Jason Hartman talks about the two ways to win on Wall Street, why we should give value to the psychology of investing, as well as valuation sources that says that S&P is overvalued. Later in the show, he is joined by a local market specialist from Oklahoma City. They discuss the new construction that keeps the economy rolling in Oklahoma City and the home value to income ratios in the Oklahoma City area.

Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.

Announcer 0:13
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 company leet solution for real estate investors.

Jason Hartman 1:03
Welcome to the creating wealth show. This is your host Jason Hartman with episode number 819 819. Thank you so much for joining me today, as we talk about a market profile, and this one is going to be kind of a surprise for you. You’ll get the word here in just a moment. We did that because we have these people that that stalk us, you know, we have, we have stalkers, right? We really do. And every time we launch new market, they are stalking us and they go and try to launch the same market. So we are not giving it away in the title, but you may already know because many of you are talking with her investment counselors. And so we will get to that in just a moment. And stalkers be damned. You’ll have to listen to the whole show and really stalk us properly before you can get the information you need. Right. Oh gosh, I I tell ya businesses business. Businesses business, right? Yeah. And that is it. Okay, so, the stock market. Let’s talk about the stock market for a moment. Do you think it’s overvalued? Do you think we’re in for a correction? Do you think we’re in for a crash? Do you think the stock market is just massively overpriced as many people do? Well, let’s take a closer look at that just for a moment before we get to our market profile and talk about how to win the best way to win on Wall Street. Here. Here are two ways you can win on Wall Street, either number one, be an insider, you know, the old saying we’re all the clients yachts, right? Yeah, that’s exactly what it is. Be an insider. Don’t be an investor. Be an insider. Remember Michael Lewis. You heard him on the show here. When he was talking about during his 60 Minutes interview how walls st is an absolute scam. And you cannot beat the high frequency traders and all the other insiders, right? You really think you’re gonna beat some super high speed computer? No, you’re not. Okay. They are going to take the profits before you can execute your trade. So, as consumers as normal, typical investors hate, we’re screwed on Wall Street. So the second best way to win on Wall Street is to be absent. Yes, be absent. I think it was Woody Allen, who had that great quote, who’s that said 80% of success is just showing up. Well, sometimes 80% of success is not showing up, right? Because you can’t hear the dogs that don’t bark. And if you show up on Main Street, and you buy some good income properties, rather than on Wall Street, you know, maybe that not showing up depending on how you look at it. You show up, you don’t show up one place, you show up in another, you could do much, much better. And you know, I was thinking about how we can’t hear the dogs that don’t bark, and how I talk about that a lot. And think about that in the context of regrets. Think about that, in the context of really anything in life. Could be a car, you didn’t buy a property you didn’t buy, or a mutual fund you didn’t buy because you chose to buy a property instead, could be the s&p index fund that you didn’t buy because you bought a property Instead, it could be the relationship you didn’t get into, because you got into another relationship instead. Or maybe you decided to not get into any relationship. You know, it’s just funny how our mind does not evaluate the profound impact of things that didn’t happen. The profound impact of things unseen of things unknown. So let me ask you this, what do you regret more? Do you regret more the things you didn’t do? Or the things you did do that didn’t turn out the way you wanted them to? You know, it’s just an interesting part of our psychology. And as investors, it is incredibly important to give big value to the psychology of investing the psychology of investing, because not only do we need to give value to the market psychology, right, the big macro picture, the macro economic market picture, what is the psychology of all of the other investors out there? And it depends, you know, first of all, you got to ask yourself, what asset class and then what asset class which assets within that class you Real Estate, for example, you would have to look at the overall psychology, the sort of consumer sentiment, right? of real estate investing. But then you’d have to look at each market, each product type, and, and a lot of things. So understand the psychology of the marketplace. But then, of course, understand your own psychology, your own psychology, because your own psychology will cause you to do things that may really, really mess things up for you. Let me give you one little example. And this is not exactly profound given that, well, it might be profound if you’re new to the show, but if you’re not new to the show, and you’ve been listening for the last 818 episodes, then you will know that this is not that profound, but even if it’s not profound, you know, sometimes we need a little refresher and this is Simple Sarah posted this in our insider Facebook, our private Facebook group where we do show content and the venture Alliance mastermind group members get to participate in interact in here as well. So, Sarah posted this and she said, what my local real estate peeps, you know people cute what my local real estate peeps are promoting here in Southern California. Here is one of her realtor friends looking for some rental income three question marks. Well, maybe we’ll have to question this after you hear the rest. I have a triplex coming up for $599,900 with rental income of 30 $350 and the property is located in Santa Ana near Santa Ana lofts. The train station and 10 minutes from downtown renters are month to month. Call messaged me if you’re interested. So far at the time Sarah posted this, it got six likes on Facebook. Now, this deal, of course sucks, because first of all, I with my vast experience some my experience is pretty vast so I can brag about that nowadays. You know, I’ve been involved in thousands and thousands of real estate transactions. And in this particular area, I know it quite well, because we used to have a satellite office for my traditional real estate company, right there in those Santa Ana lofts. Okay, well, actually, this is not one of the nice Santa Ana lofts part of the downtown redevelopment of Santana, this is a triplex near the Santa Ana lofts. And when he says it’s near the train station, let me tell ya, he’s probably not kidding. Did you ever happen to see that old Lucille Ball episode? I think it’s even in black and Wait on like Nick