Holistic Survival
Welcome! If this is your first time visiting Jason Hartman's website, please read this page to learn more about what we do here. You may also be interested in receiving updates from our podcast via RSS or via email if you prefer. If you have any questions about financial survival feel free to contact us anytime! Thanks!

How the Coronavirus will Change Real Estate Investing

Bookmark and Share

In the following interview transcript Jason Hartman discusses how the Coronavirus (COVID-19) outbreak will impact the economy, lead to migration of the American population away from cities, and increase demand for single family rental properties over the next few years.

Jason Hartman 2:32
So we are in absolutely crazy times right now. And it has been a very busy couple of weeks. I guess. The first thing I want to say about pandemic investing, is let’s get some perspective here. Folks. Just think about the way the world was three weeks ago, three weeks ago. I mean, if you lived in the US, not in China, obviously that was you You’d have to look back further than that. But if you lived in the US, and in you know, three weeks ago, the world was a totally different place. You know, before the financial markets went crazy and kind of caught this, this story and and everything. And I think I think this really is going to be a generational change. I think we are going to remember this for a generation. And it is it is going to change everything. But at the same time, and I don’t mean all in a bad way. At the same time, I think this, interestingly, could blow over rather quickly. This is the first self induced recession that we’ve witnessed, at least in probably anyone’s lifetime who’s listening at all. So it’s, it’s a very different set of circumstances. It really is. So anyways, I’ve literally just tried to prepare this quick set of slides to sort of go over some of the thoughts. And Mike, I can dive into that now or maybe if you have any specific questions, we can talk about those first and then we can dive into this whatever you like.

Michael 4:18
Yeah, no, no worries. Go ahead in, you can go ahead and dive in. And maybe we’ll have a few questions at the end.

Jason Hartman 4:24
Okay, sounds good. So, pandemic investing. I mean, I never really thought we’d be talking about this one. But we are we are living in very different times. I think we are already witnessing the biggest money printing extravaganza in world history. And there’s just going to be more and more of it. I think the response is really an overreaction. But it needs to be a fast reaction. And that’s what’s different about the way this is working. out. I think we have already begun a recession. There are people out there who say we might go into a recession. I mean, are you kidding me? Okay, I’d love to be optimistic as much as the next person, but give me a freaking break, right? You cannot shut down the entire planets economy and put it into hibernation mode and expect to not have a recession. You’re nuts. Okay. That’s, I mean, I don’t know in six months. Am I going to regret saying that? I don’t think so. But that’s possible. You know, maybe we won’t go into recession. Right, but doesn’t seem possible to me at all. It doesn’t seem possible to me at all We are, we are definitely going into a recession. Okay. So we are going to see stimulus and we’re already seeing stimulus or calls for stimulus, the likes of which will dwarf the Great Recession. Just over 10 years ago, you know, whether it be free money, meaning loans that are essentially free. Now granted, those haven’t hit the consumer yet, certainly. And they may never completely hit the consumer when you think of zero interest rates, but they don’t have to all they need to be as low interest rates. And I did a show on my podcast just a couple of weeks ago about that, where one of our clients purchased a rental property through our network and explained that he got an interest rate of 3.5%. And we demonstrated how after inflation and taxes, he was, he and his wife were actually getting paid to borrow the money. They were getting paid to borrow the money, about a quarter of a percent and this is the math on that. It’s really quite simple. Okay, if you’re paying three and a half percent on a tax deductible mortgage loan. All right, then you take 1.75% of that, which is half of three and a half. Right? Right. And that is your approximate tax deduction, depending on your tax bracket and, and what state you live in, you know what your state taxes are, right? So let’s just call it 50%. for round number sake, it might be a little lower than that if you don’t live in the Socialist Republic of California, or New York, where I used to live in in California. And so your tax bracket will be a little lower, but it’s close enough, right? And the inflation rate, you know, the feds target inflation rate is 2%. So you take 2% plus 1.75%, that’s 3.75%. And if you borrow the money at 3.5, you’re actually getting paid point five to take out the loan. That’s amazing. Now, here’s what’s even more amazing Look, we’re both real estate investors. And hopefully a lot of people listening are real estate investors because I said yesterday on my show and you know, maybe it’s a bold prediction, maybe maybe I’ll look like a quack later. But I said that income property will be the best performing asset class during this crazy systemic period and the recession we’re going into with the possible exception of Clorox wipes and toilet paper those might outperform income property.

Michael 8:32
Yes, yeah, fairly toilet paper is the cure for the coronavirus, guys.

