This Flashback Friday episode is a three-part show. The first part is a story by Og Mandino that has changed Jason’s life. In the second part of the show, he talks to CPA Peter DeGregori about the real estate professional qualifications being judged and scrutinized by the IRS. In the last segment, he interviews one of the British investors, Richard Lillycrop. They discuss his reasons for investing in American real estate from abroad and why he likes American real estate.
Announcer 0:01
Please note disclaimers at the end of show.
Announcer 0:07
Welcome to creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self made multi millionaire who not only talks the talk but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:02
Welcome to another edition of creating wealth. This is Jason Hartman when we’re glad to have you listening today, a few things, we have a three part show for you today. But before we get to that, I just want to mention a few things. Number one, I hate it when I go to those real estate seminars or I hear some salesman selling any product under the sun. And they tell me, this is the best time ever to buy this widget or whatever it is, right? Well, I do have to say that this is becoming a very, very, very opportune time to be investing in real estate with the Federal Reserve’s actions this past week and the week before, we are coming into a time of exceptionally cheap mortgage money. As you’ve heard me talk about many times in the past. The mortgage is a major part of the real estate asset. And because of this artificial reduction in interest rates, and this loosening of the money supply caused by the mortgage meltdown, which became apparent last year, or especially last August, but you could see the seeds of it long time before that, obviously, it is becoming a very, very good time to be stocking up on cheap debt. And the other side of this, of course, I want to remind you is that this means we will have more inflation, because the money supply is being loosened more than it should be in a time where we already have a lot of inflationary pressure. And I tell you, we’re going to do a show on this in the future. But there is so much inflation heading our way, in my opinion, over the next 10 years or so, as India and China’s economies continue to boom and grow, and more consumption occurs. So we’ll talk about that later. But suffice it to say, pay attention. The market is soft. There’s kind of a perfect storm developing right now. And you’ve got developers who are under a lot of pressure nationally. These are very motivated sellers. We are striking incredible deals with them at the same time.
The other factor you have is the mortgage money is getting very cheap. And then the third factor here is that even though the mortgage money is getting cheap because of the mortgage crisis, lenders are still leery and conservative and a little bit scared as they should be. They should have been more careful years ago, and we wouldn’t have been in this mess. But regardless of that, it is harder for your renters to qualify to borrow. But those who can qualify have a very, very great opportunity. Right now, because they can borrow at really, really opportune really, really low, low rates. Think about it. Two months ago, mortgage rates were 14% higher than they are today, approximately, of course, it depends on your qualifying situation. And it’s a little more complicated. But if you got a mortgage two months ago, you would have paid significantly more in your interest rate. And remember, when you talk about interest rates, don’t talk about it like the rates are up or down. 1% talk about it, like what is the relative difference in those rates? And from two months ago, it’s about a 14% difference. That’s extremely significant. All right, a couple of reminders. We cooperate with brokers. I want to just remind you, you know, I really don’t mention this very much on the show here. But we are an open network and a lot of real estate brokers and mortgage People outsource their investor clients to us. And so we do cooperate with brokers. So keep that in mind if you are a licensed real estate person. Also we are moving next month we’ve got a big, beautiful new office that we are moving to in Costa Mesa, California, right by the very famous South Coast Plaza area, we’re going to be almost tripled the size in terms of office space. And it’s a nice upgrade for us.
