On this Flashback Friday episode, Jason Hartman is joined by Investment Counselor Steve to talk about inflation and the shrinking middle-class population. They also discuss a blog post from Naked Capitalism about securitized rentals. Then, he welcomes real estate investor and entrepreneur Geraldine to the show to talk about the investor-driven recovery in real estate.

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.

Jason Hartman 0:09
Hey, this is Jason Hartman, thank you so much for joining me. Do you know what day it is? Yes, it is flashback Friday, where you hear the best of the creating wealth show and you hear some good prior episodes, some good review. Remember, we’ve got almost 500 episodes out. And you know what? iTunes doesn’t even hold them all if you’re an iTunes listener, if you are listening on Stitcher, thank you for joining us. So we want to bring you some good review stuff. Now. What’s interesting about flashback Friday, it’s a little scary for me. I got to be very, very candid with you on that. Because you the listener, you get the chance to hold my feet to the fire. Did I make any predictions? Was I right? Was I wrong? I’ve been right about a lot of things, but I’ve been wrong about a few. So you can give me a hard time about that if you wish. But it’s flashback Friday, and we will give you the uncensored Best of the creating wealth show with a prior episode. So let’s dive in. Here we go. Remember, this is not current. It’s Flashback Friday.

Announcer 1:22
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 whose own properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 2:12
Today, we are going to talk about an expo that I am speaking out on September 8, that’s the Silicon Valley real estate Expo or investor Expo. And so we’re going to have a little quick interview on that. But for the intro section today, I invited Steve back to talk with us and talk about a couple things in the news and current events. Steve, how are you?

Steve 2:31
Doing great and feeling wonky, Jason/

Jason Hartman 2:34
Well, yes, intellectual takeout is definitely wonky. So good stuff. I tell you, I’ve always said to various girlfriends I’ve had over the years, I’ve always said, I’m really a very nerdy guy who happens to dress fairly well. I’ve never owned a pocket protector or have those glasses with a little tape around the middle

Steve 2:54
It’s all about the disguise.

Jason Hartman 2:57
Yeah, that’s right. That’s right. But hey, the first thing I thought I’d have us talk about today is the middle class. And you know, I’ve long talked about it on the show, Steve, but it is really my mission to save the middle class. That’s that’s a big part of why I do what I do. When I sold my last company in 2005. I could have just retired or at least retired for a while just you know, retirements a subjective term. Depends how you want to live, right. But I’ve never been one to be very interested in retirement. I love to work. I love what I do, because I feel it’s really a mission. And one of those big missions is to save the dwindling middle class. You know, many years ago, I read lou dobbs book war on the middle class, and I’d highly recommend that but for our listeners, and I think we invited Lou on the show a while back, let us see if we can get him him on. He’s not on the air as much as it used to be. And I like his commentary. But they talk about the 2000s being the last decade for the middle class. And that whole last decade concept comes from the discussions of Japan, and Japan, they used to say Japan has had a lost decade now it’s almost to last decades for Japan. And I think the major part of Japan’s problem is a demographic problem, one that we do not fortunately have in the US, we don’t even have anywhere close to that problem. Our demographics in the US are, are pretty phenomenal, in many ways, at least in terms of age, maybe not education, and so forth. But in terms of age, we’ve got demographics that should be powering the US to a grand state of economic prosperity. But what are what are your thoughts on this?

Steve 4:31
Well, we’re saying that the 2000s were a lost decade for the middle class, I’m looking at the story that we’re referring to, and there’s a quote that really sums it up. It’s from a garage owner in New Jersey, this guy says I find that I am running in place at best. And in some areas, I’m probably slowly falling behind. And it’s kind of depressing to see that we see that the median income is down significantly. What would make that even more scary, though, I don’t know if that’s a joke. Inflation because that’s what’s just obliterating the obliterating the middle class.

