Today Jason and a few experts cover the following:
· Dr. Denis Waitley’s Winning Is Giving
· A brief radio interview on oil prices, increasing foreclosures, potential malfeasance, or at least carelessness, by CitiBank and Merrill Lynch
· The “Un-Loan™” – A unique strategy to turn real estate equity into cash WITHOUT incurring any debt. An interview with Randy Luebke from the Academy of Mortgage Planning (AMP).
· CNBC’s Mike Huckman profiles Mobile, Alabama’s booming economy after Hurricane Katrina. See Mayor Samuel Jones, $300 million port expansion, Erik Johnsen, President of International Shipholding Corporation talks about moving from New Orleans, France’s Airbus gets a $40 billion contract for the KC-30 military aircraft creating over 1,000 new jobs and Germany’s ThyssenKrupp is building a $3 billion steel plant that requires 25,000 construction workers and will create 3,000 new high paying jobs.
· Platinum Investment Counselor, Terri Hansen, shares her income property investment experiences, some thoughts on financial freedom, 401k and IRA retirement plans and the insider’s view of stock manipulations in publicly traded companies.
Welcome to Creating Wealth with Jason Hartman, President of Platinum Properties Investor Network in Newport Beach, California. During this weekly program, Jason is going to tell you some really exciting things that you probably haven’t thought of before, or a new slant on real estate, fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible.
Jason is a genuine self-made multimillionaire, who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in nine states. This program will help you follow in Jason’s footsteps on the road to financial freedom through real estate. You really can do it. And now, here’s your host, Jason Hartman.
Jason Hartman: This is Jason Hartman with Platinum Properties Investor Network. Welcome to today’s podcast, and thanks for joining us again. We have a lot to talk to you about today. First, we will start off with a little bit of inspiration that I’ll share with you in a moment, and then a recent short radio interview, but it’s very brief but I think very telling, then we’ve got a special guest, Randy Luebke, to talk to you about a new mortgage product that’s kind of interesting, and then a little bit on Mobile, Alabama. There was a recent – I think it was a Fox News of CNBC tape that I want to share with you, and then kind of reintroducing one of our investment counselors, Terri Hansen, will be here at the end of this podcast talking about her experience with real estate investing.
But first let’s start off with some inspiration. I discovered fortunately several mentors at a rather young age. I was about 16, 17 years old. One of them that had a big, big impact on my life was Dr. Denis Waitley. Now, you may have heard of Denis Waitley. He’s written several books and a lot of audio programs and they’re just fantastic. And I just wanted to share with you one of his great little poems. It’s very brief, but also very inspiring, and it’s called “Winning is Giving.” Here’s how it goes:
Winning is giving your best self away.
Winning is serving with grace every day.
You’ll know that you’ve won when your friends say it’s true.
I like who I am when I am around you.
You look for the best in the others you see,
And help us become who we’re trying to be.
Winning is helping someone who’s down.
It’s sharing a smile instead of a frown.
It’s giving your children a hug by the fire,
And sharing the values and dreams that inspire.
It’s giving your parents the message, “I care.”
“Thanks, Mom and Dad, for being so fair.”
Winners are willing to give more than get.
Their favors are free; you’re never in debt.
Winning is giving 100 percent.
It’s paying your dues, your taxes, your rent.
It’s trying and doing, not crying and stewing.
Winners respect every color and creed.
They share and they care for everyone’s need.
The losers keep betting that winning is getting.
But there’s one of God’s laws they keep on forgetting.
And this is a law that you can live and believe.
The more that you give, the more you’ll receive.
Now, isn’t that something great to aspire to? So that’s our bit of inspiration for today. Listen in to this very brief radio interview that I did just last Wednesday. I think you’ll gain some good insight from it about the state of the economy and investments and so forth. Here we go.
Al Rantel: The blue is back. This is the home of the Los Angeles Dodgers, Talk Radio 790 KABC. Hi, the Al Rantel Show. We’ve got very few moments here left, but there are three – let’s see, what did I do with them? I have them right here, three headlines, three financial headlines. Oh, here they are. Three financial headlines this morning that – my writers are on strike, too, just kidding – that I want to cover with the man for all things financial on the Al Rantel show, Jason Hartman. Hi, Jason.
Jason Hartman: Hey, Al. Good to be on with you.
Al Rantel: Yeah. I’m sorry our time is limited, but I know we’re going to squeeze you on. We’re going to be able to get you for a full hour to come in before Thanksgiving and take questions, right?
Jason Hartman: No problem at all.
Al Rantel: And by the way, a side note before I give you the three headlines. I was watching last Sunday Chris Wallace on the Fox News channel. He was interviewing Bobby Jindal who is the brand new elected governor of Louisiana. Very, very interesting guy.
Jason Hartman: Thirty-six years old I think, right?
Al Rantel: Yeah. Young son of Indian immigrants, exactly.
Jason Hartman: Right.
Al Rantel: Yeah. And he says to Chris Wallace, he says, “Well, you know,” he said, “we have this amazing GO Zone tax benefit for investors in our state but a lot of people don’t know about it.” And Chris Wallace didn’t even ask him about it because I don’t think Chris knew what he was referring to when he said, “GO Zone.” So I just wanted to compliment you that you guys have been on this from the very beginning.
Jason Hartman: Yeah, thanks, Al. The GO Zone is really the biggest gift the IRS has probably ever given the American people.
Al Rantel: Wow.
Jason Hartman: And it amazes us how few people know about it.
Al Rantel: Yeah.
Jason Hartman: I mean, incredible tax benefits, just incredible. And we have a seminar on that Tuesday night, a week from today.
Al Rantel: Yes. Tuesday night a week from today. We’ll give you the contact information for Jason at the end, but when he said that, I thought, “Wow, Jason Hartman’s been out in front on this for a long time.” And it was funny because I saw the look in Chris Wallace’s eyes like he wasn’t going to ask him, “Well, what’s a GO Zone?” Because it would’ve taken the interview in a different direction, but he didn’t even know, and I don’t think he even knew what he was referring to, but it is – for being the biggest tax benefit, it is a well-kept secret.
