Jason Hartman and investment counselor Doug look at current news. They discuss a softening in prices in the luxury housing market and how that may trickle down to other segments of housing. Doug gives us another metric to consider when looking at a potential economic downturn. Jason and Doug look at the past decade and discuss the inevitable decline. They chat about the upcoming event, Profits in Paradise, then end with a few notes on the short-term rental market.

Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 0:52
Welcome to Episode 1049 1049. This is your host, Jason Hartman. Thank you so much for joining Today, I’m here with Doug, who has been on the show several times before, he is one of our in house economist. Or I’ll say economic hacks like me, like me, I’m an economic hack, too. But sometimes the hacks know a lot better than the, quote unquote, experts. And we’ve seen that play out time and time again, throughout history. So we’re going to talk about a variety of things as they apply to our financial future, our investments, and life in general.

Doug 1:30
Doug, welcome. How are you? I’m doing great, Jason, thanks for having me on the show. Again.

Jason Hartman 1:34
Good to have you back. So there’s been a lot of talk about the yield curve lately, and I talked about it on the show maybe two weeks ago or so. The yield curve is flattening. And some say that is a sign of a recession. And you say, I think, well, maybe I’m putting words into your mouth. Just correct me if I’m wrong. You seem to say that there is one other far more Important thing that is the sign of a recession and it is not the yield curve. It is my favorite four letter word, right?

Doug 2:07
Yes, that would be debt. And so fundamentally, the thing that causes the economy to go into recession is when people stop paying their debt service, stop making their debt service payments, because like, for example, if you go into the St. Louis Fred website, I think it’s just St. Louis St. Louis is Fred or just google St. Louis. And one of those, one of the many things they track is total credit outstanding. And the way that I look at that is total nominal dollars of credit from all sources. And then you look at total nominal dollars of GDP. And so for example, if the economy grows by a trillion dollars, usually there’s about one to $2 trillion of debt growth. And so in the history basically, since the dollar went off the gold standard, the overwhelming majority of economic growth has been fueled by increases in debt. Now, that’s not a problem until people can’t pay the debt back. As soon as they start defaulting and can’t pay the debt back. It has to be written off. And then that starts a cascading downward spiral that pushes the economy into recession. money gets easier. It bottoms and the death spiral keeps going back up until you get to a deleveraging like 2008 when things crash and just keep going down because there’s no backstop, right,

Jason Hartman 3:15
yeah, it’s amazing. Now, I want to make a distinction here, though, that I think is kind of interesting, because it’s not only debts, its commitments in general. So it could be a lease on a property. It may not be an actual debt, per se. You know, when people think of debt, they think of car payment, a student loan payment, a house payment, but it might just be people not paying their rent. And so that cascading effect. It’s like, you know, we’ve heard a lot about trickle down economics. Well, when things go the other way. I call it trickle up. And I remember, I don’t know if you heard this episode, Doug, because you don’t listen to every episode. I don’t think do you? Do you Come on admitted here. I don’t

Doug 4:01
listen to every episode anymore. Now, to be fair, you used to only publish once a week and it was easier to keep up the publishing like three, four or five times a week. It’s, you know, if I want to keep a day job, I’m gonna I can’t keep up.

Jason Hartman 4:13
slay the Rodney Dangerfield clip that says I don’t get any respect, no respect. I don’t get no respect. Well, I tell you, there is a another famous radio talk show host whose name I will not mention, because it’s politically charged. But he’s a very bright guy. I’ll tell you that much. And he publishes 15 hours a week of radio and does reruns on the weekend. So I think people can at least listen to my semi brilliance for an hour and 45 minutes a week. Okay. three episodes? I tell you, okay, so and so once more

Doug 4:52
Yes. No rest for the weary around here. That’s right. That’s

Jason Hartman 4:56
Hey, you know people tell me they listen to a whole bunch of my different shows. Remember, you can listen to a lot of different shows not just this one that publishes three times a week. There are many other shows out there. We have three episodes a week on this show. But there are other shows, as you all know, as you all know, but exactly, here’s what you know. I love how you have repeated that quote to me more than once, that socialism is Trickle Up poverty. I love that, by the way. That’s great.

