Creating Wealth Real Estate Investing - Archive Episodes 201-300

Jason Hartman talks with Platinum’s Local Market Specialist about investment opportunities in the 9th largest metro area in the USA.  You’ll hear Jason’s prediction for ROI in Atlanta and a good market overview.

Atlanta, GA: 25.2% Return on Investment (2011)

Atlanta represents an investment gem in the southeastern United States.  It has spectacular economics from a development and employment perspective that make it a tremendous opportunity for income property investors.  With a wide diversity of employers, many universities, and a vibrant cultural presence in the city, Atlanta has attracted a tremendous amount of in-migration from young professionals seeking employment opportunities.  Since many of these young professionals choose to rent, the Atlanta market has very healthy rents relative to values.  Currently, approximately 31% of listings in Atlanta are from foreclosures.Atlanta’s experience during the real estate bubble and financial crisis has been somewhat unique.  Prices in Atlanta started from a much lower baseline than many other major markets.  The prices escalated to a peak in advance of the financial crisis and have subsequently fallen back to the same levels that they were 10 years ago.  Most of the other markets that experienced an inflation and deflation of prices like this are bubble markets that typically exhibit high prices relative to rents.  In contrast to this, Atlanta represents more of a linear market with attractive rates of return available from cash flows that result from rent revenues.  This is one of the primary reasons for Atlanta’s strength as an income property investing market.

The favorable business and economic environment in Atlanta make it one of the more likely places for an economic recovery to emerge.  Our models estimate a return to modest rates of appreciation in 2011, which combines with attractive rates of cash flow to produce a tremendous opportunity for astute investors.  By investing in Atlanta, it places you in an advantageous situation where you can afford to wait out market volatility and sell when it is optimal for your long-term strategy.

On this episode of the Creating Wealth Show, Jason Hartman talks with author and editor, Janet Portman, about becoming a landlord. Whether or not you call yourself a “landlord,” when you rent out a house, you’ll want to do it right!

Ninety percent of small properties are owned by individual landlords, and millions in this group are balancing their landlord responsibilities with their daytime careers. Tune in as Jason and Janet discuss everything from landlord business basics and finding good tenants, to complying with applicable rental laws and dealing with problem tenants.  Janet Portman, author, attorney, and nationally recognized specialist in landlord/tenant law, is managing editor at Nolo, the nation’s recognized leader in providing legal information for consumers and small businesses.

Portman oversees editorial work on all Nolo books and software. She is the author or co-author of Every Landlord’s Legal Guide, Every Tenant’s Legal Guide, and LeaseWriter Plus software, plus six other books, all published by Nolo.

As an expert in legal issues related to landlords and tenants, Portman has appeared on national television and radio and has been quoted in the New York Times, Wall Street Journal, Kiplinger’s, Smart Money, the Los Angeles Times, and other publications. She has also spoken on related topics such as disputes involving neighbors and pets. Before joining Nolo in 1994, Portman was a public defender for the California State Public Defender’s office, representing clients at the trial, appellate, and state Supreme Court levels. Portman received undergraduate and graduate degrees from Stanford University and a law degree from Santa Clara University.

Jason and Doug have a meandering discussion on the tragedy in Japan, life insurance, declining home ownership rates creating 6,000,000+ new renters in the next six years, Confessions of a Portfolio Hitman, interest rate predictions and much more.

Most people are associated with one or two people whom they would consider to be “high-maintenance” or demanding of your time and attention. These people are the ones who call to ask why you haven’t commented on their Facebook post. Sometimes this type of person is referred to as a “diva” or a “drama queen.” For some reason, these folks seem to seek out dramatic encounters that draw attention to themselves. In contrast to this, most of us know people who are “low- maintenance” or perfectly content to do their own things. These people are frequently engaged with what is happening, but exhibit a much lower propensity to become “crazy makers” who create drama for no other reason than attracting attention to themselves.

In light of this, consider that the way you earn the income that is necessary to support your lifestyle. Do you have high-maintenance income or low-maintenance income? It is important to understand that a job, a business, or an investment can be either high-maintenance or low- maintenance. Because of this, understanding the difference becomes quite important.

