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Real Estate Investing School Podcast
241: Mortgage Secrets Every Investor Should Know with Jason Henneberry
01:02:32
In this episode of the Real Estate Investing School podcast, host Joe Jensen sits down with Jason Henneberry, the co-founder and CEO of Tango Financial, Canada’s largest mortgage brokerage. With over 20 years of experience in real estate and...
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- [00:00]
Jason Henneberry
That opportunity that you think is like, I gotta jump on it now, I promise you, man, it comes around again. It comes around again. It comes around again.
- [00:12]
Joe Jensen
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Our guest today is Jason Henneberry. Jason's the co founder and CEO of Tango Financial, Canada's largest mortgage broker. He's also the co founder of the VIP club and Strategy Hub. And he's helped thousand realtors and mortgage professionals improve engagement and build better relationships with their clients. He has over 20 years of experience in the real estate space and is widely recognized for his knack in helping realtors and mortgage professionals with the marketing and sale of real estate and mortgage financing. So, Jason, welcome to the show. Glad to have you here, man.
- [00:51]
Jason Henneberry
Joe, thank you. You read that perfectly. You left out the part about me having a PhD though.
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Joe Jensen
Oh, you can't miss that.
- [01:00]
Jason Henneberry
He's got to miss that public high school diploma, which.
- [01:05]
Joe Jensen
That's my kind of.
- [01:07]
Jason Henneberry
It tells me about this much in all of those endeavors.
- [01:10]
Joe Jensen
Exactly. I was going to say that's my kind of PhD, but I didn't even get that. I didn't even get my high school diploma. So, you know, I did get my. A bachelor's in science from university. But. But no, sweet. There's no. There's no right or wrong way to.
- [01:25]
Jason Henneberry
Do it, you know, no right or wrong way to do it, man. Not these days, that's for sure.
- [01:29]
Joe Jensen
Well, this is cool. I'm stoked to have you on, man, because something unique about your situation compared to a lot of our guests is you. You live up in Canada, you work in Canada, you, you know, you lend money in Canada. You connect, you know, it's. It's a different world up there a little bit, which I'm always interested in interviewing people from other countries and how real estate looks to them in their country and how they look at real estate in the United States. What are the pros and cons?
- [01:54]
Jason Henneberry
Yeah, yeah, we definitely have different markets and it's great to, you know, great to have the opportunity to, you know, swap stories and see. See where the conversation takes us. So happy to be here.
- [02:05]
Joe Jensen
But just to start on that in my mind. So this is what I hear about Canada. And again, I've never invested in Canada. I don't know anybody that does. But it's like, oh, man, they're really expensive. Like the homes are really expensive and you don't have as generous of financing options as we're used to down here with like a 3 or 5% down, 30 year lock long, you know, low interest rate. But maybe that's hearsay, I don't know. Tell me, what's it like investing in Canada?
- [02:37]
Jason Henneberry
I think you're not wrong. I think we probably have a little bit of a tighter regulatory environment up here in terms of like the lending products and things like that. So it is hard to, it's harder today than it was 10 years ago to get into real estate.
- [02:53]
Joe Jensen
Sure.
- [02:54]
Jason Henneberry
My whole background is mortgage finance primarily. And, and then I get a kick out of the marketing side of things, so I help people with that. But, but when I first got into the business and this is going back to like, I've been doing this for 20 plus years now. So 2004, you could buy an investment property in Canada. We had mortgage products up here and I think you guys had similar where you could put zero down, you could actually get a cash back financed on the purchase. So you were basically born 105% of the property value and you could do that with very little paperwork. And that is like we couldn't be further from that world today. Right, right. Like now it's like you got to, you got to give a blood sample and if you want to get a mortgage. But, but man, I wish I could go back to those days. I always look at and I'm like, why didn't I just, why didn't I just buy like 100 properties 0 down back then? But you know, the hindsight is 20 20, obviously.
- [03:53]
Joe Jensen
Yeah. Well, and then that led to its own world. Right. Because, you know. Yeah. We were doing the same thing here down in the States and they're doing these, what they call signature loans. Basically you just sign the paper, here's the money. You don't need to have proof of income or proof of employment or. And if anybody's ever seen the Big Short, I don't know, have you seen that movie or read the book?
