TNG I Survived Real Estate Legacy Series with John Schaub

 

The Norris Group’s Legacy Series is interviews with I Survived Real Estate Rohny Award winners. First in the 2020 series is real estate author and educator John Schaub. The Rohny Award is given every year to a real estate educator or mentor that has impacted the real estate investment market and many careers along the way.

John Schaub has prospered during three recessions, four tax law changes and interest rates ranging from 6-16% in his 35 years as a real estate investor. His 2005 best-selling book, Building Wealth One House at a Time, assisted more than 100,000 real estate enthusiasts on their way to successful investing. His 2007 book, Building Wealth in a Changing Real Estate Market, is available online and in bookstores.

John recommends buying better, well-located houses rather than cheaper houses and other management-intensive properties. Better houses are more profitable and far less trouble. He advocates paying off debt, owning properties free and clear, and renting only to long term, high quality tenants. John buys, sells and manages his own properties, and enjoys providing quality housing at fair prices for working families in his community. He teaches one Building Wealth One House at a Time seminar each year where students learn how to identify the best investment property in their town, how to buy it at below-market prices, and how to negotiate terms that guarantee a profit.

John also invests his time helping those who cannot afford to buy a home through conventional sources through his work with Habitat for Humanity and the Fuller Center for Housing. John has served for more than 20 years on the board of Sarasota Habitat, 7 years on Habitat’s International Board and currently serves as the chair of the board of the Fuller Center for Housing.

John, a Florida native, is a proud graduate of the University of Florida, where he earned his B.A. from the College of Business Administration in 1970. He is an accomplished boat captain (power and sail), fisherman, skier (snow and water) and an instrument-rated pilot. John loves to travel, especially with his wife Valerie and their young adult children.

See below for full video and resources.

Episode Highlights

    • Who was John’s mentor
    • Early career as a broker
    • What were his goals when he started
    • John’s take on the Coronavirus
    • Who is in the next generation of educators

Episode Notes:

 

Narrator  This is the Norris group’s real estate investor radio show the award winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever changing real estate market hosted by author, investor and hard money lender. Bruce Norris.

Joey Romero  Hi everyone, this is Joey Romero. Before we get to Bruce, I wanted to jump in and make a quick announcement. I Survived Real Estate has been scheduled for two fun filled virtual nights, October 30 and November 6, expect more details coming this week. And that leads us to what we’re doing on the radio show. We’re launching our Legacy Series, where leading up to I Survived Real Estate. We will be interviewing our past Rohny award winners. The Rohny is the award we hand out at I Survived Real Estate to an educator or real estate mentor that has impacted many with their career or their teachings. This is the first of our interviews. Hope you enjoy.

Bruce Norris  Hi, thanks for joining us. My name is Bruce Norris and today our special guest is John Schaub. The Rohny award, by the way was created because a man named Jim Rohn changed my life in three hours one night in 1980 and sent it in a completely different direction. John received the Rohny Award to recognize his contribution to the real estate investment business and the many lives who have been changed because he took the time to teach what he knew. John has prospered during three recessions four tax law changes and interest rates ranging. It says here from six to 16. And I guess we’ve got a amend that and his 35. In his 35 years as a real estate investor, his 2005 bestselling book building one a wealth one house at a time, assisted more than 100,000 Real Estate enthusiasts on their way to successful investing. His 2007 book Building Wealth and the changing real estate market is also available. John, welcome to our show.

John Schaub  Thank you, Bruce, it’s great to be with you

Bruce Norris  I really was lucky that Jim Rohn and I crossed paths in 1980 did you have anybody in your life that you would say was was kind of a life altering experience as a teacher?

John Schaub  Yes, fella by name of Warren Harding. And I don’t know if you ever met Warren, but he was from my town. He was from Sarasota. And he has an interesting name. And he was a very interesting fellow. But he was very encouraging to me to start speaking and writing and I don’t think I would have done that without his influence. And he also exposed me to to create a real estate ideas which were new to me, you know, I was real estate broker at the time and young man and had 13 salesmen and was doing just a traditional list and sell operation. And he opened my eyes to a whole new world. And so I, I gave him a lot of credit.

Bruce Norris I didn’t realize you had a early real estate career as a as a broker. So you owned a brokerage with real estate agents.