Jason Hartman 8:37
Yeah, it must be you know, people in China are making mass facemask out of toilet paper. So whatever. So, so, so the money is is already it was already free before this, okay. And it’s going to get cheaper now. Right now we’re in a little bit of a weird time. mortgage companies are so busy with refi request, that they’re literally raising their interest rates on mortgages they’re offering to drive business away. That’s crazy. That is so crazy.

Michael 9:11
Yeah. And it makes sense because you know, the demand is up, right? So they’re gonna capitalize and since the Fed has dropped their rates is a great time to be a lender.

Jason Hartman 9:19
They, they, they cannot handle the demand, they cannot handle the business. So it’s a it’s a really, really weird time for sure. It really is. Okay, so there’s that. Now, let me ask you also, how much time do we have? Because I want to kind of time this out in terms of the things I want to discuss.

Michael 9:38
Oh, yeah. I mean, so I planned it about an hour, but I mean, I have as much time as you need. We’ll

Jason Hartman 9:44
finish we we don’t need an hour. We don’t need an hour. I hate you know, 20 minutes. So I think we’ll we’ll cover the main stuff. And again, one of the problems with doing a presentation on this right now, is it’s like the weatherman. There was this weatherman somewhere kind of famous that you To say, T T T, it’s too early to tell. And that’s the problem. We are very early in here, like literally two or three weeks from now is going to make a big difference in like, if I was giving this presentation two or three weeks from now, and everybody, you know, really responded to the quarantine and the the infection curve flattens out. This may be a lot different in two or three weeks. Sure, that’s how quickly that’s how sensitive This is to time. So it’s the first self imposed recession by choice, and it’s the quickest Normally, you know, you go into a recession with a little more warning, you know, there are signs you can see, you know, I mean, in 2002 2003, I was predicting a mortgage meltdown and I thought that was actually pretty easy to predict even though people argued with me. But, you know, you could just tell like, Look And I owned a mortgage company then all these adjustable rate loans were were originated at these times where the rates dipped. And they were three and five year arms meaning they were going to adjust in three and five years and I knew people would get payment shock. That seems sort of easy to predict what I that was the mortgage meltdown which was really phase one of two of the of the Great Recession just over 10 years ago. The phase Oh God, don’t touch your face. Wow. just face

Michael 11:36
it right.

Jason Hartman 11:37
I need to wear like things like babies where they can’t patch their brains, right. Where’s the hand sanitizer? Oh, wait $50,000 a

Michael 11:46
bottle. It’s a good thing that we’re doing this originally

Jason Hartman 11:49
is don’t sneeze Mike even even now I’m worried. But anyway, what was I saying here? That’s the problem. You know,

Michael 11:58
we were talking about predicting Before it was easy to predict, yeah, you saw things like arms now it’s like crazy.

Jason Hartman 12:04
So back to the Great Recession, what I didn’t predict and what very few people did was the second phase of it, which was the games that wall street was playing. I didn’t know about all that. I knew the mortgages were ridiculous. That was easy. But phase two, which is really the subject of the book, and the movie, The Big Short, that, you know, I didn’t know that was going on behind the scenes until afterwards and we learned a whole bunch of new acronyms. Okay. So back to looking at the screen here. Okay. So basically super cheap or free loans where you’re literally getting paid to borrow that client I told you about with a 3.5% 30 year fixed rate mortgage. If he and his wife never rent that property out. If they leave it vacant. They will get paid to borrow that money. That is absolutely weird. Okay, that is absolutely. It shows you the time we’re living in it. is absolutely extraordinary. Okay. On the airlines, they want $50 billion, they’ll probably get it. Maybe even more. Who knows? You know, everybody’s probably gonna get a check for 1000 bucks from Uncle Sam here pretty soon the Federal Reserve is adding $500 billion per week for short term loans. You know, these are things that go on behind the scenes, you know, into the repo market, and they have other facilities to do this that I don’t even understand. Okay. But it’s an absolutely crazy time. These are extraordinary times. One of the things I think we all have to realize, though, is we have to distinguish a couple things. We have to distinguish number one, the disk and a lot of people are lumping these together out there and I see these people, you know, on the news, lumping everything together, you got to separate it or you can’t make sense of it. So one issue is The virus itself, okay. And, you know, God forbid, hopefully more people won’t get sick. You know, who knows what will happen with the actual virus itself and the strain on the medical system around the world? What’s going on in Italy? Absolutely tragic. What’s going on Iran, tragic mass graves, satellite images of these mass graves, They’re digging, you know, the numbers are unreliable. So, you know, nobody knows what the effect is yet in terms of the actual virus in terms of the actual medical and life impact, okay. But when we look at the economic impact, we have to look at the direct impact impact, the quarantine the self imposed quarantine the self imposed recession, and, and all of that, okay, obviously, just immediately, you know, restaurants, tourism So many things are just movie theaters, their business just overnight, it’s gone. This is unheard of. We haven’t been here before. This is absolutely uncharted territory. And and then the indirect or the induced economic impact, okay. And that’s the hit all the suppliers and producers take. So all of the all of the people that supply stuff to the restaurants, the movie theaters, I mean, movies are being canceled, right? They weren’t going to, they were going to premiere but they know there’s no box office anymore. So they’ve just delayed the launch of those movies. And so there are so many follow on effects that we’re just starting to see them but there’s gonna be a lot more. Okay, so so that’s a big deal. Now here is what’s really Rare about what’s happening right now. And it is this rare economic malady called supply and demand shock. Many times when we enter bad economic cycles,

