Jason starts the show with investment counselor Adam as they talk about the price history of one home in Florida. They relate it to the financial crisis and the recovery afterward demonstrating the resiliency of housing.

After, Jason plays a short clip of author Frank Gallinelli as he describes how to evaluate real estate deals by the numbers.

In the last segment of the show Jason hosts Howard Jennings, Managing Partner at Stateside APM. The two talk about how entities can help foreign real estate investors, as well as how those same foreign investors can save themselves money in creating those entities and avoiding double taxation in certain areas.

Investor 0:00
Thanks for your support. Jason, I appreciate your support and your whole network. It’s really been very beneficial to me and, and a whole lot of others. I encourage everyone to use your resources that you have. But thanks. Thank you.

Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:02
Welcome to Episode 1248 1248. And today we have a another three part show, Adam and I have a couple things to say to you as a follow up from yesterday’s episode, we wanted to talk about that price history concept that we referred to yesterday. So we will do that. And then we got special permission from one of our repeat guests. Frank gallon le, he’s the author of a few different books on real estate analysis. At one of the venture Alliance mastermind adventures that we went on, I bought a case of Frank’s books, and I gave them away to our members so that they could learn to be better analyst of real estate deals. And so we’re going to share a little lesson of his today. And I particularly like In this lesson, how he talks about the way that you’re not really buying the property in a way, what you’re really buying is the income stream. And that’s why we’re all in this. We’re in this because we you know, we call it income property, right? That is the proper name for income property, and we are buying the income stream. So let’s not focus on the sticks and the bricks. Let’s focus on the stream of income. That is the most important thing. And then we will get to our main segment today and talk about a company that provides assistance to foreign investors. foreign investors love us income property, they love us real estate, and lots of foreign money here, which is a very bullish sign for the US real estate market. And so for our foreign audience, we have listeners of course in 165 countries worldwide. You will especially want to hear part three of today’s episode Adam, let’s dive into this price history thing. This was pretty amazing to me. I had lunch with my friend Jason yesterday. He’s probably listening. Hey Jason, how’s it going? And he was just telling me about his parents home. And the rather amazing price history. And Adam, you took a look at this. That kind of blew your mind, didn’t it?

Adam 3:25
Yeah, it

Jason Hartman 3:26
definitely shows the crash. Yeah, no. White crash. The very obvious we’ll put it that way. The dates are extremely obvious. So this home is in Port St. Lucie, Florida. Now, Port St. Lucie is a nice little area. It’s a little bit of a kind of a sleepy area a little bit. not totally. But you know, it’s a little isolated out of the way there a little bit. You know, and when I say that, I don’t mean it’s, um, you know, it’s not in a major Metro. It’s not near big airport. You know, those kind of criteria, but it is a growing area. This home back in 2002. Just to give the price history here and, and Adam, maybe I’ll do one price you do the other and we’ll rotate. Okay. So in 2002 this property sold for 170 hour round off $177,000 177. But just three short years later, Adam, what happened? It went up by about three and a half times and sold for $625,000 Whoa, now that’s only three years. Okay? It’s literally exactly three years and four months, okay, three years and four months. It goes from 176 or 177 to $625,000. And then another year goes by, and it sells again for $700,000. Wow. So it’s sells for 700,000. Now, you can tell, I sort of wonder who bought it right? Because they put it up for sale right after they bought it the exact same day. This is the greater fool theory in action, then maybe it is maybe it is and and by the way, for those of you who are new listeners, the greater fool theory says, no matter what I pay, some greater fool will come along and pay more. And that theory is like the game of musical chairs or hot potato. Do not play it. It is a mistake. Follow commandment number five, Thou shalt not gamble. That means the property must make sense the day you buy it, or you don’t buy it. And how do you know if it makes sense? Cash Flow perspective, and all of the stuff I teach in the prior episodes of this show, at our live conferences, on our upcoming cruise with the venture Alliance mastermind in October, go to Jason hartman.com slash group And join us for that. The greater fool theory is not an investment strategy. Okay? It’s the theory of fools. Okay, so the property goes up for sale right away for $49,000 more the same day, right? Then about seven months go by, and they remove the listing. Okay, so the listing is cancelled. And then what happens Adam another another seven months? Yes. Seven months later they listed for sale and they dropped the price and astounding $4,000 so now it’s 745,000 Okay, then what happens sits on the market. It sits on the market just over three months, and they decided Yeah, I’m not going to get $745,000 and