John Schaub  Yeah, I had 13 salesmen. At one time, I ran out of college. When I was in college, I got my salesman’s license, and then I listed a property and I sold it up in Gainesville, Florida, where I was going to school, made up made a nice commission about $5,000 back in 1969, or 70. So that was good money back then.

Bruce Norris  Yeah.

John Schaub  And when I got out of school, I went to put forward got my broker’s license and started an office and didn’t do that for very long. I didn’t like the business to be honest with you. I didn’t like babysitting 13 salesmen and, and putting out fires every day, I was more of a capitalist, I wanted to build capital. And so after a while, I just shut that operation down. And in a bottle I had by then I bought a number of properties, and we just continued to buy

Bruce Norris  when you were growing up and not, you know, as a kid, did you have an entrepreneurial bent to you at all?

John Schaub  Well, I’m in a paper Boy, you know, that’s pretty entrepreneurial. go knock on somebody’s doors and sell them a paper, then collect the money and try not to throw the paper in a sprinkler every day. So that was probably my first entree into the business world. But then, you know, I did odd jobs as a kid and I worked all the way through college. I always like to work you know, I was that this is probably genetic, I guess. But I like working. And it’s funny because I’ve got a one and a half year old granddaughter living with me right now along with Hoover brothers and she likes to work you know, she wants to help unload this laundry list one and a half. So I don’t know if it’s genetic, or it’s just human nature but like to work. That’s the big advantage.

Bruce Norris  It is a big advantage. What was the age you owned your first home to live in?

John Schaub  I bought a duplex right out of college it was probably 1971 or 72. And I bought it with a friend of mine and he lived upstairs and I lived downstairs so we kind of split it up. And then the first house I bought his investment was 1973 and I still have that. So I’m I’m kind of slow I don’t sell very fast. You know, I buy things and hold on for a very long time. And and that’s probably been the secret of my successes is not not being too fast.

Bruce Norris  Were you ever tempted by the flipping World,

John Schaub  I’ve never been good at it. I’ve tried a couple times, because you get tempted you see all this money being made. And right at the top of the last market back in about 2007, I bought a house for 260. And we had sold for 330. And then that fell apart, we had sold for 290. And that fell apart, I ended up selling for 145. I decided I better not do that, again, I’m not very good at that. And you know, my business is really provided providing affordable rentals for people here in town. That’s kind of our business model. And we do that by making good deals going in and either buy below the market or buy on good terms, so we can afford to rent below the market. And then we get good tenants and they stay with us. We’ve had people with us, literally 30 years and a bunch of people below those 10 or 20 years. So

Bruce Norris  yeah, that’s that looks pretty well as a crazy track record. Now I’m just curious, why did you choose real estate as an investment vehicle as opposed to other things, stocks or bonds or whatever?

John Schaub  Well, because I didn’t have much money. And I had a couple friends I actually interviewed for a job with a guy in New York and it was a friend of my uncle’s my uncle was an engineer in New York City. And this fella talked to me for about 10 or 15 minutes, he said, You know you you’re better suited for real estate. And I don’t know why he thought that but this guy was really successful stock guy. And then I have some other friends who are in the stock business, and they could consistently make about 20% a year. Well, I have $2,000. So I look 20% of $2,400 a year, I can’t eat off of that I need something that goes faster, you know, real estate was wicked, we get a lot more leverage. And you can use in the stock market, although I traded commodity options for two years. And you know, that’s that’s high leverage stuff. And my bad news with that was I got way ahead. And then the broker who had my money went bankrupt, I never got my money back. So I lost well over 100,000 bucks on that venture. And that was back in the early 70s. So, you know, I’ve tried a couple things. But real estate is just been more profitable, and just suits me better. So it’s not for everybody, but it certainly suits me better.

Bruce Norris  I think that’s actually important to know about yourself, I got into some day trading, it was crazy successful for the first 45 days, I turned 250 grand into 800 grand, you know, as the teacher in me started actually outlining a penny stock course, believe it or not, I never got to finish that course, because my 800 turned into 100 grand and I became the biggest don’t wanter you ever saw in your life. But I learned something about myself. I The reason I like real estate is I don’t have to know the value of it every minute of the day. So honestly, like if I own the stock, not it doesn’t have to matter to me financially at all. I’m tempted to look at what it’s worth. And I I’m really I’m really glad I don’t have to worry about that there’s no ticker on my property is going your property just went down or up. Cuz both of them drove me nuts, actually. So you’re right, you match your match your strategy to your personality, when you held rentals. What was your first big goal? Man, I want to I want to attain this one?

