On this Flashback Friday, Jason Hartman welcomes Harry Dent, Jr. He is the Founder of an economic think tank called HS Dent. They look at Dent’s prediction on the boom of the 1990s and then discuss the current state of the economy. Later, he looks ahead to the upcoming Great Depression given the amount of debt used to boost the economy. He discusses different bubbles such as student debt, the housing bubble, commodities bubble, and more.
I’ve known Jason for about 10 years now and his company does amazing things for their clients. I found his knowledge on real estate, unsurpassed. He’s straightforward, honest about his approach and gives you the information you need without any BS.
Welcome to this week’s edition of flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason is handpicked to help you today in the present, and propel you into the future. Enjoy.
Welcome to creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing 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 multi millionaire who not only talks the talk but walks the walk. He’s been a successful investor for 20 years and currently Leon’s properties and 11 states and 17 cities this program will help you follow in Jason’s footsteps on the road to financial freedom, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:25
Welcome to the creating wealth show. This is episode number 254. And this is your host, Jason Hartman. Thanks so much for joining me today. Well, we got another great show for you today. We have actually two guests in the show. One is Harry dent who is on again, he’s coming back to give us an update on what’s going on with him and his thinking in the economy. So we will be starting with that in just a moment. Then we will have our Atlanta local market specialist talking with you about some special financing and special exclusive inventory that we have. again one of the great things about working with us as we have Exclusive inventory that you won’t find anywhere else in many of our markets, because we have worked out those exclusive deals with our providers or vendors. And I think you’ll like it. So you’ll hear about that toward the end of the show today. So let’s go ahead and jump right into it with Harry dent. And then we’ll be back to talk to you about a few things including our St. Louis tour. I hope you’ve signed up for that. And of course, that is may 18. Through the 21st St. Louis and St. Robert, Missouri, you get to see both markets. And let’s talk to Harry dent and I’ll be right back after that.
What’s great about the shows you’ll find on Jason Hartman calm is that if you want to learn about investing in and managing income properties for college students, there’s a show for that. If you want to learn how to get noticed online and in social media, there’s a show for that. If you want to know how to save on life’s largest expense, there’s a show for that. And if you’d like to know about America, crime of the century. There’s even a show for that. Yep, there’s a show for just about anything, only from Jason Hartman calm or type in Jason Hartman in the iTunes Store.
Jason Hartman 3:23
My pleasure Welcome back to the show Harry dent. His latest book is the great crash ahead and he’s out with some big predictions for 2012 and beyond. And as you know, I’m a big follower of Harry’s, I have been for many, many years. And I love the way he looks at demographics and how they impact the economy. Harry, welcome. How are you?
Harry Dent 3:40
Nice to be back. Jason. Well, good to have you. You have a pretty different view than a lot of people in terms of your view of deflation and so forth. What do you see ahead for the economy? Well, you know, it starts in our book, The Great crash I had, which is you know, their latest book came out at the end of September. We were different across the board, we look at demographic As the private driver, not only economic growth but inflation and deflation, young people are inflationary when they enter the workforce and cost so much to incorporate. And older people kind of downsize and deflate everything. And we have these booms in Boston, we’re saying, look, this boom from 1983 to 2007, driven by baby boomers moving into their peak spinning, it’s over. And the Fed is acting like, well, we can just stimulate the economy and get it back to normal. No, you got 92 million baby boomers, they’re going to save more, borrow less and spend less no matter what you do with all your fancy stimulus and stuff. So it’s, they’re fighting a losing battle there. The second thing we point out in the book is that everybody’s looking at the government debt and trembling at 15 trillion growing towards 25 trillion in the next decade. We have 42 trillion in private debt. We created four times as much private debt as government debt, up until 2008. Now the government debt soaring because they’re having to deal with the downturn private debt when a de leverages causes deflation histories. On this and when there’s a lot more private debt, which there always is and government debt than the private debt, ultimately the leverage is more than the government that debt goes up as the government’s trying to stimulate the economy and running deficits due to a bad economy. So, you know, we’ve been saying that, sooner or later, the government’s going to lose this war is going to take 10s of trillions of dollars of stimulus to offset these debt trends and demographic trends over the next decade. And we ended up like Japan. And the only thing about that is we can’t even end up like Japan, because we came in here so much in debt, we don’t have the ability to stimulate as long as Japan did. So we see another crash coming. And it’s just a matter of when the bond markets realize that the US and the ECB can bring their economies back to normal dollar stimulus and realize it’s a losing battle like they already did with Greece, Italy, Spain, Portugal, Ireland, and then you know, this sort of stuff and somebody’s going to realize this one day in Japan, they’ve been trying to come out of a downturn for 22 years doing what we’re doing, and and they’re not coming out of it. So so we tell Look, you got to prepare for another crash. And and you know each bubble goes a little higher, we’ve had three bubbles, the one that peaked in 2000, the one that peaked in 2007. Now, sometime in 2012, or maybe early 2013, we got another bubble that’s gonna peak, and each crash goes lower. So the last, you know, first crash was 57%. And the last one was, you know, 60%, this was going to be 65 to 70%. Now, here’s the big difference, though, since the book came out, we did not expect the ECB in Europe to come up with 1.3 trillion and QE two, you know, stimulus. They were talking austerity, and they still forcing these countries into austerity, to, you know, bailouts and stuff. And
Jason Hartman 6:41
I and austerity is what they need.
Harry Dent 6:44
Yeah, that’s what they need. I mean, the truth is, the US went to extreme austerity in the early 30s, and three years, our debt ratios went from 200% to 50%. Government in private, including Iceland, had the biggest debt bubble of any country, kind of hit the wall. First had no ability to bail themselves out of that they weren’t on the euro. So they could devalue their currency would countries you do they they eliminated 67% of their massive private debt. Now they’re growing at three to 4%. Unemployment dropped down to 6%. And looks like it’s going to continue to drop. They’re the only healthy country in Europe outside of Germany is because they dealt with their debt instead of kicking the can down.