Adam 6:46
mind you. We are now in May 2008.

Jason Hartman 6:49
Yeah, wow. Well, people will notice is right about that time, right about that time when the financial crisis really reared its ugly head. So the list is removed, and I’ll bet you those people just sat there and stayed in that home as long as they could, without making the mortgage payments. How baby that’s what happened, because my friend’s parents came along. And in 2009 listeners, are you ready for this? Are you ready for this listeners? In 2009 they came along and bought that property for Drumroll, please. $235,000 Wow. That’s astonishing. I mean, that’s astonishing. Wow. And the estimated price, according to my friend, they said they just had it appraised. It was like 450,000 now or something like that. So definitely, in that particular case, we’re nowhere near the peak. But, you know, that’s not a nationwide it’s just an interesting sample. Yeah, I mean, you’re still not even your what

Adam 8:00
Maybe two thirds of the way to the 2005 price.

Jason Hartman 8:03
Yeah, yeah, that’s got some room. That price history is astonishing. It really is. You know, there are some weird anomalies. And that’s why, you know, when you’re investing, you want to deal with an experienced group like my company. You know, I said this before our profits in paradise event last year, our event in Hawaii, I filmed a little video to promote that event. And I said that I was approaching, you know, between when I was a real estate agent for many years, and then between the time I owned my company, and I had, you know, a couple different real estate companies over the years, including this one now, I’m approaching 10,000 deals that I’ve been involved in, or my company’s been involved in. I don’t know that there’s anyone else in this field who can say that? I mean, and I don’t know the exact number either. That’s the unfortunate thing because you know, hey, I haven’t been keeping track all those years, but I just kind of did an estimate. And yeah, I’m, I’m nearing 10,000 transactions. That’s amazing. You want to be with someone experienced Yours truly, okay. Yep. self promotion, shameless, but whatever. Go to Jason Hartman calm and join us for one of our upcoming events. Okay, so let’s cut to analyzing real estate investments with Frank belinelli. So what we want to do here is we want to give you a different perspective. Now, he’s mainly focused on commercial real estate. We of course, like housing the best we like the residential real estate the best. We think that nothing appreciates better than a single family home. It’s a better market in which to operate because you’re not dealing with as sophisticated a crowd on the way in or the way out of the deal. You can sell your your property to an investor who will analyze it. At least in theory more analytically, or you can sell it to a more emotionally oriented homebuyer and you can really capitalize that way. So we love housing, we love the residential side of the market. Frank focuses more on the commercial side, but the analysis concepts are the same. So let’s just listen into this clip. It’s about 10 minutes or so, and then we’ll be back to introduce the main portion of the show today.