Jason Hartman 5:04
It sure is. And, you know, it’s interesting that they don’t say that I was going to bring up that very same point. Because in this news article by Rob Quinn, it talks about how the middle class itself is defined as households with income from 39,000 to $118,000. And it says it’s shrinking. The study found that it’s falling from 61% of the population in 1971 to only 51% today. But here’s where it gets so murky. And it’s so hard to understand this. Number one is because of inflation. Number two is because of how inflation is calculated. And we all know that’s, you know, a whole scam in and of itself that we report. Number three part is technology. And that’s part of the inflation calculation when we talk about hedonic and so forth. One of the ways they misrepresent inflation, but when I had that interview, so many episodes ago, I think it was late last year, actually, with Bill wattle, who did that great piece, talking about the poor and how the poor today are so much richer than they’ve ever been in history. Poor people nowadays have air conditioning, television sets, DVD players, brand new, Michael Jordan, sneakers, iPhones, all kinds of cool stuff. But that’s the benefit of technology. So again, this stuff does get murky, and it gets hard to tell. And I think the place to really look to understand what is happening to standard of living is, is things that aren’t very technological. So one thing that’s not very technological, is the size of your home. But I’ve talked about the misleading nature of that before because homes have gotten larger. Certainly, since post World War Two baby boom, homes have gotten much larger, in terms of average, and in terms of median numbers. But you know, Steve, the interesting part is, while the homes have gotten larger, the lots have gotten a lot smaller, and the density has become much, much more compact. So we’re living on top of each other, very literally, in cases nowadays, but but but if we’re not, we’re living in small what they call cluster home subdivisions, where you just don’t have as much land as you used to in land is not very impacted by technology at all, is it?

Steve 7:17
No, no, not at all.

Jason Hartman 7:20
Remember, you’re listening to flashback Friday, our new episodes are published every Monday and Wednesday.

Steve 7:28
And that’s the pinch. You know, technology has a tendency to get cheaper over time. But some of these other things like commodities, they’re getting more and more expensive. I have a family of four wife and two kids. And I’m not kidding, you know what I could buy $100 worth of groceries a year ago. Now that’s costing me 130. And that’s where we’re seeing this pinch happening continually. And that’s where it’s squeezed in the middle class. The article goes on to talk about how the, the upper portion, some of them are actually doing better. They’re moving into the wealthy class. But most of them, they’re just getting whittled down. They’re having to cut this they’re having to cut that. And it’s just getting smaller and smaller and tighter and tighter on these people every single day.

Jason Hartman 8:11
Yeah, it no question it is. And one, you know, one of the things about food, that’s kind of interesting, number one, you need to look at the drought scenario going on in many parts of the country. So that is impacting food prices. And that’s not directly related to inflation. So it is fair to kind of adjust mentally for that. But But the other thing you have to adjust mentally for which nobody is doing except me, so far, as I know, is food quality, you know, with mass production and farming, and genetically modified food and with Monsanto and all of their evils. And in many ways, I think they do do a lot of evil, but you know, they do some good to on balance. And if you want to hear more about Monsanto, by the way, I talk a lot about them on my holistic survival show, which is of course on iTunes and you can go to holistic survival calm, but it Oh, and I just got to mention one more thing. You know, me, Steve, I’m the I’m the king of going on a tangent. And, and, you know, Obama, we just had the Republican National Convention and soon the democrats are going to meet but you know, Obama has tried to portray himself as the champion of the little guy. And you know, Michelle is the I think the first first lady actually to do a small garden you know, which is symbolic of course, it’s almost meaningless but but as a symbol in the white at the White House, right to do this little garden, a vegetable garden. What’s interesting about it is Obama is so in bed with big corporate America. it’s sickening, because what is it his head of agriculture is the former CEO of Monsanto. You know, I don’t Yeah, I don’t know how much more fascist you could be than the Obama administration except for george bush right in front of him. You know, same same kind of deal, but Obama’s even worse. So, but the thing is, George Bush never claimed to be portrayed as the champion of a little guy Obama has. So, you know, it’s kind of kind of the difference there. But, but yeah, so so the quality of food has gone down and you look at these like soaring cancer rates, and many people think it’s the pesticides, it’s the genetic engineering, and you know, a lot of this stuff, nobody really knows for sure. And, you know, it may take decades to really know. So it’s not just that you don’t just pay for things, I guess my point is this, you don’t just pay for things in dollar cost. You also pay for them in other ways you pay for them with your health, you pay for them with quality of food, certainly having small localized farms, with much less economy of scale, that makes food prices higher. And if we had the same food scenario today that we had, for example, back in the 1960s, when it wasn’t so corporatized. And not every farm was, you know, run by a big giant corporation. And there wasn’t nearly as much genetic engineering in our crops, and they didn’t have the hybrid seeds, and they didn’t have the pesticide stuff like they do nowadays. If you if you did that kind of food production, and you had to buy it that way. Today, food prices would be enormously expensive. So my point is, I’m just trying to say that inflation has been hidden largely in food, everybody complains about food being more expensive, but it would be far, far, far more expensive. If we were getting the same food we got decades ago. Do you think about that, ever? I mean, does anybody think about it that way?