at night or one of those rerun channels. It’s where Lucy was in this hotel. motel motor Lodge. I don’t know whatever it was called you know before a Holiday Inn revolutionized the world of the motel world many many years ago I think somewhere around the 50s you know traveling across the country was quite a big hazardous deal. You didn’t know where you were gonna stay and it could be pretty bad anyway the train went right by and the bed Lucille Ball was sleeping in you know would move across the room you know a lot of you know what I’m talking about you know this episode I remember this seeing this when I was a kid. So yeah, this is right near the train station. So these are month to month renters in some I’m sure crappy low end triplex because I can’t Um, I don’t know of and you know, I used to live in Santa Ana. Okay. And then you know, We have the satellite office there many years later in the redevelopment area of downtown Santa Ana, you know, so this is probably some totally crappy old property. And the tenants are month to month. Are you sure they’re not our to our like, it’s a, you know, it’s a flophouse, Scott, this deal. I mean, it’s terrible. But this is what people who consider themselves to be investors invest in, in these high priced markets that don’t make any sense. They don’t make any sense at all. And the same people invest in the stock market. Now, granted, I agree. Listen, you can get lucky sometimes a lot of people been getting kind of lucky in the stock market recently. And a lot of people got lucky in the high end, cyclical real estate markets, not only around the country, but around the world, as they’ve had quite a run. But for me, I like the good old conservative of cash flow oriented investing. So here’s an article that I recently found and where’s it from? I don’t have the actual article, I downloaded the table. And I will always want to give the source but I do not even see the source on here. Huh? Oh, well, sources s&p, Uh huh. compu stat Bloomberg fact set first call via a Merrill Lynch. Oh, you can trust them. Us equity and us quant strategy. Okay, this is a chart I’m looking at from these guys. Not a chart really a table. It’s a table of valuations. And basically the concept here is 18 of 20 of these indicators of the s&p 500 index, which is probably the best index when you’re looking at the stock market show that the market is radically over valued. Now, when it comes to real estate and You compare this? What does your host Jason Hartman think? so ridiculous to talk about yourself in the third person? Isn’t that just silly? Remember that. Speaking of memories of old TV, remember, Al Franken on Saturday Night Live back in the day. What does this mean to me? Al Franken. And later he became a senator. I think he still is right. Isn’t he a senator in like, Minnesota or something like that, anyway? Yeah, Al Franken left wing guy. So look at these metrics with me for just a moment. And I’ll tell you if they are above average, and by how much because this chart is very telling. Now I have always wondered one thing. And maybe some of you, dear listeners can enlighten me as to this concept. And maybe they’re not related. But I’ve tried to make a connection here. And I’m not exactly sure what the connection is. Here’s the connection. When the stock market is down. Does that mean money flows out of stocks into, say real estate, or when the stock market is up, does that take the tide of money into the stock market? Or is it the opposite? Or is there a lag time? You know, is it six months before or after one is up or down that something happens? Or is it what’s known as the wealth effect, right? So when real estate goes way up, and people go in, they harvest the equity and use their home as an ATM machine, which, by the way, is back in vogue that’s coming back, but it’s nowhere near where it was right before the Great Recession. So less, do you not worry too much, because the banks have been far, far more prudent this time. Let’s give the banks some credit for being more prudent. Yes, hip hip array to the banks because they have been money. more prudent this time. In fact, I think they’ve been overly prudent like a dog bearing bone, bearing his bones for the future. That was a little passage out of the Prophet by Kahlil Gibran, a brilliant little book that you must read. It’s just brilliant. The Prophet You know, this book, probably right? Khalil Gibran Am I pronouncing that correctly? Or is it Gibran? I don’t know. I think it’s cabron. Anyway, brilliant little book. Okay. So, looking through this little index really quickly before we get to our market profile, because we are on another tangent, okay. Trailing p e ratio, the price to earnings ratio, that is a very good indicator of stock valuation, the P e ratio, and in real estate, what ratio do we like is our first metric RV ratio rent to value ratio similar to the P e ratio, all right. So, trailing p e 25%. Above Average trailing gap generally accepted, Accepted Accounting principals PE ratio 31% above average, forward consensus pe 15% trailing normalized pe 3%. Median forward p e ratio meaning forward earnings or backward earnings, right, the trailing earnings are the forward earnings and the forward earnings of course are always an estimation. That’s 20% overvalued. The Shiller PE is get this 73% overvalued Oh, mama 73% overvalued Whoa, yo, yo, that’s crazy. Okay, the and I don’t even know what some of these metrics are the P slash bV stumped me again. I don’t want to become an expert on the stock market. You know why? Same reason I don’t really want to learn how to play poker or any gambling games at all because I might get fascinated with it, and I might want to throw my money at it and I know that will not be wise. Okay, so it’s sometimes better to just be a little Liger ignorant about things right because then you won’t be interested in them. You know, we’re, I think we’re generally interested in things we know about and learn about, right. If you learn about something, you might become interested and you might fall down off the cliff or down the rabbit hole and lose all your money. I gotta tell you a quick story since I live in Las Vegas here. I had these clients. years ago, they were buying a condo in Irvine from me and West Park in Irvine, that’s a village in Irvine and sort of the second phase of West Park was being built and I was farming, as realtors do a you know these new condos. And I remember I had a listing in there and this really sweet, older couple called me and I showed them around and showed them some properties and took them back to the This one property that they called on and they actually ended up buying the property from me. And you know, they were they were just the most humble, just wonderful decent people and you know probably in their guess late 60s, somewhere in that range, not older by today’s standards, but back then it seemed like that was a cold older. Nowadays it’s not because late 60s is the new 50 and so forth. We’ve