- [04:11]
Jason Henneberry
I was just going to say there's, there's those two mortgage guys where they pull them aside and they're like, why are they bragging about this kind of thing?
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Joe Jensen
Yeah. And it's so funny because I've read the book, I've watched the movie and it's so good. I recommend everybody go check it out. Just because it's an insight of like, what is possible out there, how wild things really are. You think, you just think everything's being so structured in specific ways and it's like there's a lot of manipulation and weird things going on.
- [04:40]
Jason Henneberry
Yeah.
- [04:40]
Joe Jensen
And that leads to you know, obviously what happened in 2008 where we had this huge housing bubble and it blew up the, in the whole market down here at least. How was that up in, in Canada? Did it affect you guys the same or was it you guys insulated from that?
- [04:54]
Jason Henneberry
If you, if you owned and held real estate through, like, obviously there was an impact in 2008, and I can tell my own story because I had a hard time for the, for about two years after 2008 for totally other reasons. But, but if you owned and held your property through the end of 2009, then you were, you were fine. So. And things came back up here and then they stayed strong up here right through to 2022. The, you know, it just kept, we just, there was publication after publication. Like, it's a bubble. It's a bubble. It's a bubble. Like I remember like 2013, people were panicking and, and it just, it just never popped. And it still hasn't popped up here for, except for the major markets. So height of the market for us was February 2022. And if you're in the big metropolitan area like Toronto or Vancouver, definitely we've seen a decline in some of the real estate values, but not like you would have imagined, but not like a.
- [05:54]
Joe Jensen
Drop, a collapse like cutting in half the prices.
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Jason Henneberry
Just the, the thing that people don't realize about, about Canada is how much equity Canadians have. Only 50% of homes have mortgages on them up here.
- [06:09]
Joe Jensen
Oh, interesting.
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Jason Henneberry
Yeah. And that number may be a bit different today. Maybe it's 35%. Like these things I'm just going off of like my memory of some stats. But, and the people that do have mortgages, like, the amount of equity is really, really, really high. And so nobody has to sell. And so right now in the market like this last year or two, the transactions are low. There's not a lot of product moving off the shelf in terms of like people buying and selling homes. But nobody's dropping their pants. So the house, the home price will stay in flat because nobody needs to. And when I say nobody, there is a small percentage of people obviously that, you know, they buy high ratio, small down payment at the height of the market. Those people are feeling the pain and I feel for them, but for the most part, our market is pretty solid from that perspective.
- [07:01]
Joe Jensen
Yeah, that's interesting. And, and with. For your interest rates, I don't want to like hit on lending in Canada for too long because probably most people listeners aren't. But, but I'm curious, do you guys have 30 year locked with like 5% down, like 3% down. Like you don't really have those. Right. That's one reason you have more equity is you kind of forced to put more down. And.
- [07:25]
Jason Henneberry
You'Re forced to put a lot more down. It's, it's. Yeah. If you're self employed or if you're buying like investment properties or whatever, you tend to have to have larger down payments in order to get the mortgage products. But from a rate perspective, from a term perspective, we don't have 30 year terms. We have. The longest you can get is a 10 year. I don't know anybody that takes them because they're priced out of the market. Most people will take a three to five year term on their.
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Joe Jensen
So it's amortized for three to five years?
- [07:57]
Jason Henneberry
No, no, no, no, no. It's amortized. So two different things. Good question. Amortized over 25, 30 years and even have some 40 year products. But the, but the rate and the, and the term is only for three, four or five years.
- [08:11]
Joe Jensen
Yeah, and that's for like a primary.
- [08:12]
Jason Henneberry
Residence, even primary residence. Whereas in the states you get to like, you like lock your term in for 30 years, no penalty, refinance, you get to get. You guys have like a totally different landscape. There's. But for us, the homeowner bears most of the interest rate risk in the transaction. Interesting investor. As opposed to like if you could, if you could get a great rate for 30 years. So then the other thing that happens as a result of that is like we feel the changes in the market faster because like our, our homeowners and investors like their mortgages are up for renewal sooner. So like we have most of the mortgages in Canada that have moved up in rate, whereas in the states I think a lot of people that locked in for 30 years like four years ago.