Steve 11:41
You know, I haven’t thought about it that way. I think that, you know, you have these big corporations that are driving most of the food production. With the middle class, who is the biggest demographic shrinking, however, that’s going to be decreased profits. And so these businesses, they make up for it, whether they’re big evil corporations or not. When a business feels a pinch, it adjusts. That’s what they do. And that’s what a lot of times the government doesn’t realize they think they can just mandate everything to them. So they decrease the quality, they decrease the quantity. And I was listening to a radio talk show the other day, and it was hilarious. The host took a call from a 12 year old boy who was upset that the potato chips that he buys don’t have as many potato chips, right, right. And this the radio show host said well wait, you’re you’re tracking this. In this this little boy was saying? Yeah, ever since Obama took office, there are less potato chips in my bag. And the host actually had a bag of them brought in and he counted them. Yes, you’re right. This bag is almost all air. So they’re taking cutting back on the the quantity as well altering the packaging, changing it cutting costs however they can, because this pinch is being felt throughout the whole economy.

Jason Hartman 12:48
Yeah, no, it’s it’s an amazing difference. You know, inflation is being hidden all sorts of different ways. And on that food topic here, but it really applies to many commodities, not just food. If you go to Argentina, for example, where Argentina is very well known for the high quality of its beef, you know, and I’ve been to Argentina, I’ve been to two places that are low che so if I can pronounce it correctly, and boy Assad is. And by the way, I looked at real estate in Buenos Aires and I talked about that on a prior episode. But there you don’t have as much of a corporatocracy producing food like we do in the States. And so you’re not you may pay more for the food, but at least inflation isn’t hidden in it the way it is today. So so there’s a lot you pay for it in a lot of ways other than just strict dollars. That bag of chips is of course deceiving. Even a 12 year old can tell it’s amazing. Let’s move on because we got to cover a couple things here and securitize rentals now. The whole global banking system, the real estate market, the whole system of these investment banks and brokerage houses during the last huge financial crisis from which we are still suffering pretty severely these Wall Street antics and cookery. But one of the big parts of it is that when they started securitizing mortgages, it became an issue of hot potato, where basically banks could make loans and instead of being that sort of quaint old fashioned savings and loan, and I’ll just make it harken back to the movie, probably everybody’s seen. It’s a Wonderful Life with Jimmy Stewart great movie by the way, if you’re ever feeling bad about your life, watch that movie, it’ll it’ll make you understand the value you have in the world and, and the impact you have. Everybody does. And we’re bankers really one time cared if a borrower have the ability to repay the loan, because it mattered because they would actually lose real money. But then when they started securitizing mortgages, which means they sold them off, they bundled thousands and maybe millions of mortgages in these huge pools. They sold that pool of mortgages to another party. And these were traded all around the world. It basically lightning speed and nobody really know what they knew what they were buying. Sometimes the same mortgage was represented as being in 30 different pools, and it was really only one mortgage. So it was like, it was like fiat money. It was a big Ponzi scheme. And so we obviously had a lot of problems with that, and leave it to the folks on Wall Street. They never run out of ideas, these financial engineers. Now what do they want to do, Steve, they want to securitize rental streams.

Steve 15:32
That’s right. That’s right. If you live in the western US or the southeastern us, you’re really seeing that increasingly at auctions and through different purchasing methods. private equity firms, and hedge funds are buying houses. I think they’re overpaying severely. But they’re bundling these up into rentals. And I got called to a meeting in Orange County a few months ago, where this company was saying, look, this is what we want to do. We want to accumulate as many rentals as we can. And we’re going to convert this pool of rentals into a real estate investment trust, that would be securitizing the rentals. And so then they can chop these things up and sell them over and over again. And and heaven forbid, like they did a few years ago sell the same thing five or 10 times. Right? I once heard that securitizing mortgages was kind of like watching somebody bet on a horse race. And somebody was betting on what that person would do. Who was watching who was betting on that person. It just got so convoluted.