John Schaub  Well, I wanted $100,000 in capital, I knew once I had $100,000, you know, I could work that hundred thousand dollars and make plenty of money off of it for the rest of my life. Now this is back in the 70s. So you know the numbers have changed a little bit since then. But people should set goals that are fairly reasonable. You know, if you set a goal of having a billion dollars or 100 million dollars, that’s just so far remote to most people that the chances of you doing something that’ll get you there pretty slim. And and I don’t think what those guys like Bill Gates or Warren Buffett even set goals like that, I think they set short term goals and achieve them and they get better at what they do. And, and then it just kind of built in. So you know, my first goal was was 100,000 that I set a goal, the man dollars, and you just keep working up the line. But really, I changed how I looked at things after a while and set goals in terms of free and clear properties and how many free and clear properties in my town I wanted to own. And when I got to that point, you know, I stopped that I quit working. But I did shift shift gears. And this is that I hit that goal back in the 80s. And then I started doing a lot of nonprofit work. And I started writing more and you know, I said set my mind to helping others more than making more money for myself.

Bruce Norris  Thank goodness you did. that’s a that’s a very big influence. You’ve got a class in October, I’m going to make every effort to attend. I’m looking forward to that owning enough properties to live on. Was that something that it hits you one day that you had it you had achieve that? And you’re just like, I got that under my belt?

John Schaub  Well, you know, it is really kind of what am I going to do next?

Bruce Norris  Okay,

John Schaub  Good. I guess it depends on what part of your life that you reach that but it certainly is a satisfying thing to know that you have enough rental income coming each month that if something happened to me, it would make a whole bunch of difference now because Dennis would continue to pay the rents my family would be fine, but it’s not like Okay, I’m done listening let’s just let’s just watch TV the rest of our lives. The big one. And this happens to everybody who retires kind of early. I think he’s and now what are you gonna do? You know, I’ve got friends who have retired even at 70. I said that what do you want to do you know, that used to be old, it’s not old anymore. And so you just don’t quit doing things because if you do just quit doing things and quit doing things that are meaningful for you and stimulating, then then you go downhill pretty fast. And it’s a shame to watch people who have terrific, you know, minds and a lot of skills just quit and just slide off the head. You know, you never see him again or never hear from again.

Bruce Norris  Yeah, that’s a good point. Just because you can doesn’t mean you should.

John Schaub  Yeah, yeah, I got I got one of my good friends who is another fellow who influenced me greatly a guy named Millard Fuller. Millard started a group called Habitat for Humanity years ago, and I worked with them for over 20 years. And Miller says nowhere in the Bible does a dimension retirement. I think you’ve got a good point and over retirement is not something you have to do your switch gears. You know, you certainly don’t have to work 80 hours a week all your life. But once you figure it out, you know, most successful people I think, work a few hours a week but they they what they do is make really good decisions during those few hours and they talk to people and help them long and and you know, they you make a lot of progress in a few hours a week, if you know what you’re doing.

Joey Romero  John can ask you a question. You know, you Bruce, Peter. You guys aren’t No offense, but you guys aren’t spring chickens. Who? Who do you see? Who do you see?

John Schaub  Who is this talking? This is Joey?

Bruce Norris  Yeah. Get his name straight?

John Schaub  How old are you Joey.

Joey Romero  I’m 46.

John Schaub  Oh, you’re a punk.

Joey Romero  So who do you see that’s up and coming or who’s from the next generation of real estate teachers that you’re like, hey, this guy’s legit.

John Schaub  Oh, yeah. Brandon Turner who’s got a bigger pockets. Yeah, I see. I see him as a guy and he seems to be legit. I don’t know them. I don’t know him personally, but I’ve talked to him on the phone. Everything seems to be a real guy. There’s got to be a lot legitimate people. You have to be careful with people teaching because most people teaching are just doing it for the money. You know, they’re there. They don’t teach they don’t eat. So you’re looking for somebody who doesn’t teach for a living.

