February 5, 2010 ·
Marketing gurus, famous authors / speakers and successful business owners use this easy little secret to unleash the power of online video to drive traffic, leads, sales and profits. Even businesses that have never marketed online before have created revenue in just one day. Now you can learn about the power of marketing with online video as Jason talks with the creator of Traffic Geyser, Mike Koenigs. Listen at: http://www.jasonhartman.com/radioshows/. Some of Mike’s clients include Tony Robbins, Paula Abdul, Deepak Chopra and Debbie Ford. Geek, surfer, marketer, video producer and didgeridoo player, Mike is best known as the guy who created the Web 2.0 syndication service, Traffic Geyser that distributes over a million videos per week and generates top ranking, web traffic and leads in minutes by sending video content to over 70 video sites, social bookmarking, social media, blog and podcasting directories.
Mike grew up in Eagle Lake, Minnesota (pop. 763) where he taught himself how to program at age 14. He wrote video games for the first Mac game company, PCAI. In 1991, he co-founded Digital Café, one of the first interactive multimedia agencies that produced the world’s first branded CD-ROM game, “Chex Quest” and shipped in more than six-million boxes of General Mills cereal. Digital Café produced many of the world’s first movie web sites, promotional screen savers and games for Sony, Columbia-Tristar and 20th Century Fox. He sold the company during the dotcom boom to publicly-held IPG and billion-dollar agency Campbell-Mithun in 1999.
He’s credited for making “Infomercial Toolkit” and inventing the “Internet Infomercial” for marketing and selling products or services with video on the web.
Michael has served as a producer, marketer and consultant for Sony Entertainment, 20th Century Fox, 3M, General Mills, Dominos Pizza, Ralston, Mazda Motors and New York Times bestselling authors. He’s created over 300 web sites and more than 30 products. Register for Jason’s upcoming events, The Creating Wealth Boot Camp and The Masters Weekend at: http://www.jasonhartman.com/store/events/
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February 2, 2010 ·
We’re putting enough real estate and business brainpower in one room to make Donald Trump flinch. Enjoy this content-rich sampler of “The Masters Weekend” our twice annual powerhouse educational event that can revolutionize how you think about money and wealth. Listen at: http://www.jasonhartman.com/radioshows/. Will you be any closer to financial freedom in one year? Listen in and it can make all the difference if you simply have the courage to take action on your dream. The reality is you can fire your boss and live life on your own terms sooner than you think. Wall Street Investing Does NOT Lead to Financial Freedom.
The following information might surprise you:
- Income producing properties are history’s most proven wealth creator.
- Making money in real estate is NOT just for big spenders. There are investments out there which require very little cash up front, yet have the potential for exciting returns.
- It’s a fact. The vast majority of wealthy people made their fortune investing in income property. Why do anything else?
- Learn every skill you’ll need for success: analysis, acquisition, management and wealth preservation techniques.
Our speakers come armed with the latest in shrewd real estate investing techniques, and will address such issues as:
- The smart way to choose your properties
- How to grab every tax benefit the law allows
- How to put together the most creative financing package possible
- The hidden power of the 1031 Exchange
- How to easily invest in dynamic growth markets outside of California
In part two you’ll hear one of Jason’s articles from his “Financial Freedom Report” addressing Obama’s rather scary comment; “we’re out of money now” and why this can be great news for investors. Our next show will be on asset protection and entity structuring with the author of “Lawyers Are Liars.”
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January 29, 2010 ·
Jason interviews his early mentor Dr. Denis Waitley on “The Psychology of Winning.” Listen in at: http://www.jasonhartman.com/radioshows/. At age 17, Jason discovered Waitley and it was a life altering event leading to his early and sustained success. Waitley is one of America’s most respected authors, keynote lecturers and productivity consultants on high performance human achievement. He has inspired, informed, challenged, and entertained audiences for over 25 years from the board rooms of multi-national corporations to the locker rooms of world-class athletes and in the meeting rooms of thousands of conventioneers throughout the world. Recently, he was voted business speaker of the year by the Sales and Marketing Executives’ Association and by Toastmasters’ International and inducted into the International Speakers’ Hall of Fame.
With over 10 million audio programs sold in 14 languages, Denis Waitley is one of the most listened-to voices on personal and career success. He is the author of 15 non-fiction books, including several international best sellers, “Seeds of Greatness,” “Being the Best,” “The Winner’s Edge,” “The Joy of Working,” and “Empires of the Mind.” His audio album, “The Psychology of Winning,” is the all-time best selling program on self-mastery.
Denis Waitley has studied and counseled winners in every field from Apollo astronauts to Superbowl champions, from sales achievers to government leaders and youth groups. During the 1980’s, he served as Chairman of Psychology on the U. S. Olympic Committee’s Sports Medicine Council, responsible for performance enhancement of all U. S. Olympic athletes.
Dr. Waitley is a founding director of the National Council on Self-Esteem and the President’s Council on Vocational Education, and recently received the “Youth Flame Award” from the National Council on Youth Leadership for his outstanding contribution to high school youth leadership. As president of the International Society for Advanced Education, inspired by Dr. Jonas Salk, he counseled returning POWs from Viet Nam and conducted simulation and stress management seminars for Apollo astronauts. A graduate of the U. S. Naval Academy at Annapolis, and former Navy pilot, he holds a doctorate degree in human behavior. Upcoming shows will feature: Asset Protection Attorney Mark Kholer, Marketing Guru Ted Nicholas, Federal Reserve Commentator Andre Eggeletion, Video Marketer Mike Koenigs, Internet Money Machine Yanik Silver, Organizational Expert David Allen and many other thought leaders
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January 27, 2010 ·
Jason talks with real estate “artist” and 5-time international best-selling author, philanthropist, risk-taker and visionary, Frank McKinney, who sees opportunities and creates markets where none existed before. Listen at: http://www.jasonhartman.com/radioshows/. McKinney’s first job earned him $180 a week digging sand traps on Deerfield Beach golf course. At age 22, he bought his first $50,000 fixer-upper, selling it a few months later for a $7,000 profit. Now, over 23 years later, he creates real estate markets where others dare to tread. He has built spec homes (without a buyer) valued in the tens of millions of dollars. A true maverick, he is without peer in the risky world of speculative high-end real estate, shattering price records with each new project. And his latest? McKinney just completed “Acqua Liana,” the world’s largest and most opulent triple certified (USGBC, FGBC & Energy Star) “green” mansion at $29,000,000. Each of the estate homes he creates is a one-of-a-kind work of art, infused with vivid imagination and designed on a canvas of sun-drenched Atlantic ocean.