Doug 5:25
Yeah, socialism. What happens?

Doug 5:26
Yeah, trickle up. Yep. You run out of other people’s money to spend? Yeah,

Jason Hartman 5:30
Margaret Thatcher. The problem with socialism is that eventually you run out of other people’s money. Great, quote, good old, the Iron Lady knew what she was talking about, that’s for sure. But on this thing on the debt cascade, I remember a couple of weeks ago, I was talking about the story of one of my office leases in Orange County, California. And now I found out that the landlord had not disclosed to me that there were leases in the building even though I asked them too. But when you’re in the commercial world, there’s like no protection whatsoever. Unlike the residential world where, you know, you can go write a letter to the Department of real estate and they all, you know, be all over these people. Well, maybe they will, but it’s much more cutthroat. I’ll put it that way. So anyway, I remember writing the letter when I was trying to renegotiate the lease, after I found out they lied to me and didn’t disclose all these much cheaper leases. You know, I was paying 275 a foot and their releases for like 96 cents a foot in the in the building, right. And then I tried to sublease my space and they blocked me. They had other vacant space in the building. And I remember one of my sublease tenants was in there looking. And I was trying to sublease the office space. And then they came in in the hallway literally, the landlord’s rep, stole those people away and tried to show them other space and building or didn’t try actually did show them other space in the building and I lost them. So I’m back believably cutthroat the world of commercial real estate, but that’s not my point. My point is I remember I wrote them a letter. And I said I was this is the Trickle Up phenomenon at work. Okay. It’s the cascade you were just talking about. I wrote them a letter and I said, in the great recession that we are in, virtually every contract in the world is being renegotiated. Let me give you an example how it trickles up. We used to buy radio advertising on KSI. Well, no, we actually did not buy this because it was too expensive. I wanted to buy it, where you could buy a one minute commercial on KSI during primetime like Bill handles radio show, very popular morning show on calfire at the time, a 50,000 watt radio station in Los Angeles. And that was like $900 for a 62nd spot, okay to run that. And then the Great Recession came and you could buy what’s called remnant advertising. Because they had all of their advertisers were just evaporating like crazy. The remnant space was during prime time, it was the same exact spot. You could buy that spot. Doug, do you care to take a guess? how big the Delta was here? That $900 spot that was literally $900, six 810 months earlier, when it was in the depths of the Great Recession. Do you care to take a guess at how much you could buy that same radio spot for? I guess, Florida bucks? No. 150 bucks. Shot 150 bucks. This is why I think that old saying is certainly somewhat true. The rich get richer and the poor get poorer. Now, it’s not completely true. We could agonize over that for a while. But one thing that is the key is that the rich have resources in hard times and the poor They are hurt by hard times, especially inflationary times, and they don’t have resources so they can’t buy the bargains right when the bargains are around and, and gain market share. So every company, their big market share gains, it’s always during recessionary times when the playing field has fewer competitors in it. Anyway, just a little side note there. I am known for going on tangents. Okay. Let’s move on here. But that’s the cascade. Okay. Now, guess what? My landlord in that example, in our commercial real estate office, we had about 5500 square feet in this gorgeous office, right? My landlord? They were having to renegotiate leases with their tenants as their tenants were all defaulting, right. But guess what? trickle up, okay. They went to their lender on the building that had the, you know, had the multi multi 10s of millions of dollars that they had financed on the building. They went to the lender and renegotiated the loan and then what You think the lender did? Well, the lender went to the federal government and got a bailout. And that was paid for by inflation printing money and taxes, right? The the regular income taxes and the inflation tax as well. So it’s trickle up,