Frank Gallinelli 10:28
Our takeaway from the first few sessions of this course is that the income property investor is not really buying the bricks and the board’s plumbing pakka Sandra out in the front yard, not really buying the physical property, so much as buying the income stream from that property and income stream that is built around cash flow growth and value, loan amortization tax shelter, the prudent investor is going to want to develop some sense of assurance that the property or properties That they’re looking at are going to throw off the kind of income stream that will represent an adequate return on their invested capital. And so how do they develop that sense of assurance? Well, I guess the question might be, how do you estimate what a property is worth right now? And how do you decide if it looks like a good investment? Or to put it more simply? How do you forecast its income stream? Well, it’s a process that involves several steps. The first of these is going to be to collect some necessary information to collect some data. You’re going to do your due diligence, I’m sure you’ve heard that expression before. We’re going to talk about that in just a moment. Then you’re going to start your financial projections with what is a real estate version of a profit losting something called an A pot annual property operating data. From there, you’re going to build a cash flow and resale pro forma. And with these building blocks, you’ve got what it takes, I believe, to make the kind of forecast to make the kinds of estimates the projection that you need in order to decide if a property looks promising as a long term investment. Okay, so let’s begin with that data collection that I spoke of just a few seconds ago, there’s really two kinds of data that you’re going to want to collect. It’s gonna be market data, and property data. Now, the market data is very often overlooked, especially by beginning investors. They think, Well, you know, I’ve got to find out everything I can about this particular property. Well, properties don’t live in a vacuum. They live in a particular market in a place in a time. And so it’s really essential that you understand the market where this property lives. What what are some of the things that you need to know about that market? What you need to know about things like lease rates, capitalization rates, expense ratios, to be even more specific? What are the market rates for properties like this? What are other people getting when they rent out units, such as you’re looking at, if it’s an apartment building, what are other apartment owners in that area getting for similar apartments. If it’s office space, what are similar office buildings leasing for? You need to know about your current and future competition for tenants. This property the only game in town, is there not another apartment building four blocks? Is there no retail space available? And you’re looking at a small strip center? Or is there an abundance of space and you have a lot of competition for tenants? You need to know? Well, on the same lines, you need to know about what are the current vacancy rates in that marketplace for that kind of property? vacancy rates in general don’t tell you anything. vacancy rates in apartments are not going to be very informative if what you’re looking at as a shopping center and vice versa. So you need to know what are the vacancy rates, how much space is going on rented in properties such as the one that you’re looking at. We’re going to be talking about capitalization rates, number of times throughout this course. capitalization rates, kind of the shorthand explanation is the rate of return that other investors are getting on similar properties in the same location? So you want to know what are other investors getting as a return on their investment. Because you don’t want to settle for less. You definitely need to know about the terms of available financing,

Frank Gallinelli 14:17
whether it’s through banks or other sources, before you go out making offers on property. And assuming that you’re going to require financing, you need to know what the terms are, how much of a down payments you need, what is the interest rate that’s going to be charged? What are the other underwriting requirements that the lender may have? All very essential information need to know about the employment trends in that particular market? Are there any major employer moves going on? Are some major employers moving out? Or is there talk of a major employer who’s about to move in to this market, it can make a very big difference to the success of your property. Because when jobs are plentiful, demand for just about everything goes up demand for apartments to manage. retail space demand for office space. But when jobs are disappearing, folks are moving away or just can’t pay their rent. And these will all have an impact on your income producing property. You also need to keep your ear to the ground about municipal budget issues by property tax trends and prospects for how property taxes may grow in the future. An example I always give is, are you hearing that they’re about to build one or even several new schools? Well, if that’s true, then no even though you know what the property tax bill is going to be in a particular property right now, if there’s going to be a demand for more tax revenue, it might be wise for you to make the assumption that your property taxes could have a dramatic increase. And you should have a sense of the general business climate kind of goes hand in hand with what I said about the employment trends. When businesses good investments tend to be more successful, but in business has been on a downward trend in this particular market business. And various property types may suffer due to the lack of employment. Now, where can you get information about market data, I always suggest that you should get acquainted with some commercial real estate brokers because they will generally have information along these lines should also make the acquaints of some commercial appraisers because they likewise are likely to have this kind of information because it’s their stock and trade in regards to some online resources that are several that are popular as I speak, and I can mention a few of them with the caveat that of course, by the time I upload this lecture wouldn’t be at all surprising to find that some of them have gone by the wayside and been replaced by others. That’s just the nature of how things are in the information world. But places like loop net com costar real capital analytics, research reports, royalty rates. These are sources that have been around for a while and may continue to still be available. By the time I stopped talking here today. And my necessarily inappropriate disclaimers and I’m not actually recommended Any of these simply giving you some ideas as the places you begin to look, if you’re looking for market related data for commercial real estate, how about that property related data? Where do you get information about a specific property that you’re interested in? Well, the place to start, of course, is with the owners representations. What does the owner of the property telling you? Well, there’s two ways you get that kind of information. You either get it directly from the owner if you’re dealing face to face, or it may be filtered through a listing broker. Some items can be verified independently, you can verify property taxes very easily. In terms of property insurance, there’s no reason that you need to pay much attention to what you’re being told that the current owner is paying because that’s not going to be your insurance bill. So call your own insurance agent and say, buy this building what’s going to cost me to ensure in many locations utility costs can be confirmed independently. In general, though, I suggest that you take anything that you’re given in regard to the operating expenses. It says or other costs related to a property with a very, very large grain of salt. There isn’t the industry kind of a common practice, which is politely called the reconstruction of the owners representations. translation to that is I don’t believe a word you told me. And so I’m going to start from scratch as if you told me nothing.