Jason Hartman: It really is. It’s just amazing how few people know about it. I mean, taxes are life’s largest expense.
Al Rantel: Yeah.
Jason Hartman: The largest expense any single person has in their life are taxes.
Al Rantel: Right. You would think people would be on top of everything with it.
Jason Hartman: Got to be on top of that. It’s a big thing.
Al Rantel: People will drive around all over to save five cents a gallon on gas, but taxes is where the real money is.
Jason Hartman: But how much effort will people put into getting all the federal tax back that they have paid in the last five years?
Al Rantel: Well, they can see you about that, but let me read you these three headlines.
Jason Hartman: Sure.
Al Rantel: Because I thought of you this morning, and I’m just going to read all three and I want you to take off and say what you want to say about them in the limited time we have.
No. 1, “Oil at a New Record Closing in on $100.00 a Barrel, Over $97.00 a Barrel, $4.00 Gallon Gas Predicted by the New Year.”
No. 2, “Banks May Have a Trillion Dollars in What They Call Toxic Debt.”
And Headline No. 3, “Foreclosure Wave Sweeping the United States.”
What about these?
Jason Hartman: Take those in reverse order maybe. We’ve talked a lot about foreclosures on prior shows with you, so maybe we want to spend a little more time on the other two headlines in that, but we’re going to see the foreclosures getting worse. The largest reset of these adjustable rate mortgages causing sort of what we call “payment shock” happens in March of 2008, so it’s coming up, and that number, Al, will be double what we had last month. It will be $110 billion in loans that will reset to higher interest rates barring some even more radical change by the Fed and loosening of the money supply, which I don’t think we ‘re going to see a whole bunch more of that.
Al Rantel: So that’s March? That’s coming up in March of next year?
Jason Hartman: You’ve got it, yeah.
Al Rantel: All right.
Jason Hartman: So that’s going to take a while. I think we’ll see the California market start to bottom out around the middle of 2009, so most people listening are probably local listeners except for your Internet people.
Al Rantel: The middle of 2009?
Jason Hartman: Yep. I think we’ve got a ways to go before we see things kind of calm down there.
Al Rantel: All right. And what about, do you want to go in reverse order? Banks may have a trillion dollars in toxic loans.
Jason Hartman: Al, it just makes me so upset. It is disgusting what is going on at the highest financial institutions in the world. I mean, at Citigroup, at Merrill Lynch.
Al Rantel: Yeah.
Jason Hartman: There’s a Bloomberg article today that says, “Citigroup isn’t sure. They think it might be $8 billion. Maybe it’s $11 billion.”
Al Rantel: Yeah, I saw that.
Jason Hartman: Well, what’s a few billion?
Al Rantel: What’s a few billion among friends?
Jason Hartman: It’s just like they acted like they didn’t know about this, and some people –
Al Rantel: Jason, imagine if you ran your business that way. You’d be in jail.
Jason Hartman: Yeah. Well, I don’t have a bunch of shareholders and spin doctors to bail me out like they do.
Al Rantel: Right.
Jason Hartman: But yeah, it’s really just incredible how it seems like these companies have been misrepresenting this stuff for a long time and –
Al Rantel: But a trillion dollars in toxic debt?
Jason Hartman: Yeah.
Al Rantel: What does that do to our overall economy?
Jason Hartman: Well, it’s not good news because what it’s going to do is a lot of investors that invest in this debt in mortgage-backed securities and mortgage-backed bonds will suffer. They will lose money, and the people that will win – it sounds weird to say it – are the people that bought sensible properties because the population is increasing. The properties that made sense the day they bought them, and they bought them with as much high-grade I’ll say borrowed money as possible because to bail these banks out, to bail Wall Street out, it will – I think we’ll be forced to see the dollar weaken even further.
Al Rantel: Even more? Wow, it’s already in the toilet now.
Jason Hartman: That’s how you pay for this mess.
Al Rantel: Right.
Jason Hartman: If the taxpayers have to bail it out, it costs money.
Al Rantel: All right. Now, before we run out of time, and now at the end please tell people how they can call you privately about what we talked about at the beginning because I don’t have time to repeat any of that. But what about the oil maybe $100.00 a barrel and $4.00 a gallon gas by the new year?
Jason Hartman: Well, that’s a reflection of two things. No. 1, it’s a reflection of the weak dollar, in my opinion, that we’re seeing oil prices go up because oil is a commodity kind of like gold almost where it relates to the dollar to some extent. But the bigger issue is this, the one that’s never before happened in human history, and that is that we have so many more people now participating in the world economy and consuming every resource on Earth, so you see now maybe we had half a billion people over the last century that were really in free market economies around the world that were developed economies.
And now we’ve got three billion when you include China and India that are the lion’s share of it. And so you have this massive global consumption going on that is driving up the price of every commodity, whether it be copper wire, lumber, concrete, steel, glass, and coincidentally, Al, these are the ingredients it takes to build a house. And the commodities – I call this packaged commodities investing – are all in the property, in the structure, and I find this to be the most exceptional way to invest because as you have more inflation and more consumption, the value of your structure, your house, goes up.
Al Rantel: That’s interesting. I never thought of it that way, but in the old days, most countries were living in such poverty conditions, they weren’t really consuming much. Now they’re all – there’s more and more and more and more consumers every day, and the things they’re consuming are going to go up in price.
Jason Hartman: Yep. This is the good news.
Al Rantel: Yeah, right.
Jason Hartman: I mean, that’s the reason to be optimistic about the world.
Al Rantel: All right. Real quick, Jason, if people want to talk to you, what do you got for them real quick before I run out?
Jason Hartman: Call us at 1-800-40-JASON. That’s 1-800-40- J-A-S-O-N, or visit me on the web at www.jasonhartman.com.