we we enter them from one side or the other. Okay, for example, maybe unemployment is high, maybe interest rates are high. Maybe the stock market isn’t doing well. And real estate isn’t appreciating, and there isn’t what we call the wealth effect. Okay. So consumers, which is about 70% of the American economy, okay. And the American economy is the one to talk about because it’s the biggest economy on Earth. Okay. And the consumers tighten their belt. You know, they don’t feel comfortable spending money. They’re worried about spending money so they pull in their horns, they tighten their belt, they contract, and they think oh better save for a rainy day, you know, we just don’t have extra money. We’re living paycheck to paycheck, whatever. So they’re just not out buying stuff. Okay? That’s demand shock. Okay. And that’s typically the way it works. Okay? People can’t qualify for loans to buy houses, they don’t buy houses. Right? Right. But what we have now or maybe we don’t have it quite yet, we’re seeing a little bit of it, but we’re gonna see a lot more of it. That’s my prediction is supply and demand shock. Okay. And that’s what we had in the 70s. And that led back then to stagnation. Okay, now there’s three basic economic maladies. There’s inflation, deflation, and stagnation. Okay? And stagnation is a particularly strange malady. And it’s a particularly ugly one too. We had that during the Jimmy Carter era. And what that is, is, is when you have a high unemployment, and generally kind of that bad economy I just spoke about, where you have demand shock, okay? And people aren’t comfortable spending money, but at the same time, you have high inflation. So interestingly, there’s not much demand for things. But they’re inflating in price at the same time. That’s rare, because usually when you have high demand, it’s because people have a lot of money, and you have a large amount of dollars chasing a limited supply of goods and services, and that causes inflation. That’s usually what happens in a booming economy. And we’ve certainly seen that over the past several years, where we’ve had high asset inflation, so stocks, real estate investments, inflating, inflating, inflating because everybody’s, you know, there’s a lot of money out there in the system. And so they’re chasing a limited supply of investments and the investments go up in value. Okay. But this time around, what I think we need to be really concerned about is the supply demand shock that might lead to stay nation, okay, where we’ve got a low demand and a consumer that is not feeling wealthy at all. And we’ve also at the same time got rising prices because the supply chain has been just decimated. And, you know, we’ll start with China, the workshop of the world, okay, the biggest manufacturing country on Earth, right. And, and, and so, there we go, you know, we just, you know, I mean, and, you know, interestingly one, you know, one of the silver linings that comes out of this is the environment is improving, because the economy is cratering. And so one of the ways you can look at how much China is producing, which is very little at the moment is by simply looking at pollution maps, okay, and look at satellite imagery of pollution, and the air is getting cleaner. And in, like, I saw a report yesterday about Venice, Italy, where Italy is on lockdown. And you know, for the first time, the water in the canals of Venice is clear. And you can see the fish because there aren’t there’s nobody polluting it. Okay. Oh, no, you know, like God beings do do take a toll on the planet, but they also solve

Michael 20:46
problems. Yeah, it’s a weird dichotomy. Yeah. Now I get that. That’s crazy, though. I mean, it’s not even something you would think of. But that’s,

Jason Hartman 20:55
yeah, well, there’s some silver linings to this right or silver linings to it. Okay. Any questions or thoughts so far? Before I get to Home sweet home?

