The demographics of today’s workplace are so different than the past. For the first time in history, we have a multigenerational workplace with five different generations all working together in one workforce. Author, speaker, consultant, and educator Dr. Cynthia Simon says this particular workforce is so different and are influenced by so many different things like technology and politics which shaped their views and perspectives, resulting in each generation adopting different preferences, work styles, and motivations.
Dr. Simon helps leaders to understand who is in the workplace and how they can get them to work together to contribute to the organizational success. With the changes in the tax situation, it’s great to find out some tips out about real estate investing. Investor, entrepreneur, and author Jason Hartman is dedicated to educating investors on economy markets and how to create positive cash flow from income properties and other investments. The single largest expense in any of our lives is taxes. Jason says it’s imperative that we as entrepreneurs and investors learn about taxation and learn how to minimize our tax burden.
We have Dr. Cynthia Simon and Jason Hartman here. Dr. Cynthia Simon is an author, speaker, consultant and educator. She is a multigenerational expert and she’s written a new book. Jason Hartman is the CEO at JasonHartman.com and the Hartman Media Company. He is an expert in everything real estate and investing. He’s got his own great show and he’s done so much work in that area. I’m really looking forward to chatting with him.
Listen to the podcast here:
The Dynamics Of A Multigenerational Workplace with Dr. Cynthia Simon
Dr. Cynthia Simon is an author, speaker, consultant and educator. Her experience includes so many areas. She speaks about employee engagement in multigenerational workplace, change management, employee engagement, survey administration, action planning and the list goes on and on. We have a lot of similar interests. I’ve been looking forward to this. Welcome, Cynthia.
I am so excited to be here.
It is going to be fun because we have a lot of the same interests. I often speak to groups about Boomers, Gen X, Millennials and a lot of the stuff that you talk about. I know we were introduced through my favorite person, Dr. Maja Zelihic, who has been on my show as well. Thank you for being here.
It’s my pleasure. I have to tell you, I am so passionate about this topic. If I go in a long tangent please reel me back in.
It’s a very popular topic. You get out there and you think that maybe you’ve heard a lot about it throughout the years. People would move on to something else, but there are just so many issues with it that they can’t because it’s a unique workplace. We’ve got more people working together than ever in the past. When you get a lot of diversity, you get really great end products but then you also get some communication issues. I’m curious how you see today’s workplace different from past workplaces.
You hit the nail on the head. The demographics of today’s workplace are so different than the past. For the first time in history, we do have five different generations all working together in one workforce. This particular workforce is the most age-diverse workforce of all time. One of the things I’d like to say is because they are so different and they are influenced by so many different things: technology, politics, and that list goes on and on.
Those experiences have helped shape their views and perspectives. It also results in each generation adopting different preferences, different work styles and they’re motivated in totally different ways. What that means is our leaders have to understand who is in the workplace. How they can get them to work together, to contribute to the organizational success. They really have to rethink how they manage and motivate, what I consider their most valuable resources.
They really do because a lot of people try to lump people all together. It’s easy to say all Gen-Xers are this way or all Millennials are that way or Boomers or whatever. We really have to look at people on an individual basis. Although it is important to look at their generation from their perspective of the things that were important to them and how they form their ideas and opinions, do you think we’re stereotyping into these simple boxes where it can’t be that simple?
There are negatives and positives to that particular question. I think we pick out general tendencies and that’s what we see in print. However, I’ve been out interviewing people from all generations. I do find a lot of the information that we see written is not really accurate. For example, I think that our Millennials get a bad rep. You hear all of the things such as they feel entitled, they are this or they are that. When I went out and spoke to them, here’s what I heard.
I heard that they are highly motivated and very excited when they enter the workforce. When they get there, they are quickly deflated and here’s why. They come up with ideas and suggestions and they are shut down. They’re told, “If it’s not broke, let’s not change it or we’ve always done it that way.” Instead of continuing to try, they just do the minimal and get out of there. The one thing that really concerns me is they say that they are actually waiting for their older workmates to retire so that they can make a difference.
I agree with that and I’ve talked about this. I spoke for Forbes about this very topic. It’s bringing a lot of conflict in the workplace and that led to my interest on writing a book about curiosity and how we want people to be curious. If we’re shooting down their ideas, that’s going to shut down their curiosity, which is also going to shut down innovation.