talked about that. Listen to the longevity and biohacking show for more information on that, you know, they would talk about especially the man because you could tell his pride was kind of hurt over this. Talk about how they used to own this big gorgeous property. You know, a couple of acres I believe it was in Beverly Hills, I want to maybe it was Bel Air I get those two. Confused easily. I mean, I know the difference because I grew up in LA but but anyway, it was like Beverly Hills or Bel Air I can’t remember. We were signing the papers for them to buy them. This property and you know, I’d written the contract and I was having them sign it. We were sitting there at the dining room table. I said, You know, I just got to ask you, you tell me about and he wasn’t bragging, you know, you can tell when someone’s bragging, right? He wasn’t bragging at all. He was just talking about his life. And the wife did as well. I said, you know, whatever happened, you have this big mansion in in bel air or Beverly Hills, whatever it was, and he handed me his pen. And I looked at the pen. And he didn’t say anything. He just handed me the pen. And you know, when I asked what happened, and the pen had the name of one of the big Las Vegas casinos, I can’t remember maybe was MGM or something like that? And he says that that’s where all my money went. So, you know, sometimes it’s better not to learn about something, right? Because then you’ll get interested in it and think you can beat the system and Nobody beats the house in the stock market. That’s that the house that’s the insiders, right? The brokerage firms, the investment bankers, the high frequency traders, all the insiders, Warren Buffett. He’s an insider, obviously, he does not play. Don’t take advice from Warren Buffett, you’ll be absolutely stupid if you do, because Warren Buffett does not pay the same price you pay. Okay? He’s an insider. So, you know, in real estate, there really isn’t a house, if you will. There isn’t a casino because it’s fragmented. So I always say embrace the fragmentation. The there’s only there’s a counterparty and see real estate would be more like poker. See, in poker, you’re not really playing against the house, right? You’re playing against the other players more. And, you know, again, I’m no expert at how these games work. But one of our venture Alliance members, Keith, he’s a professional poker player and he does incredibly well. I said, Well, you know, how does that casino make money? How do they How do they make money off poker players because Whenever you go into these casinos, the poker is always like in the kind of the back room, you know, the poker tables, and it’s not real plush and lush and nice, like the rest of the casino. And he says, Well, you know, they just charge you like $30 an hour to sit there and play and rent the chair, basically, I think they get a very small cut of the overall pie or whatever it’s called the turn the river. I don’t know that they have such funny names, right. And so yeah, I do know a little bit, just a little bit a tiny bit about this. So in real estate, because it’s so fragmented, and I always say embrace the fragmentation. There is no centralized house. There is no institution or group of a bunch of institutions on Wall Street. There is right. Okay, back to this little chart. So that’s one of the other wonderful things about real estate trailing p eg forward p eg overvalued. 12% 18% 16% 30%. What’s this 30% one that’s a 30% over value. That’s the P slash o CF. What the hell does that mean? I have no idea. But check this one out. This is the most overvalued metric of all. And this is called the s&p 500. In wt terms. I knew what wt I meant. Can’t remember. Okay, but here’s a good one. And I like this one. Okay. s&p 500. In gold terms. Remember gold, although I don’t like precious metals at all. But I do like using I don’t like them as an investment I should say, but I do like using them as a measuring stick. And as a measuring stick. The s&p is 20% overvalued compared to gold if you price it in gold, right. And then here’s the last one I’ll just share with you real quickly s&p 500 market cap versus GDP of the country. Right and this is pretty Bad, overvalued by 85% 85% overvalued so if you are in the s&p right now you better be careful. Okay? Now here’s the thing about bubbles. You never know when they’re gonna pop. Look at Los Angeles is overvalued San Francisco is overvalued Miami’s overvalued Boston’s overvalued, New York’s overvalued, Washington DC is overvalued. And many of these ritzy areas in Connecticut are overvalued and a bunch of other areas, right? They’re overvalued. You know, all these high flying cyclical markets around the planet are overvalued, too. But does that mean they’re gonna crash tomorrow? I don’t know. What do you think I am. I don’t have a crystal ball. I’m just guessing like the rest of you making intelligent hopefully guesses. And a lot of my predictions have certainly come through over the years. But hey, you know, you never know. I mean, look good. A piece of chewing gum, put it in your mouth, chew it a little bit and blow a bubble. Can you tell when that bubble is gonna pop? I mean, you know, I bet your kid if you have kids can probably blow a really big bubble, maybe five inches in diameter, eight inches in diameter, right? And maybe you or I can only blow a bubble it’s two or three inches in diameter. Right? So, you just don’t know how big the bubble can get before it pops. But you do know that it will definitely pop for sure. absolutely, positively. There is no question the bubble will pop. The question is when and by how much right so that we don’t know. But if we want to be good conservative, prudent investors, we got to stay away from bubbles and we got to invest for yield because over the course of time, if we are yield or dividend, same concept type investors we Know that we will win the game as the fortunes are made and the fortunes are lost in the cyclical markets. We’re the slow and steady you know, it’s the tortoise and the hare concept, right? We’re the slow and steady racehorse that just runs with endurance because life is a marathon. It’s not a sprint. Life is a marathon, not a sprint. Okay, so you can do it you know, there’s a great rush lyric rushes This, of course, great band, the most talented brilliant band ever in all world history. Not that I’m given two big huge statements by guess so anyway, the lyric goes like this. You can do a lot in the lifetime if you don’t burn out too fast. But first, you’ve got to last something to that effect, and that’s the point. And that’s the to the slow and steady goes the race. It’s a hose that way we know that. Anyway, let’s get to our surprise. Market profile check out Jason Hartman calm for properties, check out the resources there and all the educational products Hartman education comm also check that one out and real estate tools.com for some handy dandy software. Let’s get to our surprise market profile. Here we go.

