Jason Hartman goes over rent collection numbers and surprises landlords and investors with a high rent collection during the early months of COVID. Later in the episode he looks at the oil and gas industry’s historical decline. Jason continues to give listeners more knowledge on pandemic investing.
Andrew 0:00
My name is Andrew and I live in the Pacific Northwest. And I had always thought that investing in real estate would be a good idea. And I’d always kind of thought about investing somewhere near my home, and luckily had enough wisdom at a time when I learned about Jason Hartman and his podcast, that I was able to apply that wisdom and change my mindset from local investing to national investing. And also to just find markets that made a lot more sense than where I live. I’m not an expert in the field in any way, shape, or form. I’m not an expert in in investing at all, but his group of counselors has great expertise and good advice and has helped me along the way as a beginner with not a whole lot of money to work with from the start. And so far, I’ve got those six properties and about three and a half years and I’m pretty happy about it. And it’s all because his team of experts and just his knowledge and his time that he spent doing it, he can really guide you through it and his podcast is excellent. And I highly recommend it for anybody, whether you’re a beginner or an expert. There’s a ton to learn there and it’ll help you get to the next level.
Introduction Speaker 1:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:54
Welcome to Episode 1442 1442 I have a variety of things to talk to you about today. You know, this is a common challenge I face, and it is having too much to share with you. But I guess it’s a good problem. We never get to it all. There are always just stacks of things that we just never get to on the show. And I wish we had more time to do it. Obviously, we have gone temporarily to seven days a week. And few things I just wanted to take care of just some random stuff today that we need to know about as successful investors. So I wanted to start today’s episode with that famous quote, you’ve all heard, and you’re probably hearing it a lot more now. It’s from the oracle of Omaha himself. And that is Warren Buffett, considered by many to be the world’s greatest investor, in some ways by many the world’s greatest hypocrite too. So, you know, anybody in the public eye like Warren is gonna get some flack, too, right? But overall, you know, he’s pretty good. I really do agree with his value investing philosophy, I just think that we should apply it to a better asset class in stocks, and that is income property, the most historically proven asset class in the entire world. So I’ll start with this quote by him today, but I gotta tell you, I’m not so sure in terms of real estate, how valid it is. Here’s what I mean by that. You would think that this is the thing to think about today. But in the solid linear markets, which we recommend, I am so far
Jason Hartman 3:51
knock on wood, not really seeing a significance of this yet. Now maybe it will come. Maybe it’s not here yet. I think kinda don’t think so though. And here’s the quote, right, you’ve heard it, you’ve heard the quote, be fearful when others are greedy and be greedy when others are fearful. Right? And that’s a good quote, you know, be fearful when others are greedy and be greedy when others are fearful. In other words, be the contrarian. When the news is really bad, go out there and buy good assets, take action, and buy good assets when everybody is scared and worried. And you know, there is certainly a lot of validity to that philosophy for sure, because the meek may inherit the earth, but the courageous will own it before they inherit it. You like that one? I just redid that whole biblical concept there tonight. Okay. So you know, we’ll see but let’s kind of dive into some things today as we kind of think about that and look at a few things. First of all, the National multi housing Council is out with a survey, the NM Hc. And they say that 84% of the households paid either a full or partial rent payment by April 12. Okay, and this is a big survey folks, it included 11,500,000 apartment units. Now that doesn’t include single family homes. It only includes apartments. I’ve shared with you many times that single family homes probably are performing quite a bit better than this actually. But they don’t have good statistics because that market is more imperfect, in that you can’t just send a survey and have a big email list of all the single family home owners in the country. Right. But there are many research firms that do this for big institutional apartment owners, it’s really easy to survey them because you can talk to any of the big apartment developers, and they have thousands and thousands, maybe, maybe 10s, or even hundreds of thousands of apartment units, that