Doug 10:17
right trickle up. Yeah. In fact, I think a way that you might more accurately say it is that the thing that causes recessions is default. Whenever there’s default on either a debt obligation, a lease obligation or rent obligation in large numbers, then what that does is that arrest the growth of the debt spiral because right people can’t afford to continue paying making their payments on their debt service or whatever other service their lease or whatever. And so then those defaults, then push the economy into recession until for whatever reason either, you know, either money gets made easier again, which is the Alan Greenspan model, right or all the weekends get pushed out of the game. And as some people are fond of saying, the money get the capital gets returned to its rightful owners and the capital structure reorganizes around productivity instead of just chasing whatever gets you the biggest paper profits. Yeah,

Jason Hartman 11:08
yeah. Well, that’s what Wall Street is so good at. They’re so good at moving money around. They don’t actually create anything, they move it and they try to allocate as much as they can toward the insiders, right. That’s the way it works. But speaking of wall street dog, we are now on a 10 year bull market. Now, what’s interesting is there’s all these headlines and you know, the stock market’s so great, Wall Street’s so wonderful, but what they don’t remind us of they don’t none of these headlines talk about how, before this 10 year bull started, people lost a good third of their net worth, if not half of it in Wall Street. Okay, so, you know, nobody seems to mention that, right? But yes, if you invested at the bottom of the market, in the depths of the trough, yes, you’ve had a 10 year run. No questions. So the question is, though, this is the longest run, right? Because we’re coming from a very low low, how long can it continue? And you know, that’s certainly a litmus test for the economy in general.

Doug 12:12
Yeah. And that’s it actually is a really interesting question. Because Chris, as many of your listeners will know, you know, I have a job, you know, I have a corporate job. I’ve had one for a long time, I worked at Intel for quite a while and we’re at a different company. Now. It’s still in the semiconductor industry. But one of the things that I notice is that every company that’s publicly traded, the company I work for now is publicly traded. Every company is publicly traded gets pressure from analysts to grow their revenue and earnings at a faster rate, almost always in double digits. Now, if you think about them, you’re like, Okay, if the economy grows at 3%, a year, how can every major company grow in double digits? It’s impossible, right? Because when you add them all together, they basically equals the economy. But now what do we say what do the companies do to try to grow double digits, they go out and take on riskier projects. They do layoffs, they do all kinds of other stuff that very frequently blows up in their face. Because they’re taking. They’re making short term decisions instead of long term decisions. One

Jason Hartman 13:10
of the things that perverts the market, the US economy in general, it happens in the political sphere too, because of the way we view things as Americans, this instant gratification mentality of let’s make the next quarter, as good as we can. You can’t manage a real business that way. You know, it’s like you’re beholden to the investors on this instant gratification treadmill. And, well, you know, Bezos doesn’t do that. But

Doug 13:45
I was about to say a thesis is about one of the only people the Amazon’s The only companies I know, that really gets away with saying, No, we’re, we’re optimizing for maximum long term value. And you know that the market is going to do what it’s going to do

Jason Hartman 13:58
and for a long time, Time Apple not paying dividends. Same idea, you know, an

Doug 14:03
idea. Yeah, exactly. But of course, the thing that we struggle with is I don’t necessarily know a better system, because just about anything else you come up with has has ramifications that are, that are undesirable as well. Yeah. It’s much like capitalism. It’s extremely imperfect. It just happens to be the best thing we’ve got.

Jason Hartman 14:22
Yeah, right. Right, exactly. But But you know, if you look, it’s funny how the US has really just taken such a lead in the world. I mean, it’s just grown more and more, but if you remember, before, we had our Fang companies, you know, Apple and Amazon and Facebook and so forth, right. And that flex before we had these really hot, we have the companies many of them but before they were doing their thing and make grabbing all the headlines in the world, right? You know, people used to talk about Sony, okay, for exam for that and they used to say I mean, I remember this, you know, 15 years ago, 20 years ago, I used to I remember hearing people talk about how Sony had a 500 year business plan. I mean, I can’t imagine that’s even true. But that’s what I heard. And I used to hear that in business books and you read it in business books. And you know, the Japanese seem to have this much longer term view. Now, listen, Japan has been an adulterous for about two decades, but, you know, maybe, maybe that’s just talk, right. But you know, they were the, they adopted the quality circles and all the great management stuff, post World War Two and, you know, have had a long run. So, you know, they’re certainly they deserve some credit for sure. But, you know, do they have a longer term view? Does the Asian culture sort of just generally lend itself to that longer term view? I think it might. I think the Americans are really instant gratification oriented.