- [08:57]
Joe Jensen
That's interesting because. Yeah, right now it's only the people that are getting new mortgages that are like, oh, I can't buy a house now or I'm frustrated. But for you guys, everybody that had existing ones is filling the pain as well.
- [09:09]
Jason Henneberry
That's why we have the largest wave of renewals. And I know you don't want to. This is maybe kind of interesting. I'm loving it. I think it's kind of interesting without getting into like the actual market too much. But like we have the largest wave, wave of renewals ever right now in 20, 24, 5 and 6. Almost every mortgage in Canada is up for renewal in this 24 to 36 month. Period. Because in 2022 when rates started going up. And you guys felt that too.
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Joe Jensen
Oh yeah.
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Jason Henneberry
Everybody that was up for renewal then took short term, like one, two and three year terms because they didn't want to. They don't want to feel the pain of the rising rates. And, and so you have all those people coming up for renewal and then everybody else that was on five year terms from before, they're also coming up for renewal. So it's like almost every, like it's like 60, 80% of all mortgages in Canada are being renewed right now.
- [10:00]
Joe Jensen
Like, wow.
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Jason Henneberry
Yeah, it's crazy.
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Joe Jensen
Not a bad time to be a lender in Canada.
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Jason Henneberry
I guess then it's not, it's not terrible.
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Joe Jensen
Yeah, you'll be keeping busy.
- [10:10]
Jason Henneberry
You got, you still gotta help people. You still gotta. It's still a lot of work. But you know, and you want to. Yeah, but so, but we don't, in the mortgage industry, we don't rely on the real estate transactions the same way that the realtors do. We just always have. Which is kind of nice.
- [10:22]
Joe Jensen
Yeah, that's true. Because there's. Everybody has to. Every five years. It's just constant. That's interesting. And, and what. I think that's interesting for any listeners who are like, you know, here in the States, I'm just like, dude, who cares about this? I think it's interesting to know what advantages are we have, you know what I mean? So we did we take advantage? Because so many times it's like, oh, you know, people are sitting on the sidelines. I'm like, guys like, imagine like if you were in Canada and you hear that you could lock your rate for 30 years. It's like that you're so protected. It's like, that's crazy, guys, like we don't realize how good we have it. I mean, get. These are for primary loans. You know, when we go do investment loans or commercial stuff, it's pretty similar. We got three to five year arms and you know, adjustable rate mortgages and, and we'll have balloons and stuff once you get in the investment space, like commercial loans. But you know, for, for primary residence, which a lot of people, a lot of the listeners, it's like a house hack. Everybody should every year go get that 3 or 5% down. I'd say 5%. Avoid the PMI, don't do FHA, but go get a 5% down primary loan, lock it in for 30 years and just do that every year. Because you can. There's a whole country, every other country in the world basically can't do that. So take advantage.
- [11:34]
Jason Henneberry
Yeah, your mortgage market is, is, is much different from that perspective and ours is way more similar to like say in Australia or given the UK to some extent. And so you have a unique, you're not wrong. You have a very unique product mix that you can leverage for those longer term buffers. It's pretty cool.
- [11:53]
Joe Jensen
So you, you've touched every side of real estate, Jason. You know, from the lending, from the personal investing to connecting and marketing and agents, like, you've kind of touched all of it. I do want to talk to you a little about your personal investing experience because you, you at one point owned quite a few properties and then ended up exiting a lot of them. Not necessarily in a way that you were stoked about or like was planned on. Tell us, kind of break that down for us.
- [12:21]
Jason Henneberry
Well, this is getting, this is getting Back to like 2008 was rough for me for a different reason. So I, at one point. So how old would I have been? I was, I was 30 years old in 2008. And so, and by that point I owned, I can't remember the number. I kind of bury the memories because it was too painful. But I probably had 20, 25 doors when I was 30 years old.
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Joe Jensen
That's awesome.