Prior to the completion of his new multi-million dollar “green” mansion, he sold, with an asking price of $50 Million, the largest and most expensive spec home ever created, containing 72 rooms, 32,000 square feet, 12 bedrooms, 18 baths, and a 14 car garage. McKinney has created and sold 36 oceanfront properties with an average selling price over $14 million.
In addition to his real estate artistry, Frank McKinney has now become a five-time international bestselling author. In addition to his first two books, McKinney just released three new books simultaneously, each representing a distinctly different genre. All three books are published by Health Communications, Inc., best known for the Chicken Soup for the Soul series. Mr. McKinney’s new titles are; 1.) The Tap, 2.) Burst This! Frank McKinney’s Bubble-Proof Real Estate Strategies, and 3.) Dead Fred, Flying Lunchboxes, and the Good Luck Circle.
His vision and risk-taking has been the subject of numerous international television, radio and print features. McKinney was recently featured on ABC’s 20/20 with Martin Bashir, the cover of USA Today, the Oprah Winfrey Show, CBS’ The Early Show, CNN, Discovery Channel, Travel Channel, HDNet, CBN TV, National Public Radio (NPR), in The Wall Street Journal, NY Times, Bloomberg, Fortune, Barrons, Town and Country, Robb Report, The Nightly Business Report (PBS) and in over 1500 additional TV and print stories. Several areas are covered in this exciting episode ranging from real estate, motivation, marketing and spiritual growth. Next up – one of Jason’s all-time favorite mentors, Dr. Denis Waitley, on The Psychology of Winning and The Seeds of Greatness.
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January 26, 2010 ·
Jason talks with Sara, Eric and Jim about the nitty-gritty details of non-owner occupied financing with conventional loans, construction and low-down rehab financing. In a challenging lending environment you need all the help you can get, you need the real story, you need the facts rather than the usual hype promulgated by the mortgage industry. Listen at: http://jasonhartman.com/radioshows/. Many new and experienced investors purchase great properties with high hopes only to find that obtaining a mortgage may well be nearly impossible. In this show we’ll roll up our sleeves to explore myths and misconceptions about financing. Future shows will include: a rich sampling of “The Masters Weekend: A Gathering of Experts,” Dr. Dennis Waitley, Mark Kholer, Ted Nicholas, Andre Eggeletion, Charles Goyette, Mike Koenigs, Frank McKinney, Yanik Silver, David Allen and many other thought leaders. Be sure to join us for The Creating Wealth Boot Camp on 2/20! Info and registration at: http://jasonhartman.com/store/events/
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January 19, 2010 ·
Jason talks with “The Celebrity Lawyer” – Nick Nanton who is known for his role in developing and marketing business and professional experts into Celebrity Experts in their field to help them gain credibility and recognition for their accomplishments. Listen at: http://www.jasonhartman.com/radioshows/. By Celebrity Branding® yourself as the expert in your field, you are able to distinguish yourself and your business in such a way that you can stay ahead of the competition. While prospects may shop other alternatives for your product or service, in the end the only way that they can get You and your unique talent is to buy from you and your business. This method of growing a business not only offers the advantage of brand identity but also creates the highest level of relationship building with a personality driven brand. Upcoming shows will feature: Mark Kholer (asset protection), Ted Nicholas (marketing), Andre Eggeletion (The Federal Reserve / monetary policy), Dr. Denis Waitley (success), Charles Goyette (The Dollar Meltdown), Mike Koenigs (TrafficGeyser) , Frank McKinney (upscale developer), Yanik Silver (internet affiliate programs), David Allen (Getting Things Done) and many other thought leaders.
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January 14, 2010 ·
The mortgage meltdown altered the landscape of real estate investing. While some of yesterday’s most favored strategies will not work going forward, today’s savvy investor can still find great opportunities for growth and profits-if they understand how recent events could shape this industry over the next few years.
Jason talks with author Steve Bergsman about the state of various market sectors – including commercial, residential, and leisure real estate. Listen at: http://www.jasonhartman.com/radioshows. Get direction as to where things are headed, so you can make the right decisions on property investments during the coming years. The new decade will produce multiple investment currents. By separating the asset classes that will remain stable from those that will continue to lose value going forward, you’ll will gain insight on the changing marketplace. Recent developments have hurt some investors, but they have also opened the door to profitable new opportunities down the road.
Upcoming shows will feature: Nick Nanton on Celebrity Branding, Mark Kholer on Asset Protection, Ted Nicholas on Marketing, Andre Eggeletion on The Federal Reserve, Dr. Denis Waitley of The Psychology of Winning, Mike Koenigs on Scalable Video Distribution, Frank McKinney on Mansion Development, Yanik Silver on The Internet Lifestyle and many other success leaders.