Frank Gallinelli 18:23
Among other things, you want to try to reconstruct, if you will, let’s start with the revenue stream, you want to see the lease contracts. Now, very often, if it’s commercial property, they may have what’s called an estoppel clause, which if you get really deep involved in the transaction, and if it’s a property of significant size, you may be able to invoke that clause or ask the owner to invoke that clause to have the tenants directly confirm that only that the lease terms are as you’ve been told, and shown, but also that there’s no outstanding litigation between landlord and tenant that might spill over into your ownership. might want to try to get from the owner some occupants Payment History, take a look at his or her books, you’d like to try to reconstruct as many of the operating expenses as possible. And I already mentioned property taxes, insurance and so on. But you may want to make your own estimates for items like maintenance, property management, and so on, rather than relying on what you’re told by the owner. And speaking of property management, might want to examine any property management contracts that are in place to see if once again, those are going to pertain to you is going to carry over if you acquire the property. In regard to looking at the books of the owner, you can ask for a history of improvements. So can you show me a black and white with an invoice or a contract, when you replace that roof or when you replace that heating system or did the rewiring but all in all, you may be better off relying on your own independent projection of maintenance, repairs, and so on. And this is something that your ability to do this kind of great Over time as you deal with properties, and you have a sense for how much does it cost really to get the snow plowed? Or how much does it cost to get the lawn mowed or to get the hallways cleaned on a regular basis. One final item that I would mention in terms of reconstructing the owners representations to them by dealing with especially with new investors, they tend to overlook the fact that the owner may not be mentioning all the possible costs that are involved in taking care of a property. They may not be mentioning, for example, property management, and so all right, perhaps you don’t need to hire a property manager yet. But at the same time, you want to be realistic and compare apples to apples when you’re comparing properties. Consider the fact that if you’re going to manage the property yourself, that your time has value, and so a property management costs should be included even if initially you’re not going to be hiring a third party. Look for other possible omissions in The list of operating expenses couple months ago I mentioned lawn and snow. Well, if you’re in an area where it snows and the owner hasn’t included snow removal as one of their operating expenses, well, you know that somebody is going to have to remove that snow, and you’re going to have to be the one to pay for it if you own the property. So in summary, I’ve talked about collecting debt about the property, market rents, competition for tenants, vacancy rates, cap rates, financing terms and the state of the local economy, and about the property itself, the history of occupancy, operating expenses and improvements, as well as your own estimates of items such as maintenance, repairs, and other costs. That’s the essence really of your due diligence. Once you’ve done that, once you’ve accumulated basic data about the market and the property, then you can go on to the next step, which is to make your financial projections. You need to begin with what is essentially a profit and loss statement for investment property, something we call an a pod or annual property, operating data.