they can just give you an answer, right? They can pull up their software and, and tell you that according to yardie, or software that we run our buildings with 84% of the people paid either full or all of the payment, but it’s even better than that. Because there was a rent payment rate of 93% the prior month. Okay. So you saw that it ticked down a little bit. And by the way, you know, you’re always asked the question, compared to what hopefully that’s the that’s the big Jason Hartman question compared to what That’s the question for everything in life. It’s the first question, you got to always ask yourself about everything compared to what? What they don’t tell you in this survey is what is the normal rent payment rate? If it was 93%, the prior month, and then by April 12, which by the way, isn’t the whole month, they might have paid the rent on April 13, or 14th. And, of course, we don’t know, because that doesn’t show up in these stats. And if it’s 84%, what’s the normal rate? Well, I don’t know. You know, if the rate was 93%, the prior month, is the normal rate 95%. You know, not everybody pays their rent. That’s just the way it works. Right? So we don’t know they don’t bother to say that and it’s a huge, a huge flaw in the article and in the survey, but not telling that Okay, so here is something absolutely absolutely staggering, amazing. Mind blowing, mind boggling, whatever you want to call it, but have you looked at the oil market? Wow, wow. Wow. Okay, so we have this situation and even before we ever heard of Coronavirus, this was happening around the world. It was the concept of negative interest rates. Well guess what? We are almost entering a territory, quite literally, of negative oil prices. You want to talk about deflation. Oh my god. Wow. OMG man, this is absolutely mind boggling what’s going on with oil. Now, that’s not a proxy for the overall economy and the inflation deflation debate. It’s certainly part of it, but It’s definitely not all of that either. But oil futures for the first time ever dropped below zero. Okay, and the price of oil as of yesterday was $15. It’s absolutely unbelievable how cheap oil is. Okay. So soon we might enter in a time where now Well, we’re already at this time, but we might enter a time where literally, you have to pay to store your oil, okay? They’ve already filled up all the land storage probably in the entire world. And now they’re putting oil on container ships with nowhere to go. They’re just using the ships as storage. It is a an absolutely shocking experience what’s going on in the oil market and by the way, I must mention we had the gentleman for Give me I cannot remember his name. You know, I’ve only interviewed like 5000 people on all of my different podcasts over the last 16 years. And 5000 is quite literally the number, somewhere around there, give or take. And, you know, I can’t remember his name right now. But he came on the show twice. I remember interviewing him, we should get him back. And he said, the real price of oil should be $3 a barrel. And I just absolutely couldn’t believe that. You know, one of our listeners, and that was Matt Brill, by the way, thank you, Matt. sent me a chart yesterday that was absolutely astonishing as far as oil prices, and how cheap oil has become Now, again, not a total proxy for the inflation deflation debate. Because oil has had a particularly hard hit scenario with absolute demand destruction because no travel people Staying home no commutes to work, no airline flights, no cruises. And of course manufacturing slowing to remember we are in an era and also entering an era. You know, we’re just in the first phase of it, but it’s going to become extremely significant later. That’s what I say, of supply demand shock, this extremely rare economic malady that really hasn’t shown its face in any significant way since the 70s. When the misery index was really something people talked a lot about under the miserable Jimmy Carter era. And that misery index, a part of it a part of what causes it besides high unemployment and high inflation at the same time, is supply demand shock. And when you have oil, get this cheap, and you have all of these oil companies go out of business, and all of these Banks, the big, ugly, disgusting banks, which by the way, we’re going to get to them in a moment, you know, have a gun, Rob a Bank, have a bank robbed the entire world. There you go. They are now foreclosing on these oil company’s assets. And basically the banks are now setting up entities to run oil businesses to run oil companies. So it’s absolutely weird. What’s going on. But in essence, the oil companies going out of business causes a huge, there’s a demand shock now, right where there’s demand has just been destroyed. But soon, that will flip and we’ll have a supply shock problem. So initially, when you come out of this, you have these very significant