Michael 21:03
So we have had a few questions come in, you know, one. So again, more tied to real estate. So one was how will landlords get paid by their tenants if they’re being affected by their jobs? Right. So Oh,

Jason Hartman 21:18
folks lose rate question. Thank you for asking that question. Well, on my podcast just today, I reported that there was a there was a release that I reported about that Fannie Mae, Freddie Mac and HUD, the Department of Housing and Urban Development, and the two biggest secondary mortgage markets, Fannie Mae and Freddie Mac government sponsored entities will not they’ve put a moratorium on foreclosures during the corona virus pandemic. Okay. So I guess that means everybody can just stop paying their mortgage, and many cities have put a moratorium on evictions. I guess everybody can stop paying the rent to so it’s about the same.

Michael 22:04
Pretty much. Wait, so So this moratorium this is I guess, just like a pause right or like, I’ve actually never heard that term before, but okay.

Jason Hartman 22:12
Yeah, absolutely there. It put paused all of that stuff. Okay. What I think this is all going to lead to is a much bigger push toward things that we’re going in this direction anyway. And I’m not saying I agree with him. I’m just saying it’s the way things are. We’re either going to see a nationwide housing program, like a section eight style Housing Assistance Program, that becomes maybe federally run, and just nationwide. Okay. That’s number one. Possibility number two possibility is we’re going to see a nationwide push toward universal basic income Okay, and there, there was some fairly decent cause to say that that was coming anyway. And Andrew Yang, the presidential candidate, who was on my show a few months ago, was one of the big proponents of that. And it was probably moving in that direction anyway, more because of automation, and the impact of automation that is coming, that’s going to be very significant on unemployment. Okay. And so, you know, there, there are some real push for that. Okay. And so I think, I think those two things are going to really come into public focus. And we’re going to see congressional votes on this stuff. And, and it’s going to happen. So the answer to your question is in the short term, I don’t know. Okay. They’re certainly tenants are going to lose their jobs, okay? But they’re also going to be getting thousand dollar checks. And you know, for your typical tenant, they will need a couple of those thousand dollar checks every month to be able to pay your rent if you’re investing in the right kinds of properties, okay? If you’re investing in, you know, penthouses in Los Angeles or New York, all bets are off, you know, I feel sorry for you, but you shouldn’t have purchased properties like that.

Michael 24:27
Right? I mean, that goes back to what we’ve been teaching, right? You gotta buy for cash flow. I mean, especially in times like this, right? Those you gotta buy for cash in New York are going to suffer. All right, absolutely.

Jason Hartman 24:39
of my 10 commandments of successful investing that by the way, is now up to 22. commandment number five is Thou shalt not gamble. In other words, the property must make sense the day you buy it or you don’t buy it. And listen, with all of this stuff. I think income property is going to be the best Performing asset class through this whole thing. And maybe I’ll take you to the next slide to talk about that. But I think he had one other question, right.

Michael 25:08
Yeah. I mean, they’re so they’re all, you know, related to housing. Well, one of them actually, this one came from Eric church, he is asking if you would agree that this is more of a 2001 type recession versus a 2008. So in other words, he says, you know, fundamental economic problem like over inflation, like you’re talking about that loans, I type of stuff versus the 2008 2007 on that we saw.

Jason Hartman 25:38
Did it did I write that? I think that you cut out a little bit, but I think I got the gist of the question. Look, some people are saying that this was nothing more than an excuse to sell off. Oh, wait, it’s not and many have talked about. Over the past couple of years, that we’re in the everything bubble, okay, that asset prices are too high and for the stock market and for cyclical real estate markets along the west coast of the US, the southern Florida market, Miami, Fort Lauderdale, and the expensive Northeastern markets New York, Washington, DC, Boston, etc. Those types of markets are already in a bubble. They were already declining. They’ve been overvalued for years. Right? And I’ve been saying that for years. Okay, those are the cyclical markets. But the good sensible linear markets that offer bread and butter, I can’t even talk bread and butter, basic necessity, housing, workforce housing. They’re, they’ve been doing fine because they’re not overinflated. Okay. Those are linear sensible markets. Okay. They will work. And I think those markets are going to do quite well through this actually. And I think that we’re going to see, well, let me make another prediction on the next slide. Okay. You didn’t see my slides, right. Okay. Yes. Yes. So, here’s one of the interesting things about this, is that as we’re looking at quarantines, as we’re looking at a market where everybody’s social distancing, where they’re afraid to be around people, it’s all been pushed to the home. Okay. In combat companies are telling their employees to work at home, don’t come into an office and spread an infection. Okay. Universities have closed. They have told people go study online, take your courses online. Okay. concerts, sports events on the public. presidential debates, okay, they’re having the debates in front of no audience. That’s true in theaters where the candidates are standing up there at a podium with a skeleton TV crew, and a moderator debating issues in front of empty seats. Wow. Okay. I mean, this is going to be the weirdest presidential campaign time ever. If you can’t have a rally, which is sort of the fundamental thing of you know what candidates do?