Jason Hartman 7:24
He’s amazing how quickly Iceland recovered. I mean, that should be a model for the rest of the world because they went bankrupt. They were basically bankrupt during the
Harry Dent 7:34
day they were more than bankrupt their debt ratios. Their private debt was almost eight times GDP. Ours is like three times four times actually, you know, government debts one times and they’ve got the highest debt in the world, Ireland’s second on private debt. And so yeah, they were more than bankrupt. They they went from a nation of fishermen to a nation of speculators and drew and all this capital from Europe well, partly because a lot of the capital came in their banks and deposits from overseas. They just said stiffed them. And in so again, they cut their private debt which is by far the largest debt way more than government debt by 67%. And it’s still a bit high and in home prices have yet to fall there because they had a big inflation when they devalue their currency everyday they import a lot of stuff obviously, because they’re sitting on a rock ice and, and outside a fish, they report everything else. So they got hit by inflation instead of deflation, like most countries, so home prices didn’t fall as much But yeah, Iceland is an example. Yes, it may be painful, but get the pain over take some short term pain like the Iron Lady would you know Mark Margaret Thatcher and move on and they’re moving on in the rest of Europe just keep stepping into recession and more austerity and more deficits and more bailouts. And it doesn’t work. It didn’t work in Japan, Japan, bailed out entirely never came out of the downturn. If you don’t deal with debt, what we call the winter season. Don’t go into spring and Japan’s proven 22 years later, after a debt bubble peak and then housing and stocks and everything else just like we saw, they’re still in winter they still can’t recover and go into a new era and they got the fastest aging population. So Japan is dead Southern Europe is dead. Now the US is going down the same path if we just keep coming up with QE two and then QE three and then QE four I think we probably will get a QE later this year because bond rates have gotten so low not just because the Fed pushed them down but you had a flight of capital out of Southern Europe into bond markets like the US that pushed our rates down even lower so as long as our rates stay down low in the bond markets don’t revolt against the Fed like they did against other government the federal do QE three at the economy slows the economy’s not slowing now. We think QE two will wear off about summer so and then we probably will get a QE three but I think that’ll be the last one. I think you know, inflation is going to become threat the bond markets, you know, how many times do you take viagara and nothing happens and you’re not go, Hey, something’s wrong here. Yeah, you can’t just keep you can’t keep juicing the economy forever, obviously because you get massive inflation and devaluation of the currency. Well, and you lose people’s confidence because of the recent poll economists 66% economists agreed that the stimulus had been effective, but 81% said they don’t want to see any more QE. In other words, enough is not enough. What was they gonna say? Yeah, you can’t like you say, you can’t, if you have to keep juicing the economy to keep it going. It’s saying the economy doesn’t want to grow. So you know, you keep doing that, like you say, you just run into inflation, you pervert the markets, you get bubbles everywhere. And that’s all we have. We just got Bubble Bubble Bubble bubble, gold bubble, silver bubble, oil bubble, commodity bubble, you know, emerging markets, Bubbles, US stock markets, bubble bond, bubble, junk bond bubble. I mean, this is particularly light Insurance investment bubble.
Jason Hartman 11:01
You know, it’s unbelievable. We are very good at creating bubbles, no question about it here. Here’s the thing. You know, Harry, I thought you were really talking deflation the last couple of years counter to the trend. I mean, but but you just mentioned inflation. Can you
Harry Dent 11:17
distinguish that for us? Yeah, well, we have inflation template. Here’s how to make it simple as you’ve got the government inflating to fight deflation when the banking system and it was our private debt. It wasn’t our government debt melting down, like in Europe, it was our private debt melting down in 2008. We had their money supply contracted 6%. That’s real deflation the first time since the early 1930s. The government saw that and said, Holy Holy smoke, we’re going into the Great Depression and we don’t really do something strong and hard. So they’ve injected 2 trillion in the economy. They did tarp, they’ve done all types of bailouts guaranteed all types of loans, trillions of dollars of stimulus, if you added up let’s say it’s four to 5 trillion. Well, that’s gotten us back to three, two 4% inflation and money supply is now growing at 4%. Well, to me if you’ve gone from minus six money supply to plus four, and they do a QE three a little later this year, well, who says that money supply doesn’t go to plus six or seven and inflation doesn’t go to five to six? I don’t think you can keep stimulating when you get inflation at high they the targets for the Fed are 2% inflation, right. And
Jason Hartman 12:23
I’d say that real inflation at least with food and energy quite a bit higher than the official numbers. You probably agree with me but rather than Heckle Oh,
Harry Dent 12:32
yeah, definitely. Yeah.
Harry Dent 12:33
Okay. All right. Now. Now, on the other hand, Jason, real quick, though, people will admit that housing has been the biggest deflator. And we’d I don’t think we count fully. You know, there are things about equivalent rents, I don’t think account for the level of housing deflation. So yeah, you’re right food and energy and most things are higher than people think and more inflation, but housing, which is our biggest cost of living and mortgage borrowing has gone down. Right, right.
Jason Hartman 12:56
And when you say equivalent rents, you’re referring to how the country Price Index calculates the inflation rate with the equivalent rent issue. But here’s the thing, a bunch of things you said there’s so much there. And we have limited time, of course. But, you know, when you look at Japan’s last two decades, they used to call it the last decade now it’s called the last two decades, really moving into the last third decade. Japan doesn’t have the reserve currency, they do have that huge demographic problem. They’re not replacing themselves, their fertility rate is meager. They don’t have immigration. We have a lot of young people in the US we have Gen Y. And that is a big, big issue, especially when you look at housing, because Gen Y is right now moving into their prime housing formation years, and they’re going to consume rental properties or buy properties if they can. They’ve got a huge student loan debt bubble over their head, most of them yeah, that’s gonna burst you go. Absolutely. That’s a bubble we didn’t mention and that’s why I think it’s almost a trillion dollars. Now.
Harry Dent 13:54
What are your comments on that? Well, first of all, you’re right. We have a stronger, eco boom. Call them then then most countries in Europe not as strong as Australia and a few but but it’s still that generation is never got as large and then as number of consumers and birth as the baby boom, that’s number one. Number two, that generation is moving into their peak in the next several years of rentals at age 26. But most of that generation is still in school or college. And it will be many years before they move into their peak up starter home buying and then trade up home. So they’re starting to buy homes but but the economic environments not good at home prices are falling credits hard to get. We think in about three or four years you start going to see, you know, a stronger trend and starter home buying but nobody’s going to want mcmansions so this generation is not large enough in the workforce or old enough yet to offset the baby boomers downswing, I mean we are spending wave analysis shows that the economy should slow from about 2008 to 2020. Kind of flattened 2023 and then the echo boom starts to cause more growth and the baby boomers cause the client. So it takes a while to transition from the peak spending of one generation to the next generation having enough momentum to offset their decline. So So echo boomers are going to start to help but but the, again, most of them aren’t even in the workforce. Yep. Yeah.
Jason Hartman 15:20
Fair enough. And in the issue of Japan, not having the reserve currency, so they can’t bail themselves out. Iceland couldn’t bail themselves out. The US, you know, for better or worse, we’re still in that position where we can print and force a lot of our debt on the rest of the world. It is a bully pulpit, to some extent, but what are your thoughts about that?