Jason Hartman 16:30
Just a reminder, you’re listening to flashback Friday, our new episodes are published every Monday and every Wednesday.

Jason Hartman 16:39
Well, you know, by the way, let me just mention, I did a show with Zach, our provider in St. Robert Missouri, who’s You know, a lot of you have invested with him and had some very good experiences I have myself. And you know, we talked about the concept of derivatives. And you know, if you look up the word derivatives in Wikipedia, for example, another wonky thing I love, I use Wikipedia constantly. And you look up derivatives. I mean, it’s like, it’s hard to get your head around what it really is. So my incredibly overly simplistic definition that I came up with is, it’s the thing about the thing, it’s not the thing, it’s the thing about the thing, and sometimes it’s the thing about the thing about the thing about the thing about the thing removed two dozen times, so you know, it’s like that horse race betting you were just mentioning that was a good metaphor for it.

Steve 17:26
Yeah. And in this scenario, the problem we have is identical to what we had with the the mortgage backed securities is these guys would issue these mortgages, and then they’d sell them and then they’re out. their due diligence didn’t have to be that great. In fact, we saw how behind the curve, Moody’s was on rating these things in the first place. And this would be almost impossible to rate these things for the agencies. I mean, imagine the diversity of these renters in these neighborhoods. And then additionally, you’ve got the problem that, okay, private equity in these guys, they’re going to probably flood these things with renters that are not great, because once they sell off the asset to the real estate investment trust or the securitized vehicle, that’s is the article says that’s tantamount to a full cash out. And whether those tenants are still there and paying rent after the fact, they don’t care, it’s just getting their cash out.

Jason Hartman 18:19
It’s just another way to do subprime loans. And instead of being a loan, it’s a rental income stream. So they can put low quality renters in properties, people that can’t afford it, just the same people they put into loans, okay, it’s the same, it’s the same thing. They can sell off the pool of rental income streams, to a bunch of suckers on Wall Street. And this is why follow my commandment number three, be a direct investor, own and control what you invest in, whether it be income property, my very favorite, or hard money or private lending. And then you’re in control, you’re not relying on some institutional criminal, basically, to decide what your financial future is going to be like. So it’ll just be like the subprime thing. They’ll just put crummy tenants and people who can’t afford just to cook the books and make it look like they’ve got a tenant, but who knows if the tenant will actually pay? Right?

Steve 19:14
Right, right. And there’s one scenario where this could possibly turn out better than the whole mortgage backed security mess. In this scenario, these rating ratings agency and everybody, they’re proceeding with a lot of caution, because they have recognized all these variables, and they don’t really have a track record. They’re being very careful. But what we don’t have here is the government coming in and ensuring or guaranteeing these rental income streams. Interesting, and that’s in many cases, what we had in the mortgage backed securities mess, so hopefully, I can’t say whether it’ll happen. I mean, Wall Street has a tendency to make these things a lot more convoluted than they need to be. Well, I think they do better. People risk their capital, and these Reed’s go to purchase these things. They’re gonna say, hey, look, there’s no safety net for us. There’s no bailout, there’s no guarantee by Fannie Mae or whatever here. We got to use our head, we have to really take a look at real organic risk here and make an intelligent decision because nobody’s gonna catch us.

Jason Hartman 20:16
Yeah, maybe. Now that may be good, it may be bad that could really go either way though, Steve.

Steve 20:21
It’s a big maybe.

Jason Hartman 20:23
Yeah, it’s a big maybe, maybe they’ll be more careful and responsible because they won’t have the sort of too big to fail thing behind them, hopefully. Or they might just make it worse, because there is nobody there to catch them. The taxpayer won’t be there to catch them, which, you know, I applaud that for sure. But at least the last time around, I mean, if you can pick any good point of how poorly the crisis was handled, they created a bunch of fake money to do these bailouts. So it I don’t know it without the bailout certainly would have been initially worse. I think overall, bailouts made things much worse in the long run. But who in America lately has ever thought about the long run?

