Real Estate Investing versus the Stock Market

Jason Hartman and investment counselor Adam compare real estate investments to Wall Street investments. They discuss the advantages of real estate investing compared to the stock market even if tenants don’t pay. They bring this up in anticipation of concerns about the next rent and mortgage payment in April. Jason ends the show with Tom to chat about the 1031 tax-deferred exchange alternative.

Investor 0:00
If you don’t have any investment, real estate investment, you will not have the opportunity to learn to make mistakes and learn from it. And then you will not be able to tell which one is a better investment. I think you just have to get it started somewhere and with the help of your investment counselor, and then keep moving forward.

Announcer 0:18
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’t Do it. And now here’s your host Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:09
Welcome to Episode 1419 1419 I hope everybody is staying safe and sound just heard from a friend of mine who did get infected with Corona virus and he is on the road to recovery. You know, it wasn’t too bad. He’s middle aged and he’s actually older than middle aged maybe well, depends what you think Middle Ages anymore remember that’s a moving target. But yeah, he you know, he said it was it was tough. It was like a really, really bad flu basically with maybe like one other symptom but no hospitalization or anything like that. So, again, this too will pass. And I have been on a mastermind virtual mastermind It was supposed to be in person, one of the mastermind groups I’m in it’s a $10,000 a year mastermind and we did they hosted Well, we but you know, I’m a participant. But the host hosted a mastermind call, it’s still actually going on a virtual meeting was supposed to be in North Carolina. And it’s gone overboard. It’s, it was supposed to be four hours, and we’re on to almost six hours now. So there you go. That’s how it goes. But in hearing from all these business executives and entrepreneurs and real estate investors in this group this morning, the mentality and there were many more of them on earlier, but the call has gone very long or the meeting has gone very long. I don’t know if I should call it a call or a meeting. It’s a virtual meeting. You know, there’s video ever we’re looking at everybody. The sentiment seems to be that, you know, everybody needs to decide whether or not they’re going to pay their mortgage, when it comes due on the first that’s one question. And everybody’s making individual decisions, you know, whether or not they’re going to make their mortgage payment, and that is pretty much historic. You know, that’s never happened before, except, of course, during the Great Recession, but it didn’t happen. So suddenly. During the Great Recession, people did strategic defaults. But they did them at various points over the course of several years. Now it’s like, boom, all at once come, what, five days or so from now, millions and millions of people may just decide not to make a mortgage payment. And that’s what investors and homeowners need to decide. It’s an absolutely unprecedented time in which we live. But most lenders said they are just going to allow forbearance. You heard yesterday, when I played a message from one of our listeners on the show. And then you heard last week when we talked about the return policy for real estate. These are uncharted territories. But the interesting thing about it, and the opportunity if you can manage your mindset, and hold it all together, okay, that’s an F right? Because some people are kind of in panic mode, right? I mean, you all know Have them and hopefully you are not one of them, because cooler heads always prevail. Okay, so leave some toilet paper for the next person in the store.