I love that your book is called, Yes You Can, with A Plan, Work Smarter, Not Harder, How to Make the Most of Your Multigenerational Workforce. You talk about a lot of these things. It’s a hot topic because we’re having so much problems with engagement and productivity’s influence from that. You hear cultural issues, all these things all tie in to interpersonal skills and communication. That’s what we’re talking about here, communication and interrelationships between generations.
You bring up another good point and I’m so excited that we share some of the common interests. Our leaders can no longer take a cookie cutter approach or one-size-fits-all because everybody is not the same. When you are trying to communicate, motivate, train, recognize or even reward employees, it can’t be costumed to each individual, but you have to know something about that generation and know that things that are important to those folks.
Otherwise, applying the same tactics across the board will not work. For example, our Millennials, they like to be rewarded with more training or more opportunity, whereas some of the Baby Boomers, they like the accolades and the plaques, that type of thing. The mature, for example, they don’t even like to be rewarded in public. You just cannot take that same approach and expect to be successful.
We need to find out what it is that motivates people. I can remember when I was in sales, they used to have this contest every week to see how many hours you could make calls, doing certain things. I always won every week because I was so fiercely competitive. The award were tickets to a basketball game and I didn’t want to go but I just wanted to win because I’m a Boomer. We want the competition, the certain accolades and the things just to say we won. I’d give the tickets away every week. It’s something that people need to know about the people to whom they’re either reporting to. It doesn’t just go one direction.
I think that there’s intergenerational collaboration that can definitely take place. It reminds me of when I used to train companies how to get along based on having them understand the Myers-Briggs test. No matter which personality test you give, you get people to understand what their preferences are. Once you understand that your preferences are different from somebody else’s preferences, then you can work well together.
I think that that’s a big issue in the workplace. We’re not finding out more about every individual in a team and they’re just shoving a bunch of people together and saying, “Work it out.” I’m curious what you’ve seen with teams. What’s made them work well together? How do you foster a culture that encourages intergenerational collaboration?
I believe it starts at the top with leadership. Number one, they have to foster that type of environment that really places emphasis on diversity of thought. They should be interested in hearing what everybody has to say. No matter how pie in the sky it might be or how status quo it might be. A lot of times when you have leaders that open the door for that type of dialogue, it does open up the workplace. The other thing that I would say is our leaders have to learn how to promote intergenerational work teams.
Human nature is, we gravitate to people like ourselves. It’s less likely that that Gen z is going to gravitate to the mature and hang out and collaborate. What happens is when you put these groups together, you can get great collaboration and great innovation. What I’ve found from talking to all these generations is each generation possesses unique knowledge, skills and abilities that the other generation doesn’t have.
They need each other and you put them together. It’s the old fruit salad concept. Each fruit individually is great but you put it together and it makes something even greater. It’s the same thing of mixing the generation in the workplace. The other thing is ensuring that you have that bench strength. In a lot of our workplaces, we find that many of our older workers are being let go or retiring and they haven’t filled the gaps for the up and coming generations. They’re out there trying to learn on their own. In a lot of ways, they’re not being as successful as they could be.
It’s very challenging to be in a workplace where you feel a sense of like you’re not where other are within the organization. You’ve got so many people that have been in there forever. I’ve worked with younger managers in their thirties where they’re working with leaders and managers who were reporting to them because they’ve just stepped back. I could feel the intimidation that these young managers felt, that it wasn’t easy trying to manage older people.
You could feel the older people rolling their eyes at the younger people. It made me feel bad for both groups sometimes because if you just talk about the elephant in the room and just admit, “I’m not going to know everything and I need your expertise because you’ve lived there.” Why does there have to be this blowfish-puffer fish mentality? Don’t you think that’s important to admit if you don’t have the experience, if you’re younger?
It is important to admit. Those are some of the barriers that we just have to break down and get rid of. Our Millennials in particular and perhaps our Gen-Xers, they have a lot of great skills but they don’t know everything and they haven’t experienced a lot of things that our Boomers and the matures have. Just asking the questions like, “Have you seen anything like this before?” can prevent them from going down a wrong path.
The solution might not be exactly what a Baby Boomer would have come up with, but together by having that history they could come up with an even better solution. On the other hand, you have your matures out there. Think of all the knowledge that they have and everything that they’ve seen and how much more they could achieve if they just had the technical skills of a Millennial or Gen Z.