Hey, it’s my pleasure to welcome our local market specialists for the Oklahoma City Market and that greater metro area. And we’re going to talk about some of the reasons that this oil town Well, that’s one of the components of it, but there’s a lot more to it than that is a good place to invest. And just dive into some of the dynamics of the Oklahoma City metro area. Some target properties target tenants, what to expect in the future, and what kind of investments can be had there. Chad, welcome. How are you?

‘Local Market Specialist’  25:53
I’m well today. Thanks for having me on, Jason, I appreciate it.

Jason Hartman 25:56
It’s good to have you. So tell us about the Oklahoma City Market and You know what’s going on there and what the future will hold and target properties. And you just give us an overview.

‘Local Market Specialist’ 26:06
Yeah, absolutely. Absolutely. So one thing that most people don’t know, Oklahoma City as a metropolitan area is one of the largest land cities in the United States, is comprised of 642 square miles, but only about 53% of the Oklahoma City metropolitan area is actually developed at this point. So we do have a lot of farmland that leads to a lot of the new construction that we constantly have going on here as compared to other parts of the United States. So new construction is definitely something that focuses in terms of the economy here.

Jason Hartman 26:35
Yeah, no question about it. I own an apartment complex with one of our clients in Oklahoma City. And it’s, it’s been good so far. You know, we just picked it up last year. It’s a big complex, but 139 units there. And so I like that market. We tried to get into that market many years ago, a couple of different times and just couldn’t really find the right team there at the time or the right properties. It’s always a combination of the two. And you know, what are the things I’m kind of attributing that to, although I’m not sure how much of a factor this is. But you know, how does the change in oil prices impact your market? That’s a good question.

‘Local Market Specialist’ 27:14
It does not to the extent to what people would take. I mean, it is one of those things where the oil prices dip down. Everybody stands back takes a gasp, but it doesn’t affect our day to day commerce. We’ve had no slip in the housing market, no slip in the retail market. So it’s one of those things we definitely everybody takes notice. When when the large oil and gas companies go on a hiring freeze. But until there’s you know, big rounds of layoffs, like it was in the last oil bus back in the late 80s, it’s really nothing compared to that. No coma. Statistically, we’ve never really had a market to burst per se, even back in 2008 when everybody else was in a downturn, Oklahoma City, Oklahoma as a whole Continue to plug along, two to 4% appreciation, constant climb steady increase, never got out of control, but it’s never anything that was going to be drawn back either. So it’s a great area, it’s a great place.

Jason Hartman 28:11
The interesting thing is on that price issue is that as the real estate market has, you know, dramatically recovered, oil prices have actually softened. So those have been kind of counter but I remember visiting Oklahoma City on one trip, just as we were kind of, I guess, you know, depends how you look at it. But coming out of the Great Recession, we just didn’t find that much in terms of great deals there. There weren’t, you know, as many foreclosures as we wanted to see, you know, these are things that time we were we were the typical bottom feeders, right? We were looking at all these different markets around the country, and just looking for these great deals. Now that was when oil prices were real high. So what’s happened now is kind of interesting. Oil prices have actually softened, but real estate prices have gone through the roof. rents have to rents have really skyrocketed. You know, just Is there any commentary you have on that?