Al Rantel: Jason, how did you get so smart? I asked you about three big financial stories and in about three minutes you brought them into focus. I really, really, really – it’s why we go to you on these things because trying to make sense of these is difficult so I really appreciate you doing that for us.
Jason Hartman: Well, this is my specialty, but there’s a lot of other stuff I don’t know.
Al Rantel: Well, that’s okay. There’s a lot of stuff I don’t know, either, but on this one you got it covered. All right, Jason. I’ll see you before Thanksgiving, my friend, okay?
Jason Hartman: Okay. Thanks, Al.
Al Rantel: All right. There he goes. www.jasonhartman.com is where you’ll find him if you want to ask him something on your own. Big financial headlines today, and there will be more and we’ll cover them all, KABC.
Jason Hartman: All right. Let’s go to an interview with Randy Luebke. I’m here with mortgage expert and innovator, Randy Luebke, and today we want to talk about a really interesting financial product that is new and very innovative. I think you’ll like it a lot, but first we need a little background and we need to know what to compare it to. And Randy, why don’t you talk a little bit about what a reverse mortgage is and how this product is actually a better innovation beyond the reverse mortgage concept?
Randy Luebke: Sure. Well, let’s talk about the reverse mortgage, of course. They’ve been around for about 20, 30 years. The bulk of them are provided to us through FHA, and what a reverse mortgage does is it allows somebody who owns a piece of real estate to extract equity from that real estate without having to repay a mortgage payment every month. That’s why we call it a reverse mortgage, so it will provide a homeowner either with a chunk of cash that they can have today and do something with or they can have a monthly annuity paid to them as long as they live inside that residence. That’s how a reverse mortgage works.
Jason Hartman: Okay. So that’s something that’s typically used for older, retired people who are equity rich and cash poor, right?
Randy Luebke: That’s absolutely correct, and there are some restrictions on that. You mentioned older people. You have to be 62 years or older to qualify for a reverse mortgage.
Jason Hartman: Hey, I thought that was the new middle age, right?
Randy Luebke: Yeah. It’s the new 40, right?
Jason Hartman: Yeah, 60, yeah.
Randy Luebke: Yeah. So you have to be 62 years of age, and it also needs to be your primary residence, so it’s only something that’s applicable for the home that you reside in.
Jason Hartman: Yeah. And we are all about investment properties here because what’s your saying? A home is a liability; a mortgage is an asset.
Randy Luebke: It certainly is. In fact, everybody thinks of it the other way around, but it’s the home that costs you money, and if you use your mortgage properly as a financial tool, it can actually make you money. This is a brand new financial tool, and to contrast it to the reverse mortgage, a reverse mortgage in essence becomes the ultimate neg am loan if you will, meaning it’s a loan where you never have to make a mortgage payment so the loan grows and grows and grows.
Jason Hartman: What he means there is the principle balance grows and grows and grows just like on a negative amortization loan where you pay a payment that is lower than the actual interest costs so that keeps getting added on to the balance.
Randy Luebke: That’s correct. And with a reverse mortgage, because you never make a payment, the mortgage balance continues to grow and grow and grow, so the good news is you don’t have to make a payment. The bad news is that you’re eating up some of the existing equity in your home. This new product, on the other hand, does exactly the opposite. All of the equity that you have in your home today remains yours and remains yours forever. What the product does is pays you today a sum of money in exchange for a percentage of the future appreciated value of the real estate, and in addition to being able to use this with your primary residence, we can use this with rental properties.
Jason Hartman: I love that.
Randy Luebke: We can use this with vacation homes. We can use this with apartment buildings, commercial buildings. Virtually any type of real estate would be applicable for this product.
Jason Hartman: Now, that begs the question because I have a feeling you might deliver some bad news on this one, Randy. Where is the product available? I mean, for properties located where? Is it all over the US I hope, or is it just in overvalued markets like California?
Randy Luebke: Well, it is a brand new program, as I told you, Jason, and it is currently available only in the state of California, New York and Florida, but they’re adding new states every month as they go through the regulatory process.
Jason Hartman: So it’s destined to be a widespread product, right?
Randy Luebke: Absolutely.
Jason Hartman: Yeah. And most people that are US investors are sitting on overvalued properties in California and Florida. Well, wouldn’t this be nice to get some equity out of them without increasing the loan balance is really what this does, right?
Randy Luebke: Yeah. And, in fact, the way you stated it is kind of the way most people think of it, and you’re not taking any equity out of the property. As I mentioned, this doesn’t touch any of the existing equity in the property, so if somebody did own their home free and clear, with this program they would still be given cash today, use up zero of the existing equity, only being paid for the a percentage of the future appreciated value of the property. It’s an equity sharing deal on the future appreciated value.
Jason Hartman: That’s amazing that that’s offered by a bank. I predicted that this would happen about six, seven years ago, and I remember I was met with some disdain from a local lender who told me that was impossible, lenders were never going to do that. Now, I didn’t exactly see it happening this way, but I called them equity participation mortgages because I thought – that was just like my name for it.
Randy Luebke: That’s perfect.
Jason Hartman: And I thought that the houses were becoming so unaffordable that this is the only way people could afford is to basically take on a lender who would then also be the equity partner. But give us an example as to how it works. Say someone listening owns a property in California, Florida or New York, right?
Randy Luebke: That’s correct.
Jason Hartman: At this time, and hopefully, we’ll see a lot more expansion of that later. But say the property is worth $1 million and they’ve got a loan balance of $500,000.00, so they’ve got $500,000.00 in equity sitting there not being used.
Randy Luebke: Yes.
Jason Hartman: Getting exactly how much rate of return?
Randy Luebke: Absolutely zero rate of return, and it’s always at risk to loss.
Jason Hartman: And so you mean there’s FDIC insurance on that equity? Of course not, right? Yeah. So they’ve got $500,000.00 in equity sitting there, and as the market declines, it’s declining a little bit more every month, but what could they do? What can they get out of the property?