I think you’re going to see a lot more collaborating with the younger groups. I’ve had people on the show who say some of the younger groups are split into the motivated and the not so motivated. I don’t know if it’s any different in Millennials or any other generation. You’re going to have the lazy people in any group. It is funny though when I hear Millennials go, “These young kids,” and they’re talking about Gen Z. After Gen Z comes Alpha and then you start all over again. Then there’s confusion about where you fall on this chart, because everybody defines the years a little differently based on what experience you had.
When 9/11 came, that shifted the numbers a little bit of Millennials, of what they called the years. I don’t think it matters if you pick the year to any specific area but you see where you fall on the general spectrum. It will be interesting to see once Boomers are out of the picture, they’re still in there pretty heavy, to the point where we’re seeing with the traditionalist. What do you think is going to be the biggest change we see in the workplace?
I see a couple of changes that are already trending. Particularly with our Gen Zs, they are beginning to show us who they are. That’s quite evident with how they speak their mind and how they organize behind the gun control laws. I think from a training perspective, the workplace is going to change and that’s because some of the Gen Zs are going to college, lots of them are very knowledgeable, but they’re attending these mass online classes that are free. There’s no credentialing. How will they be evaluated when they come into the workplace? They may be the most qualified, but it doesn’t show up on their resume. The other thing that I think is going to start the shift is I think jobs as we know them will change.
I think it will be more so on a contract basis. Instead of having long-term jobs, I think our generations are more set up to attack projects. It’s going to be more project-oriented and when the project changes they’re going to move onto the next project. I think it’s great because it’s going to expose them to a number of different skills that they wouldn’t have captured if not in that position previously. I think that the workplace will change. It won’t be traditional. Since our Gen Zs are the most diverse generation ever, I think it will be them that will have the most impact on the workplace. Like you said, even our Millennials are saying, “I just don’t get those Gen Zs.”
I’m glad you brought up MOOCs, Massive Open Online Courses, since you and I both teach online courses in higher education and a lot of people are all trying to know what the future of education is. Online is huge and there’s so much opportunity. I’ve said very similar things to what you’re saying is I think we’re going to have more of an a la carte thing in education. People are going to pick and choose what they want to learn and where they want to work. I think it’s good because it makes people motivated to perform because they can’t just rest on their credentials. How will that impact that? Do you think we’ll see more competition?
Definitely. The other thing that that’s going to do is to encourage more immediate feedback. Our Millennials, they want constant feedback. On the other side of the coin, they want constant reward as well. I think that by being so much more competitive, it is going to motivate them to do the best. They want to rise to the top to get those advancements that they’ve been seeking.
It’s interesting to see what the expectation levels are of different generations in. There was a great 60 Minutes show many years back I think it was, Here Comes the Millennials, where they come in and they expect to be CEO the next week. There is a sense to me when I talk to a lot of younger people that they get these heavy-duty titles. Do you think that these titles are getting watered down? Do they have the same meaning as they used to have?
I don’t think so. I don’t think they have the same titles. I don’t think the titles have as much impact as they used to have. I think that they are giving these titles to satisfy their Millennial workers. I remember I had to go through a lot of hoops to climb the corporate ladder. It was no easy task, but on the other hand I had annual reviews. When you have annual reviews, you have to work hard for the entire year to get the accolades at the end of the year. The Millennials, they want the feedback immediately.
A lot of our more innovative companies like Amazon, they’ve put processes in place that does just that. I think that it can have both negative and positive consequences. In a lot of those arenas, not only our managers giving feedback, it’s your coworkers giving feedback as well. In those scenarios, if you had a person that that may be angry or just may not like you or they may want to get ahead of you, they could give you some negative feedback which could stifle your growth. I think we have to be very careful when we go into this next phase of how we want to evaluate our employees.
I’m glad they’re reviewing those annual reviews because I can’t tell you the jobs I’ve had where my boss would just say, “Write it and I’ll sign it.” What does that do for anybody right?
It still happens all the time. I liked that they’re looking at performance review in a different way. I think that the yearly review could be a great thing if it was done properly and not like that. It’s so subjective in so many ways too, which is hard to get away from. If you have multiple managers all at the same level and the one guy’s nice and the other guy is mean, and the one girl’s nice, the other girl’s mean. You can never get what you think you’re going to get because of that.
I think it would be nice to see an equal way to judge people, but I don’t know if that’ll ever happen because there’s so much subjectivity out there. A lot of people are trying to just embrace this change because it takes being proactive to see what’s going to happen with Gen Z or what’s going to happen when the Boomers retire. I think that that’s great that you’ve written this book. How do you work smarter, not harder?