So just know that we are moving soon. And our new address will be on the website. And we are growing quickly. We have career opportunities available. If you’re interested, talk with any one of our investment counselors, or visit the careers page on our website at Jason Hartman comm if you’re interested in franchises, talk to us about that, check out the franchise page on our website as well. And be sure I know a lot of you listening are non local listeners. We have listeners from 26 countries at last count all around the world and you can get on our conference calls. They are 100 for free. And the difference between the conference calls and the creating wealth podcast show is that the conference calls are a little bit more timely. And we usually have on them a lot of different speakers and a lot of guests, a lot of local market specialists from various areas. So just wanted to mention those few reminders and housekeeping items to you. And let’s get on with the show. Now, we have a three part show for you today. The first part, I want to share something that really, really changed my life. It is an inspirational sort of poem or prayer, if you will, and it is by one of my very favorite mentors from many years ago. augmon Dino, the late augmentee. Know, you may have heard of augmon Dino read his books, very famous. probably his most famous work was called the greatest salesman in the world. But he’s written many books and is an excellent famous speaker worldwide for many, many years. Just a tremendous guy and a long time ago, I pick Have a book called missions success. Probably when I was about Oh, I’m going to guess I was about 20 years old, maybe 21 years old at the time. And so I’ll share a little bit about that.
And then we have a prior guests back on the show today, Peter to Gregory, who is a CPA who specializes in working with real estate, investors and business owners. And he will be talking about another way that the IRS is picking on us and attacking us, and how to make sure we keep them out of our way and keep them from bothering us. And I think you’ll be interested in that. And then last but not least, we have one of our clients who will be on this show today. And that is Richard Lily crop frequent listener. And Hi, Richard, I’m sure you’re probably listening now from England, who would be talking about some of his reasons for investing in American real estate from abroad, the currency exchange rate issues, and why he likes American real estate so much. So I think you’ll enjoy that First, the seeds of success by augmon Dino. Now, this is a story and I would highly recommend you get the book I believe it’s out of print, but you can still find it on the internet. And I was able to find the tape Yes, the cassette tapes and buy them used on the internet. I couldn’t find them new and I, someone must have borrowed my version of it from long ago. But I used to listen to this multiple times a day and it was really, really inspiring for me, just in setting my mindset, right. I used to listen to it every single morning. And I think you will really like this. This is a story about a young man who during World War Two was stationed over in England, and he met an older woman who became his mentor. And she mentored him and helped teach him about life and success and good mindset and a good attitude and all of these things and when he left England, she gave him this book called The seeds of success. And in this book was this beautiful little verse that you’re about to hear. It’s about five minutes long. And we’ll just start with the part where he is opening the gift as he’s leaving England. And then he will read the seeds of success. And then we will go on with Peter after that, and then our client from England. So listen, and I think you’ll enjoy this. And you may want to just play it over and over and over because it is really inspiring, and really beautiful.
Excerpt from Og Mandino’s book 9:41
Our enlisted men were already engaged in a serious poker game when I see 47 transport lifted off from Scotland’s Prestwick airport early on the first day of the new year. Bob had his clipboard out and was writing another letter to his wife. Hank was agonizing over a crossword puzzle, and Tim had his face against one of the small windows gobbling at the Atlantic Ocean five below. Winning. I reached into my travel bag removed her gift that I had carried close to my heart on that last mission. I carefully peel the gold foil away from a thin red leather book. On its jacket cover, and Boston goal were the words the seeds of success. clipped to the cover was a letter dated December 119 44.
