The Creating Wealth Show Blogcast

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CW Blogcast 19 - Direct control of your investments - exhibit A. Apr 22, 2013

Show notes

Former NASDQ chairman, Bernie Madoff, will be spending the next 150 years in prison. Since he’s 71 right now, that means he’ll be a free man once again at age 221. Nobody’s feeling too sorry for The Ponzi King right now though. Even his sons refuse to talk to him. The scope and breadth of Madoff’s investment fraud is staggering.

To those who have been following Jason Hartman for any length of time, this really should come as no surprise. Any time you give up direct control of your investments, this could be the result.

We say this often but it bears repeating. When you invest on Wall Street, expect to find one day that:

1. You’re investing with a crook.2. You’re investing with an idiot.3. You’re paying huge management fees.

You might be extraordinarily unlucky and hit the mother lode – an idiotic crook who charges huge management fees. And even though you might think we’re beating this particular drum unnecessarily stridently, think of it like this. It’s your financial life at stake here. It’s your retirement and the economic health of your family for generations to come.

Bernie’s not the first or last schemer to tap into the ignorance of investors. Need a sure fire way to avoid losing everything to scandals like this? Don’t play the same game these pour souls were playing. Don’t turn your nest egg over to pie-in-the-sky promises. Stay in control of your investments. Always know what’s going on with them and, while we strongly suggest having a trusted financial advisor, don’t give them the reins to the stagecoach!

CW Blogcast 18 - Identity theft and finding the right tenant. Apr 22, 2013

Show notes

It’s no secret identity theft is a booming business. This can have serious impact on you as an income property owner. It’s hard enough to find quality tenants without having to worry about whether they are actually who they say they are. I mean, what better way for chronically deadbeat renters to sneak into your property than claiming a whole new identity?

But don’t worry too much. Most of these characters aren’t the brightest bulbs on the circuit, so a checklist of diligent screening processes can nip most of the miscreants malfeasance in the bud. By spending a few dollars upfront in doing a proper tenant screening, you might avoid thousands in eviction proceedings.

What makes up a proper screening?

Criminal background check – do they have a history of drug use or domestic violence? Might be nice to know that up front.

Rental history – ask to see the previous month’s rent receipt rather than calling the last landlord. A checkered past of frequent moves might be a clue also.

Property managers need to use their natural detective skills and intuition. Look for people using their child’s social security number, a fake ID, fake driver’s license. Cross-check documents. Study pictures for race and age. Get an address history for the past 10 years and study it. These are just a few methods landlords and managers should make standard practice in order to latch onto the best tenants possible.

CW Blogcast 17 - More on the "national" housing market. Apr 21, 2013

Show notes

Just read a funny analogy about the myth of a US housing market. It went something like this. Coming up with a national housing number is like a weatherman who combines weather conditions in Nome, Alaska and Key West, Florida to arrive at a national average temperature of 45 degrees. While technically correct, this is basically useless information.

So it is with trying to pin down nationwide trends in housing. Real estate markets are notoriously hyper-local. Averages simply have no meaning. As income property investors, we’re very aware of how you must drill down to the neighborhood level, even within good local areas, to begin to see a realistic picture of that particular housing market.

Some experts like to look at housing inventories to try to find the bottom of a decline. Believe it or not, we’re beginning to see some bottoming patterns in certain areas of the Western US. Jason mentioned this is regard to California on a recent Creating Wealth in Today’s Economy show, and we’re pretty sure he wouldn’t go out on that limb unless he was feeling it in his bones.

Tattoo this on your hand: DO NOT BUY IN CALIFORNIA. We’ll let you know if and when any local markets in Cali become good buys again. For now, let’s just watch and wait from an academic point of view as this turnaround transpires. Assuming, of course, the entire state doesn’t go bankrupt and de-rail everything.

