Jason talks with commercial real estate expert Tolliver Morris and one of Platinum’s clients turned Investment Counselor, Dave Toombs.

Commercial real estate: A review of product types and their corresponding tenant profiles. What is best for you and what are the management responsibilities of; apartments, retail, office, industrial, triple net NNN properties, medical properties, mobile home parks or self-storage?

Client and Investment Counselor, Dave Toombs, talks about maintaining marital bliss while investing and helping his kids buy their own rental properties.

From the seminar evaluation form:

“Honestly, I’m here with my husband to be educated & justify my “NO” to his investing ideas. At the break you had me. I’m excited to learn more!” Rating 10+ – Kathy Toombs

Announcer: 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: Welcome to Creating Wealth.  This is Jason Hartman.  We have a good show for you today.  Two guests on the show.  No. 1, we have Tolliver Morris who is talking about commercial real estate.  Let’s get a little introduction to commercial real estate that I think you’ll like.  We’ll talk about different product types in the commercial real estate market and give you some thoughts on what is the easiest to manage and deal with versus what is the most difficult and most complex.  And we’ll be doing a lot more on commercial real estate in future podcasts, so please stay tuned for those.  This is just a little sort of mini introduction to it.

And then second, we will have our very own Dave Toombs, former client.  Well, I guess still a client, but he came to us as a client a couple of years ago in one of our seminars and started investing with us, and he’ll talk about his very skeptical wife, how it all worked and how his experiences have been going investing, so you’ll her some real world stories from a veteran investor when Dave talks about that.  I think you’ll enjoy it, and let’s get into it.

Thanks for joining us today.  I’m here with Tolliver Morris, and we are here to talk for the first time ever on our podcast about commercial real estate investing and the new Platinum Properties Investor Network commercial division.  Welcome, Tolliver.

Tolliver Morris: Thank you so much.

Jason Hartman: Good to have you here.  Tell our listeners why should they consider investing in commercial real estate?

Tolliver Morris: Well, several reasons.  The first is diversification of risk.  We’ve got multiple asset classes you can buy into in terms of commercial real estate as well as other investments, but commercial real estate gives you different types of places to invest.

Jason Hartman: Okay, super.  And the other thing I really like about it is the larger deal size and the economy of scale because I’d have to say, Tolliver, if there’s one flaw with our system for investing which is buy shelter, which everybody on earth needs a place to live, which is what I love about residential real estate, even if it’s small multi-units, fourplexes, etc.

But the problem is if you want to go big and really build an empire, when you get to 30, 40 houses, it really does become a bear to manage.  So can you maybe speak a little bit to the economy of scale aspect and the larger deal size and then talk about the types of properties?

Tolliver Morris: Yeah.  The people that got wealth making money in commercial real estate didn’t necessarily do it one house at a time.  They invested in commercial real estate and invested in larger properties, whether they be apartments or office or retail, and we’ll talk about the different types here in a second.  But you can buy anything from half a million dollars up to $500 million in commercial real estate and anything in between, and so there’s lots of ranges that you can talk about in terms of investment size.

Jason Hartman: Excellent.  And do you have a favorite type of commercial property?  Well, what types are there first?  Just outline the different choices available.

Tolliver Morris: Well, there’s residential multifamily which would be apartment homes.  Anything from a five-plex and up is usually thought of as multifamily residential.

Jason Hartman: Yeah.  So just for listeners that may not know this, one to four units is thought of as residential, and one to four units has different financing issues, and we’ll talk about financing in a moment –

Tolliver Morris: Right.

Jason Hartman: – than when you get over four units.

Tolliver Morris: Right.

Jason Hartman: So multifamily in apartments.

Tolliver Morris: In residential, and then you’ve got retail which would be your Best Buys of the world and any type of strip retail or even single triple net retail from Jack in the Boxes to whatever.  Anything you go and kind of buy stuff that’s typically found on the corners, those are retail.  Then you’ve got –

Jason Hartman: So on that you’re talking about there are strip centers, there are single-tenant deals like a Dollar General Store, a Jack in the Box, a McDonald’s.  I think McDonald’s actually owns all their real estate, though.

Tolliver Morris: They do.

Jason Hartman: Yeah, right.  They’re a big real estate company actually.

Tolliver Morris: Right.