Michael 28:31
Yes, I mean, it’s like you’re sucking the energy from the room right which is,

Jason Hartman 28:36
you know, they get a lot of passion fire from so yeah, it’s it’s weird. It’s a It’s a strange time but crazy. Look at for years, we have been going through a retail apocalypse for 17 years. I have told people, it’s all about housing, housing, housing. Okay. I have said, look at their This is 17 years ago, I was saying this, okay? don’t invest in commercial properties. Why? Because they can outsource retail shopping to the internet. Did that happen? I was right. The retail apocalypse has been on us for a few years now. And it’s only going to get worse with this. Okay. Number two, they can outsource a lot of office work to the Philippines and India where they can get much cheaper labor. I mean, have you called tech support lately? You know, they answer in the Philippines or India right where these call centers are okay. They can outsource manufacturing. So that was a weight. The first one lessens the need for retail properties. The second one lessens the need for office properties. The third one is industrial properties. They can outsource manufacturing, and they have been for a couple of decades now to places like China, where the labor is cheaper. Okay, and by the way, the next bastion of big man Factoring outsourcing, and also to diversify, because now companies are thinking, you know, we got to diversify. We can’t depend all on China, what if they have an outbreak in China, and it hurts our supply chain? Right, you know, the next big place? They’re outsourcing to Africa. Okay, that’s the next big bastion of low cost labor for outsourcing. And I tell you, I did I’ve done a couple shows, when I hit recently, Africa is the burgeoning opportunity. Okay, big opportunity there. It’s a tough continent to deal with. Because you’ve got a lot of separate factions, a lot of different languages. Um, you know, considering the size of it, not a lot of coastline for shipping. So Africa has got significant problems, but that is also an opportunity at the same time.

Michael 30:48
That’s interesting. Where do you think in Africa like would be the I guess, the center or the influx? I like I’m thinking maybe South Africa because of the shipping but it seems kind of

Jason Hartman 30:58
part two. Yeah. South Africa’s pretty far away farm. Okay, but I know that it’s not just about the shipping, but it’s also work that doesn’t require shipping information products and so forth. So, yeah, you know, I don’t know enough about it, but you know, there are definitely bright spots like in Rwanda. You know, there’s there’s just a lot of interesting stuff. So you know, just remember Africa. Okay, cool. All this. That’s the saying, Okay. Okay. So here’s the thing, though. Home is becoming the center of the universe. Home sweet home. That’s where everybody is. And guess what? typical family of four. husband used to go to work. Wife maybe went to work, okay. kids went to school. Okay, maybe they’ve got school age younger kids, or maybe they got adult kids that are still living at home as they do nowadays. Right? Guess what, now they’re all there. 24 hours a day, seven days a week, stepping on each other’s toes. Okay, that’s gonna be interesting. This is not gonna work. So guess what? Now or picture this picture, two roommates living in a two bedroom apartment, or condo or something right. Now, both of their employers told them they went to work during the day. No, nobody was there. And they were home at night and, you know, very social activities at night. They might go in their separate ways right. Now. Those those two roommates have both of their employers that said you got to work at home. Oh, now Hey, roommate, I got to use your spare bedroom as my office space now. Okay. And then that roommate says, Well, yeah, I was thinking the same thing. I got to get my own place with two bedrooms so I can work at home. Okay, maybe their employers giving them an allowance to work at home a little extra money to pay for home office. Okay, so is the center of the universe. And this is going to benefit real estate investors in a huge way. Okay. Thank the US government for developing the internet starting back in 1969. Because without the internet, without the distribution of knowledge in bits and bytes, it would be very hard to do anything very productive at home. So okay. Faith popcorn, the futurist. She wrote a couple of books. I think they were very good. I read them years ago. And she back in the 90s was talking about the concept of cocooning. Okay, and how back then, people were not going to movie theaters as much because they had really great home theater systems. Well, look how much better they’ve gotten now. Right. Back then, it was a big projection screen. And the TV was like the size of two refrigerators. If you have one right now, it’s, you know, it’s lightweight, you can carry yourself and it’s 65 five inches and hangs on a wall. And it’s and it’s lightweight and it’s $400. Okay, it’s cheap. It’s not $5,000 anymore or $20,000 even. And so this cocooning trend is going to accelerate. Let me make another prediction for the style, like if anybody goes to Jason Hartman calm slash properties and looks at the style of properties we’ve been recommending for 16 years, okay. What they will see is typical suburban single family homes. And one of my predictions is that there will be a big migration toward that style of housing. People will be leaving, now, you got to wait till the quarantines over and so forth. But as the world returns to normalcy, people are going to think, you know, maybe I don’t want to live in a high rise in New York City, or a high rise in San Francisco or LA or Seattle or San Diego downtown? Okay, maybe I don’t want to live in a high rise in Boston or Miami. You know, maybe I want to live in a more suburban setting where it’s not so dense where I don’t have to get inside a germy elevator. And I don’t have to push the second germiest thing in the world an elevator button by the way. The first is the soap dispenser in the public bathroom.