Excerpt from Og Mandino’s book 10:27
Heirloom. By the time you open this package, there probably be an ocean between us. But neither distance nor time will ever really separate us. Here with all mine is this tiny book. I’ve asked many papers of you and you have never disappointed me. I now ask one more the most important of all, every morning. Take a few minutes to read exceeds Success. When you do, you will plant seeds of love and sharing and courage and perseverance into your subconscious mind that will produce a glorious harvest throughout the day. Because you have programmed yourself for success, not failure. For joy, not haste. Forgiving. Later in your life, after you prove to yourself that using the seeds of success as born good fruit, you are free to share them with the world if you wish. Providing that you’re willing to offer yourself as a living example of their back. When and if you do, just tell them that it was your legacy. An old lady who loved you very much. God bless
Excerpt from Og Mandino’s book 12:03
I folded the leather carefully and tucked it away. Then I began to read the words in the little book. Except for two days, when I was recovering from surgery, there has not been a day in the past 40 years when I faced the world without first reading these words from the seeds of success. God, I thank you for this day. I know I have not accomplished as yet all you expect of me. And if that is your reason for baby me in the fresh new of another dawn, I am most grateful. I am prepared last to make you proud of me. I will forget yesterday, but all its trials and tribulations, aggravations and setbacks, angers and frustrations. The past is already a dream from which I can neither retrieve a single word nor erase any foolish deeds. I will resolve However, if I have injured anyone yesterday through my thoughtlessness, I will not let this date sunset before I may come in. And nothing I do today will be of greater importance. I will not let the future my success and happiness does not depend on straining to see what look dimly on the horizon. But to do this day, what lies clearly and I will treasure this day for as long as I have. I know that it’s rushing hours cannot be accumulated or stored, like precious grain for future use. I will live as all good actors do when they are on stage. Only in the moment. I cannot perform at my best today by regretting my previous act mistakes or worrying about the scene to come. I wouldn’t embrace today’s difficult tasks, take off my coat and make dust in the world. I will remember that the busier I am, the less harm if you have to suffer. The tastier will be my food. The sweeter my sleep and the better satisfied I will be with my place in the world. I will free myself today from slavery to the clock and calendar. Although I will plan this day in order to conserve my steps and energy, I will begin to measure my life indeed, not yours in thoughts, not seasons in feelings, not figures on a dial. I will remain aware of how little it takes to make this a happy day. Never were like pursue happiness, because it is not a goal, just a byproduct. And there is no happiness in having or getting only in giving. I will run from no danger I might encounter today because I am certain that nothing will happen to me that I am not equipped to handle with your help. Just as any gem is polished by friction, I am certain to become more valuable through this day’s adversities. And if you close one door, you always open another funny. I will live this day as if it were Christmas. I will be at give a gift and deliver to my enemies. That gift of forgiveness. My opponents, tolerance, my friends, a smile, my children a good example. And every gift will be wrapped with unconditional love. I will waste not even a precious second today in anger or hate or jealousy or selfishness. I know that the seeds i saw i will have it because every action, good or bad is always followed by an equal reaction. I will plant only good seed this day. I will treat today as a priceless violin. One may draw harmony from it and another discord that no one will blame the instrument. Life is the same. If I play it correctly, you will give forth the beauty but if I play it ignorantly it will produce ugliness. I will condition myself to look on every problem I encountered today. As no more than a pebble in my shoe. I remember the pain so how I could hardly walk. And recall my surprise when I removed my shoe and found only a grain of sand. I will work convinced that nothing great was ever achieved without enthusiasm to do anything today, that is truly worth doing. I must not stand back shivering and thinking of the cold in danger but jump in with gusto and scramble through as well as I can. I will face the world with goals set for this day, but they will be attainable one, not the vague, impossible variety declared by those who make a career or failure. I realized that you always try me with a little first to see what I would do with a lot. I will never hide my talent. If I am silent, I am forgotten. If I do not advance, I will fall back. If I walk away from any challenge today, my self esteem will be forever scarred. And if I cease to grow, even though I will become smaller. I reject the stationary position because It is always the beginning of the end.
Excerpt from Og Mandino’s book 17:03
I will keep a smile on my face and in my heart, even when it hurts today, I know that the world has a looking glass and gives back to me the reflection of my own soul. Now I understand the secret of correcting the attitude of others, and that is to correct my own. I will turn away from any temptation today that might cause me to break my word, or lose myself respect. I am positive that the only thing I possess, more valuable than my life is my honor. I will work this day with all my strength, content in the knowledge that light does not consist of wallowing in the past, or peering anxiously at the future. It is appalling to contemplate the great number of painful steps by which one arrived that accrued so old, so obvious, and so frequently expressed. Whatever it offers a little on my my life is now I will pause Whenever I’m feeling sorry for myself today, and remember that this is the only day I have and I must play it to the fullest but my path may signify in the great hole I may not recognize. But I am here to play it. And now is the time. I will count this day, a separate life will remember that those who have fewest regrets are those who take each moment as it comes. For all that it is worth. This is my day. These are my seeds. Thank you, God for this precious garden of time.