Harry Dent 15:41
Yeah, I mean, we can do that until the bond markets start to say, No, this isn’t working. all we see is endless deficits. And that’s what they said in southern Europe. It stops working when people again, if you got 81% of economists who basically mostly believe in Keynesian economics, saying, enough is enough, you know, citizens have got to be feeling the same thing. There’s point where you just can’t keep doing this now Japan. Yeah, they don’t have the reserve currency. I mean, they do, they can buy their own bonds like we do. So they do have a printing press. And Japan’s been doing this since I think about 1998. consistently, their bond rates are 1%. That’s the only thing that stopped Japan from being bankrupt of Japan even had to pay 3% interest, their interest would take their entire government revenues. Japan is a bug looking for a windshield, they are going to default. It’s a matter whether it’s two years from now, or 10 years from now. And when we come out of this winter season, and you get higher inflation rates around the world, their rates are going to go up the other thing Japan’s had that we don’t have, they had very high savings rates among their consumers. Well, they’re getting so old now in Japan, where they’re negative demographics that they’ve gone from 18% to like 1% savings rates. So at some point when people retire, they start spending down their savings. Japan’s not going to be able to sell their bonds to their own citizens when they have to go out to work. markets to fund their massive government debt. They are going to be bankrupt. It’s that simple. So Japan’s strategy will prove not to work they could have D leveraged their private debt. They never D leveraged most their private debt they substituted massive public debt to ease the pain. Now they got 230% debt to GDP and rising and again move to 2% long term interest rates with damn darn near would bankrupt them and 3% with their interest would take all the revenues and leave no money for anything else that Japan’s debt we just got to wait for the funeral. That is a scary scenario for Japan is don’t have anywhere to go that so they are boxed in you talk in chapter eight of your book about the last great bubble China and capital investment. Yeah, I mean, this is something people are starting to become aware of. We started touting this two years ago and people like what I’m here by the note China’s the ones going to bail us out of this whole downturn. China has the biggest bubble in the world. All emerging countries, especially in East Asia have kick started their economies with strong guns. capital spending, government favors certain export industries they put in infrastructures. And that is something you should do in the early stages. It’s like raising kids. But China has done this twice as long as any other East Asian country, much more intensely, instead of 30% of their economy on infrastructures and government capital spending. It’s been like 50% and higher. You can’t sustain that they got 24% vacant homes, they’re building housing.
Jason Hartman 18:25
They got big that vacant cities,
Harry Dent 18:27
I mean, it’s taken cities, a million people, nobody in them, and they got 20 30% excess capacity and steel, aluminum, all these major industries, cement and they’re building roads and bridges and railways. So China has been keeping their migrant population of workers that comes in for rollers employed by building stuff that nobody needs, not the world not them. So the world slows down. China’s bubbles going to burst big time. So China’s the last bubble to burst and China drags down commodity prices. They control 40 to 50% of the the industrial metals and resources in the whole world. And it drags down the emerging world that exports them So China makes this a worldwide crisis not just a developed world Europe us crisis
Jason Hartman 19:14
so they just don’t need the infrastructure they have they’ve just totally overbuilt is what you’re saying.
Harry Dent 19:19
Yeah, there overbuilding on purpose to keep people employed because the Chinese government, there’s like government, civil unrest, but they fear civil unrest or non elected government, one party system. And their biggest way of growing has been moving people from rural areas to urban areas, which is smart because their income triples just I mean, no difference in education. take somebody on a rice paddy and make them a taxi driver in Shanghai, three times the income three times the input to GDP. The problem is they’re doing that too fast. And they’re having to keep building stuff. They’re just saying, look, we’re gonna need it one day anyway, the world’s gonna need a one day anyway. We’ll build it now or later. That’s not a good policy. That’s Bubble. So Europe has more of a sovereign debt problem because their private debt, at least in southern Europe is not as high because they don’t have big SUVs and houses and appliances. US, UK, Ireland has more of a private debt bubble and China has a government building bubble. Governments are pushing projects down to local governments, and they’re borrowing money from banks and all and they’re going to default on their loans and China’s going to be in trouble.
Jason Hartman 20:28
Wow, amazing things the way this all interplays tell us I know we’ve got to close here, but what are some of the strategies people can use to survive and thrive with their investments their careers?
Harry Dent 20:39
Well, you know, right now we’re telling people to be cautious on stocks but but we know because of this big QE in Europe and all this stuff in the US probably a QE three coming with we’re probably going to get a correction in the next couple months. So they’ll probably be one more rally especially we have QE three in the United States. So you know, you can add to stock if we see that but but somewhere late This year, early next year, you got to get out of stocks, the US dollars the best hedge if things go down you ups an ETF to play that. If you want to just be safe and sleep at night, don’t buy 10 year treasury bonds, buy treasury bills and get no return because treasury bonds can fluctuate if interest rates go up, and they could go up to 4% in a heartbeat. 2% for more aggressive investors, you know, you can basically bet on things going down instead of buying spy which bets on the s&p 500 going up and the chip you buy sh and if the s&p goes down 5060 70% which we think it eventually will you make 5060 70% 6060 70%
Jason Hartman 21:34
reduction in the s&p 500
Harry Dent 21:37
Wow, that’s gonna hurt a lot. Okay, and 87 we saw 40% overnight. In 2000 2002. We saw about 50%, of course, 78% tech stocks and then in 2008, early 2009, we saw about 55%. The next crash is going to be 60 to 70%.
Jason Hartman 21:53
So the s&p 500 may actually be 500.
Harry Dent 21:57
No, no, exactly. That’s somewhere you know, somewhere in between. We’d like 300 and 500. That’s kind of our target. It’s 667. Last time. What about what about the Dow? The Dow somewhere between three and 6000? Well,
Jason Hartman 22:11
wow, that’s I mean, we’re looking at
Harry Dent 22:15
440 last time, and it’s six 445 times. So I mean, we call this a megaphone pattern. If you look at the stock, look at the Dow look at the s&p 500, the three big tops, the one that’s building now and the two before each top has been higher, and each crash bottom has been lower. It’s called a megaphone pattern. It’s the most bearish pattern because it means the next crash, and often you break below that bottom megaphone trend line, but each crash is going to be bigger. I mean, if that makes sense. The government’s going to pump up a bigger bubble every time there’s a crash by lowering interest rates and all this quantitative easing and pushing markets up because these banks get all this money from the government and they don’t lend it out because nobody wants to borrow when they don’t want to lend. And so they just speculate in markets, you know, banks, investment banks, brokerage firms. Everybody’s a hedge fund now. And you wonder why oil oil goes to 147? One day and is it 30 to the next? It’s just a big speculation play.