Michael 35:26
That’s a great point.

Jason Hartman 35:27
Being a germaphobe I was way ahead of my time. Okay. Finally, my time has come. Now the world belongs to loners with OCD, okay.

Michael 35:42
They’re the ones that will survive this

Jason Hartman 35:45
will survive and everybody else gonna be dead or sick. Okay. There you go. Yeah. So, there is going to be in the prediction, a mass migration to lower density. style of living. Okay, how can you invest for that? Well, you know, that’s what we’ve been doing for years. Now I predicted what I called the rise of the suburbs. Okay, that’s what I was calling the rise of the suburbs. Okay. I predicted this several years ago. But when I was predicting it back then I was predicting it based on the idea of the self driving car of autonomous cars. Because it’s it’s less expensive to live in the burbs than it is in the city. Okay, with high density, right. But now there’s two reasons, not just one, the, you know, the self driving car, which isn’t quite here yet, obviously, but it’ll be here. We’ll make that commute if you want to commute into the city much easier, right? Because, you know, you go take a nap in your car or work in your cars, it drives you there. And you know, the idea of epidemics and pandemics and listen folks This is not going to be the last one, okay. There will be there have been there was h1 in one there was SARS there was, you know, man while swine flu this will not be the last one. Okay. But what it will do and and this could all blow over rather quickly. Okay. What it will do is it has changed the consciousness of virtually every human on Earth. And, you know, people will remember this, okay, and they’ll remember it for I think this is a generational memory. This is going to be one generation will change their thinking forever about housing, about work about virtual meetings. You know, I haven’t figured it out yet. But I think this is going to have a big impact on the online dating industry. So if anybody if anybody is in that world, it’s gonna have a big impact on virtual reality. It’s, you know, who knows? There’s just implications. We can’t even see it, but there’s gonna be a lot of them for sure. Yeah. Yeah. Okay. So here’s another slide. Okay. The response is bigger than the problem. Yeah. Frankly, I think the response economically speaking, I’m not saying medically, okay, remember, we got to differentiate that. I think medically, the response in the US has been kind of bad. In many ways South Korea seemed to do the best job of responding. You know, China, when they caught on, they did a better job. But South Korea really seems to be the star in the medical response. But I’m talking about the economic response, okay. The economic response, in my opinion, has been all out of proportion to the size of the problem. Okay. It’s the central bankers, the government They’ve gone nuts. They’re just this is like an overreaction. Okay, I could be wrong. Only time will tell. We will see but some silver linings to this. Okay, and I’ll wrap it up with this. Okay. And if you got any other questions, some silver linings, the response is bigger than the problem, virtual everything and I think this is going to put a nail in the coffin of the university debt enslavement complex as people will realize now that they’re studying at home and you know Harvard University and records and all the rest told them go take your courses at home, you’re going to be you’re going to be online learning now. Okay? They can’t have their college experience. Why are they paying $50,000 a year for an online course?

Michael 39:54
Yes. Great. Absolute Yes. I love

Jason Hartman 40:00
It is an absolute ripoff and has been for many years. The the university industrial debt enslavement complex has been ripping people off for decades. And now this I think is going to wake people up. And they are going to see that the emperor has no clothes. Okay. Look at Think about it. This meeting we’re having right now, getting on any virtual platform to share knowledge with people through the internet is infinitely scalable. There is you only need one professor, the best Professor on Earth, in every topic, could teach the entire planet, their topic. You do not need a bunch of different universities. Now granted, you need them. You need more than one professor on each topic and maybe more than one institution just for some time. diversity of thought, Okay, I get it. But you don’t need to pay 50 grand a year. Okay, especially to base a university that basically operates like a hedge fund. I mean, that’s what they are. They’re like branding agencies, marketing agencies, hedge funds, and, you know, real estate investment trusts all in one in any city, you can almost go to any town, any university town, and the biggest landowner will be the university. That is absurd. That should not be that way, let’s say shouldn’t have enough money to become investors like them, okay. The investments should belong to the people, okay. And they and their tuition needs to drop to reasonable market prices. Okay, so that someone can get a part time job and work their way through college without taking out a loan. That’s the way it should be. A lot of Awesome. There’s gonna be a lot of silver linings. I can’t identify them all. Yeah, just what I thought of right before I came here today. But that’s

