September 16, 2016
Jason Hartman’s Ten Commandments of Successful Investing
When it comes to advice about investment properties, there’s one guide we always trust. Founder & CEO of Platinum Properties Investor Network, The Hartman Media Company, and The Jason Hartman Foundation, Jason Hartman has empowered thousands of real estate investors with the right tools, advice, and resources needed to build wealth.
These are the rules Jason followed to build his real estate empire:
1. Thou shalt become educated.
Jason first embarked on his real estate career at the young age of 19, and education has proven to be a key part of his journey. Become your own best advisor by continuously educating yourself, and always do your due diligence before investing. With so many valuable and free resources available online, you don’t need to spend money on becoming investment savvy.
2. Thou shalt seek guidance and have a team including an investment counselor.
While it is vital for you to educate yourself, it’s also important to surround yourself with people you trust. Coordinate your investment plan and strategy with your long-term investment counselor, and make sure your interests are aligned.
3. Thou shalt maintain control.
Three problems can occur when an investor relinquishes control: 1. You may be investing with a crook. 2. You may be investing with an idiot. 3. You may have someone unnecessarily taking a cut out of your profits. Jason says, “Never leave your financial future in the hands of incompetent, unethical or greedy brokerage houses, fund managers, or corporations.”
You always want your interests to be aligned.
4. Thou shalt use prudent financial planning techniques.
Be aware of your risk tolerance, investment goals, and investing style. Always invest with your goals in mind (whether they be linked to retirement, financial freedom, creating wealth, etc.), and be prudent when investing.
5. Thou shalt not gamble.
Gambling is an expensive hobby, so avoid speculation when investing. “The property must make sense the day you buy it, or you don’t buy it,” Jason advises. “Anything without income is not an investment—it is just speculation.”
In short, invest for cashflow, not appreciation.
6. Thou shalt diversify.
While everyone has heard the saying, “Don’t put all your eggs in one basket,” Jason prefers Andrew Carnegie’s version:
“The way to become rich is to put all your eggs in one basket and then watch that basket.”
Jason encourages investment diversification among geographies rather than asset class. Because all real estate is local, use the most historically proven asset class to grow your wealth, and diversify in various regions.
7. Thou shalt be area agnostic.
To stress the importance of geographic diversification, Jason’s seventh commandment is to be area agnostic. Rather than getting attached to one area, invest in multiple regions based on the thirteen fundamentals that affect real estate value:
- Cost of living
- Job growth & employment
- Regulatory climate: Invest in landlord-friendly markets.
- Crime rates
- Culture & arts
- Fun & recreation
- Overall quality of life
- Population density
- Real estate market trends
8. Thou shalt use borrowed money.
Accelerate wealth creation, reduce risk, and maximize leverage by investing with borrowed money. Let other people’s money work for you.
9. Thou shalt only invest where there is universal need.
Avoid investments that are short-term trends, rather than universal need. For example, while housing in a universal need, industrial, office, and retail spaces are not.
“There are three basic human needs: food, clothing, and shelter. Let them rent the shelter from you.”
10. Thou shalt invest in tax-favored assets.
As taxes will be the largest expense for most, take the time to learn more about how to reduce this expense. Non-cash write-offs and 1031 exchanges may help put money in your pocket.
Want to hear the full podcast or read more of Jason’s advice?