Jason Hartman 23:09
Yeah, it’s all just a big casino. It’s unbelievable. I love the way you said that everybody’s a hedge fund now, everybody’s Yeah,
Harry Dent 23:15
yeah. And it’s basically the way they’re all operating nowadays. And then the government saying fine, because they want these banks to make money so they don’t fall down from their bad loans. But when the bubble burst, these people are gonna lose money, and the whole economy is going to come down. It’s it’s the craziest thing ever done in history, and it’s not going to look good. Five or 10 years from now what the government and the Federal Reserve and the Treasury debt is going to look like what were you people smoking? What? Yeah, you know, it’s it’s unbeliev put the economy on crack, and you’re surprised that it crashed? Yeah,
Jason Hartman 23:49
yeah. They just think they can keep kicking the can and never, never stopped dosing it with crack or caffeine or whatever you want to know. Yeah, amazing. Well, here we tell people where they can get the book and learn more.
Harry Dent 23:59
Yeah, the best place to get the book is on amazon.com our website and get the book too. But it’s easy to get at Amazon, the best thing to do is go to our website. We’ve got a lot of free reports and you get a free copy of our newsletter and that’s hsn.com Hs dent calm. All right, excellent.
Jason Hartman 24:14
Well, Harry dent, thank you so much for joining us today. Appreciate the update. We’d love to have you back every year or so to keep getting your perspective on things. Thank you. Okay, thank you, Jessie.
Harry Dent 24:27
I’ve never really thought of Jason as subversive. But I just found out that’s what Wall Street considers him to be. Really now How is
Harry Dent 24:35
that possible at all?
Harry Dent 24:37
Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know
Harry Dent 24:50
not including insiders who created wealth with stocks, bonds and mutual funds. those options are for people who only want to pretend they’re getting ahead.
Harry Dent 24:59
stuff. And other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
Harry Dent 25:10
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win.
Harry Dent 25:16
This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep.
Harry Dent 25:36
And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.
Harry Dent 25:49
We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns safely and securely. Really,
Harry Dent 26:00
I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the
Harry Dent 26:07
government. And this set of advanced strategies for wealth creation is being offered for only $197.
Harry Dent 26:15
To get you’re creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash
Harry Dent 26:23
store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.
Jason Hartman 26:43
Well, hey, I hope you enjoyed that segment with Harry dent. I tell you, when you talk about the multi dimensional nature of the housing market, I’m looking at some news articles here. And it just amazes me I mean, haven’t I been saying all this stuff for like eight years now? Yes. I have maybe longer than eight years. Well, there’s a zillo report out. That says median rent prices on the rise as home values drop. And I mean, I’ve been saying this for what seems like forever, it multi dimensional asset class, or some of the indicators are contrary indicators. So, when when prices are dropping, and there’s no urgency to buy, or people can’t buy, and maybe that’s the reason prices are dropping, you know, there are reasons people do and don’t buy, obviously, what is their general outlook, the, what’s called the wealth effect? Do they feel that they’re rich enough to buy to make commitments to make purchases? And what is their ability to obtain financing So with those things in mind, right now, you’ve got incredibly good financing. And of course, I have to mention again, that we have special financing for you investors who are foreign nationals. If you want to buy American real estate and you’re from Australia, Canada, Europe, New Zealand, wherever in the world, you’re from Asia, it doesn’t matter what Have financing for foreign investors. That beats pretty much anything else I’ve ever seen out there or at least ever when I say ever seen ever seen since the mortgage meltdown, okay, there used to be some great programs years ago, but in contemporary ways, phenomenal financing, Ira investors, people with too many loans for nationals and as low as $5,000 down at some of our markets, talk with one of our investment counselors about that you can reach them at Jason Hartman calm but this Zillow report, it’s just saying what I’ve been saying for many, many years when there’s no urgency to buy or when people can’t buy because they can’t qualify for financing as attractive as financing maybe and it is incredibly attractive right now, it just shows that rents are on the rise because of this because of people’s inability to qualify. And this trend will be with us for many, many years as the homeownership rate declines and we as income property investors. Heck, we love it when the homeownership Rate declines, that just means there’s more renters. And it’s kind of got a double effect because not only is the rate of homeownership declining, displacing those people into the rental market, but at the same time the population is dramatically increasing. So you’ve got a two fold effect there. And then when you segment it, demographically by age, and so forth, as we’ve talked about, and you look at Gen Y, and the aging baby boomers, both sides of that spectrum, right, you’ve got the aging baby boomers that are staying healthy too long. Remember what I told you in the last show about the the ski resorts losing money on those passes for senior citizens, really quite an amazing time we’re living in for sure. You know, all of these things combined to see some great stuff for us. So, back to this article here. I’ll just one of the quotes from it. It says, Well, it seems that rents are rising at the expense of home values. The opposite is true. a thriving rental market will stimulate home sales, as investors snap up low priced inventory to convert to rentals, said chief accounting For Zillow, Dr. Stan Humphries in the release. So folks, it’s the perfect storm. It really is. Last episode I told you about JP Morgan and how they got nailed with that $20 million fine, probably just part of their business plan, pennies to them nothing significant. Well, here’s another one we love to talk about. And that’s good old Goldman Sachs. There’s an AP news story that I just saw the other day and so I pulled it off. It says Goldman Sachs, paying a $22 million fine to settle charges. Washington, DC Goldman Sachs has agreed to pay $22 million dollars to settle regulatory charges that its analysts shared confidential research with favored clients. Hmm. Would you be one of those favorite clients? Probably not. That’s the ultra Uber rich, right. I hope you’re one of those people, but probably most of us aren’t right. The release goes on to say the regulators allege that Goldman Sachs held weekly quote, huddles, unquote you know where Everybody gets together for a huddle in the office right from 2006 to 2011, where they discuss confidential research on stocks with the firm’s traders. The analyst then passed on the ideas to a select group of top clients, the regulators said, they said that that creates a risk of research being passed on to special clients before it was published publicly. So the rules are that everybody gets access to the research at the same time, right? Well, you know, that doesn’t happen, of course. And that’s why one of the many reasons Wall Street is such an abject scam and traditional middle and upper middle class investors should be direct investors, they should invest in things they own and they control so they don’t leave themselves susceptible to commandment number three in my 10 commandments. So when you look at that, it’s pretty interesting because what amazes me about these people that like the stock market, is forget about the fraud for About the illegal dealings forget about the scandals forget about the insider trading the options, backdating? Forget about all of that stuff. Hey, look, even forget about the fact that the executives and the boards of directors are paying themselves big giant bonuses and salaries. As the shares are plummeting in value. Forget about all of that. Okay, because you know, even if they’re plummeting in value, you can be a short seller, right? There are ways to adapt to that and forget about the fact that you don’t really have the information and it’s so incredibly complex and there are so many factors that influence the value of a stock not just normal fundamental business factors. This would make sense to most people forget about all of that the high frequency traders, the quants, okay, the quants. The quants. Are those brilliant people in Wall Street. Of course, that would have been