Randy Luebke: Well, for example, with a $1 million property, an existing loan of $500,000.00, they’d have $500,000.00 worth of equity. Now, let’s just say it’s a married couple and that one of the two wants to participate in this program because you have an option. You can do it as a couple or you can do it individually. In other words, you can sell 50 percent of the future appreciation or 100 percent of the future appreciation, depending on how you choose to do that. Now –
Jason Hartman: That’s really interesting that the bank is almost foreseeing a divorce.
Randy Luebke: Well –
Jason Hartman: Gosh, I can’t believe that. You can sell like your half. That’s amazing.
Randy Luebke: I think more than a divorce because again we’re dealing with senior citizens. This also is a senior citizen product, by the way. You have to be 65 years of age or older to work with this program. Now, here’s what you would expect to receive. For your $1 million property, you would be getting about 15 percent of the value of the property today in exchange for 50 percent of the future value of the property tomorrow. So it’s basically about a 3 to 1 ratio, 15 percent today in exchange for 50 percent of the future value, or if both husband and wife decided to participate in the program, they would get approximately 30 percent of the home’s value today in exchange for 100 percent of all the future appreciation.
Jason Hartman: Okay. So can you explain that with numbers because I’m not sure I really understood that example? There’s a $1 million property, $500,000.00 loan balance, $500,000.00 gross equity. How much do they get –
Randy Luebke: They would get –
Jason Hartman: – if both of them participated?
Randy Luebke: If both of them participated, they would receive a check for $300,000.00 today.
Jason Hartman: Okay.
Randy Luebke: There’s no repayment to that $300,000.00. There’s no monthly payments. There’s no interest accruing. It’s not a loan, remember.
Jason Hartman: That’s cool. It’s not a loan, yeah.
Randy Luebke: It’s not a loan. It’s an option.
Jason Hartman: Okay.
Randy Luebke: Essentially you can think of it like this. They’re selling their home today, or 50 percent of their home today, or 100 percent of their home today, but they don’t have to move.
Jason Hartman: Very interesting product, yeah. Very innovative. Okay. So they get $300,000.00 and then what? They use the $300,000.00 and buy some more rental properties, I hope.
Randy Luebke: Absolutely.
Jason Hartman: And invest that money and put it work.
Randy Luebke: Absolutely.
Jason Hartman: Okay. So that’s good.
Randy Luebke: They can do anything with that money they choose to do.
Jason Hartman: All right. So then their payment doesn’t increase?
Randy Luebke: There is no payment, remember?
Jason Hartman: Because it’s not a loan.
Randy Luebke: Because it’s not a loan.
Jason Hartman: That’s cool. Okay. So what happens? Ten years go by, five years go by, then what?
Randy Luebke: Okay. Let’s use the example this time where we have just one spouse that’s participating in the program. And ten years goes by and the spouse passes, which is, by the way, the reason they really decided to give these people the option because as a senior product, the probability is that you and I as guys are probably going to pass away before –
Jason Hartman: I’ve always thought that was unfair.
Randy Luebke: It’s just the way it works.
Jason Hartman: You get to live eight years longer if you’re a woman. See, that’s –
Randy Luebke: So it enables them to receive money today, but when that spouse passes, and let’s say it’s the husband that passes, the wife if you will, the wife, the remaining spouse, is not required to sell the home or move out of the home. However, this product then steps in and becomes a de facto buyer. In other words, if she decides she wants to sell the home, the company will step in. That gave them the option money ten years ago and guarantee they’ll buy that home from them under the terms and conditions they agreed to initially.
Jason Hartman: Wow. So it’s like an advanced sale almost. That’s really an amazing thing. Why would someone want to give up their future appreciation?
Randy Luebke: It’s really a choice. You mentioned that we have equity in our home, and equity is always at risk. It’s not FDIC insured and it gets no rate of return. Some people, however, even though they understand the academics of that, still do not want to have any debt on their property. They maybe worked their whole life to own this real estate free and clear, and the idea of having debt on it just doesn’t sit right with them. Well, this is a way for them to receive money based on the value of the property today without incurring any debt whatsoever. Or take a business owner, for example. Because remember I said you could use this with commercial property, your rental properties, right?
Jason Hartman: Sure.
Randy Luebke: So the rental properties are cash flowing beautifully and they’re doing all the things we expect them to do.
Jason Hartman: Yeah. You’d still retain the cash flow because the debt service doesn’t go up.
Randy Luebke: Yes.
Jason Hartman: But you just sell the future –
value so you can buy more homes today and leverage up that future value with today’s money.
Jason Hartman: Yeah, that’s interesting. We don’t have much more time, Randy, but we’re probably going to have to have you back to talk about this on a future podcast, but tell us a little bit more about it. Give us a few more things. Can you cancel? Can you change your mind? Can you will it to your heirs?
Randy Luebke: Well, I think one of the most important concepts or facility to this program is the cost, which to the homeowner is nothing. And if you look at –
Jason Hartman: So there’s no points, no fees?
Randy Luebke: No points, no fees, no anything. There’s a small application fee of $300.00 that they’ll pay up front with their application.
Jason Hartman: Do they have to qualify like a loan?
Randy Luebke: They don’t have to qualify on credit and they don’t have to qualify on income, but they do have to qualify on health. So there is a possibility that because of their health they may not qualify, and we have ways to work our way through that but here’s the point. The $300.00 fee up front, if for any reason they can’t qualify to receive the program, that money is refunded to them. If they accept the program and engage it, that money is also refunded to them, so the only time they would ever pay a penny out of their pocket is if they were approved for the program and then decided not to go through with it. So low, low fees to – well, no fees to execute the program.
Jason Hartman: Okay, great. So can you will it?
Randy Luebke: Can you will it? The answer is no, and again this is based on the life of the homeowner, so that example where the husband died ten years later, now the equity key transaction is expired. And so the spouse, the remaining spouse of the property would have 20 years before she’d have to sell the house. She’d have a 20-year option to continue to stay in the property.