Doug 15:53
Yeah, I think if there’s anything to really be concerned with as far as competitiveness versus Asia, I think that’s it. Which is that there is a longer term view. And there is a willingness by the populace and investor community to wait out short term bumps in order to win over the really long term horizons. I think that’s probably the principal advantage that I think is going to be most difficult to overcome. Yeah, we shall see how that all pencils out. But see the thing the US has that it just has in just so much innovation, more so than other countries, there’s just a lot more creativity in the US. psyche, maybe it’s that whole rugged individualism heritage. I’m not sure what it is, but it’s pretty unique country for sure.

Jason Hartman 16:41
I do believe, to some extent in this American exceptionalism argument. It’s, you know, having been to 81 countries myself, I think there’s, there’s certainly something to that so, and listen, I can’t take credit for it. I just happened to live here. Okay. I’m just observing it. Okay.

Doug 16:58
That’s all The thing that’s really important for a lot of people to remember is because everybody remembers the successes, but successes don’t happen without failure. Right. And Sophia, for every Steve Jobs, there’s thousands to millions of people who had an idea that may have been just as good and failed. And it’s all those people being willing to try and fail for the chance to succeed. That makes the collective economy stronger.

Jason Hartman 17:21
Yeah, right. Right. Well, you know, you know, that’s, I’m glad you brought that up, because the US is a very forgiving country. You know, people can file bankruptcy and reorganize and come out of it and start over and, you know, the President is Yeah, and while Hey, you can file bankruptcy multiple times and run for president apparently, just as Trump. I remember during his bankruptcy, remember in the 90s, that his the trustee the bankruptcy trustee put him on an allowance, he and I Ivana had to be on an allowance of like, $300,000 a month each. Oh, tough life. 300,000 you mean only 10 grand a day. That’s all they could spend. Just austerity measures mean, they should try it, you know. But, but yes, you can start over and you know, this idea of fail fast, fail often fail fast fail forward. And you can just pick yourself up by the bootstraps, and do it again. And, you know, there are a lot of success stories that came out of people that were down and out, they filed bankruptcy. They were they had nothing. And then they created incredible enterprises, you know, I mean, it’s, it’s, it’s, it’s just amazing. It really is. So that can be very good for an economy. But you also have to think about the cascade behind that, right. So there were creditors that got stiffed in that deal, right? So thoughts about that because that’s what how we started this conversation that every economy a downturn really starts with default on commitments, especially debt oriented commitments like mortgages, student loans, credit card, auto, etc,

Doug 19:10
correct? Well, and I think one of the things that a lot of people can get fooled into thinking, especially during long economic expansions is that anytime you make a loan that people are going to pay it back, or anytime you make an investment, that you’re not only that you’re going to make money, but just that you’re going to be able to get your money back. And that’s not always the case. Right. counterparty risk is real,

