conventional financing.
After that, you only are allowed to have
10 of those loans.
Now, if you're married, each spouse could have
10, but after that, a lot of our
clients that are building nice size portfolios, they
will go with DSCR loans, which means debt
service coverage ratio, by the way, where the
qualifying for the mortgage is based much more
on the property than the person, okay?
The DSCR, just making sure those numbers look
good.
And on the propertytracker.com software, it shows
the debt coverage ratio.
So you can instantly know whether you can
get a DSCR loan.
Okay?
And so after your first 10 for one
person or two if you're married, then you
can go ahead and get DSCR loans, commercial
financing.
There's of course hard money, but it's very
expensive.
There are other creative financing options.
There's no way we could cover all this
in our brief time together.
There's like an unlimited number of things you
can do, really.
Now, that's great.
I mean, I think you gave us a
where to start, where to go to from
there.
What about properties?
What about use of properties?
I mean, there's so many things I can
fix and flip.
I can buy and hold.
I can put it in a long-term
rental.
I could do a short-term rental.
Like, how do you help your tribe decide
which one of those paths to choose?
Well, there's a spectrum on the passivity or
activity of an investment.
Okay?
And the things you mentioned, whether they be
Airbnb, short-term rentals, or fix and flip,
or you didn't mention but wholesaling or any
of these things, these are all more businesses
than they are investments.
Okay?
My company, Empowered Investor, we help people invest
in real estate.
Okay?
If you want to go into the business
of real estate and you've got a lot
of time or you don't have a day
job, then you can go into the business
of real estate and you can gain an
additional profit by just basically going down the
food chain and doing the things that someone
would have done before you bought a turnkey
property.
So you could fix it up and do
the BRRRR strategy, or you could fix it
and flip it, or you could go send
thousands of mailers per month or make a
whole bunch of phone calls or knock on
doors and get a wholesale deals.
Or there's just so many things you can
do in real estate.
It's an amazing industry.
It really is.
But what my company does is we help
people buy turnkey properties nationwide in different markets
that we've researched from teams that we recommend.
If I'm coming into you, we hear a
lot about passive income.
We hear a lot about cashflow and properties.
Then we hear a lot about appreciation.
What do you recommend?
Like, what am I looking for?
If I come to you to invest, then
am I really looking for something that's going
to cashflow and create that passive income?
Am I looking for something that maybe has
a better chance of rapid appreciation?
Maybe am I looking for something that does
both?
Yeah, well, appreciation is historically very unreliable and
very few people are good at predicting whether
it'll happen or not.
So for my money, I would say you
look for a property that just simply makes
sense and gives you a nice return on
investment every single year, okay, where you can
get very good returns and you can see
these all in the properties page at jasonhartman
.com, looking at the performance.
If appreciation happens, it's the icing on the
cake.
If a lot of appreciation happens, it's more
icing on the cake.
But again, it's not very reliable to project
big appreciation rates.
I mean, most experts will agree that the
standard appreciation rate over decades is about 6
% per year, give or take, okay?
And if you're expecting anything more than that
to happen, you're more of a speculator or
a gambler than an investor.
And the other thing I'll just say about
that, because you mentioned passive income, there is,
in my opinion, no such thing as a
passive investment.
If anyone is promoting a passive investment, they're
lying to you.
I mean, literally even a savings account is
not a passive investment, okay?
Because you're getting attacked by inflation and taxation
and banks change their policies.
They eschew your money to the government if
you don't have activity in the account.
They close, they go out of business.
Like all of these things have happened to
me.
And I'm thinking, wasn't this supposed to be
just a passive investment?
Precious metals.
I had some precious metals in a safe
deposit box or a couple of them, right?
And the bank says, we're closing this branch.
You have to move your stuff out of
your safe deposit box by a certain date.
And that safe deposit box was in another
state that I used to live in.
And so now I have to literally fly
there, pack my suitcase up with gold and
silver and platinum and palladium, which is extremely
dangerous, right?
To be carrying that stuff because someone could
kill you and take it and then move
it to another bank.
There is nothing as passive.
There's no such thing as a passive investment.
Everything requires attention unless you want to lose
money.
Passive investments, lose money with them.
Sure.
That's not passive.
Passive investments and major appreciation.
What are some of the other misconceptions that
you think your students have when they come
to you that you have to work through
to help them become successful?
I think the biggest one is just timing
the market.
That is the one that just kills so
many investors.
They surf around YouTube.
They see all these doomers.
They get tons of huge ratings who are
just making these leaps in logic about the
market.
Look, the fact is there is a major
housing shortage and it doesn't look like it's
going to be solved anytime soon, okay?
We have about 140 million properties in the
country.
We have about 700,000 of them that
are actually for sale right now, which is
a very low number.
Only about 0.5% of the housing
stock is for sale.
Whereas usually there's about 1%, about double what
we have for sale.
And it's amazing that that's true because interest
rates have had such a massive increase, just
such a historically high increase in interest rates,
yet the market has still appreciated where a
lot of these, what I'll call crash bros
and doomers, they've been saying, oh, the real
estate market's going to crash.