Jason Hartman: Okay. But what if she passes away, too, and then there’s two kids?
Randy Luebke: Yes. So the heirs always have an option to take out the equity key and pull it back to where they started. In other words, they can rescind it, and all they would have to do is repay the money that was provided to them as an option and any appreciation based on the terms of the appreciation agreement. So they give the money back with no interest, with no penalties, with no points, no fees, give the money back they received ten years ago.
Jason Hartman: Right.
Randy Luebke: And let’s just say the home never appreciated in value. That’s all they would have do and they had the free use of that money for ten years.
Jason Hartman: Yeah, that’s amazing. So the bank is really, pardon the expression, banking on appreciation then.
Randy Luebke: Absolutely.
Jason Hartman: Yeah. And it’s amazing that they’re doing this in three of the most overvalued markets, in my opinion, in the US, New York, Florida and California. They must be very bullish about these markets. I would say in the short term, they’re really in trouble for the next two years or so. After that I think we’ll see these markets recover.
Randy Luebke: And I think they agree with you. I think they agree that long term, real estate is a tremendous investment, and if you’re a bank and you’re willing to take that long-term perspective, they feel that they’ll be fine.
Jason Hartman: So they don’t check your credit or anything like that?
Randy Luebke: No, no credit.
Jason Hartman: Because it’s not a loan. Yeah, that’s –
Randy Luebke: No credit, no income, not a loan, no repayment, no payments, no interest.
Jason Hartman: It’s basically like selling stock in your house in a way, selling a little bit of stock in it. That’s interesting. Any final words in closing on this program?
Randy Luebke: Well, just to reiterate, it’s available on all different types of real estate, so if you have rental properties, if you have commercial property, and you can aggregate this, by the way. Let’s say you had four or five rentals and a piece of commercial property. You could aggregate that into one option solution, and it’s portable, too, meaning if you sell those properties while you’re still alive, you can port the program to your next property, as well.
Jason Hartman: As long as there’s enough equity in it.
Randy Luebke: If there’s enough equity, yeah.
Jason Hartman: Yeah, right. Okay. Interesting. Yeah. That’s a really innovative product, Randy. Thanks for sharing it with us.
Randy Luebke: You’re welcome.
Jason Hartman: And we will talk to you on a future podcast about this and other products and services, as well.
Now I want to share with you just an audio portion of a recent newscast regarding Mobile, Alabama, and all of the growth that is going on there. This has been a truly amazing area, and there are just loads of great investment opportunities there. I own a few houses in the Mobile area. I am buying some more now in Jackson, Mississippi, and I highly recommend this as an investment area. Just a lot of good stuff, and for those of you GO Zone investors, there are some interesting opportunities there, as well, so hang on for a second and listen to this. It’s the audio portion only. If you want to see the video, it’s on our website at www.jasonhartman.com.
Newscaster: Two years ago, the weather models were starting to show us Hurricane Katrina was on the way. What happened in the days after, well, you know all about. But tonight, something you probably don’t know about. It’s the success that’s evident in a town not far from New Orleans. Tiny Mobile, Alabama has become the darling of the corporate world, investments pouring in. Mike Huckman just returned from Mobile, and he’s on the money with a great example of the crisis and recovery.
Mike Huckman: Mobile, Alabama has become upwardly mobile.
Mayor Samuel Jones: The kind of economic attention we receive, the kind of success we receive, we haven’t seen this before.
Mike Huckman: There are reminders of Hurricane Katrina, but many more signs of rebirth. A $300 million port expansion project, a new ultra modern downtown office tower. The first tenant, International Shipholding Corporation, which moved its headquarters from New Orleans after Alabama made the company a $23 million incentive offer it couldn’t refuse.
Erik Johnsen: It was sad to leave New Orleans where we had been for 60 years – for me, all my business career – but at the end of the day I think this was the best thing for the company.
Mike Huckman: Especially when the government even picked up the cost of building this ramp so International Shipholding workers can roll containers off and on a freighter in just a matter of hours. This is a tall, cool reason Mobile, Alabama’s ship has come in. Every year, nearly 400,000 tons of Mexican beer is brought into this port and then put onto rail cars to points east. Trains may also soon bring huge airplane parts into Mobile if France’s Airbus, which has already built this 48,000 square-foot contemporary office building here gets a $40 billion contract for new military fuel tankers called KC-30s.
David Trent: Best-case scenario, slam-dunk win of the KC-30 tanker program, it will put over 1,000 jobs into this, across the street here, new jobs, and will have a huge impact in Mobile and in this facility.
Mike Huckman: And just outside of town, Germany’s ThyssenKrupp is about to put up a $3 billion steel making plant, the biggest new mill in the US in 40 years. It will take more than 25,000 construction workers just to build it, and nearly 3,000 full-time steelworkers to run it.
Mayor Samuel Jones: It is an industry that really kind of changes the community. It provides good, high-paying jobs, high-skilled jobs.
Mike Huckman: Which puts Mobile in an enviable spot. Thousands of Katrina evacuees moved here out of necessity. Now the city needs to attract even more people who want to live and work here.
Bill Sisson: When I first arrived here, the unemployment rate was around 7 percent for the metropolitan area, and we’re down to about 3. It hovers around 3 percent, which some would argue is full employment.
Mike Huckman: And the demand for workers could climb even higher. Local officials say they have 29 other economic development projects in the works, which would bring more than 10,000 jobs to town.
Mayor Samuel Jones: I know there will be more activity to come.
Mike Huckman: Anything you can tell me about?
Mayor Samuel Jones: There is activity coming.
Mike Huckman: What locals for years have half-jokingly called the “city of perpetual potential” may finally be fulfilling it. On The Money, Mike Huckman, CNBC Mobile, Alabama.
Jason Hartman: I had a brief chat with one of our investment counselors here at Platinum Properties Investor Network the other day, Terri Hansen, and she kind of shared some of her investment experience and also some insights into what goes on in the stock market because she works for a very large publicly traded company, and just thought this would be interesting for you to hear.