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January 10, 2010 ·
Most of us spend lots of time shopping around for the best deal on the things we buy while spending more money on taxes than anything else. Why not “shop around” to save money on life’s single largest expense? Join Jason as he talks with famed CPA, Diane Kennedy, about the tax strategies of wealthy real estate investors and business people. Listen at: http://www.jasonhartman.com/radioshows/. Diane Kennedy, a preeminent tax strategist, is the founder of USTaxAid Services, a leading tax firm that works with clients throughout the U.S. and founder of TaxLoopholes, an award-winning online tax education site. Diane is the author of The Wall Street Journal and Business Week bestsellers, Loopholes of the Rich and Real Estate Loopholes, and co-author of The Insider’s Guide To Real Estate Investing Loopholes, The Insider’s Guide to Making Money in Real Estate, The Insider’s Guide to Tax Free Real Estate Investing and Tax Loopholes for eBay® Sellers. In June 2008, Diane was invited to participate in the first White House Roundtable for Financial Literacy, sponsored by the White House Faith-based and Community Leader Initiative. She has also been invited to private meeting with members of the Senate Finance Committee and House Committee of Ways and Means regarding key tax initiatives. She has written for The Tax Savings Report, Investment Advisor Magazine, Personal Excellence, the Money & Finance section of Balance Magazine and numerous others. Upcoming shows will feature: Steve Gergsman, Nick Nanton, Mark Kholer, Ted Nicholas, Andre Eggeletion, Dr. Denis Waitley, Charles Goyette, Mike Koenigs, Frank McKinney, Yanik Silver, David Allen and many other thought leaders
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January 7, 2010 ·
We live in a spectacular time of ever-changing technology. With the pace of technology steadily rising and the competition of companies trying to stay in business, innovative media concepts are a necessity. Jason welcomes new media technology expert and founder of MORE Media Group, Bill Ganz, on this episode of The Creating Wealth Show to share his latest accomplishments in the new media revolution. Visit http://www.jasonhartman.com/radioshows/. With more than 20 years of professional media experience, Bill has a successful media-marketing background and has supported the marketing efforts of many companies such as Epson, Nissan, Kenwood, Pentax, Fender music and Haier electronics. Ganz also has recently received a Horizon Interactive Award, two Telly awards, a DV award, two Marcom Awards, the AVA award, an EmPixx award and two Communicator awards. Bill is considered one of the top implementers of corporate marketing in the United States using viral and innovative other methods. Listen in as the founder of the MORE Media Group discuses practical new ways to communicate rich multi-media experiences over the internet. Upcoming shows will feature: Diane Kennedy, the nation’s preeminent tax strategist and founder of TaxLoopholes.com and Steve Bergsman, real estate columnist and author of “After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade.”
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January 7, 2010 ·
The “Barbell” strategy of investing
In the marketplace of ideas, there is no shortage of strategies for investing to produce superior returns. These range from the ‘crackpot’ infomercials schemes that infest early morning television to people that are afraid of the stock market altogether, and also include the research of Nobel laureate economists. The key question for an aspiring investor to ask is what they can learn from each method and strategy.
Let’s start with the Nobel economists. There have been many prominent thinkers who have extolled the virtues of portfolio diversification as it relates to investment in the stock market. The analysis and conclusion of their models are very logical and convincing. When combining securities whose price volatility is not highly correlated, the aggregate effect can be to lower the volatility for the total portfolio, while still preserving average returns. The factor that this analysis misses is the impact of rare, but catastrophic events like a total market collapse. While it is true that portfolio diversification can reduce normal volatility, it is also true that this diversification will not protect against a systemic market disruption.
On the other end of the spectrum, we find people who are afraid of the stock market altogether. Many of the people who express this sentiment were heavily influenced by the stock market crash of 1929 and the great depression. Typically, these people gravitate toward the perceived safety of bonds in lieu of stocks. The implicit problem with this strategy can take one of two flavors. The first is if the bonds are conservative low-interest instruments with guaranteed principal values. There is a significant risk that the value of these bonds will not keep pace with inflation. The other side of risk with bonds is if the investor seeks out high-risk bonds that pay out attractive interest rates, but are issued by companies in dangerous financial condition that may default on their debt obligations.
The final piece of the spectrum is the ‘crackpot’ schemes that are pushed by slick-sounding hucksters. Most of these so-called ‘fool proof’ systems promise fabulous returns by following a few over-simplified steps. Typically, these systems are designed for a particular market environment. When the market shifts, the strategies that once produced tremendous wealth can suddenly generate crippling losses. A prime example is the ‘house flipping’ mania that swept across the country during the real estate bubble. One investor after another reported tremendous gains from buying houses, doing modest rehab work, and then re-selling the house for a significant profit. This system seemed to be working great until the market shifted and the speculative buyers disappeared. At that point, there were suddenly a large number of people holding investment properties that they couldn’t afford to pay the mortgage on, could no longer afford to rehab, and were not able to rent out for a sufficient amount of money to pay the mortgage and taxes.
Each of these strategies carries strengths and weaknesses. The optimal way to blend these factors in an advantageous way is what has been affectionately labeled the “barbell” strategy. The basis for this name is based in the notion of combining relatively stable assets such as income real estate with speculative investments such as stock options. Traditional investment theory recommends channeling funds into the middle of the investment spectrum with a diversified stock portfolio. However, the impact of rare events has shown a need for stability that stocks do not adequately provide. Thus, in order to capture upside growth opportunities it is optimal to speculate with a small portion of the total investment portfolio so that the risk of loss is mitigated by the stable portion of your portfolio.
In the end, this style of investing defies almost all of the advice that is popular in the news media. Traditional advice is tilted toward primary investment in the false sense of security that is offered by a ‘diversified’ portfolio of stocks. Unfortunately, this strategy lacks the ability to withstand rare market disruptions, while possessing a limited upside growth opportunity because of the portfolio’s diversified nature. Prudent investors should seek to build a base of returns from assets like income real estate that are spread around in fragmented markets so that speculative opportunities can be pursued without endangering the base portfolio value.