‘Local Market Specialist’ 29:05
Yeah, definitely being we’re actually the largest buyer of pre foreclosures, pre foreclosed homes in the state of Oklahoma. So on average, Oklahoma as a whole averaged about 1600 less attendance every month, we’re able to capture anywhere from 30 to 40 those houses every month throughout the state. So it is one of the things unless you have the and I don’t know which angle you guys were going for to try to pick them up if you’re buying them as Oreos, or if you’re trying to buy in bulk tape or if you’re buying them in the less pendants or the pre foreclosure status. I mean, there’s there definitely is the inventory that you know, luckily, with the experience we’ve had here, you know, we’re going into our 15th year I’m going into my 15th year in the real estate industry. And it’s just time under tension. I think a lot of the times that the longer that you’re in a market the more you become known and the more you know, you push put your time into the market, the more stuff starts to flow. So I mean, on average, you know, with what we do both on our retail flip and what I mean by that is when Going renovate sell to a retail buyer, even on our sub market where we consider long term buy and rehab them and hold them. I mean, you know, average 3040 deals that we can potentially get every month for either ourselves or for your investors that would work. So

Jason Hartman 30:17
yeah, fantastic. Okay, so talk a little bit about some of these sort of bullet points, if you will. I’m looking at one of your presentations. And you know, this, you know, this rapidly expanding market, obviously, you talked about that rents compared to purchase prices are excellent, the RV or rent to value ratio, they’re very good. There’s a good solid demand for rental units. income is high relative to home prices as it is in several of our markets. One of them that comes to mind is Indianapolis. That’s a really good market in in terms of that stat. And we’ve done hundreds of transactions over the years in Indianapolis, but it’s the 17th fastest growing city in the country, according to Forbes, seventh best in population growth. For Bloomberg, second best place to start a small business Business Journal, you know what, what are the things? Would you like people to know about these types of factors?

‘Local Market Specialist’ 31:09
Absolutely. Because we have such large growth in our new construction sector. When I was first approached about the turnkey model for potential investors, I asked your company I said, Hey, tell me exactly what your buyers are looking for. Number one, obviously, cash flow, apparently. Number two, low crime area number three great schools great location. Well, the reason these builders and developers are building in the new construction where they’re building at is because it’s in the low crime area. It’s in the best school districts. So what it’s going to do for your investor or for anyone that comes here to the open market is allows a quicker rent up and they vary you know, for our new construction, most of our stuffs at about a point eight multiple off of purchase price. The renovated market you know your typical Looking at one to 1.2 on average. But it’s a great area. It’s a thriving economy. It’s a great economy, you can get into it at a pretty low entry point, comparatively speaking to most parts knighted states as well. And like I told you earlier, it’s constant appreciation, two to 4% annually, which doesn’t sound sexy to a lot of people. But if you cultivate that over 10 2030 years, because most of these investors are going to hold these homes, it makes sense long term, because like I said, we don’t have that large economic downturn that most people typically experience when the market burst. Well, and interestingly, you have an insulator from that downturn, which which is exactly what happened several years ago, where you saw oil prices being very good, very high. And when I say good, I mean it in that way. You know, the, the real estate market was was not very good. And so, you know, but it’s still kind of buoyed your your market, which I thought was quite interesting. You know, just a little aside here. What do you say to people are concerned about, you know, tornadoes. I mean, that’s one of the one of the things that you have to worry about in the Midwest, of course, and in some areas, even in the southeast. But, you know, interestingly, tornadoes are very surgical, as terrible as they are. You can have one house destroyed in that all the houses around it could be just fine, right? Yes, there. You know, it’s one of those things when you’ve seen them as many times as I’ve seen them, you you get a little new to it, you don’t really notice them as much but anytime I’ve ever had someone from out of state and the tornado sirens go off, you know that you would think that we’re getting bombed or we’re freaking out. Yeah, yeah, they are. They are definitely um, you know, I’ve never lost a house to a tornado that says anything. I only know a handful of people that have ever lost their house in the tornado and that’s what’s known a lot of different people. And you know, the interesting thing enough in Tornado Alley, believe it or not, I don’t know you guys, probably all still here but as much out there, but it’s really shifted east. We don’t get near the tornado traffic that we did in years past. But the past three to five years it’s really started to shift more into Arkansas and Louisiana. We used to average I mean, Jason back when I was a kid, we would literally have tornado once a week every other week in some part, you know, it’s in about a 50 mile radius hundred mile radius of where I lived in really the past. Like I said, five years, we haven’t had that it’s the same thing with the headquarter hell predominantly would come through Oklahoma twice a year in total rows. There’s a lot of insurance companies that pulls completely out of the Oklahoma market as a whole because they couldn’t sustain the annual losses. In again, the past three to five years, we haven’t had those. So unfortunately for a lot of the roofing companies, it’s forced them to go out of market or to close up shop here in Oklahoma, but on a good note for a foreign investor, the instruments pricing has come down as well because of that, so pros and cons.

Jason Hartman 35:01
Yeah. So tell us about the insurance prices there. I mean, I assume it’s not nearly as challenging as it is in some of the hurricane prone areas. Give us an insight into

‘Local Market Specialist’ 35:11
that. Oh, no, no, the insurance here, it’s a you know, obviously, depending on the location, how close you are to a fire station and whatnot, it averages about 1% of the gross sales price for the value of the home on average, depending on the location, how real you are. The one percents pretty average. Okay, good stuff.