Jason Hartman 4:11
Oh, gosh, you know some of this, we’re gonna look back on it and think, what were people thinking? Yes, what were people thinking? But the sentiment seems to be that by May 1, most everybody’s going to be back to work. And things are going to be back on the road to recovery. It’s, you know, this is a temporary shutdown. It’s a it’s not a one year sabbatical. It’s a quick thing. And as I talked about the other day, maybe yesterday, not sure, maybe the day before the U shaped V shape or square root shape recovery. I think this one will be kind of like a square root. You know, that square root symbol right, where we were going along, going along with his booming economy, and I say that in the context of the world economy, right, because the economy was booming relative to The world economy. Of course, pretty much every economy in the world is built on a house of cards. That’s the broader picture. But relatively speaking, booming, okay. And relatively speaking, in terms of the US economy where, you know, you want to buy real estate versus other economies around the world, I think ours will recover very quickly and nicely, obviously, you know, we have huge advantages. When you can agree to a 2 trillion that’s with a t a $2 trillion stimulus package that will turn into about 6 trillion in no time flat, okay. Don’t worry about it, there’s more coming. You can just create money, you can just print money. Now, of course, eventually, that’ll cause inflation and gotta look at the big picture. So here’s a couple of steps that I’d like to just mention for us to manage our mindsets in these crazy times. Number one, calm down Relax, relax. No, that’s relax. I know I get it. I’m being funny. Well, you probably think, Jason, you’re not very funny. Okay, well, you’re probably right. I’m not very funny. But anyway, relax, stay calm. Don’t panic. Okay. Number two, keep good counsel. Okay, decide what you are going to let influence you decide just like you would hopefully do with what you put into your mouth. Decide what thoughts and what news you’re going to let enter your head. Okay, do not be a news junkie. Now, I say that and I’m almost thinking, Jason, you, you might be a little bit of a hypocrite there. Well, look, folks, I kind of have to be a news junkie because my job is to take in the news and assimilate it and help you develop a strategy to react to that. News and hopefully be proactive with the news, right? That’s my job. But it’s probably not your job. I know we have some media people that obviously listen to the show, but most of you, it’s not your job. So don’t be one of those people with that idiot box called the television. Like it’s not a box anymore. It used to be a box in the old days. Now it’s a flat panel, that idiot flat panel. They used to call it the idiot box. That’s what television was called right? don’t have that thing on all day. And don’t go on this diet of being a news junkie. It’s not going to help you. Okay? So keep good counsel. Listen to wise prudent people who are calm who are not panicking who are being proactive. Number three, keep your eye on the ball. Keep your eye on the ball. We are going to go through a crazy five weeks this next Five weeks, we’ll probably the kind of news that will occur, watching the statistics hearing about the next government bailout the next government bailout another program for this group and that group and you know, by the way, I gotta say, shame on the Democrats in Congress, who did their typical pork barrel thing with his this bailout. It’s absolutely just shameful. And I’m not being political, by the way. It was the Democrats, okay, just, well, don’t be a news junkie, but it’s in the news. All you need to do is read it. And we’ll probably talk about that tomorrow or next week. So focus, keep your eye on the ball. Okay. I remember when I was going through such a hard time with my traditional real estate company, the one that I sold the Coldwell Banker in 2005. And, man, I went through some really tough times with a business. Eight years. I ran That thing and did a turnaround. It was just like the hardest thing I ever did. And I remember one of my friends as we went through the franchise company falling apart. no fault of my own, I was just there. Unfortunately, I was a unwilling participant. We went through 911 Okay, do you remember 911? How bad that was how we thought the world was coming to an end back in 911 2001. Okay. Do you remember the great financial crisis? The Great Recession? Probably nobody listening, remembers the Great Depression, but possibly a friend of mine, a very successful friend of mine. He said, Jason, I said, What do I do? And he said, Jason, keep your eye on the ball. Keep your eye on the ball. And that’s what we’ve all got to do. Because as I predicted, over the last several episodes, we have got a tidal wave of opportunity coming our way as real estate investors. Okay. There is going to be a man migration to low density suburban living. And I got more data on that just since yesterday. I’ll share with you in the upcoming episodes no time to do it today we’ve got to get to our, our guests. And we’ve got to get to part two of 1031 exchange alternatives, which we talked about a little bit yesterday. But there is a very small little vignette, I’ve got to play for you part two of that interview for something we forgot to mention. That’s very important. So that’s coming up here. And then we’ve got Adam on to talk about comparing income property with massive vacancy where tenants just stop paying the rent comparing that to the stock market, okay? Because the question is always compared to what, okay, so keep your eye on the ball. We’ve got huge opportunities here. By the way, I’m going to make two more predictions. In addition to the no limit Federal Reserve, a push toward digital currency, a push toward universal, basic income, a push toward national section eight style program. Basically, this is all a push to socialism doesn’t matter what side of the aisle you on. We’re all socialists now. Okay. That’s the reality of it. A couple more predictions, decline of public spaces. And this one, I think is a sad one. And so is the follow on that I’m about to say but malls, restaurants, public spaces of any sort, hotels, you know, with my 1031 exchange that I just started several months ago, I talked to you about that. So that apartment complex I owned with a client of ours for $5 million. I was shopping for hotels, because I thought, you know, haven’t done a hotel yet. And I like to do a hotel deal I you know, I’ve definitely cut my teeth in the single family homes made tons of money and single family homes love it. I still think it’s the very best asset class of all, it’s not perfect by any means, but it’s the best one in the real estate sector and then done mobile home parks, a few apartment complexes. I just kind of wanted to try Try a hotel. I just wanted to try my hand at it. And I was shopping for hotels, well, look at what happens the hotel industry now, right. And I think these things even after the economic recovery, that is probably going to come pretty quickly. Okay, we’ll see how significant it is. But it’s coming, it’s coming quickly, what we’re going to see is we’re going to see a decline of public spaces. And that will be with us for many, many years to come. So not everything will recover. When the recovery occurs, it will, it will be spotty, also. So decline of public spaces in general, even if they are public spaces that our government, public spaces or private sector, public spaces, doesn’t matter, decline of them. And, sadly, an increase in loneliness, because there is going to be a social distancing that will live on far beyond this crisis. And there’s definitely going to be some sad side effects. Hopefully we can bridge that gap as much as possible with technology as we’ve seen people Having virtual meetings and so forth like this one that I’m in, that’s still going on, but I had to take a break to talk to all of you. So stay calm, keep good counsel. Keep your eye on the ball. Okay, that’s 123 number four, take action, in the midst of when everybody else is lost, doesn’t know what to do is freaking out, take action. Okay, invest, do things when other people are unwilling to do them. Now you got to be more careful and more prudent. Okay. And if you’re a newbie, this is not the time for you. Okay, but it’s changing so quickly that I might be talking to you in two or three weeks and say, okay, newbies, come on in to the market. But right now just hold your horses, okay. Don’t do anything yet. Just study. And by the way, studying people are increasing their skill set. You know, one of the benefits I mean, there are many silver linings to this whole situation. One of them is that we are going to have a higher skilled workforce. I mean, literally, people are gobbling up education. Right now, self improvement programs are selling out all of my friends that are in that business. And of course, we’re in that business, too, are doing incredibly well. People are looking for other opportunities. They’re redesigning their lives, all kinds of great things coming out of this. So stay calm. Keep good counsel. Keep your eye on the ball and take action. All right, those are my tips for you. Okay, hey, I’m going along again, we’ve got to get to today’s show, we got some very important stuff to talk to you about two more parts of today’s episode, one with Adam, when we talk about comparing income property with a situation where the tenants don’t pay their rent for months at a time comparing that to the stock market. And then also Part Two from yesterday about 1031 tax deferred exchange alternatives. If you need us, we’re here for you always reach out one 800 Hartman or Jason Hartman, calm, any of our team members will be happy to help you with whatever you need. So remember, we are your investment therapist. Yes, investment therapist. All right. Here we go with parts two and three of today’s episode.