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January 5, 2010 ·
There are women all over the world who would like to become rental property investors but many don’t know how to start. According to Creating Wealth Show guest, Lisa Bromma, women have inherent skills that can turn them into savvy and successful real estate investors, even if they have never owned property before. Visit http://www.jasonhartman.com/radioshows. Lisa is the author of many successful books, including Wise Women in Real Estate. This book helps combine the skills women already have with real estate investment know-how from experts in the field, giving you the power to take complete control of your financial future. Tune in to hear the valuable insights into why women make ideal investors… naturally, as well as tools to help you invest successfully. Upcoming shows will feature: Bill Ganz, an expert in new media technology and founder of MORE media group and Diane Kennedy, the nation’s preeminent tax strategist and founder of TaxLoopholes.com.
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January 4, 2010 ·
Re-Inflating the Debt Bubble
Reading the news has never been the best way to inspire optimism. This phenomenon has never been more true than it is today for financially astute people that are aware of causes and consequences. In a recent press conference, the US President was touting a new blitz of government programs to get the US economy “back on track.” On the surface, this seems like a laudable goal, until you consider what is meant by getting the economy back on the track it was previously traveling.
It is not a secret that the precipitous collapse of the US economy was created by a prolific expansion in debt financed investment and consumption. This helix of credit escalated asset prices upward in a speculative bubble until they were so high new buyers could no longer be found to continue paying the ever increasing prices. As the prices contracted, many people and funds with overleveraged positions found themselves ‘upside down’ when values plunged below the purchase prices. This downward vortex was fed further by people who had purchased home mortgages that they did not have the capacity to afford based on the assumption that their homes would continually increase in value. As prices fell, foreclosures increased, which further depressed prices, which created more foreclosures.
Most people of even an elementary education level intuitively know that this much debt cannot be undertaken without a tremendous level of risk. True economic growth is fueled by increases in the level of productivity for labor output that allows a nation to increase the amount of output with the same amount of input. Misalignments of prices from market manipulations frequently disrupt this natural progression of labor productivity increases with boom and bust cycles. The unfortunate fallout of this phenomenon is that politicians are frequently more interested in creating an artificial ‘boom’ that they can claim credit for than fostering genuine economic growth
For evidence of this phenomenon, one must look no further than the efforts of the current Presidential administration to re-inflate the debt bubble as a means of artificially propping up the economy in absence of a discernable improvement in the underlying fundamentals. After many months of campaigning against traditional populist straw dogs of “Greed” and “Corporate America” the people currently in charge are repeating the exact same actions that perpetuated the last debt bubble.
For example, one of the ‘fixes’ proposed was to increase allowable debt levels so that more people could refinance their homes. Another round of government sponsored programs was to give away taxpayer money to new home buyers and new car buyers. In each of these cases, the government is directly encouraging further indebtedness to finance short-term consumption. The philosophy guiding these actions is a belief that this debt-financed consumption will “get the economy moving” again.
Looking at the total credit outstanding across all sectors as a ratio of Gross Domestic Product shows a startling trend of increasing indebtedness. Even more startling is the fact that the recent economic collapse served as little more than a speed bump in this upward trajectory, and all signs point to the current administration accelerating the debt bubble with ballooning record budget deficits and fiscal policy directed at encouraging debt to stimulate short term consumption.
The intense irony of this situation is that it is a carbon-copy repeat of the behaviors that caused the current financial mess in the first place. Sustained economic growth can only come from production and innovation. These things cannot be produced by government fiat or market manipulations. They must emerge from individual people having the right incentives to create valuable products and services. As long as the government continues to engage in ‘smoke and mirrors’ forms of market manipulations and debt bubble inflation, it is not very likely that the necessary conditions for a market recover will emerge.
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December 31, 2009 ·
Human capital is likely your most expensive and most volatile resource. A high quality workforce can be vital to your success. When a company hires the right people who are peak performers it makes all the difference in the world. Most entrepreneurs face enormous challenges finding and retaining “A players.” In today’s uncertain economy, companies cannot stay in business with mediocre “C players” or worse yet “on-board terrorists” who sabotage even the best companies. Industrial psychologist and expert global consultant, Bradford B. Smart, joins Jason Hartman on this episode of The Creating Wealth Show to disclose how some of the world’s most admired and effective organizations are Topgrading their employee quality using proven best practices. Visit http://www.jasonhartman.com/radioshows/. Smart’s highly recognized series of Topgrading materials expand this idea and examine exactly how today’s premier organizations have assembled top-level workforces. Listen in and learn how leading companies win by hiring, coaching, and keeping the best people. Upcoming shows will feature: Author of Wise Women Invest in Real Estate, Lisa Bromma and Mike Koenigs, creator of the web 2.0 syndication service, Traffic Geyser.
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December 31, 2009 ·
Packaging your Commodities: Commodity Investing through Residential Real Estate
For most people, it is difficult to read through a financial newspaper or watch late night television without seeing repeated (possibly obnoxious) exhortations to invest in commodities such as gold or silver. The logic of these advertisements is frequently sound, since it is certainly true that government irresponsibility is leading toward a currency collapse and massive inflation. What frequently gets left out of the analysis is the other options available for investment that offer far greater prospects for return than gold or silver.
At the Financial Freedom Report, we are in absolute agreement over the prospect for commodity price inflation in the future. We are in absolute agreement over the massive deficits, crushing debt, and lax monetary policy of the government being a harbinger of runaway inflation over the coming decades. We are also in agreement over the dimming long-term prospects for the stock market, since there does not appear to be a new pool of investment capital to propel the stock market into an upward spiral like the one experienced over the last 25 years.
The strategy that we advocate at the financial freedom report is to use the attributes of rental real estate to invest in the commodities used for home construction. By following this strategy, we gain ownership of valuable commodities such as wood, concrete, petroleum products, and other building materials with the advantage of leverage from the bank and tax advantages from the government. We affectionately refer to this phenomenon as ‘packaged commodity’ investing because the commodity products are packaged into a residential home instead of sitting in a warehouse. The culmination of this strategy lies in the fact that commodities packaged into real estate investments can be rented to tenants. As an investor, this allows you to purchase commodity products while outsourcing the interest payments to a tenant and hedge against inflation with fixed rate debt, while delaying the payment of taxes through a section 1031 exchange.