Jason Hartman 35:31
Okay. So take us through, you know, any other highlights you want to share share about the metro area, in terms of employment, schools, you know, whether or not you believe the market is undervalued or not. And then let’s talk about some target properties and kind of target tenants who occupies those properties.

‘Local Market Specialist’ 35:48
Yeah, absolutely. Back to the growing markets. I mean, the main areas that we’re looking in for the value potential are going to be in the outlying suburbs of Oklahoma City for the new construction side that we want to talk about and approach So they’re going to be in areas that are up and coming quote unquote, school districts, school districts are already great established. But their towns that might have been, you know, 15 years ago, they might have been 10 to 15,000, population 10. And now they’re gone to 30 to 35, to 40. But they’re all still tied. And obviously, today, Oklahoma City metropolitan area. So it’s not like they’re rural or anything like that. So if you can get ahead of those pricing curves or get into those markets, as you will know, before they really start to rapidly grow and expand, the value increase for the appreciation is going to be going to be great for the potential investor long term there. Like I said, the whole reason why, let me just interrupt you for a moment if you if I could, you know, one of the things that I’ve talked about many times listeners on the show before and I talked about it in depth at my creating wealth seminar, which by the way, we have one coming up in Memphis soon, when we look at these linear versus cyclical markets. And the fact that in the in the, you know, in the cyclical market, you give away lot back in when you give a lot back in the downturns compared to the linear markets that don’t give much back. But of course, they aren’t the high flying markets with a big appreciation, you know, over the long haul, you generally do a little bit better in the linear markets, the boring markets that never make the news, right. So I just wanted to point that one out. And I’ve illustrated a couple comparisons of that on prior episodes, but go ahead with what you’re saying. No, I mean, you’re now on the right on there. Like I said, when I first talked to most people about the appreciation rates for Oklahoma as a whole. No, they were there. Well, then I go back to tell me exactly. It’s a cold market in the downturn. I mean, it can affect you adversely. So it is a long term play. It’s a buy and hold. It’s a long term play and the good thing, the constant appreciate constant appreciation that okoma provides. over the long haul is better suited for an investor like you guys have some

Jason Hartman 37:52
good stuff. Talk to us a little bit about something that you really stress in your presentations, which is the home that You to income ratio. And you look at the you know, the median home value, the monthly housing costs versus the income in the area. And I assume you believe that’s a predictor of appreciation, right?

‘Local Market Specialist’ 38:13
Oh, yeah, absolutely. Anytime you follow the money, it’s going to be written naturally raised the value everything comes along with out of the property tech sector for the schools, the new construction for commercial for retail for office, the thing that’s going to help drive more income more sales tax into the area does that.

Jason Hartman 38:32
So tell us about that.  Now, you know, give us some examples. He’s got, you know, in some different areas in the greater metro area, you’ve got some examples of these home value to income ratios to talk to us about that.

‘Local Market Specialist’ 38:43
Well, I mean, it’s as simple as it looks. So the home value for the average home in Oklahoma City right now is about $147,000. Give or take. It’s about most most of the markets in Oklahoma about a two to one ratio home value to income ratio. So you’re basically saying your average income for the state of Oklahoma household income on a house, it’s valued at 150, household incomes about 75,000. household.

Jason Hartman 39:13
So that’s pretty darn affordable, isn’t it?

‘Local Market Specialist’ 39:15
Oh, yeah, I mean, it goes on the opposite end of the scale as well, just something when I have friends or family members or business associates come out, and I can show them what they can buy out here for, you know, let’s say a million dollars, even if they’re looking for a primary residence or something. People are shocked when they can see what they can buy for 150 or $200,000. You know, houses in you know, Southern California or up in parts of Oregon or Washington that we have relations with as well. I mean, they could go for easily 750,000 to a million dollars or so. I mean, you definitely get the value of your dollar definitely goes a long ways. But like you said earlier, you have to put up with the risk of tornadoes as well. So there’s a given to take this. Well, I

Jason Hartman 39:57
you know, if you’re in California, you got earthquakes. Everybody’s got their thing, right. Yeah, well, at least most places have their thing.

‘Local Market Specialist’ 40:05
I’ll take the beat stone earthquake any day of the week. Yeah, I don’t know about that. Yeah,

Jason Hartman 40:08
they will you take the taxes. You take the 13 point now I wasn’t

‘Local Market Specialist’ 40:16
part of Florida and Texas that’s more appealing state income tax. Yeah. So if I go anywhere, that’s where it was. Definitely,

Jason Hartman 40:23
definitely. I think if you like to beat you better go to Florida, because it’s much less expensive beach than it is in California. The interesting thing, too, is just a bag on California for another moment here, since I spent the vast majority of my life there, you know, unfortunately, is that there are all these hidden taxes. And I don’t mean just in the cost of housing and the cost of everything you buy. The cost of California is just imputed and everything you buy, right? Whether it be insurance, or a meal at a restaurant, or going to the grocery store or anything, virtual anything. It’s just everywhere. The cost, right? But the other thing about it is, there’s all these, you know, the government is so desperate for money there, that they’ve gone into business against their citizens. And now this is true everywhere. Because the government’s have just learned that they, they can get greedy and you know, they can make all sorts of money giving their citizens parking tickets and traffic tickets and all these things. You know, there’s all these little hidden taxes. I remember talking to a taxi driver in Newport Beach once that said he got a speeding ticket. It was almost $1,000

‘Local Market Specialist’ 41:30
Wow, wow. That’s just

Jason Hartman 41:33
incredible.