Joey Romero  So nobody like that’s on your radar that you’re like, Okay, I vet this guy in the he’s one of the guys

John Schaub  A guy like Gary Johnson over the Oh, Gary. Gary Johnston and Clyde Wilson. Gary is from Boise, Idaho. And he’s your age or a little bit older. But he’s very sharp. He was IT guy and took her class and got the business maybe 15 years ago. Yeah, real good guy. And you have to scratch your head or, you know, I’m really not on the circuit. We’re on medium that I don’t go to conventions very often where I meet a whole bunch of people. Sure. Well, you know, Mike Cantu for sure. You know,

Bruce Norris  He’s no spring chicken either

Joey Romero  Bruce throwing shade over here.

Bruce Norris  That’s funny. You know what?

John Schaub  The Cantu thing?

Joey Romero  Yeah.

Bruce Norris  You know, what’s funny about that is I, I would have a hard time answering that question, Joey. Yeah, because that’s John’s right. There’s, it’s really rare that you have a very successful investor teach they they can be successful investors. That’s all they do. By and large teaching is a business to itself. And that’s it people that get really good. So when you listen to john speak, there’s no effort to run to the back of the room and go buy something. He doesn’t need that. And it’s not you know, it sells because it’s it’s valuable. And I’m very similar. I don’t like running people. We know. I know. But there’s, it’s an art form in a sense that there’s an effective process, but doesn’t mean the materials any good. It doesn’t mean they flipped houses.

John Schaub  Yeah, I love to teach. I know it’s sort of showbiz, but a whole different way. But when you’re in front of an audience, especially people who want to learn, and you know, they want to learn, somebody told me years ago, you don’t have to motivate us, john, we paid money to come we want to be there. Why speeches are not motivational as much as they are educating people on the right way to do invest safely and borrow wisely and the type of properties to buy and how to treat your tenants and how to deal with people and how to how to treat people and you know, all that you’re really good at all that. But once you develop those skills and have the right attitude, then life is good. Life is good. Business is good.

Bruce Norris  Yeah. Well, I love teaching. That’s a definitely a passion, to have you always invested in your home state, or have you gone out of this state and out of Florida.

John Schaub  No, I own property in 10 states at one time. My friend Warren Harding was an exchange counselor and he encouraged people to buy stuff in different places and actually gave them an award if you own property in 10 states. Net Worth and I have that plaque right here on my wall fairly expensive plaque.  Property in 10 states just because you’re shooting for that number doesn’t always make you money and I didn’t make money on all those I did make money on some of them and I ended up with really good partners guess why Peter fortune I don’t I got really well associated is I bought property in his state and he managed it for me and, and other guys around the country that property in Denver and and Tahoe and you know some fun places. But you know I live in a good town I live in a good real estate town. And so if you live in a good real estate town, the town is growing in population, you’ve got a lot of good inventory you can deal with you have renters, you don’t have too much government interference, all those things work well for you, then, you know, it’s better to buy close to where you live, I think. And Warren preached that too. He said, You know, a lot of people told us a story called acres of diamonds and story about somebody who went far far away to make money a little diamond right in his backyard. So I really believe that I’m a fisherman and I watch guys drive, you know, 300 miles to go fishing as I want you to special underdog. There’s fish right there over your dogs, other guys that come to your dock and fish. And the things they do in real estate, you know, I don’t have to walk with three or four blocks, I can find a deal. So so why would I go to do a whole nother state? Who is estimate

Bruce Norris  The current interest rates? Did you ever think we’d see them? And has it changed your philosophy when you teach people about owning things free and clear?

John Schaub  Well, I don’t think I ever anticipated 2% long term mortgages. No. So you know, I was surprised when they got this low. As far as owning things free and clear, there’s two sides of this, you know, I don’t care if your interest rate is zero. If you owe somebody some money and don’t pay them they can take your property away from you have to at some point think okay, how do I if I have some assets? How do I take some money off the table? You know, how do I pull some off, it’ll be safe, that I can’t lose, even if I do something stupid, we’re only this money alone, you know, the money you’re not going to gamble with. So I still think there’s an argument for owning properties free and clear. But not all of them. You know, it, leverage is a good thing, if you think we’re going to have inflation. And, you know, who knows, but it seems to me like we should have some inflation with all the money the government spending and just the way our government is set up, you know, we want to try to push off the cost of things to future generation. So if you think you’re going to be inflation, leverage is a good thing. But the best way if I you know, if I wanted to have a million dollars in leverage today, I wouldn’t go to the bank and borrow a million dollars, I go find somebody who has something for sale for me and bucks and give them $1 down and all the million bucks. That’s the better way to be in debt. Because now if I can’t pay him back, I’m getting the property back. I borrow the man from the bank and campaign back for coming after me. So be careful how you borrow the money, how you get in debt.