Jason Hartman 19:30
for sure. And it should be Yeah, it should be. And that’s what that are, you know, that book, debt the first 5000 years was fascinating. I played some of it on the show, several episodes ago. I don’t know if you heard that one but fantastic book. And he started right off at the beginning of the book talking about how, look, if there wasn’t some risk and being a lender, there has to be risk to keep the lender in check, because then they would just be completely predatory. They would make every stupid loan in the book. Why would they underwrite anything, if they knew they were going to get paid 100% of the time, that would be completely counterintuitive. There has to be risk in lending. If people don’t default. They’re not keeping the lenders in check. It’s an odd way of thinking. But it really is. I remember years ago, when we used to have a lot of inventory of properties to sell. I miss those days. But But I remember years ago, I did a presentation, you know, for another group. And I remember one of the people saying that look, they were looking at the Jason Hartman website, and they said, you know, they were looking at one of the properties and they said, this property isn’t a very good deal. I don’t think your deals are very good, he says. And I said, this is exactly what we want. We want you to reject certain properties. Now, nobody rejects anything nowadays because there’s so little to choose from, but back in the day when there was a lot of selection and the deals weren’t as good as they are today and inventory increase. I said to him, I said, Look, this is exactly what we want. We’re offering a marketplace. And we want you to give feedback to our local market specialists that this deal is rejected. That’s exactly the point, you know, reject the deals, please reject some of them. They’re not all as good as the others. That’s exactly the point. It’s a feedback loop. If we don’t give them feedback, they’re just going to push junk on everybody. So the feedback loop is necessary. The same is true with lending if borrowers don’t default. There’s no feedback loop to tell the lenders that they are making dumb decisions. And the problem is when we had this, what’s the word I’m looking for? Right? it escapes me right now. The moral moral hazard moral hazard. Thank you. Yes, the moral hazard. Were the lenders were making any loan because we had corporate socialism. You know, they just there was no consequence. Right, there was just no consequences. There’s no nobody to put the brakes on anything.

Doug 22:04
And in fact, I was actually just about to say that I think the principle you’re talking about is even more important to plan the other way, which is that if no companies ever default on their loans, then that means lenders won’t hold companies to account. Because in the old days, what happened was the people who really held companies accountable were were the the bondholders, because, yeah, the bondholders needed the companies to stay viable in order to make their debt service payments. Mm hmm. But what happens is, whenever there is an implicit backstop by the Federal Reserve, now the bond holders don’t care anymore, they’ll just chase yields up to Otis chase down to you know, double B single BC. You know, see my minus,

Jason Hartman 22:45
minus minus Yeah, exactly.

Doug 22:47
Yeah, there is Chase, right, the yield curve. Basically, if you don’t make it out,

Jason Hartman 22:53
it’ll make Michael Milken junk bonds of gold look like stellar triple A.

Doug 22:59
Exactly. And But back in the old days, one of the main reasons why companies kept their books clean is because they knew that if they had anything that looks sketchy that all of a sudden their debt was going to cost them 40% more to acquire. Right, and they weren’t going to be competitive anymore. And so but that’s basically gone. And I think that that getting that back is going to be a really important part of the US is long term sustainability in a global marketplace. Yeah.

Jason Hartman 23:22
Now very young, really, really interesting stuff. Okay, so I guess start of this discussion, Doug, was to talk about what can we look for in the future of the economy? What is the prediction? We are certainly seeing a significant cool down in the real estate market in the higher end real estate markets, all over the country. I mean, it is you know, usually the slowdowns start from the bottom and trickle up. This time. It’s from the top and trickling down or maybe it’s not trickling down but at least it’s going on at the top. The top of the market is very soft and areas now inventory has increased markets are cooling. It’s certainly not true in the kind of properties that we sell these cheap little investment houses are selling like hotcakes. Still, I don’t know if that’ll stay that way forever. I, like I’ve said, I hope I don’t regret saying this, but I’m hoping it’ll slow down a little bit. Maybe not too much, but a little bit would be nice. It’s very hard to operate in a market like this. But yeah, what are your thoughts? I’ve actually thought about this quite a bit because I think the model in a lot of the higher priced markets has been basically to buy, lose money on the monthly negative cash flow, and then hope for a lot of upset appreciation, sell and then cover all your losses. Yeah, that’s called violating commandment number five, that shalt not gamble. Exactly.