You don’t have to reinvent the wheel. For example, our Millennials coming into the workforce, what we do is not going to change but how we do it will change. Instead of trying to come up with a whole new process, go and talk to your coworkers. See what has been done, see what didn’t work and why it didn’t work. Maybe you could resurrect that but put a different twist to it. That’s how you can work smarter, not harder.
If you have to reinvent everything from scratch, you are definitely working harder and it’s going to take more time and more resources. You may or may not improve the quality. That’s another challenge in the workplace. In addition to all of these different generations, the workplaces have been plagued with fewer resources. What they’ve been doing is asking the resources that are in place to do more with less. You have to find ways to work smarter, not harder.
It’s going to be a really interesting workplace. I love watching what’s happening with all the changes. I’m really a fan of technology and with the newer generations, all of the things that they’re able to do. It’s going to be a whole different workplace than anything that we saw, at least in my day when the mad men were running this place. It was so fun for me to watch Mad Men. That’s exactly how it was and it’s hard to believe that it changed that much but things have definitely changed.
I think that all the information you offer to help people understand the multigenerational workforce is huge. It’s needed out there because we’ve never had a time like this. I’m sure a lot of people would like to know how they can get your book, how they can find out more about you and what you do. I’m sure you do speaking and all those types of things in so many places that so many people could benefit. If you could share your websites or any contact information, that would be great.
First of all, I have a brand-new squeeze page that’s hot off the press. It’s www.YesYouCanWithAPlanBook.com. It talks about my book. It has a short video out there. It has a place where visitors can put in their contact information. Additionally, you can follow me through LinkedIn and I’m listed as Dr. Cynthia Simon.
For those that are interested in consulting or speakers, I’m available to come to your organization or come to your group meetings and speak on topics related to the multi-generations in the workplace. Workplaces are not the only place that we have multiple generations. We now have multiple generations staying in our household. I’ve been speaking to more social services group as well as churches on the subject as it applies to the generations in the home or how that spills over into different aspects of life. I think this is a topic that is just not one dimensional. It overlaps everything that we do.
That’s such an important point and I’m so glad we had a chance to talk about this. It was so nice of you to be on the show. Thank you again.
Thank you for inviting me. I really enjoyed it.
You are welcome.
Creating Positive Cash Flow From Income Properties with Jason Hartman
I am here with Jason Hartman who is a successful investor, lender, developer, entrepreneur and author. He is the president of JasonHartman.com, where he is the producer of fifteen podcasts and eleven books, including the Creating Wealth real estate investing show. Jason is dedicated to educating investors on economy markets and how to create positive cashflow from income properties and other investments. It’s so nice to have you here, Jason.
I see you’ve been everywhere from Forbes, NPR, MarketWatch, Investor’s Business Daily and Wall Street Journal. You’re really getting your message out. I think it’s great to find out some of the tips that we can find out about real estate investing with the changes in the tax situation. I’m not in one of the best states for tax situations. I’ve got a lot of questions for you. I’m looking forward to this.
You’re not in a bad state. I’m from California, which is confiscatory tax rate. Arizona is a lot better than California, but you can move to a no income tax state and pay zero in terms of state income taxes. There are a lot of options out there. Since we’re talking about taxes, Diane, maybe we’ll start with that for just a moment. The single largest expense in any of our lives is taxes.
So many people are bored by this topic. They roll their eyes back, “Let my CPA deal with that type of thing.” It is imperative that we as entrepreneurs, as leaders, as investors, learn about taxation and learn how to minimize our tax burden. If someone was shopping for a new car, they would spend lots of time researching, reading consumer reports and test driving many cars. When it comes to taxes, they don’t do much. I think that is an equation that needs to be fixed.
It’s a tough area because I just did a number of laws out there and we’re talking just real estate. There are so many other factors and it is hard. I’ve had other experts on the show who were mentioning you can live tax-free if you do this or that. I think that some of us would love to figure out how to do it but we don’t know who to trust and we don’t know what the biggest tax draining areas are. I imagine real estate’s pretty high if you don’t do it right.
Real estate is the most tax-favored asset class in America.
What are your options of what you could be getting that you’re missing.
The tax deductions are fairly simple on the real estate side. It’s fairly easy to live tax-free. You just stop earning income and you’ll be tax-free.