*Theoretical example created through www.building-cost.net
The way that this strategy ultimately plays out is that the packaged commodities produce rental income through your property while inflation pushes up the cost of materials and the cost of labor. Over time, these increases in construction costs will generate a ‘rising tide’ that drives up market values. The cost of construction for new homes is split between materials and labor roughly even, with a contractor profit margin right around eleven percent of the construction cost. As the cost of materials and the cost of labor rises, it is likely to drive increases in replacement cost since the contractors do not have the ability to absorb large cost increases into their profit margins over an extended period of time. In practice, this will result in cost increases being passed along to the consumer in the form of higher prices.
Furthermore, it is important to consider the fact that many people need to be paid from the contractor profit margin on new construction. This makes home building an inherently volatile industry, since profit margins can expand or contract very dramatically, depending on the market cycle. Because of this, we advocate a strategy of purchasing attractive rental properties from somebody else instead of moving into the homebuilding business ourselves. This strategy allows us to ‘outsource’ the risks of new construction and focus on finding attractive deals.
*Theoretical example created through www.building-cost.net
An example of how this dynamic plays out is illustrated in the theoretical graph comparing market values against replacement costs. In an environment where the market value exceeds the replacement cost for new construction, it will trigger new housing starts by builders that recognize the opportunity for profits in excess of normal market conditions. In the case of a speculative bubble like the one that recently collapsed, huge amounts of resources pour into the home building industry to pursue the large profits. As this shift continues, the market will eventually become over-built with inventory, resulting in downward pricing pressure as bulders attempt to sell off their inventory at discounted prices.
Once the market value falls below the replacement cost in a given market, it will create a sharp decrease in new housing starts. The reason for this phenomenon is because people will be able to purchase existing homes for much less than the cost of construction from individuals that need to sell or from banks that are attempting to liquidate foreclosures. During this time, builders will find themselves in a terrible financial bind since the market prices will not be high enough to profitably build new houses. In many cases, bulders will have to operate at a loss for an extended period of time while they build out on permits and lots that have already been purchased in an attempt to recourp some of the costs. Over time, if the market values inflate back above the replacement cost, it will trigger another wave of building.
*Theoretical example of market prices and replacement costs
As this boom-bust cycle plays out, astute investors will have tremendous opportunities to profit. The most pronounced of these opportunities is to buy when prices are depressed and sell when prices are inflated. On the surface, this sounds very simple to do but it is an extremely difficult strategy to execute, because it requires prospective investors to move contrary to the prevailing market forces. During speculative booms or value rallies, the pressure on everybody is to buy and buy fast. When values are going up, up, up, there is no shortage of people who are willing to pay silly prices on the belief that they can always sell for a profit. Conversely, when values are depressed it can be very difficult to get the necessary investment capital for financing purchases. There will be more sellers than can possibly be imagined, but buyers will be extremely scarce.
At The Financial Freedom Report, we advocate a strategy of counter-cyclical buying for long term cash flow and appreciation. We prefer to target properties at prices below the replacement cost that generate attractive levels of cash flow. This produces a two-headed benefit of residual cash flows from rental income that can be used to pay for the mortgage, and a naturally low purchase price that is likely to become very attractive when market values eventually regress back toward the replacement cost. The key to this strategy lies in being able to ‘wait out’ the market gyrations with strong cash flow. By avoiding large amounts of negative cash flow, investors will remain solvent so that when inflation pushes up the replacement cost for their property and market values regress back to equilibrium, creating attractive gains in value.
It is unfortunate to think about the way in which the government has created speculative bubbles and inflation. We would all prefer to live with a responsible government, but that does not appear to be a realistic possibility at any point in the near or distant future. Because of this, prudent investors should position themselves to take advantage of government irresponsibility. The best way to accomplish this goal is by capturing attractive purchase prices from deflated bubbles, and by riding the wave of inflation as the cost of materials and the cost of labor push up the replacement costs for properties. By engaging in this strategy for wealth creation, it will place astute investors in control of real assets that produce real value for real people. Over time, this will allow you to side-step market manipulations and speculative bubbles while providing for the needs of yourself and the people you care about.
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December 28, 2009 ·
During turbulent economic times, people can become their own worst enemy. The uncertainty of the stock market creates massive insecurity about our investment portfolios. These doubts are quite reasonable and it is time to stop trusting Wall Street and start being a direct investor by purchasing hard assets which are not subject to the greed, graft and manipulation of CEOs, investment bankers, fund managers and the government. Prudent investing is a prerequisite to The American Dream of financial freedom. Visit http://www.jasonhartman.com/radioshows/. Learn from the mistakes of others rather than “the school of hard knocks.” Tune in to this episode of The Creating Wealth Show as Jason reveals 30 fatal mistakes you must avoid in order to achieve financial independence and investing success. Upcoming shows will feature: Bradford B. Smart, author of Topgrading for Sales: World-Class Methods to Interview, Hire, and Coach Top Sales Representatives and Lisa Bromma, author of Wise Women Invest In Real Estate.
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December 28, 2009 ·
Income Property Investment Myths
Why aren’t more people investing in income properties when it’s the most lucrative, safest choice in history? Good question. Probably because people would rather watch television than improve their financial condition. Sure, everybody says they want to get rich but what are they actually doing about it besides flapping their gums?
Talking wistfully about something you have taken no action to achieve is called whining. Don’t go into the Green Parrot Bar in Key West with that attitude. It’s an official ‘no sniveling’ zone.
So let’s take a quick peek a some of the more common excuses people use to not get wealthy in real estate.
Reason #1 – “I don’t have enough cash.”
Sorry. Not a legitimate reason. Find a great deal and cash will find you. Negotiate the purchase price! Take equity out of your home – it’s losing value by the day in there anyway! Have you looked into the sweet $5,000 down deal Platinum Properties Investor Network has arranged in Atlanta? Next!