Steve 21:03
Yeah, right. Exactly. The politicians, they don’t want to cause any short term economic pain, no matter what the cost, you know, elections are two, four and six year cycles. And that’s how these decisions are made.

Jason Hartman 21:15
You got that right. But in this article, we’re really we really wanted to bring this up because we saw an article in naked capitalism, and that’s nakedcapitalism.com, and it talks about the new real estate train wreck coming securitize rentals. It says no matter how think how bad things get, it turns out, they can always get worse. Wall Street is about to foist a new quote, innovation, unquote, on investors that even ratings agencies won’t be able to touch, geeky, reckless or just plain lazy mortgage. originators, servicers. And trustees took out what is actually an not an unreasonable idea that mortgage securitizations, and it turned that into a loss bomb. It’s just unbelievable that they just never stopped innovating. And every time you hear about Wall Street innovating, hold on to your wallet. Yeah. That’s that’s about what’s what’s gonna happen. But he seemed I want to talk on a future show about a whole bunch of things. But definitely this investor led recovery. And the fact that the homeownership rate, I mean, this is super exciting. The homeownership rate is the lowest it’s been in almost 50 years. What a phenomenal, phenomenal time for for us as investors. I mean, wow, could you ask for a better perfect storm.

Steve 22:37
Definitely an investor driven recovery in those price points for properties where it makes the most sense, because you can start spending too much in certain markets on jumbo properties where the price you pay starts out running the rent, you get by farmer, there’s a sweet spot there. And those properties are being picked up like crazy, but many of them by these guys that we were just talking about, and they’re driving massive, massive amounts of sales. The part of it gives me some hesitancy. hesitancy, though, is much of this is in what I call the rubber band areas where they have high volatility. And you know, you wonder if it’s more of what we were just talking about earlier, too, though, with so much of this going on back and forth. You know, what are these homes really worth? I don’t think we know yet. But we do know that from a cash flow perspective, and rental demand. They make a lot of sense today, more so than they have in many, many years.

Jason Hartman 23:34
Oh, yeah. And the demographics. And all of the factors lining up to create this perfect storm are, are phenomenal. And that’s why you know, smart investors are coming out and they’re buying properties like crazy. It just it just makes sense. But hey, Steve, thanks for joining me. We got to run and we’ll talk about some of that stuff next time. But everybody, stay tuned. We will have Geraldine talking about some thoughts on the investment market here. We’ll be back with that in just a moment.

Announcer 24:00
Jason provides an extremely unique service deal evaluator. Are you interested in a property outside of our network? Need a second opinion? No problem. Let our experts evaluate the deal. Find out more about it at Jason hartman.com.

Jason Hartman 24:20
Hey, it’s my pleasure to welcome a great lady, a real estate investor and entrepreneur to the show. And this is Geraldine Berry. She heads up a big real estate investor group in the Silicon Valley area. And she’s got a great Expo coming up now I am speaking at that Expo. So I just wanted to get a take on the market from Geraldine. How are you Geraldine?

Geraldine 24:39
I’m great. Thank you for having me.

Jason Hartman 24:41
Good. Good. Now you fall into a another category that I did not mention introducing you and that is you have such an excellent accent. I just love it.

Geraldine 24:50
Thank you.

Jason Hartman 24:52
You have a lot of wealthy tech entrepreneurs up in your area obviously in Silicon Valley, San Jose area and they are coming out, and they are buying a lot of real estate now, aren’t they?

Geraldine 25:03
Yes, they are. And I think when you live in an area like the Silicon Valley, and we’ve been in operation, this is our 11th year now, what you decide for is that things go up and down. And so people are beginning to see the reality that real estate is at an all time low, and pricing. It’s a great opportunity. And so they’re beginning to participate at a high level.

Jason Hartman 25:28
Yeah, it really is, you know, foreign investors are gobbling up American real estate, they just can’t get enough of it. They make up almost 10% of our market in the last year. It’s just amazing how they are rushing into a to buy income properties here. But oddly, not all Americans are getting that message. You know, maybe when you live in the environment, you don’t always really see it, many do. But some still don’t. With the tech entrepreneurs up in Silicon Valley, your own local market there is really booming, isn’t it?