High-Maintenance Income• • •Many hours and extensive effort are required. Reliance on expert ability limits your ability to scale revenue upward. Your physical presence is required, limiting your mobility to infrequent vacations.Low-Maintenance Income• • •Fewer hours and minimal management are necessary. Reliance on systems and automation allow revenue to scale quickly. Income can be produced and managed remotely, allowing greater freedom to travel.Upon reading this, most people will reach two conclusions . . . the first being that they would prefer low-maintenance income and the second being that their main source of income is high- maintenance. This is where we need to implement some premeditated planning. Most “jobs” tend to produce relatively high-maintenance income. Some have the flexibility for remote working, but even that requires significant effort to achieve successfully. Many businesses also produce high-maintenance income, and the business models that are low-maintenance tend to be much more difficult to get off the ground due to intense competition. Even some investment income is high-maintenance in nature if your success depends on scouring the financial markets each day to find and scoop up deals. Consider that a person who earns $200,000 per year, but works 80 hours per week must invest 20 hours per $1,000 in earnings. This equates to $50 per hour . . . not too bad, but still requires 4,000 hours per year of work time. It’s difficult to have much mobility in that scenario.

(The same principle holds true for many highly compensated professionals who earn high hourly rates, but must work large numbers of hours . . . they produce lots of income, but it requires large amounts of effort and is not very flexible.) Conversely, consider a person who starts a small web marketing business that produces a modest $5,000 per year of income but only requires 1 hour per week of management. This equates to $100 per hour of work time and is much more mobile. Low-maintenance income frequently comes in much smaller chunks than high-maintenance income, but can allow us to leverage our time much more effectively. The key to long-term success is to slowly offset your high-maintenance income from a job, business, or investment with low-maintenance income. Practically speaking, this means that you will most likely end up building up low-maintenance income “on the side” while working at your primary occupation.

The advantage of this strategy is that it allows you to test some business ideas that may fail, and be able to absorb the impact of that failure since your primary stream of income is still intact.

However, it is also likely that through continued effort and education, you will discover business and investment models that produce low-maintenance income. As you grow the amount of low-maintenance income in your life relative to the high-maintenance income that results from your primary occupation, it may become possible to leave the primary occupation that currently produces much of your income and devote your time to other interests such as traveling, charitable work, or spending time with your family and loved ones.

Ultimately, what matters to the next generation of income earners is not just how much money they make. What matters is how much money is made per hour of time invested and how much mobility they have to enjoy life outside of work. For people who wish to achieve high leverage over their time, it is likely that extensive up-front efforts will be necessary to assemble a portfolio of low-maintenance income that allows them to be more mobile and more successful in their personal, professional, and financial lives.

Jason Hartman presents a followup to show #205 with some additional information on “The Big D” – that’s Dallas Texas, including a forecast for 2011 and a market overview. Dallas experienced a series of moderate appreciation followed by a gradual contraction that has resulted in much less price volatility than has been experienced by other market areas.  The area is expected to hit the bottom of its mild contraction in 2011 and then resume a course of modest appreciation.  Dallas has a very strong business community, and a large population of renters.  This results in a much slower rate of value appreciation, and a large supply of potential tenants. Currently, approximately 40% of listings in Dallas are from foreclosures.

The primary strength of Dallas as an investment market is the strong cash flows that it generates. By building your investment on top of rents that are sufficiently large to pay for the expenses and mortgage on the investment, it will give you the power to hold strong until market conditions are optimal.  In the case of Dallas, there is a ‘perfect storm’ of factors that combine to make it a very strong investment market.  The city has a very strong business sector that attracts skilled employees.  The relatively high property taxes influence many people to rent their homes instead of buy them. This works to suppress price increases and place upward pressure on rents, since there is a relatively high percentage of the population who rents.

One of the things that some people say about Dallas is that they don’t care for the heat and humidity of summers in Texas.  This dislike of the weather convinces them that Dallas is not a place that they would want to invest.  This sentiment also demonstrates a great income property investing folly where people think that they should only invest in a place where they would want to live.  Just because you would personally choose to live in one place or choose not to live in another doesn’t mean that everybody else shares your sentiment.  Many people have moved to markets like Dallas or Atlanta because of their superior employment opportunities.  Based on this analysis, Dallas represents an excellent opportunity for income property investors.