Reason #2 – “I don’t have any time.”
Sorry. Everybody’s got time. You need to prioritize. We’re talking about your financial future here. Surely, it’s more important than three hours of slumming in front of the television or computer. Toss the kids and spouse in the car on a Saturday afternoon and cruise the neighborhoods looking for ugly houses for sale.
Reason #3 – “Everyone says this stuff doesn’t work.”
Everyone? Ask Donald Trump, Jason Hartman, or Steve Wynn. True, you’re probably getting a skewed perception of reality if your primary source of information is late night tv. This stuff does work when you do it right.
To learn how to do real estate the right way, check out www.JasonHartman.com for The Complete Solution For Real Estate Investors™
Reason #4 – “Realtors are a difficult bunch.”
This is very NOT true when you work with Platinum Properties Investor Network. Our local area managers are real estate agents who LOVE to work with you. If they don’t, we quit sending them business and, believe us, they want our business.
Reason #5 – “I might lose money.”
Real estate is way safer than the stock market. It’s funny. The pattern we’ve noticed over more than two decades in this business is, the more you education you get, the less risky real estate is. It’s a calculated risk, one you can control much better than Wall Street.
Reason #6 – “I don’t know what to do.”
You don’t need to know it all. You just need to know who to ask. Don’t let analysis paralysis get in the way of the rest of your life. It’s that important! Come to a Platinum Properties Investor Network seminar, then set up an appointment with one of our expert investment counselors and then do it. Pull the trigger. Buy your first property. We’ll hold your hand if needed and advise you every step of the way.
Had enough myth-busting for one day?
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December 27, 2009 ·
Each day is a struggle to deliver one’s best performance at all times. Susan Fletcher, Ph.D., a Licensed Psychologist, author and professional speaker, regularly promotes valuable information about productivity, change, relationships, parenting and as well as many clinical topics. Dr. Fletcher is a quoted expert in national print and broadcast media. Visit http://www.jasonhartman.com/radioshows/. Delivering a common sense approach to an age old challenge of how to balance our personal life with our work life, Fletcher’s latest book, Working in the Smart Zone, is a humorous and insightful manual for staying focused on the vision of personal and professional success. On this episode of The Creating Wealth Show, Jason and Susan discuss how you can stay at your best and maximize your performance. Upcoming shows will feature: “Jason’s 30 Fatal Mistakes Investors Make” and Bradford B. Smart, author of Topgrading for Sales: World-Class Methods to Interview, Hire, and Coach Top Sales Representatives.
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December 24, 2009 ·
Fiscally Fit: A check-up for your financial fitness
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What happens to home values when the replacement costs increase?
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The go up like a rocket
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They go down because nobody can afford to build
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They are pulled toward the cost of new construction
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They don’t change . . . construction costs don’t matter
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What is happening to the economy now that the debt bubble has burst?
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The recovery going to happening, because Ben Bernake said so
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The government attempting to re-inflate the debt bubble in order to stimulate short-term demand
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It’s just like the great depression, only worse
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The recovery has already started . . . the government reporting agencies are just suppressing the information
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What is happening to real unemployment?
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It is going up, contrary the manipulated numbers that are published
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Can’t you read? . . . it’s going down because the stimulus package is working
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It’s already higher than during the great depression
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It’s going to be back below five percent in no time
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What happens when government spending becomes a bigger portion of total GDP?
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It gets the economy back on its feet
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It erodes long-term growth by displacing private investment capital
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It make people more equal by re-distributing income
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It makes the environment better because of government regulation
Answers: 1) c, 2) b, 3) a, 4) b
Explanation of Answers:
What happens to home values when the replacement costs increase?
Over time, home prices naturally converge toward the cost of construction. The reason for this is twofold. First, new housing starts tend to boom when prices are high, creating an increase in supply that generates more competition and usually lowers market prices toward equilibrium. Second, when prices are depressed and market values dip below the cost of construction, new housing starts will drop off precipitously. As an extended period of time passes with no new homes being built it will slowly pull prices up toward equilibrium. Thus, in all cases the cost of construction plus land is the approximate equilibrium point to which home prices naturally converge.
What is happening to the economy now that the debt bubble has burst?
The impact of the debt bubble bursting was a dramatic contraction in the availability of credit. This meant that many people who were previously spending on credit are no longer able to continue spending. In this kind of economic environment, many people begin ‘deleveraging’ or actively reducing their debt burden. However, in this economic cycle the government is attempting to stimulate short term demand with credit based spending, ostensibly re-inflating the debt bubble. The way that they are doing this is with tax credits for new home buyers or rebates for people that trade in old cards to purchase new ones. These programs are all encouraging increased indebtedness in an attempt to stimulate the economy. Unfortunately, sustained economic growth can only come from increases in production and productivity, and none of the government programs is addressing either fundamental factor of economic growth.
What is happening to real unemployment?
The way that government statistics track unemployment is to remove ‘discouraged workers’ from the pool by only tracking people that are actively seeking work. Fundamentally, this means that people who stop looking for work (and are not employed) are removed from the pool for counting the statistics. This means that the total number of jobless people can actually go up, while the unemployment rate goes down like what happened in July’09. Furthermore, the official numbers count people who are under-employed in part time work but would like to work full time as fully employed. It also counts people who work in commissioned sales like Real Estate or Insurance as being employed, even though they may not have earned a commission check for quite some time. When analyzing the strength of the economy, it is important to not only look at the published statistics, but the underlying assumptions.
What happens when government spending becomes a bigger portion of total GDP?
The important to thing to consider when talking about government spending is that the government cannot spend a single dime without taking it away from somebody else first. This comes from direct taxation, borrowing in the credit markets (displacing private capital), and printing money (devaluing the savings and equity of all people who hold dollar-denominated assets). As the government grows larger, it must necessarily displace or destroy private investment and spending to finance its operations. Since government operations are necessarily politically motivated, it naturally follows that the real output of government spending will result in substantially less production and productivity improvement than if that same capital had been deployed though private channels. As the government seizes control over more and more of the economy, it pushes more decisions onto the desk of politicians and neutralizes the market forces that create economic growth.