rocket scientists or scientists that some sort of science paid better, but it doesn’t. So they go to work for wall street and they install these high frequency trading systems now. 60 minutes did a story on this about a year ago maybe. And it was quite interesting. And there have been lots of stories about it. And you know, you’ve read about it, maybe. But the high frequency traders, literally, the speed of light is 186,000 miles per second, not per hour per second. So light can go around the Earth, it can orbit the Earth seven times in less than a second. It’s pretty darn fast the speed of light, isn’t it? It wouldn’t make much difference if you were a high frequency trader. And you had your computers executing these software based trades based on these algorithms that these incredibly brilliant people, the quants come up with, to program these computers to execute trades of stock and literally move the market because there’s so much money doing this. Do you think it would make a difference if you’re high frequency trading, servers and computers or in say California versus New York, or in New Jersey versus New York Right next door to the stock exchange at 186,000 miles per second. Yeah, actually it does. lightspeed is not fast enough for these high frequency traders. So they have literally located their servers, their computers, right next door to the stock exchange in New York City, so that they can execute their trades faster than the others. Because lightspeed traveling around the Earth seven times in less than one second is not fast enough. It blows my mind that people actually think they’re going to outsmart that, that they’re going to out trade that that is unbelievable, really unbelievable. I’ve talked to you in the past about how what gets rewarded gets repeated. I’ve talked to you about how all of the bad behavior seems to get rewarded nowadays. And, and here’s another example of it. This is an article from dsx news, Bank of America to offer principles. deductions of more than you ready you sitting down you listening have more than $100,000 Oh, wow. So in other words, taking on big debt, taking on big risk and not paying your mortgage, the thing that shouldn’t be rewarded is actually rewarded the most. It’s kind of like winning the lottery Hmm. Instead of going to work having a job being responsible, saving your money and not gambling, yet gamble and you get rewarded. So the article says some Bank of America borrowers may be in four principal reductions in amounts exceeding $100,000. According the latest developments in the settlement, the bank and four other large servicers made with state and federal regulators. One of the five servicers participating in the settlement BMA is set to pay the largest portion of the total $25 billion settlement. The bank will Pay $3.24 billion to the government and $8.58 billion to borrowers of bfas. Total $1 billion is part of a separate settlement regarding loan origination issues for countrywide. Remember, of course, the VA acquired countrywide back in 2008. It says, For deeply underwater borrowers, this may result in more than $100,000 reduction. And what they’re what they’re saying is that they want these banks to get the loan to value or the LTV ratios for these borrowers at 120% or less meaning if you have a property that maybe you paid 200,000 for maybe you put nothing down. Hopefully you borrowed as much as you possibly could, as I’ve been advising you to since the beginning of time, because I know that malinvestment is actually rewarded in so many cases as as ridiculous and philosophically disheartening is that is, that’s just the way it is. And we’re not going to change it, all we can do is work within that environment. So you got that house for 200,000, it went down to 100,000, its value was cut in half. And now what they’re saying is, if you have, say you have a $220,000 loan against it, they’re gonna lop $100,000 off. So your loan balance can be 120,000. And that would make the loan to value ratio 120% 120% of the value of the property at 120,000. You know, folks, debt is good, as long as it’s long term, fixed rate, prudent investment grade debt, but then again, doesn’t even have to be prudent because a lot of these people weren’t very prudent and they got rewarded. Not very fair, but it’s just the way it is. We have Ken coming up in a minute who’s going to talk to you about some financing stuff and some exclusive properties that we have In Atlanta, Georgia for just a moment. And again, this is not a market profile of Atlanta. We’ve already done that. But before we get to that, I just thought I’d talk to you for a moment about one of our other markets Phoenix. This is not just true Phoenix, but I’d say it may be a little more true of Phoenix. And we we just got a lines, a whole bunch of new inventory in Phoenix, which I’m glad to say we’re working on that it’s not on the website yet. But do look forward at Jason hartman.com. You should see it pretty soon as early as maybe next week, late next week. And we’ve got a whole bunch of new good inventory coming your way there. But I tell you, it is getting really, really tough to do business in Phoenix, and in some of our markets because the inventory is just so darn scarce. And there are multiple offers on so many properties. And I pulled off a real estate agents blog, I thought this was kind of interesting. Top 10 signs the Phoenix real estate market has gone bananas number 10. Answering office phones and this is you know, this is what a real estate agent would think okay. As a real estate agent writing this to other real estate agents number 10. Answering office phones is no longer way to just get in easy way to just generate leads. Answering office phones is now an easy way to end up committed for post traumatic stress disorder. Okay, number nine a listing agent tells you that the house you want to show can only be shown Saturday between one and 2pm in other words, only one hour a week because the owner breeds pit bulls on the property. And also just an FYI, the house will definitely need all new paint and flooring due to the pit bull breeding your buyer still actually wants to see the house because there’s just nothing else available. Number eight, you begin to screen your calls against annoying unsolicited all cash backup offers on your listings that are firmly under contract. I mean, think about it what real estate agent wouldn’t want to answer their phone and get an all cash backup offer. Just in case the deal falls through right number seven, you develop a psychic sense for when a new house has come on the market for one of your buyers, by the time you pull up to the house, set up an appointment to show the property and make it over there with the buyer at 8:05am. on day zero of the listing, you find that the house is already under contract it’s already sold. And and I tell you folks I functioned in this market many times over the years and I know what they’re saying it is it is definitely true. Number six, you are no longer deterred by the quote multiple offers received unquote field in the MLS service in the multiple listing service until the buyers have moved in that sucker is fair game. In other words, you’re willing to just put in more offers on multiple offer properties. Number five, you show a house that mentions a sparkling pool in the listing description, except that the backyard is nothing but grass and dirt. The seller explains that she doesn’t Why the agent put that in there? Because they threw the pump into the bottom of the pool and pumped all the water out and filled it with dirt last fall. Despite this misleading description, in other words, the house gets eight offers first day on the market. Number four, no trouble finding buyers, reigning buyers trouble finding a house for buyers stress a part of the brain in charge of grammar, some buyers, please go away. Thank you. And you know what? I remember someone saying that to me, one of the executives I was dealing with in Southern California saying to me that, you know, the real estate market is too crazy when you can’t find a real estate agent to help you buy a property. And that’s true. It’s getting like that, where agents only want listings because there’s just too many buyers and not enough sellers. And again, you’re not reading this in the news media folks, because the news media reports at three to five months late and they report all segments not just the segment in which you would be attracted to or we’d recommend as a investors, we’re talking about the investor segment of the market here. Mostly number three, your spouse has become accustom to soothing you back to sleep. After you wake up in the middle of the night, drenched in sweat screaming, not again. It can’t happen again. Didn’t we learn anything from 2005 number two, those water bottles that realtors are always carrying around to stay hydrated. Well, it’s not water in there now. And the number one reason the Phoenix real