inflationary pressures before things kind of normalize, right? Because there’s no suppliers of goods they’ve been put out of business, and it’s a rocky road. Okay, we’re gonna have a rocky road ahead. We’ll see. But some good news in this demand destruction, Coca Cola, Coca Cola, that disgusting poisonous syrup. Okay, that sugar water is down 25% Yes, coke consumption is down 25% So that’s some good news. Now listen, I used to drink this stuff like crazy. I used to consume soft drinks, left and right. And I got to give credit to my girlfriend from a long time ago, my girlfriend Karen, who got me off of that stuff made me see how absolutely disgusting and poisonous it was. And I just stopped drinking it. You know, you should really limit your drinking to just a few things. Lots of water. I love water. I highly recommend water and if you don’t like water, like my mother, she doesn’t like water. Carmen, who’s been on the show, of course, Carmen doesn’t even like water. Right? He got to drink more water. Maybe it’s because you don’t have good tasting water. So experiment two Buy some different waters, they really do taste different. Okay? And get some good tasting water because it’s good for you drink it drink a lot of water. Okay coffee also pretty good for you Don’t drink too much of it, but you know, three cups a day maximum. And and then you know a little vodka. Maybe have a little vodka in there once in a while too, right? So, you know, it’s a little bit of escapism is actually healthy, I believe. Not too much. Just a little, just a little. Okay, enough about my beverage consumption recommendations, but do away with soft drinks. Because there is no redeeming value in soft drinks. They’re absolutely terrible for you, if you can’t pronounce easily, and there are too many syllables and all the words of the ingredients of anything going on or into your body. It shouldn’t go on or into your body. Okay, that’s it. So too many syllables. Don’t do it. Okay. All right. So
Jason Hartman 14:53
this comes as no surprise, right? We knew all of the corruption and the elite would be ripping off the world and here they are, right? Have a gun, Rob a Bank, have a bank robbed the entire world? Well, a bunch of small business owners have now filed class action lawsuits against Chase, Bank of America and the disgusting criminals at Wells Fargo and US Bank over their handling of the paycheck protection program. The PPP, we just did a show on that on our bonus episode on Saturday. And the lawsuits allege that the banks process the biggest loan amounts first, because they could increase their origination fees and steal more money from the government and the public by doing so, and I don’t doubt for a moment that is true. I got to tell you something, you know, you hear all this stuff about lawsuits and tort reform and how America is litigious and all this stuff. kind of stuff. But you know what they don’t tell you in those in those statements is they don’t tell you that litigation is basically a form of human rights. It’s a right to redress. You know, in less litigious cultures. What they don’t tell you is that companies screw people more often. Okay? They don’t tell you that because there’s you can’t hear the dogs that don’t bark. It’s basically a huge elephant in the room that you don’t know about. You know, look, I’ve been to 87 countries, as you’ve probably heard me talk about, and some of those countries I’ve been to many, many times over. Okay, but 87 unique countries, right. And I will tell you, and you’ve probably experienced the same thing, whenever you go to a less developed country than a Western big western country with a big economy like the US or or many others, right? You go to these countries and maybe you go do something like you go ziplining or parasailing or you get in a taxi cab, or you do anything, or you take a shower in the hotel, and you just notice how little attention there is everywhere you look to safety, right? There’s very little attention to safety. And then you go do parasailing in the US or you do you take a taxi in the US or do any of those other things, right? And you look around and you think, oh, wow, there’s just a lot more attention here to safety. Right? And this is easy to notice. You notice that everywhere. Guess why there’s so much more attention to safety in a more developed country like the US because of lawyers. God bless them right in some ways. Listen, I have my complaints about lawyers. Everybody should sorry. counselors who are listening to the show But look, the reason these things develop is because someone back there one of your ancestors filed a lawsuit and got a careless, reckless, negligent or crooked player to do things, right to do things, honestly to do things correctly. Okay? It’s a form of human rights, that right to redress, right? It’s not all ridiculous and it’s not all crazy. Now granted, some of it