Jason Hartman: So bad example on that one, but with those single-tenant-type properties, like who builds the building?  Do you just own the pad as the landlord and the investor or do you build the building and then lease the building to one person or one tenant for 20 years?

Tolliver Morris: It can be done a bunch of different ways, but typically what happens is a develop comes in with a piece of property and develops a piece of property with either a specific use for a tenant or a multi-tenant site and then leases the space to a Starbucks or some of those types of tenants and then will sell it off as a triple net investment leased property.

Jason Hartman: Okay, excellent.  So that covers the retail gamut.

Tolliver Morris: Right.

Jason Hartman: Did we cover all the retail stuff?

Tolliver Morris: We did.

Jason Hartman: Okay, next one.

Tolliver Morris: Next one would be office, and office would be anything from low-rise office space to high-rise office space and everything in between.  And office is kind of what it sounds like.  It’s where you put insurance companies, law firms, accounting firms, all that kind of stuff goes into office space.  Then you’ve got industrial, and that is several different types.  You’ve got R&D industrial.  You’ve got manufacturing industrial.  You’ve got shipping and receiving industrial, so you’ve got all sorts of different types of uses for industrial property, and typically there’s an office component in the front and there’s warehouses and manufacturing in the back.

Jason Hartman: And like what’s the allocation of industrial?  I know that you’ve been helping us with our new office, and we’re moving soon and I’m real excited about that.  When you think of industrial, some of the listeners might be thinking really large, but a lot of these are just little, tiny places that are 1200, 1500 square feet, right?

Tolliver Morris: Right.  Some of the industrial properties can be a small space that has – or a small building that has multiple spaces leased to individual tenants, and lots of times those are easy to both manage and easy to get rented, and they have low costs on the front end of those, so great little investment opportunities.  The other type might be a 10,000 square foot industrial building that’s a single lease triple net industrial building.  Those can also be an interesting investment vehicle.

Jason Hartman: So what types of businesses do you have in here, like printer?  You might have a mailing service.

Tolliver Morris: Right.  You can have auto usage.  You can have mailing services.  You have contractors.  You can even have architects sometimes going to industrial if they have kind of a back office assembly area, so any type of shipping, distribution.  The cleaner uses are typically better for the small investor because you don’t have to deal with any toxic issues, so I would typically stay away from –

Jason Hartman: Ah, environment stuff, yeah.

Tolliver Morris: – the environmentally impacted stuff like auto uses and some of those things that would use toxins in their particular facilities.

Jason Hartman: Okay, good point.  On this industrial subject, Tolliver, I once talked to a commercial broker who was looking for a space here in Orange County for a client, and they just were leasing it, but they needed an industrial space, a fairly small one, and they said, well, they needed the ceilings to be really high because they made satellites.  And I thought, “Well, that’s an interesting tenant.”  They actually build satellites –

Tolliver Morris: Right.

Jason Hartman: – that go into outer space.

Tolliver Morris: Right.  It’s amazing what you find in these little industrial parks.

Jason Hartman: Yeah.  And again, in places like the People’s Republic of California – I like to joke about that, but it’s somewhat true – you have a lot of restrictions against manufacturing, and it’s hard to do business here because there are tough environmental regulations and a lot of tough regulations like that, but in different parts of the country, a lot of the government agencies are much easier and more friendly –

Tolliver Morris: Right.

Jason Hartman: – to these types of businesses.

Tolliver Morris: Right.  So you have big industrial all over the country.

Jason Hartman: Yeah.

Tolliver Morris: And small multi-tenant industrial that services and fills the needs for those bigger industrial groups.

Jason Hartman: Yeah.  So that’s something an investor would want to consider is what is the regulatory climate like for the tenant, right?

Tolliver Morris: Right.

Jason Hartman: In other words, what’s my market going to be for tenants?

Tolliver Morris: Right.

Jason Hartman: Can the tenants do their thing here or is it difficult to do their thing here?

Tolliver Morris: Right.

Jason Hartman: So good point.  Okay.  And what’s the next one?

Tolliver Morris: The next one would be medical.  Medical is one of those that’s emerging.

Jason Hartman: Aging population.

Tolliver Morris: Aging population.

Jason Hartman: Yeah.

Tolliver Morris: And so to the degree that you can own medical buildings and lease them to doctors or eye scanning or hair transplant or any type of different types of groups, those are increasing in number in terms of the need.