Geraldine 26:00
It is and you can see some companies like Facebook, despite people talking about the debacle with the

Jason Hartman 26:06
The IPO

Geraldine 26:08
Yes, exactly. But it’s been a great boom to our area, Google and Apple, they’re all locations right here in our backyard. So inventories have extraordinarily low levels there. So there’s very little inventory. So what that means is that there’s multiple bids on houses all the time here now. And rents are escalating pretty rapidly. And so that means jobs are coming back. And the you know, the market is heating up. And I don’t think we’ll ever have a big flood of inventory in the Silicon Valley Bay Area market. It’s just not. I don’t I don’t believe the banks would ever let that happen.

Jason Hartman 26:49
Well, I you know, I don’t know if it really could happen. I mean, even if your prices went down, they’re they’re so high already. It’s unbelievable. What do you get up there? You get a little two bedroom, one bath house for a 900,000, right?

Geraldine 27:01
I know. And actually just, you know, in terms of my story in 2005, we were we had heard from speakers coming to our organization about the the market and the financial crisis that was on the horizon. So we exited the market, and particularly outlying areas like Stockton, and how they would be impacted. And I was heavily invested in there. And so we sold and then we I sold my primary residence, and I rented for several years here. And then I bought back in a year and a half ago, which like in retrospect was the perfect time, Jason. But yeah, that was kind of accidental, but we were keeping an eye on it. And I feel that you don’t have to get in at the very bottom, or out at the very top. There’s no need to be greedy. If you can get in around that area. You’re doing just fine.

Jason Hartman 27:52
Yeah. You know, Geraldine, I always I always found that it was a good philosophy in business, always leave a little bit of money on the table for the next guy. Because when you don’t, things just generally don’t work out too well.

Geraldine 28:06
Exactly, exactly. And I think I think that, you know, we want other people we want, we want to keep this thing going. And I think if you’re too greedy, it does come back to bite you. And we even had people who had commercial buildings, who wouldn’t negotiate with their clients, and they got into a bind when the economy turned here. And then the ended up having an empty building and losing the building. So there are times to really kind of negotiate and, and help people and make things mutually beneficial. You know, I think when you do that, and you come from a good place, things really do work out.

Jason Hartman 28:42
Yeah, well couldn’t agree more, just to it reminds me the late great Stephen Covey, who passed away recently, author of so many great books, including the Seven Habits of Highly Effective People, you know, one of his things was it’s either Win Win or No Deal. Because if it’s not win, when people find a way to make the deal fall apart, that’s a philosophy you just have to live by. So and I know you come from a good place there because, you know, you’re you’ve just got a very successful organization. And, and you’re really quite an entrepreneur, which I want to talk about in a moment. But give us your outlook on the national real estate market and investor sentiment. You talk to a lot of investors, you’ve got a huge group, what are they saying?

Geraldine 29:22
Well, I talked to a lot of people and people are interested now and participation because they see the writing on the wall. There’s there’s no inventory locally, or very little. And there’s a lot of competition and you know, you’re having hedge funds come into our markets, and they’re buying for the long term hold. And so they’re not concerned with with the margin that they get on these houses, so they’re beating out local investors. So that’s an interesting tidbit, I think but we just wonder long term how that will play out is these big hedge fund managers that have never been involved in real estate to this degree before buying multiple houses.

Jason Hartman 30:01
Geraldine, I’m so glad you brought that up. Because you know, you want my prediction on that I think your yours is probably the same. But of course, we all remember the famous Warren Buffett quote from a few months ago, where he said, I buy a couple million houses if I couldn’t figure out how to manage them, right. And you know what I always say to our investors, they probably sick of me saying this, I say that the good and the bad of the income property business is that it’s a highly fragmented market. And as such, you’re in a place where you need to as an individual, or a small investor, and we’re all small investors listening to this, we’re not a hedge funds, embrace the fragmentation. It’s very frustrating in a way, because not every property manager you deal with does things the same way, you can commoditize this business very easily. And that’s what keeps the big institutional investors out. So my prediction on all these hedge funds and institutional people coming into the buy up, buy up income properties in droves, is that they will try it, they will be in this market for a couple of years. And they will slowly start to exit later, as they experienced the frustration of that fragmentation, which leaves that opportunity for you and I, doesn’t it?