- [12:48]
Jason Henneberry
Yeah, it was good and it was a good time. And I, you know, and I didn't know anything but a rising market from the time I started my career in 2003-2008, five years. It was robust and making good money as a, in my industry. And I just, I loved real estate, so I bought a lot of stuff. But then I had a whole other program and we don't need to get into this because this doesn't matter, but there's a, there's one other big fundamental difference between Canada and the U.S. yeah, your mortgages are tax deductible, ours are not. And so you're the mortgage that you get on your home you don't get any tax deductions for. What we get is when you sell the house, you get to sell the house tax free. So which is cool to get the capital gains. And this is, this is a primary residence. You get the capital gains exemption on a primary residence when you sell, but you don't get to write the interest off along the way. So I had a really cool program that basically helped people convert that mortgage to a tax deductible loan. And it was awesome. And we promoted the heck out of that in 2006 and 2007. And we took like a billion dollars worth of mortgage applications in a two year period. Back then we had like, we put 300, sorry, 20,000 people through 300 seminars across the country. It was like, it was amazing. And then 2008 hit and I had made a massive commitment to marketing way in advance because you save your money. And so this is just a business lesson, but I was pre committed for all of the second half of 2008 and the first half of 2009 on basically what was a seven figure market, like national marketing budget, radio, TV, the whole nine yards. And then September 15th, 2008, bottom falls out of the market and like zero people showed up to my seminars for the next four months.
- [14:38]
Joe Jensen
Oh man.
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Jason Henneberry
Yeah, it was, it was brutal. And it forced me to, you know, you can only do that so long when you're, when you're, you've got that commitment to, that such a big spend that you can't pull back. And so I was way over leveraged from the perspective of a marketing commitment. I didn't have the incoming cash flow to offset. And so it took me out, it completely wiped me out. We had to sell my house, I had to restructure my business. I sold all my rentals, dead stop. And by the time the damage was done, I had like 30,000 bucks to my name and I had to build a new business from scratch. And this was like 2011. So it was like a two year period where I trickled along and I just, it was a total disaster. But a lot of good things came out of that. And I, and you know, and we are where we are today, like Canada's largest brokerage. We fund about $5 billion worth of mortgages every year. About 70 mortgage brokerages that plug into our system. Like it was cool, like it's a good story in the end, but, but there was a moment of pain there and I had to reset my portfolio. And that was not fun.
- [15:46]
Joe Jensen
That is wild. You know, it's so interesting because you know, you're obviously more of like a businessman than anything. You, you're definitely in the real estate world, but, but you, you play that business game. You play big, you play hard, you've had the roller coaster. I just think it's so interesting because it's like there, there so many people I know that own businesses, they've had these experiences where they've virtually almost lost it all and then they come back and they're, you know, making more money than most people know what to do with. And it's, it's interesting because it's like real estate's so safe compared to that. You know, it's like you make a little bit of money, you own a home, you get some appreciation, some tax, write off some cash flow, and it just slowly does that over time. Then you have a lot of equity and you buy some more. And it just kind of. You don't. You don't hear these stories unless they were like flippers or developers. You don't really hear something like getting devastated and losing it all. But you also don't go make billions of dollars with it, you know, and so it's interesting. It's just such a. I don't know, I feel like you have to have like a different spine to be able to.
- [16:48]
Jason Henneberry
And I want this to come across in the best way possible. Like I am. I appreciate the kind comments, but I consider myself successful in my own right, but not wildly. Nothing crazy. So we're not talking massive, wealthier or anything like that, but comfortable. Comfortable and happy. But you're right, I do enjoy building the business side. I'm okay to roll the dice a bit, but what's cool about that is young enough and early enough in the career to learn a lot from it. And what was interesting though, I still loved real estate and my whole way of earning income, you know, in the finance business. So it was still. I still had to like figure it out. But the way that I got back into the market is I clearly didn't have enough capital left after that disaster to like go and buy a bunch of stuff. But what I did do is I did a lot of rent to owns because the one thing that I salvaged in that through that period of time was I didn't let my credit get damaged or anything like that. You know, I dealt with the debts and I. And I made sure I came through clean. So I was able to rebuild really fast. I didn't have a long history to clean up. As soon as I got cash flow back in the business, I was able to go buy real estate. What I didn't have was capital. And so what I did is I got really big into rent to owns for a while and we promoted them. We found people who couldn't necessarily get into homes but had some down payment saved and I did a ton of those and I helped people get on the property ladder and then we co shared the property. So I did, I. I don't even know. Not like when I say a ton, it wasn't like I was doing hundreds, but I did like a dozen of them in a two year period. And that's, you know, real estate market obviously came back 20, 11, 12, 13, 14. Like you know, we all know the history. So those were really good years to be invested in a bunch of properties. And, and so, you know, the combination of that and like rapidly getting back into the market and having access to some equity growth was really helpful for, for, you know, making up for lost time.