Jason Hartman: With medical, for example, I remember the last building we leased.  We had an office there, just a traditional office, and then across the hall from us was a cosmetic surgeon, and so I remember when they moved in after us, they built like a big diesel generator outside and it was like they had to have all these parking requirements.  And what are some of the issues?  Medical is lucrative for the landlord, but it’s also complicated and expensive to build it out, right?

Tolliver Morris: Right.  It’s very challenging to go into new medical that has not been tenanted because a lot of the improvements are very specific to the companies that move in to those buildings, and the improvements can be very costly, just as you said.  So the lower cost medical would be – dentistry is not that expensive to put in, and they can actually go into sometimes office buildings as well; chiropractic.

Jason Hartman: Right.

Tolliver Morris: Some of those types of groups that are not, again, dealing with toxics.  We talked about that with the industrial.

Jason Hartman: Right.

Tolliver Morris: You don’t necessarily want to be in the toxic realm –

Jason Hartman: Right.

Tolliver Morris: – with the medical facilities unless you’re a big operator and you know how to deal with that.

Jason Hartman: Yeah.

Tolliver Morris: A small investor –

Jason Hartman: So you’ve got to know what you’re doing.

Tolliver Morris: Correct.

Jason Hartman: Okay, good.  And what else?

Tolliver Morris: And the last thing is mini-storage.  It’s one of those kind of little side ones that can be pretty lucrative, and it’s typically fairly easy.  You’ve typically got somebody who’s either onsite or staffed locally to deal with the mini-storage units, but once they’re up and running and once they’re fairly full, they’re pretty much a cash cow.  They do great.

Jason Hartman: Isn’t that great?  Because in mini-storage, I have two storage units myself and they raise my rent so aggressively all the time.  It’s like clockwork, the rent goes up, but it’s such a hassle to move.  Like I never go to these things and I’ve just got old boxes and stuff in there.  I don’t think people move because it’s not like enough money for them to move out.

Tolliver Morris: Right.

Jason Hartman: There’s not enough motivation.

Tolliver Morris: Well, many times these mini-storages are filled with items that have less value than the monthly rent of the mini-storage.

Jason Hartman: It’s the eBay world we live in, right?

Tolliver Morris: Right, indeed.

Jason Hartman: On the mini-storage, it’s kind of interesting because I know that one of the big trends there is to have automated mini-storage, and I don’t know how plausible that really is.  A mini-storage is like running a business.

Tolliver Morris: Right.

Jason Hartman: At least at first, so at first you might buy it and it might be pre-leased where it’s an existing business.

Tolliver Morris: Right.

Jason Hartman: And when you have someone like living on site, and I guess there’s all different permutations.

Tolliver Morris: Right.  There are companies that manage multiple mini-storages, and they’ll do it from offsite locations and –

Jason Hartman: Like you contract with them, right?

Tolliver Morris: Correct.

Jason Hartman: And let them run your property pretty much?

Tolliver Morris: Correct.

Jason Hartman: Okay.

Tolliver Morris: The automated mini-storage is a very brand new thing.  It’s not been tested.  We don’t really know how that’s going to work and permeate into the market and whether that’s going to be successful next to the kind of people-assisted mini-storage.

Jason Hartman: Yeah, good.  Good point.  So a lot to consider here, and we’ll get future podcasts on each of these subjects and drill down more, of course, as we’re working more with the commercial properties and get specific on each particular product type later.  What about mobile home parks?  That’s one you –

Tolliver Morris: Well, mobile home parks are kind of in the category of residential multi-family.  The great news about mobile home parks is the returns can be fabulous.  The challenge with mobile home parks is the caliber of the tenants typically is challenging to deal with.  There’s a lot of turnover and it’s something you have to work at.

Jason Hartman: Yeah.  And this is – this again because I have looked at a lot of mobile home park investments myself that I wanted to do personally, and one of the things I found is that, again, it’s a business.  It’s like you’re running a business –

Tolliver Morris: Right.

Jason Hartman: – rather than just a real estate investment.

Tolliver Morris: Right.

Jason Hartman: Whereas sometimes we’ll have a client occasionally, not very often, that will complain that they’ve got to talk to their property manager.  That’s nothing.  I mean, some of these things, you’re really running a real business, so –

Tolliver Morris: You’re running it on a regular basis.

Jason Hartman: Yeah.