is in California. The California Bar Association has something every year they call this they call it the stellar awards, named after Stella, the old lady who spilled the coffee on her lap when leaving the McDonald’s drive thru. Well, that story isn’t what it appears to be because McDonald’s did a disgusting smear campaign against Stella the coffee actually was too hard. Okay, and I know everybody thinks that’s ridiculous. She got this multi million dollar verdict. Yeah, but it was it was overturned, okay, she didn’t get that much money in the end. Okay. You know, you heard the headlines. But that wasn’t the final outcome of the case. And I interviewed the director of a documentary on that on the show. It’s called hot coffee. Go go look it up. Go listen to that, check out that documentary. It’s pretty interesting. It’s called hot coffee. And anyway, this is the way law is formed and the way law develops, it’s a good thing, okay? Like anything, it needs to be managed. It needs to be kept in check. Okay, but it’s just part of life. So let’s hope that the small business owners with their class action lawsuits, go and stick it to the disgusting criminals that these big banks because they just abuse, abuse, abuse, left and right. And thank God that the little guy can go and Sue these big disgusting companies, right? It’s, it’s it’s a good thing. But again, balance, keep it in check. Right? Okay, guess what, Jim Rogers, the famous hedge fund manager and at least he was a billionaire. I don’t know if he’s still a billionaire or not. Maybe nobody’s a billionaire after what’s gone on with the markets lately. But he has been on the show three times before. You’ve heard by episodes with Jim Rogers, great guy. I really like his outlook. I like his books a lot, too. And he talked about, he made a prediction a few years back about how North Korea was going to open up, and it was going to become a really exciting region, when all those people are freed, and there will be you know, cheap labor and all this kind of stuff. Right. And well, guess what? Maybe we’re getting closer to that. Because US intelligence says that the North Korean leader Kim Jong Hoon is in grave danger following a surgery okay. He was absent from national celebrations on April 15, and was last seen in state media on April 11. So maybe Kim Jong Moon is going to be history. And in North Korea, it’s always a chance that a country like that could open up paths or something like that the stabilizes their leadership. So we will see, okay, forbearance. Right? We’ve talked a lot about mortgage forbearance. Again, I want to caution you on this thing, the situation on forbearance is unclear, okay? It’s clear that you can get a forbearance, but it’s unclear as to whether or not it will hurt your credit. Now, it may not hurt your credit overall, it’s not supposed to. But if you are looking to buy properties right now is, by the way, a surprising number of people are people are really just jumping in I mean, sales are ticking along and remember, look, this issue of, you know, will things go down the tubes, right. It’s, I’ve talked to you many times about the inflation deflation debate, right. And that’s a debate between technology and globalization, deflationary forces and monetary and fiscal policy that are terrible and money printing that are very inflationary forces, right? So these two sets of things are at war for whether or not the dollar is going to go down in value or up in value, which, by the way is not exactly inflation or deflation. It’s, it’s, there’s more subtlety to it, but I won’t get into it. Now, in the interest of time, it’s a question of what will happen, right. So, technology, globalization, deflationary forces, money printing, bad fiscal policy, bad monetary policy, very inflationary. Well, we don’t know which force will be stronger in the end, right. It’s an ongoing tug of war, and we’ll see what happens. But look, here’s another big tug of war. And when I talk about pandemic investing, this is a big deal. What I’m about to tell you Right, there is no question in my mind that the economy is in a mess, an absolute mess. We are definitely in a recession. I call that before many people in the know in the media, were willing to say it. Duh. Of course we’re in a recession. Okay. You don’t need a an economist or a rocket scientist to tell you that that’s obvious. You shut down this much of the world economy. What else can you expect, right? But it might even be worse. It might be technically a depression, right? Which there’s no academic definition for that even. But many agree that the definition for recession of course is two quarters of flat or declining GDP. And depression is four quarters consecutively of flat or steadily declining GDP, right. So we have two or four quarters recession or depression. I don’t know we’ll see. Right? But that doesn’t really matter that much. Don’t