‘Local Market Specialist’ 41:35
Yeah, no, it’s amazing. Okay, so any other areas you want to highlight in terms of these home value to income ratios? No, I mean, it’s pretty cut and dry. You know, like I said, most of the areas, it’s as simple as that the value of the home, it’s usually about a two to one to one ratio to the income, which is good, low, affordable housing, you know, for for a lot of people so outside of that, like said your dollar stretches a lot further than it does in other parts of the United States. And that’s both both for primary occupancy and also, the rental market to so damn good.

Jason Hartman 42:10
Okay, so one of the things I’m always telling our listeners is that I’d rather have a be market in terms of the marketplace itself, and an A team in that market versus a B team and in a market, right. So it’s not all about the market. A lot of it is about the relationship with the local market specialist we have in that market, about the way they manage their operation, their customer service, their responsiveness, you know, many of our local market specialists, they have made, you know, millions of dollars working with us over the years. And some they just blow it, you know, it’s just they just haven’t, they just, they just messed it up. And you know, we couldn’t keep recommending them. Tell us a little bit about your operation your team, you know any of your business philosophies or anything like

‘Local Market Specialist’ 43:04
that you want to share? Yep. I’m glad you asked that, actually. So first and foremost, customer services, the top priority. We do this for the customers first, for the profit Second, it has to be that way. It’s a value that is enriched and everyone that touches any of these properties or anyone that I do business with. I know the client is always First, the income is always second. Always, it has to be. Secondly, I would never put someone into a property that I wouldn’t that I wouldn’t own myself. Okay, so if it’s not a market or a subdivision, or a school district that I personally don’t own or would not own property in. I wouldn’t recommend it to anybody else. I wouldn’t put someone into a bad investment, long term stock, the way I operate, not the way I was raised. It’s not the way I do business. And I think that your buyer and yourself could appreciate in Oklahoma It’s a small market. Okay? Most people say six degrees of separation in Oklahoma, it’s about two, somebody knows somebody, that’s just the way that it is. So it doesn’t take long to get a bad reputation in town in Oklahoma City or in Oklahoma as a whole. So being in business close to 15 years now, in handling all the different aspects of real estate, from the brokerage to the property management to the construction side. I don’t think we could have gotten as far as we’ve gotten without putting the customer the client first. So the value has to be back to them, bar none always. And again, where I see in what I feel were a lot of people miss. You were talking about your other local market specialists that you can no longer recommend. It’s probably the same way guys that are here that quote unquote, rehab properties just because they put down some linoleum tile and paint the walls is considered renovated. And obviously you and I both know that’s not the case. So anytime I do an existing structure, I want it to look feel and smell like a brand new house when you’re standing inside. Okay, so we touch everything from upgrading the electrical panel, new pecks plumbing throughout. If the roof is less than or older than five years we replaced the roof. If the windows are older than five years, we replace all the windows. If mechanicals h back are older than five years, we replace all the mechanicals hot water. It’s completely new base case trim molding, fixtures, appliances, countertops, everything is new. On the inside, you have the look and feel of a brand new house even if the house is 40 years old. On the inside, the only way you’re going to know any difference when you’re pulling up and you’re driving through a mature neighborhood. It’s the same way on our new construction turnkey model. I wouldn’t go into or put someone into a new construction property that I wouldn’t want to own myself. Whether it’s the school districts or whether it’s the quality of the construction. Whether it’s the quality of the material, I wouldn’t put someone in a client into a property long term that I wouldn’t own myself. So I can tell you bharden on the value of our company, the values that we instill to everyone that touches our properties, is the customer’s always First, the profit to a second. Yep,

Jason Hartman 46:18
yep, good stuff. Good stuff. How do you handle management in the property management side?

‘Local Market Specialist’ 46:25
In regards to what exactly we do both short term long term property management. We’ve done that now for as part of our real estate brokerage package. We started off obviously managing just my own personal assets and then we grew into one of my business partners assets. It’s just grown from there. We do a little bit different the the, I guess you can say portfolio on the on the podcast, but we use the AppFolio system to everything on the on the property management side done through there the benefit about it to a investor the reason why it’s important to them It can itemize out every property on a monthly basis for all their all their payouts from the end of the year, they can show all their expenses that may or may not have been on the property throughout the year, it can track all the guest cards or inquiries that they’ve had on the property, if it’s in the lease position, they can see the amount of activity that they’re getting on it. Another benefit to the system actually reports to the credit bureaus. So it’s a selling feature for potential tenants to be able to help them build their credit long term by renting through us. It also allows them to pay online either via cheque credit card, or they can pay it local as cash advance stores throughout the state as well if they don’t want to take the time to mail something. And so there’s a lot of upside there. But property management, the way that we handle it, it’s, I mean, it’s all encompassing really your investor, once they purchase and buy out here in Oklahoma, they really shouldn’t need to worry about anything. And that’s the the number one priority and the number one goal is to create, quote unquote, what I like to call middle blocks money, they go to the mailbox, they collect a check, and they deposit and that’s about all the stuff they give to their property. In Oklahoma.