Tolliver Morris: Mobile home park people are some of the salt of the earth and great people, but you do have an element typically in a mobile home park that they’re tough to get the rent out of.  A lot of mobile home parks, frankly, are set up on automatic draws out of people’s paychecks.

Jason Hartman: Wow.

Tolliver Morris: So those are the ones that are fairly successful.

Jason Hartman: Yeah.  And there’s different issues there.  One of the advisors I was talking to was saying what you’ve got to do nowadays really to make it work is you’ve got to buy the mobile homes, put them on the lots, and then lease them out, lease the lots, the land –

Tolliver Morris: Right.

Jason Hartman: – and then sell the mobile home to someone and carry the paper yourself.

Tolliver Morris: Right.

Jason Hartman: They said that was like the ultimate way to do it, and I thought, “Oh, that’s very complicated.”  But I think it’s profitable.  It’s just you’ve got to understand there’s a time commitment to this stuff.

Tolliver Morris: Right.

Jason Hartman: It just depends how active you want to be versus how passive you want to be.

Tolliver Morris: But those can be fabulous returns if you ever want to take a look at a mobile home park.  They can be some of the best returns out there.

Jason Hartman: Excellent.  Talk to us, Tolliver, about who typically invests in commercial real estate.

Tolliver Morris: Well, in the big properties, whether they be commercial or industrial or even residential multifamily, you get lots of pension funds, insurance companies, endowments, institutional buyers who will buy these gigantic portfolios of properties, or even large asset single properties.  You also get public companies that come in, the REITs, which are publicly traded on Wall Street, and the average individual can buy shares in REITs and so they can own commercial real estate through an REIT, which is a real estate investment trust.

Jason Hartman: Oh, good.  That’s what I wanted to say, yeah.  And there are private companies, too, right?

Tolliver Morris: Yeah, private companies.  A good example would be the Irvine Company here in Newport Beach who owns a lot of property and is a privately held company.

Jason Hartman: And part of the Irvine Company used to be a public REIT.

Tolliver Morris: Correct.

Jason Hartman: But then Donald Bren bought it all back.

Tolliver Morris: Bought it back, yeah.  I used to own some apartment communities of Irvine Company.

Jason Hartman: Right.

Tolliver Morris: They bought my stock back.

Jason Hartman: Uh huh.

Tolliver Morris: And then you have individuals and family trusts, and they typically own the smaller commercial real estate, and so there’s kind of an – there’s an opportunity to buy commercial real estate that’s in this tweener place, that’s kind of not too small and not too big that’s perfect for the individual investor.

Jason Hartman: Right.  And I think that’s a very important point you make, which we will talk about on future podcasts, too –

Tolliver Morris: Right.

Jason Hartman: – which is what is the right deal size to be looking for?

Tolliver Morris: Right.

Jason Hartman: And that’s a long discussion, I know, so –

Tolliver Morris: Right.

Jason Hartman: But it’s a good point you bring up.  How can you invest in commercial real estate?

Tolliver Morris: Well, again, we talked a little about REITs, the real estate investment trust.  You can invest that way, which they’re public companies.  You can buy shares in REITs, and they hold property but you are definitely in a deficit position because you’re totally subordinate to their whims and what they want to do and how they want to buy property and how they want to manage and operate property.

Jason Hartman: And the big salaries they pay themselves.

Tolliver Morris: Absolutely.

Jason Hartman: And the taking the money off the top and the acquisition fees, the disposition fees –

Tolliver Morris: Right.

Jason Hartman: – the management fees, and that’s why I like being a direct investor.

Tolliver Morris: Right.

Jason Hartman: And this one applies to the next one you’re going to say, too.

Tolliver Morris: Right.

Jason Hartman: What’s the next one?

Tolliver Morris: Which is limited partnerships, and limited partnerships are where somebody comes in as a developer or investor or accumulator of money and will run and manage a particular investment.  You buy a fractional percentage of that, and again, you don’t have control.  Typically, decent returns if the property does well, but you don’t have control.  And then you can invest individually, which I know is what you’re most interested in, Jason.

Jason Hartman: Be a direct investor.

Tolliver Morris: Right.

Jason Hartman: Be an individual investor.  Yeah, absolutely.

Tolliver Morris: In that case, you control everything that happens with the property.  You make the decisions as to what happens going forward in the future – when you sell, whether you sell, how the rents increase.