Is it the 1041 Exchange that people miss that they sometimes pay a lot of taxes? I have a real estate license and I remember there’s a very slim window that you have to be able to do certain things in residential versus commercial. Are you dealing mostly with residential or are you dealing with commercial?
Mostly residential income properties that are held for investment. Our firm deals with 100% investors. We help people build real estate portfolios nationwide. What you were referring to earlier is called the 1031 Tax Exchange. It’s one of the great benefits of income property but there are other tax benefits as well. There’s the potential protects deductible travel to where your properties are located.
The Holy Grail of tax benefits with income property is called depreciation. When someone buys a property, Diane, they usually think of that as one single component but it’s really two things that they’re buying. One component of these two components is land. The land that the house or the apartment building is sitting on. The other component is the improvement or the house or the apartment building or the office building sitting on the land.
The IRS allows us to depreciate that structure, that building, sitting on the land, that improvement. They allow us if it’s residential to depreciate it very quickly over 27.5 years. The theory behind this is that one day the house will fall to the ground. It will have no economic value and at that point, since it’s a business, you would be able to deduct the loss of your business equipment.
Just like if you had a factory and you had a machine that makes widgets. If the widget machine dies, you could deduct it but what you really do is you depreciate it over a schedule. The difference is the property doesn’t really depreciate, at least historically speaking. It appreciates. That’s where the beauty comes in. You can have a property that is appreciating producing positive cashflow where the tenant is paying down the mortgage for you.
Inflation is reducing the value of the mortgage for you behind the scenes and you can be taking a tax benefit even though you’re making a profit. Normally if we want a tax benefit, we have to spend money or have a loss. In income property, it’s the only asset class I know of where you could actually be making a profit and still have a tax benefit. It’s the most tax favorite asset class in America.
I think the problem I was alluding to was with some of the people that have lost money and all the different things that happen to get people involved in the different kinds of investing to either home ownership or whatever. I saw a lot of people who got hurt when subprime got big because we all thought that the market would do something that it didn’t.
We thought that people who had poor credit would be able to refinance when things got better. They took a tough interest rate hoping they’d fix their situation with their credit. They’d be able to refinance into a better rate and everything is going to appreciate. The supply and demand made things tough and the market crashed. How do we know that that’s not going to happen again?
We don’t know. Here’s what we do know. We do know it will happen again. It probably won’t happen that drastically again in our lifetime. Here’s what we do to protect ourselves. We follow one of my ten commandments of successful investing. It’s commandment number five, Diane. That commandment is, “Thou shalt not gamble.” It says that the property we’re considering investing in must make sense the day we buy it or we don’t buy it. Let’s define making sense. We don’t buy properties for appreciation. We don’t buy properties for speculation.
We don’t buy properties based on the greater fool theory, which says, no matter what I pay for this property, some greater fool will come along and pay more. That’s crazy because eventually you will run out of greater fools. What we do is we buy for cashflow and we buy for yield. Yield is pretty reliable, Diane. Appreciation or depreciation, not very reliable at all. It’s very hard to predict the cycles. As I’ve become older and more conservative, and I’ve been a real estate investor since I was twenty years old when I bought my first property in Huntington Beach, California and it was a rental property.
I invest for cashflow. If you do it relatively right, not even great, you can realistically earn a very high return because the property is a multidimensional asset class. Other investments are either one or two dimensional. Income property is five dimensional. The typical investment, if you were investing in cryptocurrencies, non-dividend paying stocks, precious metals, or non-cashflowing real estate, inexpensive markets like the West Coast or the Northeast or South Florida, those markets are crazy. Those are called cyclical markets. They have very severe up and down cycles. When it’s going up, everybody’s a genius in a bull market. When it’s going down, it’s tragic and everybody loses their fortunes.
Avoid cyclical markets that don’t have cashflow and invest in conservative linear markets where the property makes sense from day one because it produces a yield based on the rent-to-value ratio. Even through the great recession, income held up on properties fairly well. It wasn’t perfect, but it’s pretty reliable. People need a place to live. Most of them will pay their rent on time every month. You’ll get a few bad apples here and there, but you’ll get income.
Just because of the income component, the cash-on-cash return of the investment, it is very realistic to earn 10% to 13% on the cash-on-cash, in the right properties, in the right locations. The overall return on investment, with all of those multidimensional features, you can earn over 20% annually. The property doesn’t have to go up in value. I’ll just keep it. Why would you sell something that produces a good return? Just to hang onto it for the long-term.