CW Blogcast 16 - Jason loves his new iPhone application. Apr 21, 2013

Show notes

The truth is Jason not only loves his iPhone but he really loves the fact that there is now a Property Tracker application to run on it. Longtime listeners have heard of Property Tracker before. It is Platinum Properties Investor Network’s software of choice for small to medium size income property investors.

We didn’t invent the thing but we sure do love it, especially now that it has been implemented to work with the swanky new iPhone. Simply put, this is the most powerful real estate analysis tool available for the iPhone. In real life terms, it means you don’t have to break out your laptop when you’re out running around comparing properties for your next portfolio purchase.

That’s right. Pull out this pocket-sized device, input the property information in four easy steps and you’re ready to go. Look at the first-year projection if you’re into flipping. Check out the multi-year projection if you want to buy and hold.

What else can you do?

• locate the property using Google Maps• Take a photo and store it with the property• E-mail a PDF file to clients or investment partners

The iPhone with Property Tracker is a serious tool that, once you try it, you won’t believe how you ever lived without it. It’s that good. You can find more information about the software in general and the iPhone application in particular at www.propertytracker.com.

CW Blogcast 15 - Don't get hit by the shrapnel of the "fatal conceit". Apr 20, 2013

Show notes

The "fatal conceit" is an idea coined by Friedrich Hayek. It simply means that central planners working for the government tend to miraculously consider themselves free from sin and error. Nowhere is this more evident than in watching the present gang of do-gooders try to borrow their way out of a mess created primarily by, you guessed it, debt.

So while names like Obama, Bernanke, and Geithner fervently believe they can do a better job distributing capital than the free market, we occupy ringside seats at the circus and marvel at the size of reality blinders men like this must be wearing.

But how does an average, everyday Joe Citizen keep from getting hit by the economic shrapnel created by these financial sub-morons? If you want to get ahead despite their idiot machinations, you better start looking for an investment strategy that can profit from inflation. Profit from inflation? What kind of crazy talk is that?

Actually, it’s the kind of crazy talk that makes sense in today’s economy. Income property investing. Not just any kind of income property investing but the kind based on maintaining high levels of prudent debt so that you actually benefit from rising inflation. If there’s one thing you can rely on, it’s the fact that central planners do not know how to hold inflation in check for long. Now’s the time to position yourself for that day when the cat gets out of the bag yet again.

CW Blogcast 14 - Two stages of wealth creation. Apr 20, 2013

Show notes

Buying real estate for investment purposes can seem like a big chunk of information to digest if you look at it all at once. Let’s break it down into more manageable bites. The simplest part is Stage 1. During this time your primary focus is to stock up on debt. You want lots and lots of debt attached to high-quality, fixed-rate, long-term, investment grade debt.

More specifically, you want this debt attached to packaged commodities, basic materials that are in high demand when used to construct structures like houses and apartment buildings. You want lots of this kind of debt because, when you invest in real estate the right way, debt is your asset. Debt is what will protect you from the ravages of inflation and, by the way, make you very wealthy as time goes by.

Now it’s time to enjoy increasing rents, appreciation, tax savings, and let our “Refi ‘Til Ya Die” strategy make you financially free. This part is Stage Two. See how simple this income property investing really is?When you buy real estate, the cost of the commodities used to build the structure is locked in until the house falls down. This could be 60 years or more. In the meantime, you’re refinancing every seven years and pulling out large chunks of equity from your investments. Let it replace your working income while you buy more real estate!

CW Blogcast 13 - The Reluctant Investor's Lament. Apr 19, 2013

Show notes

Jason likes to close the monthly Creating Wealth in Today’s Economy seminar with a poem called The Reluctant Investor’s Lament. It was written in 1977, but still packs a wallop of powerful thoughts. Below is an abridged version for your reading pleasure.