Jason Hartman 22:00
Well, I hope you enjoyed that and learned a little bit more about how to analyze a real estate deal. And be sure if you haven’t done so already, I know many of you have to go to Jason Hartman calm and get that free video. If there is one thing you do and only one thing you do to further your real estate investing education, go to Jason Hartman, calm. Watch that free video that I have there. It’s 27 minutes long, and you will learn almost not everything, but almost almost everything you need to know to really be excellent at analyzing real estate investment. It’s at Jason Hartman, calm right on the front page, and it’s totally free. So check it out. And we’re going to talk to a guest today who specializes in helping foreign nationals who owned investment property in the US and provide some services to them. The US is a hotbed of real estate for foreigners. They love American real estate. So let’s go ahead and dive in and listen to our guests today. It’s my pleasure to welcome Howard Jennings. He’s managing partner at state side. APM. Howard, how are you?

Howard Jennings 23:18
I’m good. Thank you. Nice to be here.

Jason Hartman 23:20
Good to have you. You’re coming to us from the Detroit area. Is that correct? That’s correct. Okay, good. It’s sunny Michigan. There you go. Basically, your company offers a variety of services for foreign investors foreign nationals wanting to invest in the US, is that correct?

Howard Jennings 23:36
That’s right. We are a one stop shop. And we offer support services designed for the real estate investor. So we would from the start, establish an LLC, a bank account to go with it. We offer insurance and Home Warranty products. And then once you’re up and running and established will also do your tax filing at the end of each year to keep you ready. united with the IRS.

Jason Hartman 24:01
Okay, so that’s income tax filing right for the rental income, correct? Yeah, do foreign investors buying us real estate really need an entity like an LLC? I mean, we have clients from all over the world and some us entities and some

Howard Jennings 24:18
Japanese speaking, the reason someone would put their property into an entity would be to protect their personal assets. As most people know, America is so happy. And one of the best ways to protect your personal assets is to have your investments owned in individual entities. So in the event that you are sued by somebody, they’re actually suing just the entity and they’ll only have access to those assets rather than you personally, which would give them access to all of your world assets.

Jason Hartman 24:49
Right. But, you know, to just give you a little devil’s advocate, I mean, people need to understand that. Setting up the entity does create some new levels of complexity, especially when it applies to financing. Now, that is less true with foreign nationals buying American real estate. But for Americans buying American residential real estate, meaning four units or under, the entity really does put a kink in the financing options. And of course, you have insurance, I mean, you can ensure around most of these problems, but for the for national investors, they won’t be able to take advantage of some of the really cool financing that the American investor has. So, you know, maybe that that LLC burden becomes lower. And that’s one of the reasons you know, there are advantages and disadvantages. I just want to make sure people understand that on balance, you know,

Howard Jennings 25:44
absolutely. It’s not the be all and end all. It’s something that you have to decide on for your own personal circumstances. With regard finance for foreign investors. That’s traditionally been tough, certainly over the past few years. It is relaxed. And where we found clients have found financing. It tends to be only available if they’re financing through a US LLC, rather than trying to get it personally, which they would be doing if they’re Americans. So it seems to be a reverse position for foreign investors compared to us investors.

Jason Hartman 26:21
Yeah, it kind of does. So I get that now is the LLC the right entity? I mean, you know, foreign nationals combine their own name, they can use an LLC, but depending on what country they’re from, there are some other vehicles besides the LLC. I know you mentioned Canadians, as we were chatting off air, and maybe you know, some other countries the LLC is not necessarily the best vehicle, right?

Howard Jennings 26:47
That’s right. Typically, we use an LLC because it’s cheap and simple. It’s easy to establish and it’s cheap to run and maintain. In most states. There are the odd exception, but mostly

Jason Hartman 27:00
One of those exceptions would definitely be my former home. The Socialist Republic of California very expensive place to have an entity.

Howard Jennings 27:09
And Texas is expensive as well.