Jason Hartman 18:42
Well, did you enjoy the seeds of success? Isn’t that just a wonderful thing? Play it over and over I highly recommend it. I have heard it thousands of times and I just love it. One of the parts I love the best is where it says I will live as all good actors do when they are on stage only in the moment. I cannot perform at my best today by regretting my previous x mistakes or worrying about the scene to come. And then one of my other favorites is I will treat today as a priceless violin. One way draw harmony from it and another discord yet no one will blame the instrument. Life is the same and if I play it correctly, it will give forth beauty. But if I play it ignorantly it will produce ugliness. At the end, he says, I will remember that those who have fewest regrets are those who take each moment as it comes for all that it is worth. So enjoy the seeds of success. Get the book, if you can find it in you’re lucky enough to get the audio version because I think that’s particularly inspiring. And just read it over and over play it over and over augmon Dino is just wonderful man just did a great job with that. So thank you talk.
Let’s talk to Peter Gregory. And let’s hear a little bit about the IRS and what they are doing to that. Holy Grail of tax benefits, that real estate professional status now, as an investor, this does not necessarily have anything to do with having a real estate license or being in the real estate business as a broker, a salesperson. This is a status that is available to real estate investors. And it can really help you save on life’s largest expense. But the IRS You know, they’re hungry for money and they are cracking down a little bit on this. So I want you to hear from the expert just for a few moments hear about what’s going on there. And then we want to welcome our client Richard Lily crop and the show with that and thanks so much for listening. Here is Peter. It’s my pleasure to welcome back a prior guests Peter to Gregory CPA based in Newport Beach, California, with vertical advisors and you can visit his website at vertical advisors calm I want to say before Before we get into the topic of the dates day, that Peter is a tax expert, however, remember that this is group tax advice. So it’s general in nature, and your tax situation may be different. Taxes are a complex subject. So whenever you hear here on our podcasts, this one or any of the podcasts for that matter, be sure you talk with your individual advisor, or call Peter’s office and retain him for your individual advice. So that all of the advice is tailored to your specific situation. Peter, welcome.
Peter DeGregori 21:34
Thanks, Jason. Thanks for having me back.
Jason Hartman 21:36
Great to have you here. You know, I’ve been seeing a lot lately about what seems to be the holy grail of tax benefits. That status of real estate professional as it is called by the IRS, and the IRS seems to be getting a little bit more picky about this tax benefit and in terms of who qualifies and who doesn’t tell us what’s going on there.
Peter DeGregori 21:57
Yeah, good. Good question. I’ve received a lot of phone calls from my clients also, here’s what’s happening is the US economy is not as good as it’s been Congress is looking for some more money. So they’ve asked the IRS to go find some more money. And one of the areas the IRS is looking at is real estate professionals because if filled out properly on your tax return, it reduces everyone’s taxes.
Jason Hartman 22:21
Yeah. Excellent. And you know, Peter, one thing I want to say again, to our listeners is, don’t get bored with this issue of taxation because it is life’s largest expense. So it is so please listen carefully to what we’re talking about today because I think it can really benefit you. Okay, well tell us more.
Peter DeGregori 22:37
Well, so what I want to go over briefly in the next five minutes or so, is just giving the listeners a little bit more information on the real estate professional status is not changing. The IRS is looking at it more. So what do you need to know to make sure if you do get audited, what is the actual law?
Jason Hartman 22:55
Okay, so in other words, what you’re saying is, it is still possible to qualify as a real estate professional and get all of the wonderful tax benefits that go with it. The question is, the qualifications are being judged and scrutinized a little more closely by the IRS. Right, exactly. Okay, good. Well, we have a prior podcast on this subject that any of these listeners if they want more detail, because we won’t have time to review it all today, right, as to real estate professionals, so go back and listen to when I had Peter on last time. There’s a podcast back there. Just look up the prior podcasts about it. But go ahead.