Bruce Norris  To me, that’s what’s so valuable about what you guys teach. I see I’ve paid cash for everything, you know, at a discount, you know, so I came from a different philosophy. And probably that’s because I was I kind of got introduced to the business working for a guy that flipped. So that was kind of my indoctrination. My first taste of real estate was buying something at a discount negotiating that and flipping it and making money. And it was always dealt with normal financing or it was dealt with cash. And then you know, when I hear you guys talk, I feel like the rookie in the room, man, you’re, you know, you have to explain things to me three times before I go, Okay, I kind of get what you just said.

John Schaub  I think everybody’s like that. I know. I’m like that. And I had a fellow I taught with for years. His name was Jack Miller. And Jack was a genius. But he was hard to follow. It was hard to keep up with what he was talking about. So I talked with him literally for seven years. But it was fun. We both had a pretty good sense of humor. We played off of each other and had a good time, but also trying to figure out what he was talking about. Yeah, many times it took me years to say okay, that’s what he’s talking about, you know, so you have to hear it more than once I think to get it. And no matter no matter who you are very few people get it the first time.

Bruce Norris  I took a class from him one time only. And it was as for a very specific transaction that I wanted to do. It was 50 lots I wanted to buy. And I knew I couldn’t buy them. So I was trying to stick in. He taught an option class. So when I got the option book, I was sitting down, and he never followed the book one page, he just adlibbed was thinking, Wow, that’s pretty tough to do. I did buy those lots, by the way, which was pretty funny. You had a bunch of employees as a broker. Did you ever do that as a property buyer? Or have you always kept your model simple?

John Schaub  Well, I had a bunch of salesmen as a broker is a couple employees, but most of them are just commissioned salesman, but when I had a larger operation of investment property I had I had there was five of us working five employees. You know, I had full time bookkeeper. I had a full Time a receptionist I had a full time handyman and I had my wife and myself. So it all of us were in the business but we had a lot more properties then I’m down to I’m uncle gave you the exact number, but I’m down to a lot fewer properties now. And most of them are paid for. And I manage everything myself. So Valerie, my wife and I do work together, she handles the putting the money in the bank and paying the bills part, I’m not fond of that. And I I charge of making the money you don’t bring in the money in the door getting in the bank. So it’s a good good team effort. And you know, I encourage people to get their spouses involved because you never know what’s going to happen to you know, you can you can get stupid in one day, or you can be riding your bike down the street and hit a pothole and not remember who you are for a while. So it’s real important to have some backup, if you’re in this business, and even though the tenants might pay to rent, somebody probably has to pay taxes in the insurance, but that rent in the banker is going to disappear.

Bruce Norris  Absolutely. You know, things are going pretty smoothly in the beginning of 2020. And interest rates were pretty favorable, under 4% unemployment, and all of a sudden the world changed. So like your seminar in October 10, and 11th, change happens, it happened. So

John Schaub  We wrote this seminar in January. I wrote a newsletter in January that says changes that is going to come and that was before he even knew about COVID I just felt that we had this 12 year run, I’ve been watching builders make some extraordinary profits, you know, selling you out where you bought that house with, you know, none of those houses were there five years ago, they built that whole area in the last five years. Great job. But we’ve had his real run going in the real estate world for a long time now. And there’s, there’s always cycles, and you know, it may go on for another five years, it’s hard to tell California has really long runs, Australia just finished a 20 year run. So you know, it could it could keep going. But there’s also reasons that his prices get higher. And if interest rates creep up a little bit that might slow down. And there may be more opportunity to buy.

Bruce Norris  Yeah, that’s a what’s been interesting in California and I and you’re you’re gonna be a lot more familiar with Florida than I am. But California median price has gone up past 700 grand. And they’re really getting aggressive price gains in the last three months. And I gotta be honest, it surprises me, because I still see a lot of uncertainty with unemployment. I just I don’t I don’t understand. But the same sort of is the same sort of thing happening in Florida in the last, say, three to four months where prices have been pretty aggressive. Rather than people being fearful of buying, it seems like they’re very aggressively buying. And the inventory is not very big. So do you have what what’s your take on that? Why is that occurring?