Jason Hartman 27:11
Oh, how much? How much does Texas cost?

Howard Jennings 27:13
I didn’t know that to form a new entity in Texas is about 350 for the state fee. But if you form it in another state and then registered as a foreign entity in Texas, it’s about 750. hideously expensive in Michigan. It’s 50 bucks.

Jason Hartman 27:30
Yeah, right. Okay.

Howard Jennings 27:31
So they’re the sort of maintenance issues. But coming back to is it suitable on all Canadians are the most difficult because the CRA which is the Canadian equivalent of the IRS will tax any entity as if it was a corporation, so even an LLC, which is a pass through entity, which means it doesn’t pay tax on its own, all of the profits pass through to the members group? personal tax, the CRA will tax it as if it was a corporation. So the profits before distribution would be taxed at the corporation rate in Canada. And then when those profits are distributed to the members, they’ll also be taxed at their personal rate as well. So they end up being taxed twice. So to avoid that, the only entity the Canadian can use to avoid double taxation, but still use the entity to protect their assets is a limited partnership, not to be confused with a limited liability partnership. Limited Partnerships traditionally are quite expensive because they have to be individually written for each person. And they are as easy to understand as the workings of the mind of a woman.

Jason Hartman 28:49
Okay, well, I’m sure women would say the same thing about men but okay. Yeah.

Howard Jennings 28:55
It tend to be incredibly complicated and the most instances Canadians who are investing sort of normal amounts are probably just as well to pay the double taxation that incur the costs and the headaches of trying to set up and maintain the limited partnership.

Jason Hartman 29:13
Okay, so there’s obviously more to all of this, we’re just doing a brief overview. So any other unique things about other foreign nationals, besides Canadians

Howard Jennings 29:22
know, we tend to find all of the clients countries, most countries tend to have tax treaties with the US. And in almost every instance, they get credits for tax that they pay to Uncle Sam, in their own countries, so they avoid double taxation, which is the biggest issue LLCs tend to be treated as pass through entities in most other countries apart from Canada. So whilst there are lots of entities out there that we can use, we tend to stick to LLCs because it’s cheap and cheap and simple. accepted by all of the governments that we tend to come across.

Jason Hartman 30:04
Okay, what other services do you provide? Sounds like you’ll file their US tax return for them. And that’s going to be a relatively simple return just based on the properties they have in this states.

Howard Jennings 30:16
That’s correct. We have a in house CPA, and we prepare, typically the 1040 1065. So if it’s an LLC, corporate and personal returns, we electronically file them and we’ll prepare them for federal state and city taxes were applicable as well. We have a flat fee, making it very simple. We charge at the moment we charge $250 per entity per year, which includes one property, and each additional property is $75 on top of that, so it’s very easy for the clients to work out what they’re going to be paying up front before they get into anything. And they’ll know that it’s completely done. There’s no other bits they need to do. For our US clients, we tend to just do the real estate bit and then pass that to the client for the client to give to the CPA to file their normal returns.

Jason Hartman 31:14
And how about Insurance Services anything else you offer,

Howard Jennings 31:18
we are the one stop shop for administrative advice and services. So we can ensure in any state of the US we run several master programs. So we are not insurance brokers or agents, we can’t sell insurance so need to make that clear. We operate a bit like a membership where people sign up for our services, and that gives them the option of adding their property to one of our master programs. One of our master policies. The advantage to that is the client gets the discount premiums of bulk purchase, we ensure thousands of properties across America. And I premiums reflect the value that we give the carriers. And so if we’re charged 20 bucks, the client gets charged 20 bucks. And I liken it to joining Costco just to buy the cheap gas and never going in the shop in the store to buy anything. Sure, sure.