Michael 42:07
but that’s great, though. I mean, even that right there, it’s that’s amazing because I totally agree and we start to see it and we’re starting to see it now we’re all these companies are coming up with these virtual seminars, right, these courses they’re launching now. Right? That’s true. And, and the university thing didn’t even think about that. But that is true. And I think that I mean, I don’t know, it’s my perception that that might even trickle not only from the universities but even down to some of the lower schools like high schools and

Jason Hartman 42:35
oh, yeah, that’s right. But But the thing and yes, you’re absolutely right. That will trickle down and it already is because a lot of kids are studying at home right now as we speak. Okay, because they, they’ve been quarantine. But the thing is with with high school and junior high and elementary school, that isn’t a ripoff, like college. I mean, they are ripping, listen The NEA the National Education Association, which has been called by Forbes magazine, the National extortion Association. They’re ripping off the taxpayers. Sure. They definitely are. Okay. But the you know, it’s not as it’s not a direct ripoff, like colleges. Okay. So you know, listen, I’m not against college, I love education. It just needs to be reasonably priced. That’s all right. Okay. That’s all I’m saying. There’s no problem with it. No, we, of course, we need college. But, you know, and education of every kind, but shouldn’t be overpriced. Any more questions?

Michael 43:36
Yes. So we have one question here. I’m sorry. Here is so what kind of impact do you think that the bailouts of big industries like airlines cruises, you know, banks will have on the government in the overall economy?

Jason Hartman 43:54
Well, oh, good question. Good question. Well, basically what any bailout stimulus quantitative easing any of these things, what they lead to is they ultimately lead to inflationary pressures. Okay. It takes some time to work its way through the system. And remember when you think about and you know, government spending invariably creates pressure for inflation, okay? Because when you put all these dollars out there into the system, and they trickle down, then you have more dollars chasing a limited supply of goods and services. That’s the classic definition of inflation. Okay. And so we talked earlier about supply demand shock. Okay, so this goes into that thinking, all right. So ultimately, it’s inflationary. Initially, it takes a while to work its way through the system. But I was gonna say something else about that. I might think of it in a minute, but yeah, but anyway, inflation Pressure is what I think about it. So the strat Oh yeah, I know what I was gonna say, by the way the strategy is own income property with debt with cheap, long term 30 year fixed rate that, okay, that’s free, it’s free money. I demonstrated that earlier in this meeting, okay? So get these free money loans, buy good properties with them and rent them out. And, you know, let inflation destroy the value of your debt because inflation enriches borrowers and cost lenders, okay? Because you pay that debt back and cheaper dollars. This is a longer thing I teach. And I know you and I have talked about it, Mike. But I called it I call this inflation and do step destruction. It’s one of my techniques that I teach on my podcast. And you know, you just look up Jason Hartman on any podcast platform you’ll find it but he Here’s the thing. Remember, when you think about inflationary pressures, it’s a war between two things. Okay? One is the war between irresponsible government spending and the Federal Reserve. Okay. And other central banks around the world could be the European Central Bank, Japan, whatever, just central banks, okay, but the Federal Reserve being the biggest one, that’s our central bank. So you’ve got this, this inflationary pressure created by irresponsible government spending and central banks. Then on the other side, you’ve got technology. Okay, technology is deflationary. government spending in central bank activity is inflationary. So the question is who’s gonna win who’s gonna win the war? Okay. And, and, you know, inflation really is tamed by technology. I mean, this this gadget Okay, this phone is insanely powerful, and it’s so cheap. I don’t know why people say They think their iPhone is expensive. I mean, this one cost me 1500 dollars. But guess what my first phone cost me 30 $400 and I actually financed it. And it weighed 14 pounds. Okay. And all it did was call people. That’s it. And the phone bill was $45 a month flat fee plus 45 cents a minute. Um, I used to have cell phone bills of $800 a month. Oh my. Okay. So, you know, think be grateful for what you have, right? It’s cheap nowadays, except you know what’s not cheap assets. Real estate is expensive. Stocks are expensive. investment grade assets are expensive. Technology super cheap. I put an article on my blog many years ago, when the iPad first came out, and everybody was amazed by you know, the iPhone. Add, I mean this I have several of them. This is an old one, but you know, I got some newer ones too. And you know, the iPad was like this amazing gadget, right? And it was cheap for what it was. The article is entitled, I can’t eat my iPad.