John Schaub  Not sure why but I agree with you, I think it is occurring, I see people paying extraordinary prices for properties that you know, I look at something and say it’s worth a million and a half, somebody pays two and a half million for it. And so they’re paying premiums, they’re bidding against each other being premiums for property. And, you know, at some point that’ll end You know, if the stock market would fall off the cliff, you know, if it if it drops 30% tomorrow is a psychological thing. You know some people’s money’s disappears, probably on the retirement plan, that type of stuff, but psychologically, that that would that would really put some fear into people. And when people are afraid, and they start hoarding their cash and they stopped buying things, and we had a period of time here in the spring, you know, when when the virus first started there, effect a lot of people were where people just sat on our hands, you know, nothing happened there for a month or two, but that that build up some demand. And and I think part of what we’re seeing in Florida and maybe in parts of California is people moving around, you know, people are coming here from other places, they’re getting away from some of the bigger cities and are looking for a safer place to live. Place they think is safer. So maybe maybe it’s a folks moving around moving to places that are there good places to live distributions, this in some ways, and maybe that’ll continue, we’ll see.

Bruce Norris  But I just think, you know, it’s just interesting because I thought the mood would be really tentative. And it’s not. It’s very aggressive. And I understand the pulling of inventory off so as soon as the Coronavirus hit and the you know, okay, go stay at home. A lot of houses were pulled off of being for sale. And that made sense. So I think people were saying okay, well, we’re gonna get hammered if we keep our home for sale, but it now that is kind of reversed and you have more normal volume. I don’t think those people put their homes back on the market in the same amount they took them off. And so all of a sudden you have more demand and inventory. So we are, we are seeing over bids, and I in Florida, we’re building homes, you know, new homes and selling them. And they sell the first day 100% of the time right now, which is, yeah, is

John Schaub  It’s almost scary. So good. You know, and

Bruce Norris  that’s exactly right.

John Schaub  You and I have both seen a few recessions. So you know, you know, something is going to change at some point, you just don’t know. And so that that’s, that’s kind of the basis of us teaching this seminar on changes, you know, that sort of sort of like the old boy scout motto, be prepared. And that doesn’t mean burying your head in the sand. when things change, it means anticipating change, and figure out what’s best for you during these changing markets, you know, what you do personally? So we make it a very personal, you know, seminar, giving them a lot of worksheets and talking about what should you do next? What should you do today, with your debt, with your tenants with your properties? With your partnerships, all that stuff? So get into some detail?

Bruce Norris  Yeah, I love the the choices that you present, you know, cash flow today or profit tomorrow. It’s obviously that’s something that I had to really struggle with. Jack Fullerton was actually very influential in me ever keeping a rental? Because I didn’t, I did not for a long time. And he was and he became a friend, you know, and he said, what happens? You know, what happens if you can’t go flip the next house? What happens to your family, you know, and I took it seriously, one day, I said, Okay, and then, you know, Mike Cantu was it. He was at the time, you know, trying to race to the 10 houses free and clear thing. And I’m competitive. And I said, Okay, I’ll take that on. So it’s kind of fun. But yeah, you’ve got a lot of great topics. I’m looking forward to it. I’ve got a question about just, it’s interesting. When you when you live in California, come here. I’ll be happy not to pay state tax. That’ll be that’ll be nice. California state taxes like 13%, Florida zero, right? Florida’s ranked number fourth most fiscally sound state in the country, California, something like 45th. So my question is a really honest one, what pays the bills in Florida?

John Schaub  Well we balanced budget every year? You know, we raise taxes, sales taxes, the short answer to your question, but you know, the, and they’re gonna have some challenges this year, because I think sales tax revenue will be down just because there’s less volume in the hotel business, and all the tourist businesses, all the restaurants, so there’ll be a challenge balancing a budget this year, and they’ll have to cut some programs. But you know, Florida always has a balanced budget. I think every state is required to balance their budget. They just do it different ways. Yeah.