I just wanted to take a quick moment to sort of reintroduce one of our team members here. We’ve had Terri Hansen on a former radio show podcast from way back, if you’ve listened to all the old podcasts, but you don’t hear from her too much on the podcasts so she was in today and I just wanted to have her say hello and tell you her story. Hi, Terri.
Terri Hansen: Hi, Jason.
Jason Hartman: Tell us about how you became interested in real estate investing and then subsequently became a client of ours and then became an investment counselor here at Platinum Properties Investor Network.
Terri Hansen: Well, I’ve been interested in investing in real estate for a number of years, and I’ve got an MBA. I’ve got a degree in finance. I’ve taken all these classes, read all these books. I even took trips out of state to look at areas where I might be interested in investing in real estate, but I never had the courage to do it. I never felt as if I had done enough homework. I never felt like I was maybe meeting with the right people who I could trust, who I could have confidence in what they were telling me.
I would call property management companies and they wouldn’t call me back, so I never invested but I kept wanting to do it. I kept really – that was in my mind that I really wanted to do that. And I came to one of your seminars a number of years ago. Actually, I think it was in 2005.
Jason Hartman: Yep.
Terri Hansen: So I listened to what you had to say, and you were talking about an area in South Carolina, which I really like that area because that was one of the areas I had looked at before. And I liked what you had to say. You were telling me I thought the straight story. You were telling me what was good about investing and the things that I needed to be concerned about in investing.
Jason Hartman: Yeah. It’s not all rosy.
Terri Hansen: Right, yeah.
Jason Hartman: There are some pitfalls. I just think out of any investment that you have available, this one is the highest return for the fewest problems.
Terri Hansen: Right. And I’d much rather know about those potential pitfalls up front and know how to ward them off, and that’s what I really liked is that you guys had that knowledge. I felt like you had done your homework and you really knew what you were talking about, and I felt that I could have confidence in you guys, so I said, “Hey, here’s my check. Let’s go buy a house.”
And it was great because I got wonderful mentoring through the entire process. When things came up that I had questions with, there was somebody there to answer my questions, so I really felt very, very comfortable doing it. And so to me the difference between my goal to invest in real estate and actually being able to see that happen, to see that dream become a reality, Platinum Investor Network was the difference for me.
Jason Hartman: Okay, great. So thank you for saying all that and sharing all that and the kind words. How many properties do you have now, Terri?
Terri Hansen: I am here today actually doing my documents for my No. 10.
Jason Hartman: Ten properties, congratulations. So really out of all the years before, maybe ten years or so, you were interested in real estate investing previously, but it’s really in the last two and a half years or so that you’ve suddenly just gone from – I think you own your own house, right?
Terri Hansen: Yeah. I’ve had my house.
Jason Hartman: Yeah. So you went from one property to ten properties?
Terri Hansen: Well, 11 now, yeah.
Jason Hartman: Eleven properties? Yeah, ten rental properties.
Terri Hansen: Right.
Jason Hartman: So congratulations. That’s excellent.
Terri Hansen: Yeah.
Jason Hartman: Anything else you want to share with our listeners here on the podcast?
Terri Hansen: I just think that what’s so neat about Platinum Investor Network is it takes the mystery out of it and it makes it very doable. I tell my friends and my family that it’s very doable. They listen to me and they go, “You own how many properties?” And they can’t believe it, and I said, “It’s very doable. It’s a possibility for anybody who follows the plan, who subscribes to the strategy.” I think the strategy is so awesome. For me, my goal is all about my financial security and retirement, and I feel like I am building a retirement plan, an income stream that I’ll never outlive, and that makes me feel so comfortable and so confident in the future.
Jason Hartman: Good stuff. Terri, I want to ask you something on kind of another subject. To our listeners who don’t know, Terri is not full time here. We’d love to have her full time. She works for a very large, well-known publicly traded company, and maybe we’ll just leave the name out, but all of our listeners would recognize this company. And you have a big executive corporate job, and I wanted you to speak to maybe two things. As an insider inside of a large corporation, and a lot of listeners are working for large companies now.
No. 1 thing is, speak about maybe the “security” that is being offered by our government nowadays and large companies nowadays in terms of pensions and things like that, and maybe why and how you came about the understanding that you’ve got to take responsibility for your own financial future because they’re not going to be there for you really.
Terri Hansen: Right. Ever since I’ve been working, I’ve been in companies who subscribe to the retirement plan of the 401(k), which is really a self-funded plan. Some of the companies will add –
Jason Hartman: They’ll match or add a little, yeah.
Terri Hansen: – and matching and like that type of thing, yeah, but I’ve never worked for a company that’s had a pension plan. Some of the employees of my current company have a pension plan from earlier days, but what we find is companies are really shifting more towards it’s a self-funded plan and people are on their own to do it.
Jason Hartman: And there’s no loyalty because the company might lay you off at any minute.
Terri Hansen: Yeah, right.
Jason Hartman: And we’ve certainly seen that the last 20 years. It doesn’t matter who you are, high on the totem pole, low on the totem pole, in the middle, every position in corporate America is at risk all the time.
Terri Hansen: Yeah. And I was a big planner in terms of saving in the 401(k) and trying to get the highest investment that I can, but what I realized after coming to Platinum Investor Network and seeing what you have in terms of a strategy for building a retirement – wealth, if you will – is that there is no way I could touch the kind of wealth that I could create through real estate that I was going to be able to do with trying to manage my 401(k) and hopefully get as high a return as possible. I mean, the stock market is so volatile –
Jason Hartman: Right.
Terri Hansen: – from year to year that you can’t guarantee that you’re always going to get a 10 percent return, but I can way exceed that on the real estate side. And so I’ve really shifted my focus in my 401(k) as a secondary importance to me. What’s really important for me is building the retirement in real estate.