Jason Hartman 48:06
One of the things we’re always looking for, and you know, depending on the offerings in the market will, you know, will veer a little bit on this, but we’d like to try and be in what we call landlord friendly markets, when things go bad, and they inevitably will, folks that life is life is that way, okay? When things go bad and you get out, you get just a rotten egg once in a while, a bad tenant, you got to evict them. How hard is it to do that? You know, if there are damages that they owe you money, how hard is it to collect? Talk to us a little bit about that just quickly.

‘Local Market Specialist’ 48:42
It’s a very landlord friendly state. I’ll start by saying that so obviously, first and foremost, because we have the proper leases in place, all the proper signed documentation, which you think goes without saying that obviously you’d be surprised in eviction court. Many property management companies don’t have the proper leases signed and in place Outside of the basic necessities to provide heat and water, there’s not a whole lot that goes into more great detail in terms of landlord responsibilities. And so one of the things if it does come to the point, you know, we average out of our portfolio, maybe about 1%, five day notices a month, or 1% of the entire portfolio, let’s do a five day notice. And for the listeners that don’t know, obviously, if they don’t make the rent, by the fifth day, we send out a notice to pay now or we’re going to file an eviction against them. And then out of that, we might actually have to go to court on maybe one a month to at max, you know, three or maybe a really bad month. So not a lot. There’s not a high eviction rate. Like I said, it’s a small market, it really is even on the rental market, so people know, you know, it’s just a matter of time. You can only do wrong by so many people but one thing also we do, too, we don’t allow previous evictions. So we never lease to someone that has a previous eviction and that’s not to always say that the past is always an absolute indicator of the future. But if you have to make something The past 36 months, we’re not going to take that risk in the future with him. Well, that’s

Jason Hartman 50:04
so to do in 36 months, this

‘Local Market Specialist’ 50:06
is probably an issue. Yeah, I’m being extreme. But you know what I mean, you’d be surprised people still rented them. But once it’s a 30 day turnover, to be able to reclaim the property. And you are we charge the max, the max per diem rate for for the default under state law. And then what we do is we partner with a collections company, and we turn over all the accounts to them to be able to either garnish wages, or Skyping bank accounts or whatever the case might be to be able to reclaim the lost income.

Jason Hartman 50:40
Yeah, yeah. Good stuff. Good to hear. Okay. Well, it sounds like you definitely know what you’re doing in that aspect. And then in the other parts of it, let’s wrap it up. Anything you want our listeners to know in closing, of course, they can contact any of the investment counselors at our company through Jason Hartman calm or if you already have an investment counselor you’re working with just reading out to them, we will be glad to help you with the Oklahoma City Market in that greater metro area. But just any closing

‘Local Market Specialist’ 51:06
thoughts, really more than anything, what I’d like to say is, I know a lot of people have expressed concern about it being a new market, like you’d mentioned before, in the past, you tried to get into this market just didn’t happen, I would, I would highly encourage and I challenge anyone to give Oklahoma a chance come out here and lead myself and my team show you around and show you what all we have to offer. And I think you’d be pleasantly surprised not only by the stable values, but also on the in terms of the value of the property that you can buy for the money.

‘Local Market Specialist’ 51:35
I challenge anyone to do that. So

Jason Hartman 51:37
I want to tell listeners one of the other things they’re going to find if they come out in tour your market, you know, a small percentage of our listeners do that, you know, most by sight unseen. We really do like people to go there whenever possible. You know, we may be arranging a property tour in the future, but let me tell you, the first time I ever visited Oklahoma City, the thing that surprised me the most. You’ll be looking through neighborhoods. Just a nice little subdivision. And you’ll see oil wells. That’s just the funniest thing. You don’t see that anywhere else, you know?

‘Local Market Specialist’ 52:09
Yeah. Yeah. Yep, you’ll be surprised where they can find find a location that you would never think possible you’ll be driving down the street or, you know, all of a sudden they’ll put up an old Derrick behind a gas station or they’ll put one up just in the middle of a random field that there hasn’t been one there ever. They just randomly decide to open back up a welder. So it’s crazy for sure. Yeah,

Jason Hartman 52:30
it’s it’s more profitable to put the wells there than the house for the developer is definitely more

‘Local Market Specialist’ 52:36
profitable long term. That one just really surprised me when I was there the first time but

Jason Hartman 52:40
good stuff. Hey, thank you for joining us. Check out the properties on Jason hartman.com. Contact our investment counselors. They’ll be happy to help you with this market. And thanks for listening.

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