estate market has gone bananas you pass a stranger in the grocery store, who has a desperate defeated look in her eye. The skin on her face is saggy and gray from too much fast food eaten on the run her closer rumpled. She’s wearing two different shoes and she badly needs a root touch up for her gray hairs. You feel deeply sorry for this hollow shell of a person until you realize that you’re standing in front of the mirror display in the floral section. Looking at yourself Boy, that is true. It has gone bananas and a lot of places, folks. And I’m not saying that this is a turning point in the economy or anything like that. But I am saying that the good inventory is getting gobbled up awfully fast. So get busy, get working with an investment counselor at my company. And we will we will get you the newest best deals as they come available. Again, go to Jason hartman.com. And register at the website. So we can contact you do the Contact Us section, make sure you include your phone number, and we will get busy working for you because the good inventory is disappearing faster than you can believe fast enough to make your head spin. So hey, let’s talk to one of our local market specialist about that here. But be sure I know we’ve jumped around. We’ve talked about Phoenix St. Louis, and now we’re going to talk about Atlanta but be sure to register for our St. Louis creating wealth in today’s economy boot camp, and our St. Louis tour. That is coming up and also st Robert tour. And that is may 8 Through the 21st earlybird pricing on the website at Jason Hartman calm in the events section, we look forward to seeing you there, it’s going to be a great time a great trip. And also should should be very fun as well as educational. And you’ll get a firsthand look at this tour of inventory in St. Louis in St. Robert, some of our best cash flow markets. So hey, let’s go to our local market specialist in Atlanta. And our next show, we’re going to talk about well, we’ve got a bunch of great shows coming up for you. And I’m not going to go over them all. Now in the interest of time. Here is our Atlanta local market specialist talking about financing and exclusive inventory. Hey, it’s my pleasure to welcome our local market specialist Ken back to the show. He is from Atlanta and wow, business is booming in this market. People always say Jason, what’s your favorite market? Well, I don’t have one that’s like asking a mother which one’s her favorite kid. I like all our markets for different reasons. And you need to be diversified, of course. But I gotta tell you, I really kind of favor Atlanta right at this very moment. I’ve been doing a lot of private lending there. And all that private lending that I’m doing and our clients are doing that is generating exclusive inventory for us. You can’t find this inventory anywhere else. Except on Jason Hartman calm that’s the only place so exclusive inventory is really cool. And again, it’s it’s darn hard for our competitors to do this stuff because they don’t have the capital we have most of the time, at least. And they’re not creating exclusive inventory like we are. So we are your first stop Jason Hartman, calm properties section. Ken, welcome. How you doing? I’m doing great. Thanks for having me. 2012 is off to a pretty awesome start, isn’t it?
Harry Dent 45:45
It is. I’ll tell you what, man we’ve had a lot of activity so far this year.
Jason Hartman 45:49
Yeah, you know, my best year in the business personally, was 2008. And I tell you 2012 I feel like it’s, it’s almost gonna be that good. People, they say their best year was like 2005. And my business may individually last a lot longer than that. And into 2008 was a really good year. But let’s talk about two samples can. And these are properties that are exclusive to us. People can only find them at Jason hartman.com. And I’ve got the performance in front of me. Let’s talk about maybe this first one in Douglasville. Hmm, what do you do?
Harry Dent 46:24
That’s a science project. This is a house that you’re actually going to be lending on. Yeah, so the private lender on this particular house, I am
Jason Hartman 46:29
the lender that’s financing the deal for you for your business. And I just love doing this. It’s a win win win relationship all the way through the supply chain. And first of all, is a gorgeous property built in 1998. So it’s newer. It’s three bedroom, two bath, 2200 square feet, and one of our investors can buy this property today for 88,900. Tell us more about him.
Harry Dent 46:53
Yeah, it’s in west of Atlanta in a town called Douglasville, which is an area that experienced a lot of growth over The last five to 10 years, just a really good traditional suburban neighborhood, very owner occupied neighborhood. But this is a very typical style house in Atlanta. It’s a split level where you kind of walk into the middle and you either go up to the upstairs or down to the downstairs. It’s a two car garage. Good thing about Douglasville to lower property taxes out there. In fact, the taxes right around $900 for the year.
Jason Hartman 47:24
That’s amazing. Yeah, that generates a return on this property. I know you had to actually adjust the tax down because it’s such the tax rate is so low there. And in the overall return on investment for this property is projected at 34% annually, based on all of our very conservative assumptions, but the cashflow here, over $300 a month positive cash flow on a property that only takes you just over $22,000 to get into all all in I mean with closing costs and everything. cash on cash return here is projected at a whopping 17% annual Wow, that means if the property declines in value, which I don’t know how good when you’re only paying $40 per square foot, but if the property goes to zero, say you pay 88,900. Today, the property depreciates to zero, it’s worth nothing. But you simply generate the rental income and keep your expenses where they are. You’re gonna make a cash on cash return of 17% annually.
Harry Dent 48:28
Phenomenal. Not bad,
Jason Hartman 48:31
not bad, not bad. You know, someone asked me the other day, they said, Jason, why don’t you buy all these properties? Why don’t your vendors just keep them all? Why would they ever sell cash flowing properties? And that’s such a silly, stupid question. Because, you know, of course, you’re running a business and I’m running a business. I’d love to buy all these properties. I don’t have the capital to buy them all. I loan on some of them. I turn my money around when when when I get paid back when our end investor buys them, and I get a nice return on my lending. Then I just roll that into another property but I can’t buy him all I wish I could.
Harry Dent 49:04
Yeah, same thing here we get asked the same question I give him the exact same answer. I’d love to hold all these properties as long as I could, but unfortunately I’m not made of money. Yeah, we don’t have an unlimited
Jason Hartman 49:13
amount of capital so So the one thing we do is you run your business of buying properties through banks and foreclosures and ad auctions and selling them to the investors we refer to you I run my business and we all try to pick up some deals for our own personal portfolio along the way. So we’ve created exclusive inventory here now let’s let’s look at the flip side of one of these deals and this is not the same deal but you just paid me off on one of my loans. And I remember making this remark to you yesterday cam that you know, I really wish you didn’t pay me off so quickly. I wanted that money to be in play longer. And then you rightfully so pointed out to me that because of the the funding fee, really when they turn quickly like that here I only had the money out for 32 days. Wow, what did that deal look like for me, I signed up to loan you the money at 12.5%. And my loan amount was 57,500. But let’s kind of deconstruct this deal. And the reason we’re deconstructing it is that anybody listening, I’ll be happy to refer them to you or any of my private lending sources if they want to loan money and keep their money from a lending perspective. Now, I just have to say and feel free to comment on this. Personally, I like owning the actual property better. But the one thing I do like about lending on the properties on a short term basis like this, is this simplicity. Whenever I do a lending, it’s just a pay per transaction. I don’t have to talk to any property managers. I don’t have to sign any property management agreements. I don’t have to call any insurance brokers and shop for insurance policies. I don’t have to approve any tenants. It’s a paper transaction. All I do is I wire you the money. And then I sign the docs, and later you give me more money back then. Gave you like that deal? That’s about
Harry Dent 51:02
it, right? It’s pretty simple. So
Jason Hartman 51:04
it depends what type of investor you are. And what I’d say is be both on some properties and lend on some properties. They’re both good.