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December 21, 2009 ·
Double Dip Recession
The recent financial news has been abuzz with exhortations over the anticipation of an end to the recent financial calamity. The stock market has already discounted this optimism into its valuation, as current market values represent a multiple of forecasted earnings per share well in excess of historical trends. The conventional wisdom is that the economy will get “back on track” in the next few months and resume its previous trajectory of long term growth. The factor that nobody seems to be considering is the fact that the previous ‘track’ the economy had been traveling down is the express route to collapse that generated this whole financial meltdown in the first place.
It is not a secret that the explosive economic growth experienced during recent years was largely caused by debt financed consumption artificially increasing demand for goods and services. Unfortunately, this debt bubble inflated beyond the capacity of many people and financial institutions to carry. When the bubble eventually burst, it created a cascading devaluation of financial instruments, which triggered forced deleveraging, which further depressed values, which triggered more forced deleveraging.
Now that the government is throwing money away at an unprecedented, breakneck speed there is additional stress on the system since the overspending is being financed with the undertaking of additional debt and monetary expansion by the Federal Reserve. These irresponsible actions will eventually have the impact of raising interest rates, and may push the economy back into recession.
The most likely way that this scenario will unfold is that the Federal Reserve will either contract the money supply in response to inflationary pressure or allow the currency to inflate until investors refuse to purchase bonds at face value and demand higher coupon rates. Thus, the ‘front door’ for interest rate increases is controlled by the Federal Reserve since they can contract the money supply, which will force up short-term interest rates and incentivize long-term bondholders to sell and buy short-term notes with higher yields. The “back door” for interest rate increases occurs when investors lose confidence in the ability of the government to meet its debt obligations without devaluing the currency and refuse to purchase bonds unless they are discounted by the treasury.
These interest rate increases will have two significant impacts on the economy. The first is in relation to long-term interest rates, which serve as the basis for fixed rate mortgages. When mortgage rates are forced up in conjunction with long-term bonds, it will immediately slow whatever housing recovery may be under way as it increases the cost of borrowing to purchasers. This will have the net effect of decreasing the amount of house that can be purchased per dollar of monthly payment. The impact of this phenomenon will be a downward shift in the range of home prices that people can afford, which will ultimately stall the housing recovery.
When these effects eventually spill over to short term rate increases when the Federal Reserve eventually begins a campaign to fight inflation, the impact will travel further downstream in the economy. The reason for this downstream impact is the fact that short term interest rates influenced by the Federal Reserve are the basis for revolving credit account and lines of credit that many consumers have been using to finance their consumption spending. When the short term interest rates increase, it will initiate an upward shift in the amount of interest owed on consumer debt and will also increase the required payments. This will have the net effect of reducing the amount of income available for consumption spending.
As these two effects compound on top of one another, they create a very real possibility of a ‘double dip’ recession that continues downward after a brief period of stabilization. The ultimate reason for this phenomenon is a continued campaign of market manipulation by the government to ‘stimulate’ the economy in absence of market fundamentals that are supportive of sustained long term growth. Unfortunately, this boom-bust cycle will continue indefinitely until the focus eventually returns to creating the necessary market fundamental for long term growth instead of sponsoring government programs to stimulate demand with borrowed money, but make no changes in the incentives that guide investment decisions.
As astute investors, it is important to be wary of market sentiment that amounts to ‘wishful thinking’ for an economic recovery in the absence of supporting fundamentals. Recognizing these boom-bust trends and the propensity for government entities to manipulate the financial markets is a key tool for investors that are looking to protect their wealth and prosperity. At the Financial Freedom Report, we advocate investment in real assets that are secured by fixed-rate debt and rented out to tenants as the optimal strategy for fighting this campaign of market manipulation by the government.
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December 20, 2009 ·
We are living in uncertain times as job insecurity looms large. What if you could create $1,000 of additional income each month? On this episode of The Creating Wealth Show, Jason Hartman welcomes author, speaker and guru, Loral Langemeier as they discuss simple, realistic tools to generate additional income. Visit: http://www.jasonhartman.com/radioshows/. A New York Times best-selling author and motivational speaker, Loral has helped people across the country launch innovative simple businesses that generate cash and build wealth. Loral believes one of the biggest mistakes many make is concentrating on getting out of debt rather than creating new income. Loral’s latest book, Put More Cash In Your Pocket: Turn What You Know Into Dough, is an incredibly timely book about making more money based on your own individual skills and abilities. Tune in as Jason and Loral empower listeners to stop sacrificing and start thriving. Upcoming shows will feature: emotional intelligence with Dr. Susan Fletcher, author of Working in the Smart Zone and “Jason’s 30 Fatal Mistakes Investors Make.”
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December 18, 2009 ·
Saint Robert is known as the “business hub” of Missouri’s Pulaski County. The city is relatively young, however it has achieved more than most cities since its birth, living up to its motto “Grow With Us.” On this episode of The Creating Wealth Show, Jason Hartman talks with our Local Market Specialist (LMS)™ in St. Robert about the many reasons to invest in this Missouri investment market. Visit http://www.jasonhartman.com/radioshows/. Zach informs Creating Wealth listeners that the city of St. Robert has experienced rapid growth in the last five years. The city also serves a far greater population base which includes Fort Leonard Wood (Population 28,937) and Waynesville (Population 3,507). As an investor, growth is one of the most important factors when choosing an investment market. As St. Robert continues to grow and prosper, investors are taking notice of its prudent investment opportunities. Tune in as Jason discusses Platinum Properties Investor Network’s latest special financing rental property opportunity. Upcoming shows will feature: Loral Langemeier, one of today’s most dynamic and pioneering financial strategists and the importance of emotional intelligence with Dr. Susan Fletcher, author of Working in the Smart Zone.