Peter DeGregori 23:32
Yeah, I think it was number 28. podcast
Jason Hartman 23:33
number 28. Thanks down there.
Peter DeGregori 23:35
So here’s what happened. Probably a couple months ago, there was what’s called a Tax Court memo that was issued by the IRS and the IRS went in and audited a husband and a wife and found out improved that the wife who was apparently supposed to be the real estate professional didn’t qualify. And the Tax Court summary opinion is Harmon h AR mln versus Commissioner. So if you want google it or go to the IRS website, and you can read it yourself, but here’s the overall issue is the spouse had two jobs, she had a full time job work 2000 hours, and then she had a part time job. And they only had one piece of rental property. And on their tax return, they wrote down that they qualified as a real estate professional. So I can see the problems here right away and correct me if I’m wrong, but how could she possibly spend another 750 hours a year being a real estate professional, working 2000 plus having another part time job and who knows how many hours there? And then number two, one rental property? How are you going to justify 750 hours to the IRS with one measly property? I agree, in my opinion, impossible. So just kind of the highlights here is it just didn’t meet the smell test and the IRS went in and they caught it for audit. They actually went to the spouse’s employer and said, show us how many hours she worked. They qualified that she worked over 2000 hours and they said, Look, you have to work more hours in real estate. And you’ve already worked 2000 hours in your job, and you have a part time job. So let’s just round it to 2300 hours. So you need to prove to us that you’ve worked over 2300 hours on your one property, wow, wasn’t able to do it. So just make sure it makes sense. I don’t think that there’s an exact number of how many pieces of real estate that you need. But here’s some important facts to remember, the more properties the better, because it’s going to be easier to get to real estate professional status.
Jason Hartman 25:43
And I’ve heard and it’s great that you don’t want to name a number because there is no number and that’s good that you don’t name a number, but just to put it out there. I have heard other tax advisors say that you really got to have at least 678 properties to justify the title. Time, if you want to make a comment feel free.
Peter DeGregori 26:02
Yeah, I just wanted to, I think it depends if you have a property manager or not, I have some clients that have enough time and ability that they actually manage all their properties. So they’re going to be able to get their hours much quicker. But if you’re going to be not as involved, then you’re going to have property managers. And definitely the larger number of properties is going to make it easier for you to get those hours. So we’re going to go briefly just over the real estate professional and make sure everyone remembers it. And here’s the law. It’s in Internal Revenue Code Section 469 c seven for anyone that wants to read it. The law hasn’t changed. The IRS we’re seeing is auditing no more. So if you may have potential exposure, make sure you have your ducks in a row. Make sure you have your logbook, and your logbook is going to have to prove that you’ve worked over 750 hours in real estate And if you have a job, more hours in real estate than all your jobs combined,
Jason Hartman 27:06
Okay, so Peter, a lot of clients get confused on this because I hear them ask that question all the time. You don’t have to have a real estate license or be a realtor to do this. Right? Correct. Okay, because you said worked in real estate. So I just want to be careful what’s really worked on investing in real estate and learning about real estate right or
Peter DeGregori 27:25
Yeah, so if you’re a real estate investor, you own properties and you rent them and you collect rents. Then the hours that you spend on those real estate, doing rehab, talking with your property managers, going to real estate seminars, all these things are going to add up talking with potential renters, reviewing lease agreements, all those different things, but there’s other ways of becoming a real estate professional. If you own your own business and you’re a real estate agent or a broker, that’s probably going to qualify you if you’re a contractor. Your own your own business, those hours working in real estate are gonna help you get to real estate status. So again, this is where you need to understand the rules and talk with your tax advisor.