Harry Dent 51:11
Yep. I love the diversified approach on some properties and let alone on some properties. That’s exactly right.
Jason Hartman 51:16
Well deconstruct this loan, and let’s talk about how I did because anybody listening can do the same thing. I think
Harry Dent 51:21
this was what 57 five was the loan amount on this particular one, and money was only in play for 32 days. I think he made about $630 in interest during that 32 day period, but you also got a $500 funding fee up front.
Jason Hartman 51:37
So I made 1100 and $30 and eight cents to be exact,
Harry Dent 51:42
or go in in 32 days, which when you annualize that, that’s about a 23 and a half percent annualized return on your money.
Jason Hartman 51:53
23 purrs over 23% annually, you know, can I’m starting to feel guilty. I’m sorry. Feel like one of those sleazy payday lenders, you know, with those check cashing places and all the bad neighborhoods,
Harry Dent 52:06
you know, it’s just the the thing is it’s a win win. I love the fact that we’re only in a deal for 30 days that that our properties move that quickly and use the investor man to make that kind of annualized return. It’s, it works out good for both of us.
Jason Hartman 52:18
Yeah, it does. It does. And so I’m loaning the money to you, you’re my borrower. Now do you feel like I really rip you off?
Harry Dent 52:25
You know, not at all. I mean, it’s to me you perform a vital function for our business so I don’t mind at all that you made a great return on your money.
Jason Hartman 52:31
But you know, people ask and why do you need to borrow the money you’re you’re doing really well. I know how you’re doing and you’re doing well for yourself. Congratulations. Good job. And the reason you need the money is because your business you know, when you’re buying houses, this is an expensive big ticket item. I mean, this is a capital intensive business. So what else would you say to someone that says Why do you need the money why would you pay such a high borrowing costs?
Harry Dent 52:54
Well, that’s exactly right. Same thing I said before reason I don’t hold on to all these properties is I’m not made of money and it’s you know, when you’ve got 30 or 40 houses going at one time. That’s a lot of capital requirement. And for us to partner with, you know, investors that can do one z two Z’s with us, it just makes all the sense in the world. The other thing is I’ve got lending relationships with local community banks who have better interest rates, but there’s so much red tape and they’re so tedious and they want so much of my capital in and it just takes so long I’d rather be more nimble and pay a little bit more for the money and be able to move quicker on on properties.
Jason Hartman 53:30
Yeah, in see the thing is for you, you know, like on this deal, I mean, this is a very This is the shortest deal I’ve ever done. Just so everybody knows, I’ve never had one pale this quickly. Usually they’re three months or 92 days. And, you know, I got one out now in a different market, not in your market, but that one has been it, they was gonna pay off in like 90 days, and then the deal fell out of escrow. So we had to put it back in or we didn’t have to, I didn’t do anything but just as a lender, right. I called up my my vendor, my local mark. IT specialist in this other market. I said, Hey, I thought my loan was paying off right at the end of the year. And they said, you know, we did too, but the deal fell through. So you’re gonna carry it longer and get paid more interest. And I’m like, okay, it was my arm. on that one, I’m getting 12 and an eight, I think on that one, or 12 and a quarter, not quite as high as this one. But you know, what was I gonna say about that? Sorry, I lost my train of thought. But it’s pretty cool. So you don’t have to pay that carrying costs for very long. That’s what
Harry Dent 54:26
I was getting. Yeah, you know, our, our average. We, in fact, we just ran some just some reports for our own business here over the last six months. Right now, our average is about 62 days,
Jason Hartman 54:36
60 days. So you’re putting in a pretty high cost of caring, but it’s for a short time.
Harry Dent 54:40
That’s right. Yeah. And so you know, perfect examples, the deal that we were just looking at that you just did, if yours had gone out 62 days, which is our average, it’s still a 17 and a half percent or so give or take return on your money that you would have gotten if it had been on average, like the time
Jason Hartman 54:54
Yeah, and I just want to clarify that for everybody. So they understand see the funding fee the $500 fee. Funding fee that I got upfront in the deal, or points points are just prepaid insurance. So what happens is, you’re getting a note rate or the coupon rate here on this deal was 12 and a half percent. But the fact that it paid off so quickly, when you throw in that $500 funding fee, that actually increased my actual interest rate, because it was so short, the longer it goes, the lower mine, my rate gets, because you throw in the funding fee, and then you you take that over a longer period, you sort of amortize it over a longer period, if you will, that actually lowers the percentage rate I get, right, everybody understand how that works? Can anything you want to throw in there to help people understand that I’m not sure everybody will see that right away, and I just want to make sure they get it
Harry Dent 55:46
right. So essentially, like you said, you’re starting with the 12. Typically what we do is a 12% interest rate, but because of that funding fee of $500, which is fixed and it’s one time it’s like you said the longer that the loans in play the Closer you sort of migrate to that 12%. But if it’s quick enough, it’s a quick turnaround. Like I said, Our average is about 60 days, 62 days, you know, you’re going to be upwards between 15 and 20% return on your money.
Jason Hartman 56:11
Now everybody listening, if you want to be on the lending side for some of your deals, and on the on the buying property side for other deals, the trick is, it gets a little difficult sometimes to keep your money in play. And that’s why the properties really are your long term road to wealth, the lendings like really quick gratification. I just love it. And I love the simplicity of it. But again, sometimes there isn’t a deal to lend on. And your money is not in play. So that’s part of the problem. There’s a challenge to that a little bit. Is that fair to say Can
Harry Dent 56:45
it is I’ll tell you that the investors from your group right now that are lending with us, it’s rare that their money is out of play for more than a week. I mean, honestly, it’s usually a scramble to get the money back to them and turn around and get back to the attorney for the next closing.
Jason Hartman 56:58
Hey, I just wanted to tell you something and you probably didn’t hear this because I know you only listen to my show sporadically. And that really bugs me. But anyway,
Harry Dent 57:06
I’m so busy servicing your members.
