Heroic Investing
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HI 59 – The Importance of Understanding Regression to Replacement Cost and LTI Ratios

HeroicInvesting.com

Episode: 59

Guest: Jason & Gary

iTunes: Stream Episode

Download: MP3

All investing comes with risk attached, but some investments are a lot riskier than others. Stocks can run to 0 and leave you with absolutely nothing. Real estate, however, doesn’t really have THAT particular problem. No matter what happens you’ll have the land, as well as the physical materials the home was made out of.

Gary Pinkerton tees up the episode with his story of investing in the dot com bubble, then lets Jason Hartman take the lead to discuss the important topics of regression to replacement cost and LTI ratios.

Key Takeaways:

[1:34] The dangers of the stock market, and the dot com era, and how Gary got burned

[5:10] An intro to the cost of the “bricks and sticks” when it comes to homes

Jason Hartman Monologue:

[9:25] As a prudent investor, you need to know the vital points about LTIs and regression to replacement costs. Learn all you need here.

[11:31] Jason Hartman’s personal risk evaluator model relies on construction cost and land cost, and this is a great way to minimize risk when investing in real estate.

[16:26] If you’re building in a higher price area, you’re going to have to pay your contractors more because they have to be able to afford to live in that area.

[19:36] Three sources of assessing your land value: tax collector or assessor for property taxes, an insurance broker – an insurance company selling you a policy based on the property, and an appraiser.

[23:58] If you’re interested in looking for the sorts of properties that can offer you regression to replacement opportunities, come along to the Birmingham, Alabama property tour in November.

[30:06] For more information specifically about risk assessment in investing, go to www.JasonHartman.com and type in ‘Hartman risk evaluator’ into the search bar to find podcasts and blog posts.

[32:09] Another recommendation for you is to look for the podcast and YouTube video about how to read a property Proforma. This is a really vital skill you can use to become a better investor.

Website:

www.JasonHartman.com/Properties

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