“I hesitate to make a list, of all the countless deals I’ve missed;Bonanzas that were in my grip, I watched them through my fingers slip;

The windfalls which I should have bought, were lost because I over thoughtI thought of this, I thought of that, I could have sworn I smelled a rat;

And while I thought things over twice, another grabbed them at the price;It seems I always hesitate, then make up my mind when it’s much too late;

A very cautious man am I, and that is why I never buy;

When Tucson was cheap desert land, I could’ve had a heap of sand;When Phoenix was the place to buy, I thought the climate was much too dry;

“Invest in Dallas – That’s the spot!” But my sixth sense warned me I should not.The golden chances I had then, are lost and will not come again.

Today I cannot be enticed, for in 1977 everything is so overpriced.The deals of yesteryear are dead, the market’s soft and so’s my head.

At times a teardrop drowns my eye, for the deals I had but did not buy;And now life’s saddest words I pen, If only I’d invested then!"

Now get out there and pull the trigger on a deal!

CW Blogcast 12 - The easy way to get a loan modification. Apr 19, 2013

Show notes

Every once in a while you hear a story that makes you go, “Hmm, how DOES something like that even happen?” It all goes back to the secondary mortgage market and the practice of banks and Wall Street firms buying and selling pools of mortgages – one loan was sold 39 times, according to Kim Nguyen, an acquaintance of Jason’s who practices law in southern California.

Nguyen recounted how he represented a client over a $650,000.00 loan that was being refinanced but ended up in foreclosure court. One of the regulations is the plaintiff must produce the original loan documents. Apparently, this mortgage had been shuttled between buyers so much they couldn’t find the original documents.

Guess what happens when a bank can’t prove in court they are the actual holder of the note? In this case, the judge waived the entire loan! Just like that, there was no more need to refinance because the loan didn’t exist anymore.

Can’t find the loan documents? Doesn’t inspire a lot of faith in the secondary mortgage (vulture) market system. Do stories like this make a difference in the practice? Not likely but one family left court very happy that day.

CW Blogcast 11 - Owners, make your property manager happy. Apr 18, 2013

Show notes

You’ve bought your first income property and have a property manager in place. You can’t just turn off your cell phone and take a year-long yacht cruise to the South Pacific. There are some responsibilities you, the owner, still have. Here’s a quick list.

1. Interview the property manager BEFORE executing final purchase contract to discuss reasonable rental rates for that particular area and property.

2. Sign the property management agreement.

3. Discuss the marketing program with property manager and authorize any leasing concessions you are prepared to make.

4. Pay advertising, utilities, and other miscellaneous expenses until leased.

5. Review and approve repairs requested by property manager.

6. Don’t be a pest. Calling more than once a week places you in that category unless there are unusual circumstances.

7. Don’t go crazy placing restrictions on tenants. That’s an excellent way to insure your property stays empty longer and you miss out on a good renter. Of course, no one is ever going to be quite good enough. Get over it. You want that rent money, don’t you?

That’s not too hard, is it? Probably the best job you’ll ever have because it leaves plenty of time to ferret out even more great deals using Platinum Properties Investor Network’s proven strategies for creating wealth. Yes, this stuff really does work.

CW Blogcast 10 - They're melting in California Apr 18, 2013

Show notes

As a California-based business, we offer the following commentary and wonder, “Why are we still here?”

Yes, it’s warm in California but we’re talking about a different kind of melting. On June 10, 2009, California Controller John Chiang had this to say about the Golden State’s economic future. “Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government.”

This could get ugly, folks. Unlike the federal government, California doesn’t have the option of printing its own fiat currency to postpone doomsday.

The big problem is there simply is not enough coming in over the transom from tax receipts to even begin straightening things up. Want to hear some real numbers? There has been a 39% drop in personal income tax receipts since last year. Add to that a 52% drop in corporate tax receipts and an 8% drop in sales tax receipts. These are some serious numbers.

What do you do? Leave the state seems to be the unanimous decision among many. One thing is for sure – we track and recommend income properties for investing in almost 40 local markets around the country. California will NOT be going on our good list any time soon.

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