I can’t and the reason I was entitled that way. Yeah, well, here’s why. Because food prices were soaring. And, and the iPad ad was this wonder of technology that was so cheap, you know, you can’t eat your phone. Okay. So inflation is an uneven thing. And and ultimately, though, all the spending all the all the bailouts just think it’s going to eventually cause inflation. What do you do to combat inflation for your personal economy? By income properties with it? Lots more about that on my podcast. Okay, go ahead. Love. Did you have another question?

Michael 48:58
Yeah, one last one last quick. And we’ll and we’ll get get you going here. Jason, I’m kind of curious how this craziness is gonna affect the short term rental market. And maybe you know, like Airbnb s versus the hotel industry, right where you have lots of people in one space versus just a single home.

Jason Hartman 49:18
Yeah. Very good question. And I have not addressed this on my podcast yet, but I was just about to, I’m glad. Monday I’ll probably talk about this on the show. Um, I think the Airbnb market is going to be next, the short term rental market is going to be mixed. And I also have a podcast called the short term rental profits podcast. And here’s here’s how it’s going to be next. I think that um, destinations that you have to fly to are going to suffer and destinations you can drive two are going to get the benefit of their suffering those other destinies Here’s what I mean. If you own a short term rental property in a place like San Diego, which is commonly flown to by people that live in, you know, maybe their climates or whatever, and there’s a lot of convention activity in a place like San Diego, beautiful city I used to live there. And those properties I think will suffer. And I’m in St. Augustine happens to be the oldest city in America. It’s a charming little town out of people drive to those short term rental property drive from Orlando, Atlanta, other nation, or a Bama for most of them. They drive to St. Augustine, Florida. I think those are actually going to benefit because people don’t want to fly. And also, I think those kinds of properties that you can drive to that have popular are popularly chosen by guests arrive. That’s my statement. Okay. So if you have short term rentals, in any place where most of your guests drive to go to your short term rental, I think you’re going to be pretty good, because you’re going to pick up the losses from people, the short term rentals apply to those kind of vacation destinations, and or business destinations for conventions and conferences. And also, the cruise ships are obviously being hit very hard. Yeah. And so people want to go somewhere, but they want to be able to drive to it, and they don’t want to get on a ship. Okay, at least for the foreseeable future. You know, that’ll ultimately change and you know, that business will come back but right away. I think if you have a driving oriented short term rental, you’re in good shape. The reason San Diego By the way, isn’t a good driving or short terminal, yet picks up some people from Arizona They want to go to the beach in the summer. Sure. But I’m in San Diego, you know, you you might drive there from Orange County or LA Well, you’ve already got beaches in Orange County in LA. Cindy doesn’t present that much of a different offer for you. Okay. You know, it’s really kind of like Arizona as the major, short short term guest in the San Diego short term rental. You know, so, so when you got a place like Jacksonville, I think you’re a little better off or sorry, St. Augustine. JACK, St. Augustine outside of Jacksonville. Okay, so another question.

Michael 52:39
And then let’s wrap it up. I think that’s a I think good’s it. Yeah, that’ll be it for now. Jason, thank you so much for your time. This has been phenomenal. You know, guys, definitely make sure that you connect with Jason obviously, you got his website there. Jason hartman.com. Yes. You have actually a few different podcasts, Jason that you’re that you’re on which is amazing. Are you had that critical? Yeah. The heroic investing show? I know you do. Yeah.

Michael 53:06
I’m so good.

Jason Hartman 53:07
Yeah. That you’ve been on that show? Yes. Yes. Oh, yeah. You’ve been on that show. Yeah, yeah. Good stuff. Yeah, we’ve got a whole bunch of podcasts. The main one is the creating wealth show. So check that out. You know, I’ve also got a YouTube channel. And I just want to wish everybody the best. These are very strange times we’re living in. Stay, stay healthy. Stay well, and be careful out there and happy investing.

Michael 53:34
All right. All right. Well, guys, you heard it here. Again. Thank you, Jason, for your time. Really appreciate it. And all right. We’ll catch you guys later. Take care of

Michael 53:44
Awesome. All right.

Photo by Jordan Hopkins on Unsplash