Jason Hartman: How you want to finance it.

Tolliver Morris: Correct.

Jason Hartman: How do you like your property manager?  If you don’t like them, get rid of them and get a new one.

Tolliver Morris: Right.

Jason Hartman: So you’re in control.

Tolliver Morris: You get all the upside if you control individually.

Jason Hartman: Yeah.  Because no one is taking the profits off the top, right?

Tolliver Morris: Correct.

Jason Hartman: Yeah, good.

Tolliver Morris: Correct.

Jason Hartman: And the last one?

Tolliver Morris: And the last one, you can own your own business and buy property, so if you’re a business owner and you want to move in to property, you buy property.  Typically, people buy property still individually and lease it back to their business, but you can get special financing if you’re trying to buy business property, which is called SBA financing.

Jason Hartman: Yeah.  Small business administration loans, and if you occupy like a certain percentage of the building or all of it –

Tolliver Morris: Right, 50 percent of the building or more –

Jason Hartman: Yeah.

Tolliver Morris: – then you get special 504 SBA financing which is typically 10 percent down and great rates.

Jason Hartman: The one thing, though, I do want to say about doing it with your own business, notwithstanding the financing which could be a very good deal, is that I usually find with a lot of my friends in like young entrepreneurs organization who have their own business and they – it’s a common thing that I hear for them to say, “Well, we just bought our own building last year,” or, “We want to buy our own building.”  And I find that to be largely a mistake, and let me tell you why.  It’s because people are dictating that they want to own the building just because they happen to have a business versus evaluating the investment on its own merits.

Tolliver Morris: Right.

Jason Hartman: And then running their business on its own merit based on what they can get, so you could be trapped into buying a building just because you want to stick your business in there, but it may be a better deal to rent.

Tolliver Morris: Right.

Jason Hartman: Just for example like in California right now, residentially it’s a better deal to rent than own for your place to live.

Tolliver Morris: Right.

Jason Hartman: Now, that will change as time goes on, and it has been better to own in the past certainly, but that’s something to consider.

Tolliver Morris: Yeah.  I would agree completely, and I’ve seen a lot of companies get into trouble, especially companies that have a lot of fluidity in terms of size and change quite a bit.  They get stuck in properties that don’t fit their needs any more, and it dictates their business decisions versus making good real estate decisions.

Jason Hartman: Good stuff.  Okay.  Tolliver, we’ve been going for a while here, and I know I want to talk to you about several other things, so let’s just save it for the next podcast.  We’ll have you back.  We’ll talk about lending, we’ll talk about what the market is like for commercial real estate today around the country, and we’ll talk about how to find the best commercial real estate opportunities.  So anything in closing for this segment?

Tolliver Morris: I think commercial real estate has got a lot of opportunity out there and I would love to help some people with commercial real estate.

Jason Hartman: Good stuff.  Well, thanks for joining us today, and we will have you back on a future podcast, maybe the next one or the one after that, and we’ll talk about those other three major areas.  Thanks for coming in.

Tolliver Morris: Thank you.

Jason Hartman: I’d like to introduce you to a new member of the Platinum Team, and it is a former client who kind of comes with a funny story.  This is Dave Toombs.  Hi, Dave.

Dave Toombs: Hi, Jason.

Jason Hartman: Great to have you here today.  Dave comes with kind of a funny story before we talk to him about real estate investing and his experience and his inspiration for investing in real estate.  I think you’ll find it interesting he came to our seminar a couple of years ago.  Then Dave asked his wife, Kathy, to come to the seminar, and she was very, very skeptical.  In fact, at all of our seminars we give out evaluation forms, and what Kathy said on the evaluation form just continues to make me laugh because she said, almost an exact quote here is, “I came to the seminar just to justify my ‘no’ answer to my husband about this whole idea of real estate investing, but you had me by the break.”

Dave Toombs: That’s Kathy.

Jason Hartman: Kind of like Jerry McGuire, “You had me at hello.”  And that’s just a great story.  And then Dave recently got his real estate broker’s license and came to work with us here at Platinum Properties Investor Network, and we’re glad to have him on board.  But Dave, tell us a little bit about why you started investing in real estate now rather than doing it several years ago, which most people wish they would have started sooner, but maybe you can address that a little bit.