- [18:52]
Joe Jensen
Yeah, let's dive into that a little bit, if you don't mind. So these rent to owns, I'm familiar with it actually the first property I ever did I ended up doing a rent to own out to somebody so I could get a higher rent, I could get a little down payment from them. It helped me cash flow. Luckily they didn't end up buying it because I still own that one today and have a lot more equity in it than I would have ever imagined. But so I'm pretty familiar with it. But I'm not sure most of our listeners are, but I'd love to dive into that. So what was your strategy? And we can get nitty gritty here if you want with the rent to own stuff. Like how did that work? Were you rent owning it as a purchase and then rent owning it as a sale as well and doing this sandwich deal or were you just on one side or how did you.
- [19:35]
Jason Henneberry
A lot of ways, there's a lot of ways to, to have wins for people. Like you can have win in a rent owned situation. You can have a win for the homeowner like the tenant buyer. You can have win for the realtors who are helping you transact and find the properties. You can have a win for the finance company who's going to help bring the deals together because you're, you're financing it on the purchase, you're financing it on the transition. So there's, there's, it's like a multi transaction type thing. So it's good from that perspective. You can have win for the person who's bringing the, the credit. So like oftentimes you'll get say a rent real estate group who's promoting it, a finance group who's bringing the money together. You'll have a tenant buyer who's got the down payment and you'll have someone who's got good credit and solid income who will qualify. And so you're, you're, you're bringing tenant buyers and qualified investors together and then you're creating a bunch of wins for everybody. So it really is though a down market strategy meaning like the worst time to put someone into rent to own is when the market's as high as possible. But because you pre, you pre agree like, okay, we're running this deal, it's five year deal or three year deal, it's going to have. These are the exit triggers, like in terms of values and stuff. So you need, in order for everybody to win, you need the value of the property to appreciate over that period of time. So like the best time to do that is at the bottom of the market and you have the most potential upside for everybody. And the worst time for the tenant buyer is when you're at the height of the market because if they don't get the appreciation, then they've just paid more in tech, in rent, technically for no financial upside. And so. And it's harder to get them the mortgage so that they can ultimately be the owner. So that's why you said like, sometimes they don't close, sometimes they don't convert to ownership. And but I think right now like it's kind of a down market depending on the city, depending on the state. So you know, rent to owns are potentially a good opportunity for if you're trying to bring a lot of transactions and a lot of partners together.
- [21:38]
Joe Jensen
So how is. So break it down though? So for you as the investor, you know, you bought a dozen of these or whatever. How were you doing it? Were you finding these? Like, how are you making money off it? What was your strategy with it?