Bruce Norris  We’ll trust me California doesn’t  the budgets. You know, the other thing that confounds people coming from California is your building lot cost. I mean, that’s just astonishing to me. And the story behind all these finished building lots. What did they do? Why did they create so many 10s of thousands of finished building lots in advance? That’s astonishing.

John Schaub  Well, there are a couple. You’re talking about flippers, big time, flippers, and they were land flippers, and they would come down and they buy sections of land. And when they did that they buy out in the woods, where, where it was really cheap. And then they would market it out of state. And they would market it to people for a relatively low downpayment, and then monthly payments. So they were taking cash and creating paper with it. But the market was phenomenal. So we’re like to use car business where they buy a car for 300 bucks and sell it for $3,000 $200. Now, you know, that kind of deal, right? So there, they were probably I don’t know what they just hypothetically say they had $100. And a lot, they sell it for $3,000 with $200 down and carry back a note. So it enter profit up front. And they did that over and over again with a whole bunch of the state. millions of acres have been developed that way. And interestingly enough, now in the towns that have grown out and they’re starting to build off some of these laws, they’re still pretty, you can still buy some of those lots in for back taxes for $500 or $1,000. And the retail prices they got up as high as about $15,000 dinner back down to about 5000. They bounced around a little bit. But as you get into town, you know where you live and where I live, the law prices have steadily climbed and and to buy a decent building lot anyplace close to where owning rental properties are as 150,000 now and climbing, and that’s you know, I watched California I’ve been teaching to California since the mid 70s. So I watched all the stuff in Garden Grove in Orange County and San Diego and I watched those prices go from 30,000 to 50,000 to 100,000 200,000 400,000 800,000. I said that’s happening here too. as people move here, prices of land is going to go up because the good land is what really goes up in value. It’s not to house so much as to good land, you know to buy a lot in Garden Grove now you pay 400 $500,000 that the house is a teardown probably more than that.

Bruce Norris  Yeah. We you know what interesting about the way Florida gains population versus California, California gains population now 100% from just what’s called natural causes, though, birth over death, it loses migration now, more than immigration by quite a bit. Florida has just the opposite. The death rate and birth rate are almost on par. But you’re the number one state in population percentage gain. And it’s all in migration of adults either immigration or from within the other 49 states, Florida is the number one attraction and as far as who’s moving their wealth moves there by by large margin Florida’s number one for wealth transfer. So that’s that’s a To me, that’s an important thing. You know, I pay attention to statistics and I put a smile on my face thinking okay. That’s a good business plan to have a lot of seniors that need medical care going forward. And a lot of people with money are landing in Florida to me that that makes a lot of sense.

John Schaub  We call that clean industry. Rich, old people are clean industry. They come down, they spend a lot of money. Don’t go to school don’t break into people’s houses. So you don’t need as many policemen we don’t need as many schools. It works out pretty well.

Bruce Norris  It does. The coronavirus impact do you think it’s short lived or a long term game changer,

John Schaub  I think they’ll there’ll be a point in time. And I don’t know if a year from now, or two or three years from now we’re just use ancient history, we don’t even talk about it anymore. If you think about how it’s changed your personal life and then think about how it’s changed society personally, you’re washing your hands more, you’re staying away from people, you probably haven’t had a cold in six months, I haven’t. You know, I have three little kids at the house you know, chances of me getting a cold are pretty good. We’re just being healthier we have we’ve improved our stay in healthy routine. And as society, we’re doing that now to a society where you know, we’re working from home, we’re not going out as much. I think those things, a lot of those things are going to stick. You know, I think people will continue to work from home, I think they’ve, like I learned when I started teaching seminars, jack and I would go out and teach half a dozen times a year. But when I came back, I found that I would catch up in just a few hours, I was all caught up again. It’s amazing how efficient you become when you you know, when you do do things like that. So I think people found it very efficient working from home and it can be it’s going to change the world probably for a better and plus, you know, where we’ve gone to have lots of mass loss of respirators, we’re gonna have all sorts of people working on developing more medicines, the government is really spot underwriting the cost of development now, which is a big thing. So I think the world will be a better place in a year. And I’m guessing probably a year from now things will be kind of back to normal. We’ll be doing seminars with without wearing masks, but we’ll see. We’re wearing masks and this one, you know about the presenters, we’re gonna be up on the stage and at least 30 feet from everybody. So we won’t have a mask on but we want everybody in the room. They have a mask on to us. We want everybody to stay healthy.