Jason Hartman 15:28
So Adam is back with us. You haven’t heard him on the show in a while. And he wanted to come on and talk about an example, comparing a property he and his wife purchased. I think it was about two years ago. Maybe he’ll tell you and he wants to compare that with the stock market. You all know we are in rather crazy economic times here. So it’s good to keep things in perspective. And that’s what Adam is here to help us with today. And of course, you can reach out to Adam through the website, Jay. hartman.com or at one 800 Hartman, and he will help you with your investment counseling needs and a portfolio makeover. Adam, let’s talk about this example. What do you have going on here? This is a property you purchased for $99,000. Right?

Adam 16:16
Yes, we bought it back in mid early to mid 2018. And it was a like you mentioned it was a $99,000 purchase. And the reason I’m using this one is just because you know, we talked about our bread and butter $100,000 house, yes, I thought well, 99 is pretty close to 100. Check. So I’ll give the general information now. So is $99,000 purchase, we put 20% down, and we paid with closing costs and prepaids we’re just gonna round it up and say we spent about $25,000 into the property to begin with, okay, now on the day that we paid our first mortgage payment, the Dow and I’m going to use the Dow because people talk about that more than the NASDAQ or the s&p. It’s not the best representation but You’re not going to hear CNN or Fox News talk about how the SNP did today, because the numbers aren’t big enough. It’s not sexy enough. So the Dow was at 23 930. And the day that I looked at this, and when I did the comparison, we had just paid our mortgage payment for March, and the Dow was at 19,173. So the Dow was down 20%. In those two years, granted, probably 99% of that was in the last month because the Dow is down about 30% over the last month. But if you bought $25,000 worth of stock on May 3 and held it through today, you’d be down 20%. Now, if you look at kind of the equity we put in, we’re in a pretty good spot, but then I wanted to say, everybody I’ve been talking to who’s looking at purchasing a home. Their big concern right now is am I going To find a renter who can pay my mortgage and who I can start cash flowing with. That was the main reason why it started.