Jason Hartman 57:10
I won’t give you too much of a hard time. But one of the things I did say recently on a show, and no offense, because we’ve got people lending in different parts of the country, in different markets with different providers we have but one of the things I did say recently is I gave some guidelines for hard money lending, which I emailed you a copy of that, but a new one that I added to it is, is this one, and I said this on the show recently, as I said, Take your money back each time, take your money off the table. And the reason I said that is because of the the Bernie Madoff thing, like say, for example, you were a crook. And you’re not I know, let’s say you were running like a Ponzi scheme out of this stuff, right? It would be really hard for anyone to run a Ponzi scheme when the investor or the lender keeps taking their money back on every deal and then putting it back into play. So when every deal I take my money out It’s not in a fun, I’m a direct lender, I’m lending on a specific property. And I’m in first position. And I’ve got a specific note or mortgage on that specific property. And that’s what all of our investors members that we refer to you are doing on the lending. So here, what I do is I get paid off, I get my money back each time, and I stick it in my own bank account. And then I wire it out to you again, for a new deal. Any thoughts on that? We do,
Harry Dent 58:26
we do that on every transaction. And in fact, a lot of the folks that are lending to us are borrowing out of their IRAs, and it’s got to go back into their IRA. So we can refill out the new paperwork, you know, there, whatever investment direction letters to come back to us. So I think you’re exactly right. If you if anybody’s doing hard money lending within a group, I would definitely say get it back. But in terms of how we operate, that’s exactly what we do.
Jason Hartman 58:49
Yeah, yeah. And you know, I like the fact that you hire the lawyer and you actually pay for the lawyer to do the transaction and your your stuff is so well documented, and I’ve just been really impressed with it. how clean and smooth and official. These transactions are.
Harry Dent 59:03
Yep, it’s on our nickel like, like you said, I mean, we spent $150 per transaction so that you’re as secure in your investment as possible.
Jason Hartman 59:12
What would you say about loan to value ratio and collateral and the lender being comfortable with collateral?
Harry Dent 59:19
Well, we try to provide our lenders with comps, if you’ve seen that I’ve sent to you here’s pictures of the house. Here’s comparable properties. This is where we think that’s going to come in and most of the time you’re lending 65 to 75%. loan to value, you know, on the ARV value once it’s been fixed up,
Jason Hartman 59:35
and ARV, you know, that acronym after repair value, or after rehab value, it means a couple different things. It’s the same thing, basically, but that’s what a RV means. Right? Right,
Harry Dent 59:45
exactly. And so you’re in a very secure position. And the other thing to emphasize is the fact that you’re in first lien position to there’s no other loans. There’s no other liens against the property. It’s just you as the lender, who’s in first lien position.
Jason Hartman 59:58
Okay, good. So Speaking of exclusive inventory, there’s another one here. And this is another gorgeous looking house. I mean, I just love the looks of the houses in your markets are so substantial. Tell us about this one.
Harry Dent 1:00:09
This one is in astell, which is in Cobb County, same thing. It’s West, the town I actually grew up in Cobb County, great system to be in very good schools. This particular house square, same thing over 2000 square feet. I mean, about 2100 square feet. We’re asking 98 nine for it. And that’s what the full scale renovation included in that price cost per square foot $47. I mean, this is half of what it would cost to build this house. Yeah.
Jason Hartman 1:00:35
So in by the way, that’s a great thing. We talked about regression to replacement costs. We talked about buying below cost of construction or cost of replacement. And in your market for this type of house about $100. A square foot is what it costs to build it.
Harry Dent 1:00:49
Yeah, 80 to 100 somewhere in there.
Jason Hartman 1:00:51
Okay, so so you’re well below cost of replacement, and the monthly rent per square foot is projected at 52 cents per square foot or 1100 dollars per month. And positive cash flow here 304 per month or almost 30 $700 per year, which brings a cash on cash return to the investor projected at 15% annually now, folks, just realize, again, I’m going to point out I love this cash on cash metric, because it basically just shows you that if the property if the value gets cut in half, if there’s no tax benefit, if there’s nothing else, but what you put into it, versus what you’re getting back on it. You’re at 15% annually. Wow, that is mind boggling. Ken, what are you going to get in the bank about point 2%? Now, the ROI is is thousands of times better when you look at a overall projected return on investment here 31% annually. How do you meet that? Yeah, pretty strong. So again, we recommend you diversify into several market’s depending on how big your portfolio is going to be. And I recommend you do some lending. And then the long term strategy is owning and controlling that income property. Remember, the lending is not multi dimensional, it doesn’t provide tax benefits. In fact, you get taxed on it. So you use the long term wealth creation is to buy and hold your income properties, because those are the most tax favored asset in America, and the lending you do for some quick pocket money. And you know what we’ve had Ken, that’s really interesting. And we’ve seen some of our clients grow so nicely with this is they didn’t have much money to start with. And so what they might do is they might do some private lending in the beginning and use that to sort of pyramid into owning income properties. And so they do that, like that dual pass strategy. Any comments on that?
Harry Dent 1:02:49
No, that’s exactly exactly right. We have a lot of investors who just even want to kind of have a relationship with us. See what it looks like sort of dip their toes in the water and a three month loan is not much different. Commitment sort of lets you try it on, see how it fits. And then when they get a bit more comfortable with us in our houses, then you’re exactly right. They move into purchasing one and owning it long term.
Jason Hartman 1:03:09
Great stuff. Good stuff. Well, what else would you like people to know about Atlanta about the properties? Again, this is exclusive inventory for us. And there’s a bunch of exclusive inventory on the website at Jason Hartman calm that you won’t find anywhere else. And the reason is, is that my deal with Ken and the others is that it’s ours exclusively, because we finance the deal. So that can really bring some more choices to you as an investor that you won’t find anywhere else. But anything on any one of I guess the three subjects the Atlanta the greater Atlanta market, these specific exclusive properties or other exclusive properties, or financing from a lender perspective.
Harry Dent 1:03:46
Well, I think just in terms of being in Atlanta, I think Atlanta is really on the map right now in terms of an investment market. I mean, our inventory has been down three years in a row. We’ve really cycled through a lot of our foreclosures, obviously Interest rates are still phenomenal. But our economy is projected to be strong, we’re actually supposed to add over 50,000 jobs just this year alone, hundred thousand people per year for the next 10 years. We’re a growing market, and our real estate just happens to be on sale right now. So it’s a great time to get into Atlanta, whether you’re on the lending side of the buying side,
Jason Hartman 1:04:18
fantastic. Contact us through the website, Jason Hartman calm and you can learn more, you can see some great videos on this market. And you can browse all the properties there right on the website with full performance, and they’re all totally consistent. So once you learn how to look at the one page document we have at Jason hartman.com. Everything is consistent. Just learn how to read that one page, and you don’t have to be a detective. So it’s a great thing. Thanks so much for joining us today. Appreciate it.
Harry Dent 1:04:46
Harry Dent 1:04:49
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