Bruce Norris  Wow. Okay. I didn’t know that that was coming. Okay. Now for your math. Live seminar. Is that the first one this year?

John Schaub  Yes. The first one is year, and I have nothing scheduled for next year. I typically teach January in Sarasota, but I’m not going to do that this year until it calms down a little bit more. I love to teach, but I’m not gonna put my family at risk by getting in a big crowd and being a guy, I gets unlucky.

Bruce Norris  Last question. And I want to ask you, if you have any, if you have any new books you’re going to write, but are you concerned about any glut of foreclosures coming that would affect things,

John Schaub  I’m a little concerned about the tenants who have deferred the rent, because I just can’t imagine that any of those tenants who have deferred the rent have saved up enough to pay the rent.

Bruce Norris  Correct.

John Schaub  So when the time runs out here, whenever that’s going to be, they may delay it again. But when the time runs out, there’s gonna be a whole bunch of folks who are renters, and I’m not talking to worry about my people, because my people stayed current, they paid the rent on time they liked their houses are below the market to start with. So for them to go someplace else, but would not be a smart thing. But for you, there’s a whole bunch of tenants who are not very smart, and they paid live week to week, month to month, and I guarantee you, they don’t have six months rent saved up if that’s what they have to pay to stay in there. So either the landlord is going to end up really short or the government’s gonna write them some big checks, something’s going to happen. But I’m more concerned about that issue than I am foreclosures at this point. You know, the credit market is a little bit looser than it was maybe two years ago, but there’s nothing like it was in 2005 2006, for where anybody could get a loan. That’s not the market we have. So most people borrowing money today can probably afford to pay it back. And of course, the banks got conservative earlier this year, they’re starting to loosen up a little bit now. I have had one tenant move out and buy a house and then that’s kind of assigned to me if I have a bunch of tenants buy houses, that’s a sign that credit is getting pretty loose because most tenants don’t have great credit. You know, just just It is. So I’m not too concerned about foreclosures more concerned about what’s going to happen. And particularly with the big landlords that have big multiple unit buildings, how they’re going to handle I think just like a lot of hotel foreclosures right now, I think we’re gonna see a lot of foreclosures in those big apartment buildings.

Bruce Norris  Yeah, I agree with that. Any future books that you’re thinking about?

John Schaub Well just update my biography, for you. I did rewrite the building wealth one house at a time in 2016. So it’s a newer edition is selling really well. McGraw Hill called me a couple weeks ago, wants me to update it again and do a third edition. So I’m going to rewrite that book. I’m not sure I’m going to write a different book right now. But see how things go. book writing is a labor of love. It takes a lot of time. I write newsletters, you know, six times a year, I write up a six page newsletter. And that takes me a week just write that. But that keeps me pretty busy. I don’t have a plan right now to write a new book.

Bruce Norris  All right, I gotta sign up for that newsletter. So is that on your website? dirt on a website? Okay.

John Schaub I’ve been writing an app since 1978, six times a year, six pages. That’s a lot of pages.

Bruce Norris  That’s a lot of pages all right. Well, I look forward to that. I’m still a rookie in Florida. So and you know What’s so funny? I attended a seminar you guys taught two years ago, maybe you and I had some long time. But I don’t remember what was said in in the seminar just maybe during a lunch or something. But you made a comment that just being really careful about having business partners. When I when I had that stuff go on this year, I didn’t have a business partner, but I became responsible for somebody else’s actions willingly. But still, that thought really crossed my mind what you said. I thought that was about a million dollars of advice I should have taken

John Schaub  Well, you know, it’s one reason I write the books and teach a little bit is because I want my kids to hear some of that too. But I think one of the most important to say Did you ever make is who you partner up with both personally and in business, because if you get the wrong partner, you’d replace it. It’s a it’s a nightmare. It is just a nightmare.

Bruce Norris  Well, John, thanks so much for joining us and taking time, and I look forward to seeing you in October.

John Schaub  I look forward to it to Bruce thanks

Narrator  For more information on hard money loans and upcoming events with The Norris Group. Check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com. The Norris group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and nmls license 1623669. For more information on hard money lending go to thenorrisgroup.com and click the hard money tab.

 

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