Jason Hartman 18:07
Either way, I want to mention something on that. I’ve already predicted that I think what is going on now is a prelude to either a universal basic income push toward that end or a section eight style National Housing Program. A digital currency a cryptocurrency that’s an American backed cryptocurrency, the one that will beat all the others Bitcoin, whatever. It’ll be the one that’s mandated under legal tender laws, and or a national health care plan. Many of these things you’ll like Adam, because I know your politics,

Adam 18:45
health care plan, and I would think a jobs guarantee would be really good in this situation.

Jason Hartman 18:50
Well, you know, this this definitely is moving us toward a cradle to grave government that is much more involved in our lives. For better or worse, it’s just moving in that direction. So that’s my prediction, we’re going to see a lot more government in the future, regardless of what party you vote for, it doesn’t matter. You know, in a disaster scenario, emergency, we all become socialist and we look for a big brother to help us out. So that’s where we are folks. Um, I’m just being a realist, not a philosopher. Okay, keep going.

Adam 19:23
So I looked at our payment that we paid for that property in March of this year, and our payment is $443 and 50 cents that’s principal that’s interest that’s prepaids all the escrow money, everything is $443 and 50 cents of that, just under $98 was principal so that’s money that we essentially get to keep because it’s in the property we can refi later and spend it on other properties or whatever else we feel like. So the money I quote unquote, would lose if I didn’t have a tenant is just over $345 And out of all the money that we’ve put in at that point, Jason, that’s only 1.3% of it. So we could lose if the Dow is down 20% right now, we could lose 15 months of payments, we could have over a year with no tenant. And we would still be up based on what we had put into the Dow initially. So to all those people who are out there concerned, I agree it is concerning because the money is coming out of your pocket, the day that you put your mortgage payment down, but on the other hand, compared to what compared to good

Jason Hartman 20:40
question, Adam, I’m glad you asked the famous Jason Hartman question compared to what absolutely the right question good.

Adam 20:47
So if you compare it to the Dell because your money is down 20% you could have over a year of pain your mortgage with no tenant pain and without you taking the option of halting mortgage payments. And you would still be up because that would be 19 and a half percent roughly.

Jason Hartman 21:03
Yeah. And the dirty little secret, of course, as we’ve talked about is you don’t have to pay your mortgage. I guess. That’s, that’s what says only those folks. But you know, do that at your own risk. And, dear listeners, I will play for you the message I just received yesterday. As we talked about last week on the return policy for real estate, the loan modification opportunities, the workout opportunities will be coming. And guess what, one of our listeners took advantage of it already. This is Johnny from Arlington. And here is what he had to say, Jason, I’m on customer service right now with my lender working out a loan mod, which we love. I love the audacity of being a real estate investor by the way. Thanks for lending me $100,000 Hey, do you mind if I not pay you for a couple months? Thanks, Jason. That’s it. 31 minutes I was on the phone, total of 31 minutes and was able to get forbearance plans for two of my properties. And so I’m not going to be paying the mortgage payments, the entire mortgage payments, taxes, insurance. One has PMI. I’m not paying that for three months, I knew that eventually that will be due. But at the end of that three months, then the mortgage servicing company will consider a mortgage modification plan. And so first, they want to kind of test the waters of the current economic situation with the forbearance option, and then if things aren’t shaping up, and they’re willing to consider the modification options, so for me that works, that’s three months that I can maybe find a better purpose for the cash in the present time, and I’ve got the means to pay it off eventually. But that’s a pretty good plan. So I would love it if maybe, if you would strongly advise other options, but that seemed to be the only way to go for me. But that works for me. I think I would imagine that things aren’t going to be rosy after three months. I think that we’re going to be looking at a lot more of these actual modifications the guy I was talking to said that he’s been doing dozens and Have these sorts of calls all day, as always hearing about so everyone’s doing it. And that’s probably a reason to consider doing it. Right. All right, Jason. Hey, thanks. So there you go, folks. We have the loan modification culture. It’s already back. It started, what 12 years ago. It was big for about four or five years. And here we are, again, Adam, continue.