Doug 24:45
But I think one of the emerging trends that may be a really great opportunity that you and I are still working on really kind of cracking the code on helping investors capitalize on is the short term rentals because the whole idea with Airbnb in short rebuttals is that you can realize a much higher cash flow yield. Well now if I can buy at a higher priced market and still cover from a cash flow perspective by doing a short term rental right now, it doesn’t have to appreciate in order for me to make money, I can make regular cash flow and just sit and wait, you

Jason Hartman 25:18
can basically apply the long term rental model that only works with less expensive properties. You can apply it to more expensive properties. But again, you know, we will sell no wine before it’s time As the old saying goes correct over here and we are pretty conservative group. We’ve been looking at this deeply and heavily for a good year and a half to two years now. And I have been interviewing thought leaders experts in the field. We even hired a person that the folks on the show you don’t know but we’ve hired an old friend of mine who is big in the short term rental business is now working for us. We’re learning a lot from him. He spoke at the venture Alliance meeting in New York City. With you, Doug, and you to share the stage on that. And we’re going to talk about this more at the profits in paradise event in Hawaii. Yes. So I’m excited about that we’re going to, we’re going to dive into the comparison of the short term versus long term rentals. We do have one short term rental market now. And that’s in St. Augustine, Florida. So talk to your investment counselor about that if you’re interested. So more on that, but hey, let’s make sure people get registered for the Hawaii event. Absolutely. It’s gonna

Doug 26:33
be amazing.

Jason Hartman 26:34
Yeah, Doug, what say you about that?

Doug 26:36
I think the thing that’s gonna be really great about profits in Paradise is it’s going to give us a chance to really dig into more of the details about what really differentiates. It’s the short term versus long term models. And then also dig into you know, how, you know, how can you go about going from wherever you are now to building a portfolio, because I think the way that we’re going about the short term rentals is different than just the About every other provider out there just about every other system out there. Yeah. But I think it’s honest to say that it’s far more sustainable from a long term perspective. And it’s far more robust because most of the other providers and short term rentals are very big. And the idea of Kate, you want to do lease term or traj, and you want to do it local. I said, Okay, well, that’s great. If you live in an area where lease arbitrage works.

Jason Hartman 27:23
Yeah. And you and you’re still not diversified. And a lot of those people have a lot of furniture sitting in storage units to spend a lot of money on movers, because, you know, those don’t last all the time. But

Doug 27:35
yeah, exactly. You know, it’s like the, in the old days, people used to say, Okay, well invest in your backyard, and I say, Hey, you know what, that’s great. If you live in Memphis, yeah, that’s great. If you live in Indianapolis, what if you live in Los Angeles?

Jason Hartman 27:44
Yeah, it doesn’t make sense. depends on where your backyard is.

Doug 27:47
So yeah, depends on where your backyard is. Yeah, because the will the advantage of our model is that we’re basically taking our out of state investor paradigm and we’re remoulding that into short term. Short term rentals into that paradigm so that people can be successful with this new version of investing that’s really tailored for the 21st century from wherever they live. And you know, then basically anytime that you are pioneering new soil, that’s not a trail that’s easy to easy to blaze, but we’re blazing it because I think it really has to be done in order for our customers to continue having the success they have had in the