Dave Toombs: Sure.  Actually, we did try investing in real estate back in about 1989, 1990 timeframe.  We lived up in Washington state, and then circumstances brought us back down to California and we kept our home in Washington, and it was just a matter of timing where we bought at the high and then wound up having to sell at the low.

Jason Hartman: That’s not a good strategy.  We don’t like that strategy.

Dave Toombs: Not a good strategy.

Jason Hartman: We don’t recommend that strategy here, but okay.

Dave Toombs: But looking back, if we were able to hang on to that house, we would have made out like bandits today, so again, it was just a matter of timing.

Jason Hartman: That’s always the thing with real estate.  Staying power is the name of the game.  The people that stay in the game always seem to win over time.

Dave Toombs: Sure.

Jason Hartman: And one of the things is, of course you know, we teach at the seminars and in the podcasts is that real estate must make sense the day you buy it so that you can afford to stay in the game, and it must make sense from a cash flow perspective.  Okay, what else?

Dave Toombs: Well, one of my business goals in investing is to remain happily married, so I decided to keep my wife on board.  And as you mentioned, she came to one of the seminars and she had done quite a bit of research on her own by reading Robert Kiyosaki’s books and so on, and so the seminar for her just tied everything together and that helped quite a bit.

I also wanted to address professionals in my similar circumstance and age group, people that have been in high-tech or selling and so on.  You realize that sooner or later, just your paycheck and investing in your 401(k) is not going to carry you to the retirement that you desire.  And just like Kathy, I read a lot of books by Robert Kiyosaki, and we saw Rich Dad on PBS, and so all those things together just brought us to the point that we’re at today as far as investors.

Jason Hartman: Excellent.  Why do you prefer real estate, Dave, over other investments out there?  You work for a large publicly traded company, and of course I’m sure you’re buying stock and probably you have a deal with your pension plan there and so forth, and you’ve been around and looked at other investments and done other investments.  What’s so special about real estate for you?

Dave Toombs: What’s special to me is this particular case – it’s proven.  I’m not the first one in.  I’m not doing all the heavy lifting.  I’m not having to figure things out by myself.  There’s other people I can ask questions and associate with and see what to do and how to go about doing it.  The other thing is it’s very easy to understand.  One of your other guests is Joel that helped develop Property Tracker, and he kids that you don’t have to be a rocket scientist to understand accounting for your properties.

I would add to that and say you don’t have to have an advanced degree in business in order to understand investing.  As a matter of fact, my kids – I have two kids, Dean and Caitlin – they go over the performance sheets for our properties and help us select what we’re going to invest in, so they get it.

Jason Hartman: So when you’re looking at the reports that our software creates for you, those first-year evaluations and projections on the properties, they actually help you pick properties.  And what are they, 10 and 15?

Dave Toombs: Yeah.

Jason Hartman: Yeah.

Dave Toombs: They are 10 and 15, so they’ll look at return on investment and all the different categories and say, “This is a good property.”

Jason Hartman: What an excellent education at such a young age to bring your kids into this.  They can get involved.  It’s simple enough, and that’s what’s great about it.  I find that the Wall Street world, they sort of make things sound so complicated.  They’ve got so many terms and phrases, and keep it simple.  Real estate investing is a relatively simple thing.  Sometimes people kind of view themselves – and I’ve noticed this and you probably have too, they come to the seminars, they call us, and they sort of view themselves as kind of too sophisticated for real estate investing.

Dave Toombs: Um hm.

Jason Hartman: They want to do complicated things as though they’re better, but sometimes the simplest things really are the best.  They’re the most tried and true, and real estate is so historically proven.

Dave Toombs: Sure.  And when I compare that to other investments, I mean, we all need to have short, medium, and long term goals, but when I look at things like stock, whether it’s the company that I work for or other publicly traded companies, it just seems like there’s forces outside my control that make the stock go up or down, so real estate is just a lot more predictable.

Jason Hartman: Yeah, that’s a good point.  Sometimes in the seminars I’ll ask people, “How many of you work for a publicly traded company?”  And, of course, 30 percent of the hands in the room go up probably, and I say, “Have you ever noticed that the stock in your company goes up and down and you work at that company every single day, and the ups and downs in your stock have nothing to do with the intrinsic value or the actual goings on in the business?”  And they know that because they work there, right?

Dave Toombs: That’s right.