Adam 23:26
I mean, something like that is you know, we were talking about this before you played it is, it’s worth a shot. The worst thing I can say is no if you if you want to try to do it, absolutely worth a shot. Yeah,

Jason Hartman 23:35
like I always say the best insurance is a high loan balance. By the way, if you’re new to the show, and you don’t really understand what we’re talking about or have a context for it. Go back and listen to some of the old episodes. At Jason Hartman calm you can use the search engine, and you can search for keywords like loan modification, short sale workout, or just listening to the two episodes I recorded was Rabbi Evan Masek last week on the return policy for real estate. Okay, Adam, go ahead continue with your example, if you would. So the example is pretty much wrapped up. But I really just wanted to tell people is that in this environment? Yes, the idea of purchasing a property can be daunting. But one thing that we need to remember is that we’re in an asset class. That is also, you know, it’s just housing in general. And it’s also owned by your primary property owners. And when they get bailed out, or when they go to help them, it’s going to help us so that the United States government is not going to let your mom and dad or your son or daughter or whomever you know, that is living in a house that they bought. They’re not going to let 90% of them lose their house because of a pandemic where they can’t go to work. That’s not that’s never going to happen. I actually it’s even more than that. You know how Always has such a strong lobby behind it. And everybody in the economy wants to support housing. So you’ve got that going for you real estate investors, but also in the current environment. You have the home, as I’ve talked about the past couple of weeks, the home is becoming the center of the universe. This is where they’ve told everybody to go and work. They’ve told everybody to go and study. They’ve told everybody to huddle up in the house and not leave. Okay, this is the best asset class in the entire world. I mean, you know, I’ve always said it’s the most historically proven asset class in the world, and the most tax favored asset class in America, the most debt favored asset class in America. But now, more than ever, you’re finding the home being this incredibly valuable asset. So buy lots of them and let people rent them from you. One thing I do want to say about that So Adam, and you alluded to it is that if you are a brand new investor, and you know, we have investors of all stripes and all socio economic classes that come to us, and, you know, they’ll listen to the podcast, they’ll go to Jason Hartman calm, they’ll reach out to one of our investment counselors, and some of them have millions of dollars with which to invest. Some have hundreds of thousands of dollars. Some have big real estate portfolios already and want to add more properties to their portfolios. Some are just starting out, and they’ve got 25 or 50 or $60,000. For those of you just starting out until further notice. We don’t want your business. We don’t want you to invest with us right now. We want you to just hold your horses and wait because there are question marks. Okay. And for you who are just starting and you don’t have big cushions and a big margin. There’s no hurt in that. waiting to hear what I say in two or three weeks or maybe a month. I don’t know, none of us know. But right now, keep your money, keep your powder dry. For the rest of you with more resources and more cash to deploy, you should keep investing, and at the very worst your dollar cost averaging into the market. And hey, it’s mostly the bank’s money anyway, you’ve already heard how that works out in your favor. But But yeah, I think I think that’s the thing, you know, beginning investors should just cool their heels. I know you may be anxious. By the way, I would change my stance on that. if interest rates or really, really low, but oddly, Adam, and you just interviewed one of our mortgage affiliates yesterday. And by the time you hear this, I don’t know whether you’ll have heard that interview or not listeners, but contrary to the way it really should have worked out. mortgage rates went up a little bit. So it’s sort of counterintuitive. Anyway, go ahead.

Adam 28:01
I was gonna say if you’re the one of the new investors that Jason is saying not to jump in at the moment, what you probably want to do, which would be really helpful is reach out to your investment counselor and say, Hey, I’m not wanting to buy right now. But I’m thinking when I do want to buy, I want to buy in York, or I want to buy in Florida. And what we can do is we can set up a call between you and the market specialist. And you can learn about them, you can learn about the market, and when the time comes, and it’s time to pounce. You don’t have to worry about Oh, is that market good for me because you’ve sorted out which one is going to be best for you. And then you can just say, you know what, Adam? You know what, Sarah, you know what, Carrie, when a property this price in that market comes available? I want it right and then we can get to work doing that. And that’s something you can keep your powder dry, but keep your knowledge up.

Jason Hartman 28:53
Yes. And in fairness, I want to mention that Adam did not list every investment counselor I have so We have others too. But yes, absolutely. So it’s always good to be in contact with one of our investment counselors and be on the list. Get on the inside, it costs you nothing. It’s It’s free to get a consultation, get a portfolio makeover, and just get that relationship built. So when you’re ready, you have that relationship, and you’re ready to go. That’s always the best case. But new people, cool your heels. Just wait, okay, don’t do anything today. In a couple of weeks. This situation is changing so fast. In a couple of weeks. I may have a completely different message for you. I just don’t know yet. But right now, we don’t want your money. Okay. Just Just keep your powder dry. For people with more resources, keep on going. That’s, that’s our opinion of what you should do. Okay, anything more to the example that you want to say to wrap it up?