Jason Hartman: Yeah, good. And one of the other things, and other regular listeners certainly know this, is that those numbers in those pension plans may actually look reasonable. That if you save for 35 years and you fund the maximum every year, and maybe you have an employer who’s offering a little extra like some matching funds or matching stock or something, but regardless of the ups and downs in the stock market which are very scary, but the other thing that’s really scary is that if you really dig deeper and you think about it, those numbers may look like, “Oh, I’ll be able to live on $10,000.00 a month in retirement,” or $8,000.00 a month or whatever it is, and they’re usually not that high.
Terri Hansen: Right, yeah. I was going to say I haven’t seen any that are that high.
Jason Hartman: I know, but I’m just being really generous.
Terri Hansen: Yeah.
Jason Hartman: But you adjust those numbers for inflation.
Terri Hansen: Right.
Jason Hartman: And it’s like those dollars in 10 years, in 20 years, are going to buy a heck of a lot less than you think they are.
Terri Hansen: Right.
Jason Hartman: And that’s the big scam of the financial planning world and Wall Street and everything. We have a great article on our website about how when the Dow hit its record highs a few months back, adjust them for inflation and the Dow hasn’t done anything.
Terri Hansen: Oh, yeah.
Jason Hartman: It’s just nothing impressive at all.
Terri Hansen: Right.
Jason Hartman: The other thing I wanted to ask you about since you work inside of a large publicly traded company is as an employee within the company, the thing I have always said is –and you’ve seen me ask this question – I’ll say, “How many of you have worked for a publicly traded company in the past or work for one now? Raise your hand.” Two-thirds of the hands in the room go up easily.
Terri Hansen: Right.
Jason Hartman: And I’ll say, “When you worked in that company, I’m sure you paid attention to what the company stock was doing because you probably owned a bunch of it.”
Terri Hansen: Right.
Jason Hartman: And can you speak to at all how out of synch what’s going on in the actual company is compared to what’s going on in the speculative world of Wall Street and the financial markets where you’ll see the stock go up or down, and it won’t have anything to do with the business itself and the fundamentals of the business.
Terri Hansen: Yeah. I’ve seen that happen. It would be so infuriating when you had published a great quarter in terms of numbers and your stock would go down.
Jason Hartman: Yeah, it’s arbitrary.
Terri Hansen: Yeah. It would be so frustrating, and I know I work closely with some of the executives who were definitely keen on making sure that the stockholders were getting the return on investment, and it would be difficult. It’s a very difficult challenge that what you’re trying to build in terms of the strategy of the company and the direction you’re trying to go doesn’t always get represented in terms of the value of the stock.
Jason Hartman: And so the lesson I think for our listeners in that is that when you invest in the stock market in any of these financial markets, bonds included – I mean, certainly we’ve seen that with this whole sub-prime fiasco as well as equities – you are putting your financial future at the whim of a speculative market that does not necessarily in any way reflect the fundamental value of a company and what it’s doing in its business.
So you could have a great story about, “Hey, this company has got this innovative new product and they’ve got patents on all of this and they’ve got great management and all of this stuff, and they’re doing this and that and they’ve got a sustainable, competitive advantage.” That’s a big word in the business world.
Terri Hansen: Right, uh huh.
Jason Hartman: But that’s not what it’s about. It’s about what’s happening in all the games that are played on Wall Street and in the financial markets, and you are subject to the whims of that huge ultra-powerful world that a company, and certainly an individual investor, has just no say in whatsoever. So that’s kind of one of the points I want to make with that, but any other comments on that thought?
Terri Hansen: I very much follow what you’re saying, and it’s very frustrating. And that’s why I think that what I have been able to find here with Platinum Investor Network has been great, and also I’ll put in a point for those people who are your clients, who are busy executives who have important responsibilities in their job and their family and things who want to invest but really don’t have the time to, this is the way to do it.
Jason Hartman: We make it real easy, yeah.
Terri Hansen: I mean, they make it so possible to do, and I’ve had friends who said, “I’ve gone to another investing group and they told me if I had $20,000.00 I could go to their university and learn how to invest in property.”
Jason Hartman: Yeah, what a scam.
Terri Hansen: And I said, “Hey, if you have $20,000.00, come and you’ll have a mentor who will work with you.”
Jason Hartman: For free.
Terri Hansen: You can buy a house.
Jason Hartman: Yeah, you can actually buy a property rather than just think about it.
Terri Hansen: Buy the property and you’ll learn so much more doing it yourself than just talking about or listening to somebody else about how they did it, and then at the end of that you’ll be an investor, and you’ve started now a great new career. And so my corporate life is really funding what I want to do in terms of my investing.
Jason Hartman: And that’s funny you say that because one of the things I always say in the seminars is the reason you have a job or the reason you have a business is so that you can qualify for loans to invest in real estate.
Terri Hansen: And that’s exactly how I feel right now.
Jason Hartman: Yeah, good stuff. And the other thing is we give away our education. We don’t make money on education, and people are constantly telling me, “What are you giving away those great podcasts for free for? Why are your seminars so cheap?” And the reason is because we want to leave the customer, our potential client, with the money in their pocket so they can invest and build some wealth with it. And we’re tied to the result of their investment because if what we say doesn’t come true in real life, they won’t invest.
Terri Hansen: Right.
Jason Hartman: And if they don’t invest, we’re out of business.
Terri Hansen: Right. And that comment that you make there has a lot of weight with my friends and family that I tell about what I’m doing and talking to them about my interest in doing this, and they really value that. And I say, “Jason is very interested in seeing people be successful, becoming investors.” And I’ve seen a lot of my friends, I’ve seen a lot of the clients that have come through the office go from not being an investor, not owning anything maybe other than their own primary residence, to holding a portfolio of properties, and it’s a total change of your life and it’s exciting. It’s an adventure that has been fun. I love doing it.
Jason Hartman: Yeah.
Terri Hansen: I can talk to anybody about real estate investing. I love the subject.