Jason Hartman 28:10
And a lot of our clients, what they do is they just keep, you know, an Excel spreadsheet in their computer. And every time they come to one of our seminars, they write that down in a time. So you know, no more criticism about my seminars being too long,
Peter DeGregori 28:23
right. And I’ll just give you one last example here. I have a couple clients that are under IRS audit under this exact issue. And one of the ladies said, Hey, you know what, maybe I’m going to just let the IRS when it’s gonna just be a waste of my time for me to pull together all this information. Now, I didn’t like to hear that because I want clients to get the benefit. So when I briefly told her if she left the IRS when it was gonna cost her about $20,000 in taxes, she decided that it was worth it for her to go through and pull all the information so look at it’s easier to do it and write it down when you’re actually doing it. So go and write it down, put it in a logbook put a brief comment example of what you were doing. And that should be enough support much better than not having one. And in this case, this lady didn’t have a good enough logbook there was impossible for her to get the hours which is only one property. So consider if you have enough properties and consider if you are truly a real estate professional.
Jason Hartman 29:23
Alright, I’m sure that was helpful to you hearing about the real estate professional status. And we have a lot of stuff coming up on taxation, on creating wealth on lease options as a way to improve your cash flow in your rental properties. And just a whole lot more coming. So keep on listening to future shows.
Now let’s go to our client from across the pond as they say, and welcome Richard Lily crop from England. We wanted to do something kind of different today and talk to one of our clients from overseas. So we’ve got Richard Lily crop on the phone Richard, welcome.
Richard Lillycrop 30:00
Thank you, Jason,
Jason Hartman 30:01
Good to speak with you too. I know you’ve been a podcast listener, and we appreciate you listening. And we’re particularly fascinated and wanted to have you address a little bit, the subject of why you were interested in American real estate, and maybe the issue of the exchange rate and so forth.
Richard Lillycrop 30:17
Okay. Well, basically, it comes down to figures simply, the rental returns here in the UK are pretty short compared with similar properties in the US, you can typically get like a double rate of return, and the property is half the price.
Jason Hartman 30:33
That is really amazing. I’ve long felt that American real estate is really in many areas not in of course, overpriced bubble markets, is still really a bargain when you look at it on a global scale. That’s interesting that you noticed that how did you happen to find us by the way,
Richard Lillycrop 30:48
Hopefully, middle of last year, I was listening to quite a few businessmen investing podcast. I’ve done a real estate search and basically your podcast came up after listening to a few I registered on your website. And that’s when she called me back to discuss what I was interested in buying.
Jason Hartman 31:06
Excellent. Well, we’re glad to have you as a client. And now you’re on the the pound. So you live most of your life in pounds, not euros, right?
Richard Lillycrop 31:15
Yeah, that’s correct. Yeah.
Jason Hartman 31:16
In England, are the mortgages denominated in pounds also, because I know many European countries, even if they’re not on the Euro, they denominate mortgages and larger assets in euros sometimes.
Richard Lillycrop 31:28
Yeah, everything in the UK is pound.
Jason Hartman 31:32
Okay, great. And so how is that exchange rate change for you, Richard over the past few years?
Richard Lillycrop 31:37
Well, I can remember when I was younger, going on vacation to the US. And it was probably about one and a half dollars to the pound. But recently, I’ve seen on the news, it’s like 2.1 to the pounds pretty amazing exchange rate at the moment.
Jason Hartman 31:53
Yeah. And you know, I think that’s actually going to even get a little bit more favorable for you, unfortunately for us in ways
Richard Lillycrop 31:59
Yeah. I’m wondering How far it’s gonna go.
Jason Hartman 32:01
Our government, as you know, has been extremely irresponsible with their spending. And the only way to sort of get out of this mess is to devalue the dollar. The currency that seems to be the only way out Really? Yeah. Yeah. So the rental returns are about double in the States. Have you looked at other countries as well as the US?