Jason Hartman 32:17
I don’t know which company you’re using. And you may not want to share that on the air here. But we do have some clients who got burned by one of the companies that was sort of promoting to the real estate investor community and a lot of clients found out that it wasn’t really like regular insurance, and it was sort of this personally underwritten kind of insurance. I don’t know that I’m explaining that very well. But essentially, the company just wouldn’t pay claims. And I’m sure they paid some claims Don’t get me wrong, but we got complaints and definitely did not recommend that company. And they’re they’re big. They’re well known. They changed their name recently. Think that was to maybe hide some of the PR.

Howard Jennings 33:03
So we deal directly with a carrier or with a wholesale broker. The policies that we have, I’m going to call them programs because it’s easy to understand. We have some underwritten at Lloyds of London, some underwritten by agent Alliance here in the US, some underwritten by national American casualty here in the US and they are the people that pay the claims and do the underwriting. What you have to realize is that the type of policy that we have the type of program we run, and it’s the same program that many banks run for their our reo business, you know their foreclosure portfolio, or property managers. The cover provided is not the same as the cover provided by your individual homeowners policy. So you need to remember that the cover is different. The programs that we run have actual cash value as opposed to replacement cost. Now typically what that means is, if you buy a property for 50 grand, you can insure it for 50 grand, rather than insuring it for 200 grand, which is what it would cost to rebuild it. Because in a 50 grand house, should it burn down, you’re not going to rebuild it, you’re just buy a replacement for 50 grand, because it’s cheaper than rebuilding it. And so, if you understand that the cover is different, and therefore the limitations on cover is different.

Jason Hartman 34:37
And when you say come running coverage, right?

Howard Jennings 34:40
Yes, yeah, yeah. Yeah.

Howard Jennings 34:45
So yes, in America, the type of insurance is called basic form, standard form special for broad their terms that nobody in the world uses apart from America. special form is what we would call In England, and probably the rest of the world, all risks, which means if it’s not specifically excluded, it’s included. So the cover tends to say, we’re not going to cover seagulls bending your aerial, or if the windows are painted green, they’re the only exclusions surfacey Gold doesn’t bend your Ariel and your windows aren’t green, anything else is covered, which makes them easier to understand but you have to read through the exclusions of the other thing to bear in mind is confidence given to investment real estate tends to have a lot higher deductible than general homeowners. So our deductibles vary from two and a half thousand dollars for all risks and two and a half thousand for theft and vandalism all the way to five and five or two and a half and 10. So If you depending on the premium you want to pay and where your property is, the deductible will vary. And if you’re used to just having homeowners insurance with a $200, deductible or whatever, and you have a claim, and you know, your claim is three grand, but your deductible was five, then that’s disappointing, because you suddenly can’t make a claim. So we try to make sure that our clients fully understand exactly what it is that we have on offer on what they’re getting. Because we obviously want to avoid all of that. We’re very as transparent as we can be. We’d rather somebody didn’t buy because they understood the Baltic because they didn’t

Jason Hartman 36:43
cover other services.

Howard Jennings 36:45
So we’ve covered tax returns insurance, we offer a home warranty, which cuts down on maintenance, that covers things like your furnace breaking down to the hot water tank leaking, and it covers repair replacement and you can cover it Different parts and appliances. We can get tax ID numbers, very important. You can’t file taxes to the IRS, unless you have a tax ID number. If you’re America, and it’s your social security number, if you’re a foreigner,

Jason Hartman 37:17
that’s just something normal that comes with an entity, you set up a tax ID number, right?

Howard Jennings 37:21
What do you get the tax ID for the entity, but you have to have a personal ID number to file your personal taxes.

Jason Hartman 37:28
Right. So if you’re not using an entity, you need that,

Howard Jennings 37:31
yeah, well, if you are using an entity, you’re still going to be having personal income. So you still got to file personal tax application

Jason Hartman 37:37
if it’s a pass through entity. Wow. Okay. All right. Anything else people should know? And you know, maybe if you want to just talk, Howard, as you wrap it up on general real estate investing, that’s fine, too.