Adam 29:50
No, I think it just proves that you know, but don’t wait to buy real estate, buy real estate and wait.

Jason Hartman 29:56
Right Good point. The insulation you have is that you have This beautiful multi dimensional asset class that really provides you with lots of options, and lots of strategies where you can constantly adjust and adapt to the economy or the marketplace as you go. And that’s why we love income property. Adam, thanks for joining us today. You can reach Adam or any of our investment counselors at Jason hartman.com or by calling one 800 Hartman. on yesterday’s episode, we talked a lot about the 1031 exchange, or 1031 tax deferred exchange, I should say, alternative, and how you could use a Qualified Intermediary installment sale to potentially give you some great options instead of the 1031 tax deferred exchange, which which is also fantastic. I’ve done it many times, as I’ve said, and talked about over the years on the show. What we forgot to do is talk a little bit More about that inflation relationship, and how you can benefit from that and talk a little bit about a present value analysis. So I’ve got Tom back with us, so that we can wrap up the thought and kind of circle back to that. Thanks for coming on today. Let’s talk about the present value analysis of this.

Adam 31:21
Okay. Well, when we spoke, we talked about the beautiful thing about having the government’s money in your hands for 30 years. So when you can defer your capital gains tax for 30 years, you’re essentially holding on to the government’s money for 30 years. So what we mentioned yesterday was the fact that you can take that money and grow it potentially eight times over if you could make 7.2% on your money. That’s the rule of 72. But what we didn’t talk about was the inflationary impact. So assuming the tax rate stays the same, the tax bill 30 years from now, should be exactly the same as it would have been today.

Jason Hartman 32:02
Right? Which by no means do we think it will be exactly the same might be higher or lower. And, you know, there will be nuances and deductions and you know, it’s never simple. But go ahead.

Adam 32:15
Well, hopefully the Obamacare taxes gone the net investment income tax Yeah, a portion of it to that extra 3.8% but just pure inflation reduces the purchasing power of money over time. Mm hmm. So, even if you assume just as simple 2% inflation over time, the value of $1 today would be about 50% of what it is today 30 years from now, right picture a present value and curve it would start off at $1 today, but over time that curve would drop down and slope out. And the advantage the reason I say that this present value of the depreciation savings by getting into a Property could be more powerful than the perpetual tax deferral on that 1031 exchange is that

Jason Hartman 33:08
let me let me just circle that back for the listeners a little bit more. So yesterday, we talked about how one of the wonderful things about this alternative, and you know, of course, check with your tax advisor, there’s more to this, okay? And we can connect you with some resources there as well. But you get to start the depreciation clock over again, when you do a 1031 exchange, you don’t get to do that you bring that depreciation recapture forward into the next deal. And this is a way to reset, if you will, or reboot that clock. Would that be a fair way to say,

Adam 33:47
Dell? Great point. Thanks. Thanks for bringing that up. I was taking too much for granted.

Jason Hartman 33:51
Okay. I just want to make sure everybody remembers that from yesterday. There’s a lot going on in the world nowadays. So people are distracted.

Adam 33:58
So when you do a test 31 exchange, you’re theoretically putting off that tax deferral forever. Because when you die, you property could pass your heirs with a step up in basis. Now, of course the value greater than the estate of the seller so that people people often forget to mention that aspect of it. But if over 30 years, the present value of the tax deferral has has already dropped 50%. There’s only 50% more in perpetuity, right? So I would argue that if you can get cash in hand through taking depreciation on a brand new property, the present value of that in your hand today is worth a lot more than that extra 50% that you could get 30 years out in the future.

Jason Hartman 34:44
Does that make sense? Right, because you have the use of the money today. And like I said before, wimpy from Popeye taught me about inflation when I was a kid, I’ll gladly pay you Tuesday for a hamburger today. You’d rather pay later. Have the use of those funds today. Because if you pay later, you’re not subjected to an opportunity cost of losing the opportunity to use those funds today. So very, very powerful. Very powerful. Okay. Anything else on that? Nope, that perfect. Okay, good, good stuff. So contact us for resources. We can connect you with Tom. We can connect you with other resources, attorneys, tax people, and also check with your own tax advisor, but this is a great option for you. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

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