There are some factors. I’ve had my own investment properties and you have to deal with property managers. You have umbrella policies, and then there’s also the nonowner-occupied situation. If you’re in an area where they don’t want too many non-owner occupiers, which are investment properties in a regular neighborhood.
Let’s unpack that. Those are really good points to bring up. First of all, management. A lot of property managers are crooks. My company vets and recommends property managers but regardless of all of that, what we do is we exert a lot of leverage. We like volume customers and so we get to dangle the carrot of future business. That is what makes them perform. I’m not saying anybody is doing anything out of goodwill or charity. I’m saying they’re doing it out of pure greed and capitalism. It’s because we have such a volume of customers, they pay attention.
The second thing is we teach people how to self-manage properties from a distance. In the peak of my diversification, I owned properties in eleven states in seventeen different cities. I made the mistake of over diversifying. My recommendation from my lesson that I learned personally is to diversify into three to five markets. At least three, not more than five, nationwide. People go to JasonHartman.com and click on the Properties page, they can see the different markets that we like and recommend, which will change in the future. You take the most historically proven asset class in diversified geographically.
The other thing is you can self-manage these properties from a distance. When I fell into self-managing a property that was 2000 miles away from me, I never would have thought that was possible. It is, a lot of our clients do it. With the technology and tools available, it really is quite easy. In fact, sometimes it’s easier than having a property manager. You talked about the owner occupancy ratio in a neighborhood, where there would be too many rentals or too many investors. I believe you were referring to the homeowner’s association or HOA.
The first thing I’d say is I don’t love associations. I would try to generally avoid them or if you don’t avoid them, be in an area that has what I call HOA Lite. In those areas you’re paying small homeowner’s association dues of maybe $30 a month. They don’t exert a lot of control over the area. They do exert some control to make sure your neighbor doesn’t paint their house purple or repair their car on the lawn or whatever.
Those are fine, those are tolerable, but we do not really recommend condos. Condos are problematic on many levels. I don’t want to say never, because I have made money on condos, but the deal has to be really good to intrigue me. Definitely the single-family home is the most historically proven asset class in the world.
I agree and trying to get loans is very challenging. I did a lot of underwriter training in one of my jobs. I found it really interesting to see what they approve and what they don’t improve and different things. It takes money to make money and so it takes money to buy these houses. Even if you can get a low down payment, you’ll eventually have a certain number of mortgages of it versus how much income you make. This is not for any person to be able to step in and go, “I’m going to buy a bunch of houses.” What percent are you putting down when you’re saying that you can buy multiple properties like these?
What do you think is the thing that makes you pick a certain area as being the place to go? What is it that you say you’re looking for? I figured you have an algorithm to calculate that of where to go. Is it based purely on taxes or what other factors?
There’s more to this. People can listen to my podcast, the Creating Wealth show and hear the in-depth detail about it. Let me give a very cursory outline of your question. There are three basic types of real estate markets in the entire world. It doesn’t matter what country you’re in, it’s linear, cyclical and hybrid. The cyclical markets we talked about before, they are the West Coast of the United States and the South Florida. They’re the ones that make all the news. They are the famous markets. Around the world, the cyclical markets are London, Dubai, Hong Kong.
The linear markets by contrast are the boring markets. They are the places you don’t hear about on the news. They are places was like Atlanta, Memphis, Indianapolis, Little Rock, Arkansas. The only story to tell is the investors are getting great returns on their money, but they’re not high-flying markets that are going through the roof. They’re also not markets that are dropping through the floor in the next recession. They’re pretty consistent.
The hybrid markets are right between the two. Where you are and where I lived, the Phoenix metro area, that is a hybrid market. Denver is hybrid. Austin is hybrid. Even Atlanta moved to the hybrid side. I said it was linear before. We used to do a lot of business in Phoenix, Denver and Austin but we don’t do any business in any of those now. The hybrid nature of those markets means that the prices are too high in comparison to the rental income.
There is a very simple rule of thumb that your audience can use to instantaneously analyze a deal. If you want to spend 28 minutes on this, there’s a great free video at JasonHartman.com that’s entitled How to Analyze a Real Estate Investment. It takes them through in 28 minutes the entire pro forma and as the free crash course on real estate investing that everybody should take. The rent-to-value ratio we want to see is approximately 1% per month.