The complete opposite happened.
And look, if you listen to them, you
missed out, okay?
And you're just going to keep missing out.
You got to get in the game.
That's where the money is made, being in
the game, not being a spectator.
And that's the biggest mistake I see people
make.
They talk themselves out of it because they
listen to the wrong advice and they don't
really think it through in detail in terms
of what's really going on and what the
dynamics of the marketplace are.
It's interesting.
We just came through not to get politics.
We just had a recent election and I
think we've learned from these pollsters being so
wrong like that.
Maybe we should trust these experts' advice.
But speaking of the recent election, so what
are your thoughts of the future?
Like what do you see for see happening
here in the years to come with the
real estate market?
Well, if Kamala would have won, or Trump
did win obviously, but that wouldn't really change
things that much in terms of real estate,
okay?
Overall, the same strategy would apply.
Get in the game, okay?
But one of the really beneficial things about
income property investing is when there's inflation.
And either way, there's going to be inflation,
okay?
Trump is likely to deregulate things, which is
great news.
That'll mean more business, more home building.
That's good, right?
From a business perspective, for sure.
But he's also likely to place tariffs on
things, which will make them more expensive.
And a lot of those raw materials I
mentioned earlier, the ingredients of the house, those
doorknobs, those hinges, the plumbing, the plumbing faucets,
so forth, a lot of the stuff's made
in China.
And it's going to have big tariffs on
it.
It's going to get a lot more expensive,
okay?
But ultimately, that's going to be good for
the U.S., I think, in the long
run, because it's going to make more U
.S. jobs here.
It's going to be more beneficial to set
up a company to make these parts in
the U.S., rather than making them in
China or wherever they make them, right?
They're made all over the world.
And so that's one thing, but either way,
we've got $35 trillion in terms of national
debt.
We've got unfunded entitlements that go into the
future that are, some estimates say they're $220
trillion.
The size of the entire U.S. economy
is, what is it now?
About $28 trillion every year, I believe, the
GDP of the country.
And basically, that means the whole country would
have to take no income, pay 100%
tax rate for like 10 years to solve
the problem.
That's not going to happen.
The deficits and the unfunded mandates will continue,
even under Trump, okay?
Trump is a good businessman.
I think he's much better for the country
than the alternative, no question.
I'm very happy that he won.
It seems like most of America is as
well, but either way, it's going to be
a great time to invest in real estate
because there's going to be lots of inflationary
pressure and there's a very significant housing shortage.
Jason, what's up?
Talking to you, seems like I got 30
minutes fly by really quick.
And then that's why I need to keep
bringing you back on because there's so many
things we could dive into.
There's a lot of people here that are
in real estate investing, want to break in.
They need someone like you as a mentor.
I mean, you're the guy in the country
that basically helps people break in and really
succeed in this space.
So where can everybody go that's watching this
and listening to this go to be able
to dive in and be able to get
more insight, more resources, more help from you?
Yeah, thanks, Ty.
So my podcast is called The Creating Wealth
Show.
So just look up Jason Hartman on any
podcast platform.
You can find me on YouTube, just type
Jason Hartman.
And then my main website is just jasonhartman
.com.
And I'm on the other platforms too, Instagram.
I get a lot of engagement on Instagram,
which is Jason Hartman and then number one
and Twitter or X as well, Jason Hartman
ROI there for return on investment.
So you can find me in all of
these places.
Sounds good.
Thanks for joining me today, Jason.
Happy investing.
All right, so listen, if you're watching this,
I mean, you have to go to jasonhartman
.com because if you go to jasonhartman.com,
what you find is a treasure trove of
resources.
I mean, not only can you link to
everything that you want to link to, especially
on the bottom of the page where you
can access the social media links, but you
also can even find like a resources section
and you can look at his properties to
be able to find available properties, the performance
that we discussed today, the areas that you
want to really consider buying in the properties
you want to consider buying.
But he's even got a resources tab that
has everything you can think about from calculators
to articles to blog posts to everything else
you would need resources to actually be able
to be successful.
His blog is there, you're able to, I'm
not sure, Jason, can you access the podcast
from your website, jasonhartman.com?
Yeah, you can.
Sure, sure.
It's better through a podcast platform because then
you get the updates and so forth.
So you want to make sure you look
for his podcast on the podcasting platforms.
It's a better way to go, but you
also can access the blog, the podcast, more
information about him, all of these resources, properties
to invest in, everything.
It is a good starting point for you.
And then from there, you want to take
the next step to talk to Jason.
Jason's got a fantastic tribe of people that
he's helping actually succeed in this space.
And as we all know, like you're going
to get better results, faster results if you're
working with an expert than trying to figure
all this out on your own.
And there's a lot to figure out.
So make sure you get started at jasonhartman
.com.
There's more than abundance of resources.
You'll probably find anywhere else to help you
actually succeed in the game of real estate
investing.
So thank you very much for tuning in.
Make sure you check out jasonhartman.com.
Take care.
Have a great day.