Jason Hartman talks with one of his Local Market Specialists from Dallas about ultra-low 5% down on brand new income properties. David has been a professional real estate investor since 2000 with investment holdings and development projects have included single family homes, apartments, office, retail, hospitality, and winery and companies that have held real estate interests in California, Texas, and Mexico.

With a solutions-oriented, entrepreneurial spirit is best characterized as pragmatic enthusiasm. He is skilled in communicating complex financial matters in simple yet meaningfully direct ways. David has a gift for finding creative financial solutions. Starting with an assessment of an investor’s or asset’s strengths to find ways to leverage those strengths to maximize profit while minimizing investment risk. David has extensive experience creating private placement syndications, investment partnerships, and providing investor relations services. As a real estate syndicator, David has raised and/or managed over $30M of private equity invested into real estate development projects. David has served on the advisory board for numerous companies and government agencies. David served as the elected treasurer for the Central Business District Property Based Improvement District – a taxing authority for the City of Vallejo (CA). Current and past consulting clients include real estate development companies and hedge funds with projects in excess of ten billion dollars, manufacturing companies with production and distribution facilities in United States and Mexico, Silicon Valley software companies, and a prominent Napa Valley winery. David obtained a real estate brokerage license in 2005 and is a former member of the National Association of Realtors.

David is a graduate (cum laude) of Chapman University where he attended as a Presidential Scholar and studied organizational leadership with renowned economist and university president Dr. James Doti. David performed graduate studies at California State University Fullerton (CSUF) and University of California Los Angeles (UCLA). With interviews and features in numerous publications including the San Francisco Chronicle, the Vallejo Times-Herald, the Vacaville Sun, the Merit Times, and the San Antonio Business Journal, he is frequently a keynote speaker at real estate investing clubs in California and Texas. He is formerly a member of the teaching faculty of California State University Fullerton, Santa Ana College and Azusa Pacific University.  Visit http://jasonhartman.com/members/ and take advantage of our latest member benefits.

We’re putting enough real estate and business brainpower in one room to make Donald Trump flinch. Enjoy this content-rich sampler of “Meet The Masters” our twice annual powerhouse educational event that can revolutionize how you think about money and wealth. Will you be any closer to financial freedom in one year?

Listen in and it can make all the difference if you simply have the courage to take action on your dream. The reality is you can fire your boss and live life on your own terms sooner than you think. Wall Street Investing Does NOT Lead to Financial Freedom.

The following information might surprise you:

• Income producing properties are history’s most proven wealth creator.
• Making money in real estate is NOT just for big spenders.
• There are investments out there which require very little cash up front, yet have the potential for exciting returns.
• The vast majority of wealthy people made their fortune investing in income property. Why do anything else?
• Learn every skill you’ll need for success: analysis, acquisition, management and wealth preservation techniques.

Our speakers come armed with the latest in shrewd real estate investing techniques, and will address such issues as:

• The smart way to choose your properties
• How to grab every tax benefit the law allows
• How to put together the most creative financing package possible
• The hidden power of the 1031 Exchange
• How to easily invest in dynamic growth markets outside of California

Jason Hartman talks with Robert Frank, author of The Winner Take all Society, The Economic Naturalist: In Search of Solutions to Everyday Enigmas; Falling Behind: How Rising Inequality Harms the Middle Class and many more! 

In ‘The Winner-Take-All Society’, Bob Frank discussed the fact that more and more of current economy and other institutions are moving toward a state where very few winners take very much, while the rest are left with little. Part of it is attributed to the modern structure of markets and technology. This view can be seen as a call for serious changes in policy, because the well-being of the average citizen is by most accounts the main goal of social and economic policy.

Robert H. Frank is the Henrietta Johnson Louis Professor of Management and a Professor of Economics at Cornell University’s S.C. Johnson Graduate School of Management. He is a monthly contributor to the “Economic Scene” column in The New York Times.