For example, if it’s $120,000 house, we want to get around $1,200 a month. If we can achieve that, we’re doing great. By contrast in Phoenix, in a suitable rental property, you would pay $220,000 and you might only get $1,400 or $1,500 per month. In Los Angeles, by supreme contrast, you would pay $600,000 and you would only get about $2,200 to $2,500, maybe $3,000 a month if you’re lucky. The rent-to-value ratio in Los Angeles is only 0.5% at best versus 1%.
All this brings to mind is that there’s all these different states. If I want to buy something in Arizona, I have the license, that’s one fee I don’t have to pay. The convenience of having real estate license and also the people not calling me in the middle of night was a convenience of having a property manager. I know you say you can do all these things through technology, but aren’t people still interrupting you in the middle of the night? How are you able to get these properties in other states if you don’t have a real estate license or do you?
That’s our business. I’ve been helping people invest nationwide. I used to be a regular local realtor. I spent many years in the real estate business in Orange County, California, in Irvine and Newport Beach. I had a traditional real estate company. I sold it to Coldwell Banker in 2005. I got 64 people working there. I sold that company and then I got into the investment business and I was doing them both together. We hope people source the right properties in the right markets. We help them manage them. We provide software and tools to make it all work. We call ourselves the complete solution for real estate investors. You can learn more on my podcast at JasonHartman.com.
They don’t need their real estate license?
No, they don’t. We match them up with the right providers. I want to address that property management myth that you just repeated. What happens when the toilet jams and the tenant calls you at 3:00 AM? I’ve had hundreds of tenants. I have never received that phone call. I have my cell phone sitting by the bed, but it’s off. Nobody would expect people to come to their house at 3:00 AM and unplug the garbage disposal. It just doesn’t happen.
You have a network of people that will go to the house when the phones start ringing the next morning, I imagine.
I want to ask you a question, does the property manager answer the phone at 3:00 AM? Does the property manager go to the house at 3:00 AM? No, they don’t do that either.
I don’t know what they do, but I was glad that I didn’t have to do it. I’m glad that you cleared that up and this has been really interesting. Thank you, Jason. I think everybody can learn a lot from this. I hope everybody takes some time and to check out your site one more time. Do you want to share your links?
It’s JasonHartman.com. I have a very popular podcast. It’s one of the oldest, if not the oldest real estate investing podcast on iTunes or Stitcher Radio or whatever podcast platform. You can just type my name, Jason Hartman and find the Creating Wealth show and it’s all 100% free. We’ve got over 1,000 episodes and have interviewed a lot of famous guest experts on the topic of economics and investing. It’s much broader than just real estate. We talk a lot about a lot of interesting things. Check it out.
Thank you so much.
Thank you, Diane. Happy investing to you and your listeners.
Thank you so much to Dr. Cynthia Simon and to Jason Hartman. What a great show and if you’ve missed any past episodes, please go to DrDianeHamilton.com. You can go to the radio show there, find out more about that and also find out about my consulting and speaking business and books and everything else that I’m working on. I hope you enjoy that and I hope you join us for the next episode of Take the Lead Radio.
About Cynthia Simon
Dr. Cynthia Simon is an author, speaker, consultant, and educator. Her expertise includes: Employee Engagement in a Multigenerational workforce, Change Management, Employee Engagement, Survey Administration & Action Planning, Recognition & Rewards, Training & Development, Relationship Management, Innovation Campaigns, Learning Assessments, Metrics & Reporting, Diversity & Inclusion, and Communications.
About Jason Hartman
Jason Hartman is a successful Investor, Lender, Developer, Entrepreneur, and Author. He is the President of JasonHartman.com, where he is the producer of 15 podcasts and 11 books, including the Creating Wealth Real Estate Investing Show. Jason is dedicated to educating investors on the economy, markets and how to create positive cashflow from income property investments. Jason is also started The Jason Hartman Foundation to provide Financial Literacy for Youth. His work has been featured in Forbes, NPR, MarketWatch, Investor’s Business Daily, and The Wall Street Journal.
- Dr. Cynthia Simon
- Dr. Maja Zelihic
- Yes You Can, with A Plan, Work Smarter, Not Harder, How to Make the Most of Your Multigenerational Workforce
- Dr. Cynthia Simon – LinkedIn
- Hartman Media Company
- Creating Wealth
- Properties page – Jason Hartman’s website
- How to Analyze a Real Estate Investment
- Creating Wealth Show on iTunes
- Creating Wealth Show Stitcher Radio