Geraldine 31:16
Exactly, and what what we like to talk about frequently at the esteri is that real estate investing as a business, you’ve got to look at it, you’ve got to look at the underlying numbers. Does this make sense? Who have I in that area that worked up piece for me, and I say this as an investor both in California and of space. If you know, a market, you can quickly ascertain if that property makes sense to you and you can make a decision. Hedge Funds can’t move that quickly. They have the money. But can they make an educated decision, and then do they have the people in in place to take care of the business on a day to day basis, which can be a grueling thing, which is why you’re seeing a lot of people now saying, Hey, I might possibly invest I might be the I might be your first Trust Deed investor in a house as opposed to owning the house. But the money is secure. So there’s different ways to approach this. But in Silicon Valley, I think a lot of the professionals that I talked to, in that I interact with them, a lot of people that attend our organization are high level professionals in the valley. So that’s how we get an opportunity to really kind of see both sides of the coin. But what they’re seeing is you know that companies are not that loyal. So creating a portfolio small, any size, in real estate, maybe simple as acquiring a house a year for the next five years, is a great strategy and a great way to go. Because that way you can secure your future and your retirement. So you can put it on a 15 year long, 30 year long, whatever works with your time horizon, get it paid off, and then you’ll have these rents coming in to you at retirement time.

Jason Hartman 33:11
That is the perfect plan B, you know. This is your social security folks. It is the security, the only real security in the world is the the the activity of planning and acting to create your own security, not depending on anybody else, Wall Street. So the government, it doesn’t work. You know, we’ve got to create our own security,

Geraldine 33:33
We have to and we have to band together with the people that are on the same page as as an affiliate with people who are like minded in that regard so we can execute and learn from one another. And that’s what I do best is I pull people together, who are really pushing their life forward. You know, I’m up at 5:15 every morning, Jason I’m not lolling around in bed waiting for a set top to get up. I have a lot of work done by 8am. That’s because I have a vision for my life. And I am executing on that vision every day.

Jason Hartman 34:05
Well, you know, you’re quite an entrepreneur. I mean, you’ve you’ve been working since you were 10 years old. I share that with you. I started very young to you know, I was always looking for ways to make money, whether it was selling patches to other kids in school, making money and then having, you know, multiple paper routes and work into moms businesses, and then you know, starting my own business. So it’s a great history when you just Geraldine I mean look at entrepreneurs make something out of nothing, where there was a vacuum before the entrepreneur goes in and create something that wasn’t there that did not exist out of a bunch of random parts and disparate parts. And as real estate investors, that’s what we’re saying everybody should do be a real estate entrepreneur. We have a an executive with one of the major tech firms in Silicon Valley. I won’t mention the name But this individual is their plan, and they’re executing on it pretty quick is to purchase about 80 properties through our network, and then come to what they call Financial Independence Day, where they, they leave their company, and just have their real estate. And their income properties support the same high high lifestyle that they had with that big technology company in Silicon Valley. So, you know, it really is a great thing,

Geraldine 35:26
Jason, in fact, I have some entrepreneurs, some professionals from the valley that have done just that, they have left their job, and now they’re people I interview, you know, when they talk about how they did it, why they did it, the security that they had in a job and how they waited till it was the right time, we don’t suggest that you find out about real estate as a potential way to make a lot of money. Because it’s not that easy. Don’t give up your job, take your time farmers strategy, farm a plan begin to execute. There’s a lot of hours in the day, even if you work, you can do this on the side.

Jason Hartman 36:03
Yeah, it really comes with what you’re talking about of, of the very modest plan of maybe buying one income property per year for five years, or, you know, maybe you’re buying one per month for five years, you know, and then you’ve got six properties or five, whatever that number is, that’s all individual for everybody listening. But it reminds me of Harvey McKay’s book, he’s got these great book titles. And I had him on the show several episodes ago, but one of his books is called dig your well before you’re thirsty. Isn’t that a great way to look at real estate?

Geraldine 36:36
It sure is. It sure is. And, and in terms of just planning and strategy. I mean, I grew up in a family in the south of Ireland, I was one of eight kids, I, I’m not saying I worked since I was 10. I did I was made to contribute to the household in terms of working. And we had a, my mom had an antique store that I had to take care of. And she left me completely responsible for that sometimes that 10 11 12 years of age,

Jason Hartman 37:03
that’s great training.