Jason Hartman: Good. Well, Terri, thank you so much for being with us for a few minutes today, and we don’t see you often enough around here. We want to see a lot more. Maybe we’ll talk you out of that big executive corporate job someday. You know I’m working on it.
Terri Hansen: Yes, I know. Well, thanks for letting me come, Jason.
Jason Hartman: All right. Thanks again.
Terri Hansen: Bye-bye.
Jason Hartman: Well, we had a lot to talk about today. Thank you so much for listening, and stay tuned for a couple of announcements and we’ll look forward to seeing you soon. Happy investing.
I’m here with Senior Area Manager, Karam, and we wanted to talk to you quickly about his recent trip. He just returned yesterday from Jackson, Mississippi. Karam, what did you find there?
Karam: Well, Jason, it was a very interesting trip. Unlike other areas, this is a very unique area in the sense that we live here in California and we go to all these markets, and every market is different. Jackson, Mississippi, on the other hand, the way it is different from the other areas is they don’t have the apartment complexes like we have in most of our metro areas.
Jason Hartman: Yeah. So you don’t have that high-density attached housing, huh?
Karam: That’s correct. So what happens is all these houses have high demand of rental, and on the rental side there is not too many houses available for rental, so there is a quick rental and you get the high rents, so the cash flow is better. But you have to drill it down to the micro area, the communities that we want to invest in, buy the investment properties. First thing we look at is the school system. Now, if you look at any particular city and suburb, it may have a good school system or it may not be in the good school system. Now, one particular city may be half in one county and the other half is in a different county.
Jason Hartman: So that was true of Hattiesburg, right?
Karam: That’s correct, yes.
Jason Hartman: So if you look at Hattiesburg, you can’t choose by just Hattiesburg. Some of the area is not so good –
Karam: No so good.
Jason Hartman: – and some is a desirable investment area.
Jason Hartman: You were telling me about how they gave you a list of 131 properties that the broker thought would be good for our investors, and the process of you narrowing it down and what you narrowed it down to. Why don’t you tell everybody about it?
Karam: Well, I just narrowed it down to 21 properties.
Jason Hartman: Out of 131?
Karam: Out of 131, and that’s all I would sell from, 21 properties, and they are in a good school system, a good, quality product, looking at the communities, the location of the communities, location of the properties, and that’s all I came up with.
Jason Hartman: Excellent. So Karam, talk to us about this specific property you’ve got in front of me. This one is $179,760.00, so we’ll call it $180,000.00. It’s almost 1,700 square feet. Projected rent is $1,500.00 a month, and return on investment, Karam?
Karam: Yes, 42 percent, believe it or not.
Jason Hartman: Forty-two percent projected ROI, and if you qualify for all the GO Zone tax benefits, projected first-year ROI is 128 percent. Don’t try that in the stock market, huh?
Karam: That’s correct. The reason is these areas, not only the high rent but the property tax is very, very low.
Jason Hartman: Only $195.00 a month on that property, wow.
Jason Hartman: Good stuff. Okay, Karam. Anything else you want to talk to us about? Let’s – you’ve got one more property. Maybe this one in Indianapolis. That looks kind of interesting. There’s some big discounts on this.
Karam: Yes. Indianapolis really surprised us, that market, and we are getting great deals.
Jason Hartman: Yeah. We weren’t’ expecting this one to be so good.
Karam: Yes, great deals. And I’ll give you an example of the property that I saw yesterday, 2,101 square feet, four-bedroom, two and a half bath, brand new, single-family house, comes with the rent-ready package, meaning washer, dryer, refrigerator, blinds, garage door opener, front and back yard sodded; for only $127,000.00. Do you know what that means, Jason, per square-feet price?
Yeah, that’s amazing. You’re buying like very close to the cost of actual construction here. How much?
Karam: Yeah, $60.00 per square feet only.
Jason Hartman: Sixty dollars per square foot?
Jason Hartman: That is unbelievable. It’s like the downside risk is almost nothing. Go back and listen to our podcast on risk evaluation.
Karam: And, again, return on investment is 41 percent.
Jason Hartman: So 41 percent projected return on investment, and these are some good properties. Give us a call or check out our website for more properties, and all the details are listed there, and we will look forward to talking to you on the next podcast. Thanks.
Hey, I just wanted to announce a couple of quick things for you. If you are able to come to one of our live events, we would love to see you and meet you in person. We’ve had people fly in from all over the US for them. So hopefully you can join us for some of those events.
Also remember our rental coordinator is here to help with your rental properties. If you need assistance with your rentals, your property managers, your advertising, remember we’re here to help, and we stay with you through the life of the investment, so feel free to call our office anytime and ask for the rental coordinator for assistance on your rentals.
Also want to remind you, listen to our old podcasts. At least go back to Podcast No. 13 forward and listen to all the podcasts after that. You’re welcome to listen to all of them. The ones before No. 13 are older, but they’re also good, but the newer ones, No. 13 and forward, which are really good ones to listen to, so please take advantage of that.
And remember, the overall market commentary right now, due to the mortgage meltdown and the sub-prime issues that are going on out there in the market, is that rents are going up all across the nation. When people cannot qualify as easily to buy a property, they are forced to rent, so let that work in your favor by accumulating more rental property assets. And don’t be afraid to ask for more rent and raise your rents. That’s a good thing to do.
Also if you are interested in career opportunities with us, our company is growing quickly and we would love to talk with you about career opportunities. We’re in the process of getting approved for franchising. If you’re interested in a Platinum Properties Investor Network franchise, we’d be happy to talk with you about that and get you set up there once we are finished with our approval process.
Be sure to see appropriate disclaimers and disclosures on our website at www.jasonhartman.com. Remember that we are not tax or legal advisors. So give us a call on any of these issues, and remember, we are here to help, and we will look forward to talking to you on the next podcast.
This material is the copyrighted creative work of either Jason Hartman, the Hartman Media Company, Platinum Properties Investor Network, Incorporated or the J. Hartman Company, all rights reserved.
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Duration: 49 minutes