Howard Jennings 37:48
The hardest thing that clients seem to find is reliable property management.

Jason Hartman 37:54
No, tell me about it. We’ve been doing this for 15 years. And that is the The biggest challenge we face on a daily basis is getting good property management and, and even with our level of volume and experience, it’s just amazing that really how bad that industry is. But yeah, what I try and compare, there’s a lot of bad industries, I mean, just finding real estate agents or lawyers or anybody to do anything. There’s just a lot of bad apples out there. And every and every field,

Howard Jennings 38:26
it seems to be the people are looking for how much they can make in one killing, as opposed to looking at the long term picture. And we tend to be the other way. We are far too lazy to go with a new client.

Jason Hartman 38:39
Yeah, yeah. Well, that’s that’s a good point. You know, almost every decision in life comes down to the decision of instant gratification or delayed gratification, the the bigger payoff by thinking longer term, or the quick buck, if you will, by thinking short term, and whether it be with People’s diets and health or their money, and you know how much they can milk a customer for? It’s absolutely disgusting. I mean, these people just Yeah, they want to nickel and dime people to death. And I think the property management industry is the rebellion is finally starting, and I hope to lead at myself, because we’ve been teaching people self management for the last 10 years. Interestingly, you really can self manage properties pretty effectively from a distance with some good techniques, local contacts, and technology. We have great technology to help us do this nowadays. And I frequently profile this stuff on the podcast, so Yeah, go ahead.

Howard Jennings 39:41
Yeah, I think where people fail is in due diligence. I think you can’t do too much due diligence. And we have a tremendous number of clients that say, Oh, no, I’ve never seen my house. When you ask them the last time they came to see it, because it would reduce my investment return. If I spent the thousand or $2,000 extra coming to look at it, and consequently, they’re setting themselves up for failure because they’re nickel and dimed themselves, you need to come and see what you’re buying, in my opinion. And you need to make sure that you do due diligence and don’t let people get away with it. If I just keep saying it to diligence, they did ask questions it don’t think you’re appearing stupid if you ask a question or have to ask it twice.

Jason Hartman 40:29
The other thing is, don’t just accept answers from them. And don’t just accept prepare across, you know, make sure that you are getting a fair deal. pushback. Is this the thing? I would say?

Howard Jennings 40:40
Yes. I asked for photos. If you get an email that says, the toilets broken, it needs to be replaced. So Fine, send me the photograph. You can see it’s broken. When they replace it. Send me the photograph of it replaced so that I can see you’ve done the job and then I’ll pay you

Jason Hartman 40:58
Yeah, the beauty here. Now, you know, of course those photos can be faked. So you gotta be careful of that. But the beauty is now there are apps for smartphone apps, that geo tag those photos. Of course, I’m sure any system can be cheated, but it’s a lot harder. And they time track, they location track, they do all kinds of things. So this is getting better folks. It really is getting better technologies, making it a lot easier to really manage your own properties from a distance or keep tabs on your manager because yeah, they they, like the late Ronald Reagan said trust but verify. And I’d say that goes triple in the property management world and with contractors. Yeah, yeah,

Howard Jennings 41:43
yeah. And I think that’s the biggest book may come across. More and more frequently. We are coming across more and more reputable people that are selling properties. And I think more people have realized there’s more money to be made in being honest, than there is in being good. Honest.

Jason Hartman 42:00
Well, I hope your optimism is is true. I get a little I get a little bit cynical about it. But that’s, you know, probably a longer discussion than we have time for. Anyway, give out your website.

Howard Jennings 42:15
So you can see all the services we offer at WWW dot state side A p m.com. I’m not gonna spell it phonetically.

Jason Hartman 42:25
It’s all right. Don’t worry about it stateside. APM. Howard, thank you so much for joining us.

Howard Jennings 42:30
Thank you very much. Appreciate your time.

Jason Hartman 42:34
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