Richard Lillycrop 32:20
I haven’t actually, there’s been a lot of hype recently here about Eastern Europe, Romania, Bulgaria. But I haven’t really looked at those markets. I like for us because it’s the one the size is just so big and established. And it’s just so stable as well.
Jason Hartman 32:38
Right. And the legal system is so transparent here. I don’t know. Richard, did you happen to catch the podcast I did on my Eastern European tour?
Richard Lillycrop 32:45
I did. Yeah.
Jason Hartman 32:46
Yeah. I don’t know what you thought of that. But I felt that Romania was probably the best out of all of those, but still speculative. And yeah,
Richard Lillycrop 32:54
I think there’s some big gains to be made, but you’ve really got to be brave to give it a try.
Jason Hartman 32:59
That’s Good way to put it brave, brave and know what you’re doing and a lot of management attention because I heard lots of stories about corruption and payoffs and that sort of thing over there. So,
Richard Lillycrop 33:11
Yeah, my reason for choosing the US as well was also the language.
Jason Hartman 33:15
Yeah, that’s a good thing. Of course you speak English better than we do, by the way.
Richard Lillycrop 33:18
Sounds so much nicer
Richard Lillycrop 33:20
It’s cause I’m doing it longer.
Jason Hartman 33:22
I love it when you call a company and they have a British person answering the phone or on the voicemail. It’s so classy. It’s wonderful.
Richard Lillycrop 33:30
The American accent us this was good for us believe me.
Jason Hartman 33:33
Really. Wow. Okay.
GE 33:34
We don’t have the accent.
Jason Hartman 33:35
Yeah, we don’t have an accent.
Jason Hartman 33:37
GE has a question for you.
GE 33:38
I just wanted you know, you mentioned the rental rate was different if you can just give us a comparison because you purchased the house in Austin. Yeah, what was the price of that property?
Richard Lillycrop 33:48
$171,000.
GE 33:50
And what rent are you getting on that
Richard Lillycrop 33:52
rent is 1250 a month.
GE 33:55
So you’re saying a property that price in your area would be about 650. Half that? What Yeah,
Richard Lillycrop 34:02
okay, yeah, I can give you an example. I’ve got the first property I bought, but a couple of years ago now, I bought it for 118,000 pounds. So I guess $230,000 and I’m guessing 525 pounds a month.
GE 34:20
Wow.
Jason Hartman 34:21
how much were you able to borrow on your us purchases? Richard?
Richard Lillycrop 34:26
I could borrow up to 70%. Okay, so put a deposit down of 30.
Jason Hartman 34:30
So 30% down for a foreign buyer. And that’s good. You still get a lot of leverage. And remember, one thing we always say is denominate your debts in dollars or any other depreciating currency and denominate your assets in hard assets. Like the real estate, the the property, the commodities within the structure, the house sitting on the land. So that’s a good thing. And how did it go in terms of getting your property rented in Austin? Austin was the first one you bought and I know you’re doing another transaction through us as well in Ohio.
Richard Lillycrop 35:01
Yeah, I found often to be very quick. The property closed November, middle of November last year. And it was leased by the middle of December. So basically one month from closing.
Jason Hartman 35:12
Yeah, good. So that was really fast. What interests you about real estate as an investment vehicle?
Richard Lillycrop 35:18
I think it’s fantastic. Basically you put down what is a small percentage of the property costs for bank then lunch of arrest for tenant pays your mortgage for you. And then every pound or dollar that the property goes up in value is basically yours.
Jason Hartman 35:35
Isn’t that great? I mean, there is just no better equation than the than the care. I always say that real estate is different because it has special characteristics. And as we’re talking now, Richard, I’m sure you’ve looked at the financial markets today. It seems like we’re in a big mess as far as the stock market. And I don’t think that’s going to get much better anytime soon.
Richard Lillycrop 35:55
No, I saw your mortgage rate came down today or your interest rate.