Geraldine 37:05
It was great training. And you know, then I came to America, and I had probably $500 in my pocket. And, you know, the American Dream is alive. And well. That’s all I want to say, even in an economy that we’ve had a few major things go wrong in terms of our economy, and we have things that we need to fix. But America is still the place I want to be. Because there’s so many things that you can do to be successful here.

Jason Hartman 37:31
What year did you come here from Ireland?

Geraldine 37:33
In ’87.

Jason Hartman 37:35
Okay, so in 87? Yeah, this just gives the listeners some perspective on on that. And you know, that is so true. I mean, many people talk and write about now the decline of America. And I agree that America is declining in many ways. So you’re not going to hear some Pollyanna view. But the question is, Geraldine, compared to what compared to where? I mean, where is it better than in America, even now, you know, I’ve got a friend who lives in China, I talked about frequently on the show. And he loves to bash America and say, China’s better. And I’m like, Are you kidding me?

Geraldine 38:08
No. With their one-child policy? We I interviewed an economist on the AI about China. And you know, the fact that there’s a whole generation of men that have no women, for them, that’s going to be a big issue for the Chinese. Because of the one child policy, just that single thing.

Jason Hartman 38:20
Within 20 years, China has a huge unsolvable demographic problem in two decades. There, they are going to hit the demographic wall, just like Japan did. and Japan, you know, they used to call it the last decade. Now Japan is almost at two last decades in their economy. So these countries, if they don’t have some degree of immigration, hopefully it’s legal. That’s another subject. And if they don’t have a birth rate, those countries die. they wither away, look at Europe, look at Japan, and China, it’s right around the corner for them. And you cannot change demographics are destiny. America is still a vibrant, colorful, flavorful place where people still come and still put their money.

Geraldine 39:14
Exactly. And especially if you live in an area that you know, you live, you live in Phoenix. I mean, there’s a whole lot of activity going on there. inventory is low there now. And the economy is beginning to really thrive again. And I think, you know, we have to look at that I was in London, I was speaking at a company in June. And the British. My perspective from from that is it was there was a lot of finger pointing about the banks and it was still going on and on. That’s not constructive. How are we going to get past this? That’s what I’d be looking at. And then I go back to Ireland and the entrepreneurial spirit is really common alive there in terms of what do we do people are pushing through this and the Irish have more debt per capita than you know them most of the countries in Europe because they secured the desert, the banks. So there’s a there’s a lot of issues that people have. And we have our own here in America. But we certainly are a big country, and we’re a force to be contended with. And we will thrive. I do believe,

Jason Hartman 40:17
Geraldine, that’s a great message for investors. And I couldn’t agree more, you just got to position yourself right? Many, many people will be devastated in the coming years, because they didn’t position themselves right for the inflation that many including myself think is coming. And the changes that are going to happen. I mean, the game has changed. All we’ve got to do is adopt the strategy that works for the current environment, and we will all prosper because of it. Now you’ve got an expo coming up. I’m one of your speakers at that Expo. Tell the listeners a little bit about it, if you would,

Geraldine 40:50
Well, STREI is known for its content, rich meetings, and events. We do not do sales pitches. And so this event, we have more than a dozen workshops, with speakers that are at the top of their game, we’ll have a panel from the financial field. And these are all heavy hitters in the banking industry, they’re going to share with us what they see as opportunities and how, how we can participate. And Jason, you’re presenting on the 10 commandments of investing. And there are rules for investing. And you’re going to share those with our our attendees. We have somebody talking about apartments, we have people talking about property management, we have Bruce Norris, who’s a California market timing expert, but his views are applicable wherever you are, he’s been somebody who’s been a friend of the STREI for for probably eight to 10 years. And so we’re looking forward to a very full program in terms of content. And then we’ll have the expo floor and there’ll be opportunities to explore what’s available in terms of buying real estate. And so we’re very excited about this is that the convention center in Santa Clara, and it’s the registrations Okay, the registration is expose silicon valley.com Real Estate Expo silicon valley.com. And it’s $79. It’s all day Saturday, September 8.

Jason Hartman 42:18
Fantastic. Well, Geraldine Barry, thank you so much for joining us today. And I’m looking forward to contributing to your Expo in helping you make it a big success.

Geraldine 42:26
Thank you very much indeed, Jason.

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