Jason Hartman 28:24
past. Okay, so I want to talk about one of the potential pitfalls on the short term rental side. And I know we got to wrap up here, but I think this is worth a thought experiment. I want the listeners to think about it. Feel free to give us some feedback or ask questions at Jason hartman.com slash ask. And while you’re there, of course, go and get your tickets for profits in paradise. By the way, I want to tell everybody there is an airfare war going on for tickets to Hawaii. airfare is cheap to fly right now. So one more reason to come and join us for profits in paradise. So Jason hartman.com slash ask for questions or comments, and then tickets to profits in paradise her for sale there too. But Doug, here’s the interesting thing. So I’m wondering where the occupancy is coming from. And this is pretty hard to analyze. So it’s just gonna be some food for thought more than any we don’t have an answer for this. But just think about it, folks. We have seen this boom in the short term rental world. And the hotel business from what I understand is doing pretty well, at the same time. So where is all this new demand coming from? That’s the question. And if there’s a change in the economy, where will it hurt the most? Will the hotel, occupancy suffer? Will all those people with VR Bo and Airbnb suffer? The short term rental side will it be a mix of both? Where is all this additional demand coming from at the same time, we’re seeing supply increase. I mean, in our studies, we have looked at how this is affecting, you know, people converting their normal long term rental properties or their own homes in which they live to short term rentals. It’s literally changing the face of neighborhoods. There’s a lot of supply out there, folks, there’s a lot of supply. And if you don’t believe it, just go look online, there is ample supply of properties. And when you break those down by single, you know, room nights, the number of nights available to stay short term in hotels and short term rental homes, has skyrocketed in the past maybe 10 years. Okay. So where’s that initial additional demand coming from? And what’s going to happen when there’s a different cycle in the economy?

Doug 30:49
I think I’ll answer the second question first, which is what’s going to happen when there’s a cycle another cycle in the economy? I think the answer is that prices are going to compress. I don’t think your demand is going to disappear. Here, but I think your willingness to pay higher prices will be diminished. And then as the economy recovers, and the willingness to pay higher prices will come back.

Jason Hartman 31:09
So pricing power is what’s pricing? Exactly?

Doug 31:13
Yeah. And as far as where demand is coming from, if I’m being completely honest, I don’t necessarily know. But the thing that’s both intriguing, exciting, and a little scary is that I don’t know that we have to know where the additional demand is coming from. We know for certain that there is a lot of demand. I can’t say exactly who we’re where, why it’s coming from, but I know it’s there. And I know it’s growing. I don’t know that it’s going to grow forever. But I know for certain it’s not going to go away. And so I think one of the things that’s actually beautiful about the whole capitalist system is that I don’t have to know why something is happening. I only need to know that it’s happening and that there’s an opportunity. And I think that that’s one of the things that I really want to impress on our investors to see Yeah, I don’t have to Know why people want to do short term rentals? Only he knew that they want to do short term rent.

Jason Hartman 32:05
That’s true, but but it’s worth examining motivation and ability, because you’re obviously not the ostrich type of person. I know, I know you too. Well, Doug, we’ve known each other for I mean, since you were a client, you know, what, maybe 12 years ago or 11 years ago, that long, and you like to analyze things, you’re an analytical guy. So when

Doug 32:26
when that demand dries up, or you know, there’s a sign of it switching, you want to be the first to know, because you can react more quickly than other people out there other investors out there, right, exactly. Well, I think the the best insurance for a short term rental provider is to be a premium provider. Meaning that you what you want to do is you want to provide the, you know, the highest end overall experience because as Nate, the gentleman you recently hired said, the market is never crowded for quality. The best is always in demand. It may not Fetch as high up Price, but there will never not be a demand for the best. Yeah, never know. And so I think that’s the best strategy for short term rental provider is to make sure that you’re a premium provider, because then even if your price is compressed a little bit, your demand will never disappear. Because you know, the whole thing is being able to have staying power. And if you have demand, you have staying power, you may sustain a few losses. But losses are inevitable. If you’re in the game long enough, you’re going to lose money at some point. And then you’re going to win in the long run. That’s that’s how it works for every real estate investor in the history of real estate investors. Nobody has ever made money every month of every year. Yeah, it just doesn’t happen. Well,

Jason Hartman 33:38
well. That’s why we all have to think long term, right? With everything in life. I mean, you know, we just have to discipline our thinking to think long term, because that’s the tortoise and the hare that slow and steady always wins the race, right? So yeah, no, good. Doug, thank you so much for joining us and listeners. Thank you so much for joining us and happy investing to all and we’ll talk to you On the next episode,

Doug 34:01
we’ll talk to you later.

Jason Hartman 34:04
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