get off Caught up in the technical definitions, whatever they are right. The point is, the economy is certainly hitting the skids. There’s no ifs ands or buts about that. But what is the war? Right? Well, the war here is will the economy tank the markets? Okay, stock markets, real estate markets, precious metals markets, cryptocurrency markets, whatever any asset right commodities markets, whatever right? Will it do that? And will that force be more powerful than the forces I have outlined in pandemic investing and there are many, but the major force is the mass migration trend that is coming. The new the 2020 version of The Grapes of Wrath. You know, that book or that movie, The Grapes of Wrath, john Steinbeck, very important piece of literature right, and The Grapes of Wrath. was all about how people migrated? There was this mass migration to the west, a lot of it to California, which back in the day was the Golden State, sadly, not so much anymore. Right? So will that migration, if you are positioned correctly, if you’ve positioned your portfolio correctly, and by the way, you’ve already done this, if you’ve been following my plan for the last 16 years, 17 years, you’ve already done it, you’ve already won the game, okay? Because I say this force will outweigh the negative economic forces. So while everybody’s fearful, okay, let’s go back to Warren Buffett, right. be fearful when others are greedy, be greedy when others are fearful. Well, that doesn’t mean go out and buy real estate in cyclical markets that are too expensive. It doesn’t mean buy real estate in high density markets that are going to double crash. Okay? They were already collapsed. thing just because of the economy because they were overvalued and the economy was in for its correction anyway, right. But guess what, now, they’re gonna double crash, it’s gonna be a double whammy. But the benefactor of that double crash is this cheap, suburban real estate that we’ve been recommending these cheap single family homes in these secondary, and really third tier markets. Go to Jason Hartman comm slash properties and you’ll find them there. Right? And I say that force is so powerful, because when we get into this and we will, it’s coming, don’t worry, don’t worry, I know I’ve told you I’m gonna have a webinar on this. Okay. Really, the webinar needs to be a web course. Over the course of several weeks. There’s just too much information. And when we get into that you’re going to see the back of the napkin math I’m doing and how incredibly significant this 2020 modern version of The Grapes of Wrath is it’s absolutely staggering the amount of migration that is the potential here. It’s unbelievable. Okay? So mortgage forbearance. Okay, the thing I want to tell you about that, and then we’ll wrap it up for today. Mortgage forbearance is now at 5.95%. Okay. And just last week, banks saw an increase in forbearances of 80%. Right? So more and more people are taking advantage of the forbearance. Be careful. Okay, listen, I’ll be the first person that wants to tell you to give the bank’s the middle finger there, you know, why wouldn’t you And plus, you deserve your bailout to when we did this back during the Great Recession. And, you know, millions and millions of people just strategically defaulted on their properties and stopped making the payments. I was all for it. I think it’s absolutely the right thing to do. Because the banks got bailed out, you didn’t get bailed out, okay? The people didn’t get bailed out the way the people get bailed out, is it on a secondary level, they bail out the disgusting bankers, and then you get bailed out by not having to pay them, okay? Or they bail out the bondholders, right? Have these toxic pools that the Wall Street crooks created a fake debt and fake mortgages that they sold 33 times the same loan, there was no loan there at all in that pool of mortgages they sold. You know, you all know the story by now right watch margin call, by the way, great movie margin call really, really good. So the way you get your bailout is by simply strategically defaulting. But be careful. This forbearance thing is probably not without its downturn. And if you want to take advantage of the property buys today, you probably can’t do a forbearance and be getting new loans at the same time so you can do your forbearance. Later, buy your properties now maybe I don’t know. You know, it’s just too early to tell. As the weatherman used to say it’s t TT. too early to tell how this is all going to play out. We just don’t know. But we’re here to help you. We’re here to do a pandemic investing portfolio makeover for you. Our investment counselors are standing by Jason hartman.com or one 800 Hartman, and we will look forward to talking with you tomorrow about more of this stuff. Until tomorrow. Happy investing.
Jason Hartman 29:39
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