Jason Hartman 35:59
Yeah. You know what that means. So it means more inflation and devaluation of the dollar. So that 70% loan you have on that Austin property and in the next one for your Ohio property keeps getting cheaper to pay back. That’s a great deal. Yeah.
GE 36:13
I have a question for you. Have you looked into working with other investor networks? And if so, how did Platinum investor network differ from those?
Richard Lillycrop 36:20
I haven’t dealt too much with other networks. Basically, the three properties I have here in the UK, I’ve sort of done the work myself looking into markets and stuff. I did have an off plan investment but didn’t actually go through last year. But basically, once the company signed me up, then I didn’t really hear anything. After that. I was just sort of left on my own.
Ge 36:46
Oh, I see. Okay, so would you recommend Platinum investor network to your friends and relatives?
Richard Lillycrop 36:51
Yeah, totally. Yeah. Yeah. Great. Good. Well, yeah, basically from from the initial market. recommendation from yourself in the cheers proxy right through to the leasing process of the property manager. Everyone has been just totally professional and the communication is excellent, especially with being such a long distance away.
Jason Hartman 37:10
That’s what’s so great about today’s world, you know, email and the internet makes it all so easy, doesn’t it?
Richard Lillycrop 37:15
Yeah, totally. Yeah, good. But communication has been just fantastic. And even after leasing a property, platinum properties have kept in contact to check everything’s okay. Excellent.
Jason Hartman 37:27
Thank you for your kind words on that. Richard, are there any things you’d like to see us do differently or any services we should add?
Richard Lillycrop 37:34
That’s a tough question. Really. I don’t know if I change anything. Maybe the only addition would be like a tax advisor. As part of your group, someone you could just speak to who would know, just the basics of like non-resident investor question, someone you could just fire questions to.
Jason Hartman 37:52
Oh, yeah, that’s no problem. We’ve got that already. kurachi we’ll get that for you. After we’re off the call here. We’ve got a couple different advisors that can help you there.
Richard Lillycrop 37:59
Okay. Excellent.
Jason Hartman 38:00
Richard, I think that this is really one of the best things for foreign investors. I think that the foreign investors have a real leg up on buying American real estate in undervalued markets where the land is really cheap. And where you’re borrowing the money, the currency is devaluating. We think it will continue to devalue a lot more. And it’s just a great thing for you. It’s kind of like you’re arbitrage in the currency. But you’re doing it with the bank’s money mostly, or at least 70%. is with the banks and then the tenants money paying the bank back for you.
Richard Lillycrop 38:33
Yeah, exactly. Yeah.
Jason Hartman 38:34
Yeah. So it’s a good thing. Any words in closing you’d like to mention about that or anything else?
Richard Lillycrop 38:39
Well, I guess just a quick comparison of the two markets here in the UK, the land probably makes up over half of the total value of the property. So it’s pretty lucky to be able to buy the property so much cheaper, all the land effectively, so much cheaper in the US.
Jason Hartman 38:56
Right, and I’m sure you’ve probably listened to the podcast. We did on risk evaluation model where cheap land lowers your risk dramatically and expensive land becomes much more speculative and risky actually.
Richard Lillycrop 39:09
Yeah. yeah. Good.
Jason Hartman 39:10
Yeah, that’s a good thing to notice. Well, Richard, thank you so much for being on the podcast today. I’m sure our listeners all over the world will appreciate your thoughts and your perspective on it. And we appreciate you. Thank you.
Ge 39:21
Thank you, Richard. And we will definitely be in touch.
Richard Lillycrop 39:24
Great. Thanks very much.
Jason Hartman 39:25
Take care of Bye. Bye. Thanks so much for listening today. Stay tuned for a few announcements and happy investing.
Investor 39:33
Hey, so we’ve been Platinum members for a couple of years down and we’re just real pleased with the way things are working out.
Investor 39:40
We can’t be happier and it’s really changed our lives for the better.
Announcer 39:44
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Jason Hartman 41:55
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Announcer 45:43
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