Heroic Investing
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Investing in Landlord Friendly Markets & the Power of the US Dollar

Jason Hartman

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Jason Hartman starts the show by discussing an article by USA Today on the subject of investments. He looks at a few very interesting points on the minimum wage. Later, he warns about financial advisors and their conflict of interest with their clients. He ends with a discussion on the US dollar, commandments to live by, and more.

Announcer 0:04
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.

Jason Hartman 0:39
Hello, and welcome to Episode 149 of the heroes 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 and 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 post the 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 10 commandments stuff in there from him. 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 a founding member of that, that mastermind, and he’s actually add a mastermind for real estate providers. So we have 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 to right now. And surrounding yourself. You know, it really comes it just comes back to what Jim Rohn said, and many others have have repeated that you were the sum total of the five people you spend the most time around. And I think most of us have, 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 yet, 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 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, you know, be able to do accounting on things to have a history that’s locked in, it can’t be modified. That’s fascinating. To make sure that, you know, there’s no 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 the 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 He’s possible. And so that’s something that we really do need. So perhaps I didn’t give a good example of that. But let’s go with to the bulbs, or over those little dolls back when I was a kid. And I can’t remember, but two of us 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, two 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 both of those is 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 been 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, his landlord friendly market. So I have a friend who, 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 apologize 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, you know, the network made mistakes going into that industry to begin are 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 gonna 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, 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 met 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 are 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, it probably, that’s probably actually a conservative estimate. But it’s somewhere near the $1 billion mark. And I’m thinking, you know, 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, then sending my money to some Wall Street criminal, right. And criminal is used in a 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 are 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 a maybe a good example, all of the minimum wage, increased 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 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, or 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 interests 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 retire investments that have high fees and low returns, unquote, Obama said in a speech to supporters at the AARP headquarters now, AARP, you know, 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 one percentage point for affected persons.dot.it can cut your savings by more than a quarter over the course of 35 years, unquote. 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. And 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 you’re, 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, 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 talked 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, swanky pair of new shoes and buy yourself a swanky pair of new shoes, you know, you want a new suit, get a new suit, whatever it is, you know, the the small, reasonable rewards along the way, so that you set up your psychology to interpret things the way you want it, we 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 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, 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 in 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 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 yes, I do too. I mean, I I love Apple products and, you know, he’s obviously a visionary. But you know, the experts talk all about his options, backdating schemes and all of this stuff he did. It wasn’t kosher. There’s just too many conflicts of interest. Be a direct investor, you know the drill, right. Okay, another thing I predicted, and I’ve been talking about this for many years, and it goes back and harkens back to commandment number nine. I know I’m always talking about commandment number three, thou shalt maintain control, be a direct investor, but 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’s their universal need? Remember Maslow’s hierarchy of needs. Remember the old saying that people need three basic things? What are they their 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 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, in 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 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 can use this 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. And now, like, you know, half the population probably works out of their house. You know, 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 news or app, a new news or website, and 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 to, 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 is 93 square feet. So this may not sound like a big deal to you. But think of the percentages remember how I talked 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 a 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, all I’m very sophisticated. So I’m going to buy some shopping centers or some high rise skyscraper office building. So 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, and after that, it gets kind of murky. Okay. So let’s talk about the humble US dollar. The one that I’m going to 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. here 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 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, if people who are gold bugs and Bitcoin believers Bitcoin bugs and crypto currency 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 Bled 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 know, like, I love how the Bitcoin people in 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, which stashed away in safe deposit boxes or under the mattress or buried in the backyard. And we’re using the 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 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, bitcoins got such a 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 well, 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 want to find gravity until about one year ago, about one year ago, they started to kind of go off the reservation, and, 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 a 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 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 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 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 talked about commandment number three, let’s review number five, that 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 10 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 10 commandments stuff. I wrote this 10 years ago, okay, this is 10 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, or country is, it’s got a applicability in all market cycles, you know, and so number four is thou shalt use prudent financial planning techniques. So in in commandment number three, I talked about the evils of Wall Street, I talked about how Wall Street is the modern version of organized crime. But in number four, I talked 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, a note, you know, two little notes on diversification, generally speaking, diversification perpetuates wealth that someone already has, and concentration or focus not being diversified. Betting 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 within GM 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, it could be little rock and 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 timeframe 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 their 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, and inflation, they’re really going to benefit, you know, they’re really conservative, we will put them all in the cash flow oriented markets, if there’s 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, have studied the Myers Briggs Temperament Sorter, or the disc profile or the Colby and I think that’s caol be the cold. So a lot of people in my mastermind group talk about the Colby. I don’t know what it’s called personality assessment test, or really character assessment. In so you’ve taken one of these tests or, you know, maybe 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 and our clients never do that stuff. I mean, all our clients are professionals that are entrepreneurs, they’re too busy 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. And 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 just want the done for you program. And so we will, 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, even in the market. That is the easy market with a 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, doesn’t even exist in the bank. It does not exist. Truly 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 person analogy 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 tape 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 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 got to weigh all of these things in the equation. All right, number six, weather, crime, culture and arts, health and healthcare, 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, no, there’s an argument as to whether that’s actually progress, okay, but let’s just use the 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 environmentalist don’t realize is that those people become resources, and they solve the problems they create. That’s a good thing. They, 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 going to 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, I’ve always 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 going to be there soon. So I’m going to check it out. Of course, everywhere I go and 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 Jason hartman.com. We’ve got some phenomenal properties up there in the property section at Jason hartman.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 two the meet the Masters home study courses at Jason hartman.com and 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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