Jason Hartman: But you’re just subject to the whims of this speculative market out there of zillions of investors all over the planet that are playing all sorts of games, making everything so out of control for the actual investor.  I love the fact that it’s very difficult for them to manipulate real estate like that.

Dave Toombs: Another thing that’s very important to me is Platinum’s complete solution.  I’ve spoken with other investment organizations where they’ll sell books and tapes, or for thousands of dollars they’ll provide consulting, and when I came to Platinum they have already built out a complete network in several states of real estate agents, financing, just about anything that you can think of, and it’s all ready to go.  And they guide you through the process and stick with you after you’ve closed escrow, so that was incredibly important to me.

Jason Hartman: Good.  What was your big “aha” moment about real estate investing, Dave?  What sort of really brought you to the edge where you jumped in and did it?

Dave Toombs: Well, for anybody that’s lived in California for any length of time – I’ve lived here my whole life – I looked back at a couple of different instances.  One is my parents bought a house in Tustin back in 1972.  It cost $32,500.00, and at the time that was all the money in the world.  Their house payment was $318.00 a month.  That house today – you can look it up on www.zillow.com – is worth over $700,000.00.  Nobody’s done a room addition, a second story, or even remodeled the kitchen, and you just look at that as an instance of what’s going to happen and compare it to today and 30 years from now.

That was one “aha” moment.  And then, of course, my own experience with our house in Irvine.  We bought it for just a little bit over $200,000.00, and that house is worth close to $800,000.00 today.

Jason Hartman: Isn’t that amazing?  And one of the things, too, Dave, that is I think more influential in terms of seeing upward price repercussions in the future, of course, I always want to say if you haven’t listened to the old podcasts, you didn’t hear me say this before.  This doesn’t apply to all markets because there are many markets around the US that are really declining in value now, and that’s why we’re area agnostic, No. 1, and No. 2, we diversify, and No. 3, of course, we select what we think will be the best markets for the future.

But the population is growing faster and faster.  It’s like exponential growth, so for your parents’ property in Tustin, your property in Irvine, you saw those go up, which is terrific, but I think we’re going to even see a lot more pressure on prices in the future because of accelerating population increases, No. 1, but No. 2, the growing middle class outside of the United States that are consuming all of those building materials, and obviously we’ve talked about that on other podcasts, too.

Dave Toombs: Sure.

Jason Hartman: Good.  All right.  Dave Toombs, welcome to the Platinum team, and thanks so much for being on the podcast today and sharing some of your insights.

Dave Toombs: Thanks very much, Jason.

Jason Hartman: I’m here with Area Manager and Investment Counselor, Lynda Mulley, and she just returned from Kansas City and also Grand Junction, Colorado.  And Lynda, tell us about what you saw in Kansas City.

Lynda Mulley: Kansas City is a great market, Jason.  It’s very stable and solid.  It’s a market where there’s good growth and lots of things going on, and there are some great projects there that I took a look at that I think the investors would love to hear about.

Jason Hartman: Now, one of the things we always do is you’ve got to go buy your own house there –

Lynda Mulley: Yes.

Jason Hartman: – if you want to recommend the area to clients, and, of course, I’m already an owner in Kansas City.  I bought a fourplex there.  But tell us what you’re recommending today in Kansas City.

Lynda Mulley: What we have is a great single-family home, three-bedroom, two-bath, about 1450 square feet for $189,900.00.

Jason Hartman: Brand spanking new, right?

Lynda Mulley: Brand new, rent ready, close to schools and a beautiful shopping center, big upscale shopping center called Zona Rosa, which I had lunch at and just fell in love with.

Jason Hartman: Excellent.  What’s the projected return on investment?

Lynda Mulley: Projected investment return here is 34 percent based on our usual assumptions that we put on our performance projections and the loan that you could get.

Jason Hartman: Excellent.  Boy, 34 percent annually.  Don’t try that in a mutual fund or the stock market.  You probably won’t get it, but you can do it pretty conservatively and prudently with the right real estate investments with the right structure.  Lynda, thanks so much for talking about the property in Kansas City.

Lynda Mulley: You bet.  Thank you so much.

Jason Hartman: Hey.  I just wanted to announce a couple of quick things for you.  If you are interested in a Platinum Properties Investor Network franchise in your area, we are now approved for franchising in 18 states.  Please visit www.jasonhartman.com and click on the franchise link and fill out the short application.

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, 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.  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.

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:  33 minutes