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December 18, 2009 ·
Talking with the Stars . . . Jason’s marquee guests on the Creating Wealth Show
In the last few months, Jason has had some big name guests on the Creating Wealth Show. Some of Jason’s recent guests of note are Pat Buchannan, Robert Kiyosaki, and Catherine Austin Fitts.
Pat Buchannan is well known in the United States as an outspoken conservative voice in favor of limited government, and less globalization. In his Jason’s interview with Pat, they discussed the prospect for large amounts of inflation in the near future. Pat commented that the US debt would be floated away on a sea of inflation. At the Financial Freedom Report, we couldn’t agree more with this sentiment, and advocate that investors defend their financial wellbeing with income producing assets that are financed with fixed-rate debt.
Robert Kiyosaki is the author of the noted “Rich Dad” series of books, games, and videos. In his interview with Jason, he discussed the importance of financial education in achieving success. They also discussed the importance of passive income to financial success, and the impact of dynamic investment strategies. Robert rightly pointed out that it is possible to make money in any kind of investment, and also possible to lose your shirt in any kind of investment. The key is always to become educated. At the Financial Freedom Report, we couldn’t agree more with this sentiment.
Catherine Austin Fitts is the founder of the Solari report, and is a renowned thinker in the financial world. She advocates for a decoupling from the centralized banking model that channels influence toward the dominant industry players and government. Put another way, she is an advocate of free markets but the current system is nothing even remotely resembling a free market. We advocate direct ownership of investment property as a way to help circumvent the systemic bias toward institutional players.
The Creating Wealth show will continue to seek cutting-edge thinkers that help provide insight into investing and the economy. We firmly believe in the importance of becoming educated, and the best source of education is frequently to seek advice from experts. This does not necessarily mean that we agree with everything that all of our guests say . . . what it means is that we believe there is always something that can be learned.
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December 16, 2009 ·
Economic deliberation with Britain’s financial author and Journalist of the Year – Gillian Tett.
Jason Hartman’s Creating wealth show has had a wide variety of notable guests over the last few months. One of Jason’s recent guests was Gillian Tett, a British journalist, whose recent book Fool’s Gold confronts the current banking and financial crisis. In March 2009, Dr. Tett was named the Journalist of the year at the British Press Awards. During her interview with Jason, she spoke at length about the systemic problems of the current system, and potential solutions.
The principal problem inherent in the current banking system is that free market forces are not allowed to prevail, as demonstrated by the government efforts to bail out failing banks. The problem created by this system is that when financial institutions are protected from failure by the government, it incentivizes them to take extremely large business risks since their upside is vast, and their downside is covered by the government. In response to this upside-down set of incentives, many have called for increased regulation of banks. One of the difficulties discussed was the fact that some of the problems that precipitated the credit collapse were the direct result of regulations imposed on the banks by public authorities.
Ultimately, the principal source of the problems for financial institutions is the fallacious notion that risk can be eliminated. By perpetually shifting risks onto counterparties, the financial world devolves into a large game of ‘hot potato’ where everybody tries to toss the hot potato to somebody else before the timer expires and the ticking bomb explodes. An example of this phenomenon is the practice of securitizing mortgage products into collateralized debt obligations. As these products were combined with one another, it became more and more difficult to ascertain the risk profile of a given security. When the credit crisis emerged, these became ‘hot potato’s’ as investors tried to offload the securities onto one another before the values collapsed.
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December 15, 2009 ·
In this video, discover the properties investment opportunities available in San Antonio, TX. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 14, 2009 ·
In this video, discover the properties investment opportunities available in Orlando, FL. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 11, 2009 ·
The lending regulations have changed drastically within the past two years, causing investors quite a head ache when attempting to buy America’s most tax-favored investment, income properties. With a self-directed IRA or real estate IRA you can be in control by investing your retirement funds when, where, and how you want. On this episode of The Creating Wealth Show Jason talks with an expert from The Entrust Group about the current investing opportunities with your IRA and 401k. Visit http://www.jasonhartman.com/radioshows/. Don’t miss the latest 2010 Roth IRA conversion changes and cutting-edge strategies to invest in real estate! Upcoming shows will feature: Wise Women Invest In Real Estate, Lisa Bromma and Loral Langemeier, one of today’s most dynamic and pioneering financial strategists.
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December 11, 2009 ·
In this video, discover the properties investment opportunities available in Kansas City, MO. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 10, 2009 ·
In this video, discover the properties investment opportunities available in Houston, TX. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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December 9, 2009 ·
Internet marketers are getting more creative with web 2.0 and web 3.0 technologies every day. If you are the least bit familiar with YouTube and its vast potential to capture an audience, you know the power of video is BIG and a great way to market your company’s message to people. Our guest, Lou Bortone, is a long-time marketing consultant and video branding pro who helps entrepreneurs build breakthrough brands on the Internet. Visit http://www.jasonhartman.com/radioshows/ . As an online video branding specialist and award-winning marketer, Lou provides services such as video production, brand development, creative support and web copywriting. Lou is a former television executive who worked for E! Entertainment Television and later served as the Senior Vice President of Marketing & Advertising for Fox Family Worldwide, a division of Fox in Los Angeles. Lou is an author and ghostwriter of six business books and Certified Guerrilla Marketer. Tune in to this episode of The Creating Wealth Show as your host Jason Hartman and Lou Bortone talk about the latest video branding techniques needed catapult your marketing campaign to the next level. Upcoming shows will feature: New 2010 Roth IRA opportunities to invest in real estate from Orange County’s Entrust representative and author of Wise Women Invest In Real Estate, Lisa Bromma.
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December 9, 2009 ·
In this video, discover the properties investment opportunities available in Denver, CO. Jason Hartman’s Platinum Properties Investor Network provides analysis of the demographics, real estate market and business climate. http://JasonHartman.com http://CreatingWealthPodcast.com
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