- [21:49]
Jason Henneberry
So we promoted through. So for us as mortgage brokers, as a finance company, we need to find ways to like support our referral partners. And so we knew we could put these deals together from a financing perspective. And so what we need though is we need deal flow. And so we went to realtors, essentially we said, hey, we got this cool program. Do you guys want to promote it to your clients? It's a down market. There's not a lot of real estate transactions. This is a great way to cause real estate transactions. And so they got excited about that and put our program in front of clients. So that was a win for the realtor. They were basically our distribution to find potential, potential clients, both on the investor side and the tenant buyer side. So from a marketing perspective, we didn't have to spend any money. Which, remember my previous life, I was, I spent a fortune. Yeah, I got real, real, you know, scrappy. And I found ways to find clients without spending any money. So this is. So that's a. So. So that's great. So you can get, you can find deals and you can Find investors through your partners if they're in marketing mode. And so in a very busy real estate market, you're never going to get a real estate agent's attention to help you market that kind of program down market. It's a win. So that was the first part and then we had to do the financing and so we would basically like. I personally did a bunch where I was the investor, so I financed the whole deal, I was the investor and then the realtors brought me the tenant buyers. But I probably did like, I did like over a hundred of them where we just supported the financing and we were basically bringing the tenant buyer and the investor together and causing the transaction. So I did lots of those. And then you just gotta be careful because you don't want to put anybody in harm's way. Rent to Own sometimes have a bad rap because you'll get bad investors who kind of take advantage of the situation, take advantage of the tenant buyers. You just want to make sure you have really good people in the transaction that are, they're all there to cause a win. And I think that that's really important if you're going to get into it. Just you know, there, there can be that risk. So you know, you want to go in eyes wide open and making sure you're finding good people.
- [24:04]
Joe Jensen
So how are, so when you're lending on these? Because I'm trying to like understand the detail here. The agents, you know, they're not, you've the, they're bringing you people and shit. They're having a hard time buying right now. So you're not actually selling the home right then. And so like how are the agents getting paid? Are they waiting three to five years and then getting paid? As a lender you're not lending yet because they' buying yet. Are you buying?
- [24:26]
Jason Henneberry
You're getting all kinds of reasons, These are great questions. All kinds of reasons why someone can't buy a home today. Right. Maybe they're new to the country, maybe they're new to being self employed and they don't have that history that the, that the finance companies want to see. All kinds of reasons. Yeah, Maybe they have damaged credit and they're rebuilding, you know, maybe they came out of a divorce. There's so many reasons why someone can't quite buy today, but they want to buy. And a lot of those people will have down payment savings. They just don't qualify for the mortgage yet. And they might need like 2 year run rate to get there or 3 years or something like that. So that's one side of the transaction and then the other side is the investor. And so what we did is we said we would find the tenant buyer and we would say hey, how much money do you have? What can we probably afford? If you rebuild your credit or you get back, you know, you get your two year history of self employed. Realistically we're going to be able to qualify you for, for this two years from now or three years from now. So let's go buy you that home today and you go shopping, you find the home you want and we will match you with an investor and the investor will qualify for the home. So we caused a real estate transaction. So the tenant buyers, they actually got to buy their future home and live in it right away. They just didn't become the owners until we could finance them into that situation. So it was great. So you got people that can't quite get into a home that get to actually feel the pride of ownership immediately. Realtor gets a transaction and the investor gets a, gets tied up to someone who is like, who cares about the property.
- [26:05]
Joe Jensen
So these investors are the ones qualifying for the loan. They're the one buying the property. Then now they have this really solid preset tenant that's going to pay you may even help with the down payment payment and pay higher rents or whatever. So like, like why is the investor wanting to do that? It's just a solid.
- [26:23]
Jason Henneberry
Well the investor wants to do it because it reduces risk. So think about if you want to go buy a rental property, just a residential rental property, you got to come up with a down payment, right? You take all the financing risk on it and then you got to go find a tenant and that tenant needs to stick around or may not stick around, they may trash the place, they don't care. You know what I mean? So with a rent to own type situation, from the investor's perspective, the tenant buyer is bringing the down payment. So you don't need to bring capital, you're just bringing qualification. Tenant buyer covers all the closing costs, everything the tenant buyer agrees to, to pay, not to not only cover those costs but to, but to sir pay like to pay a premium which then gets put aside as you know to help them build a down payment. But it fundamentally becomes buffer financial buffer that the, that the owner, the investor wouldn't otherwise have if the tenant buyer goes sideways on them, which can happen. I'll tell you a funny, that's not really a funny story, but I'll tell you a bad one that I did where I was the investor oh, and, but so there's all kinds of reasons why as an investor you just bring your qualifications. So kind of investors that we had, they were doctors, they were dentists, they were lawyers, they were guys and gals. Like they were just professional people who just wanted good deals. And then what's nice about the investor is they have a predetermined roi, they know when they exit that deal, they know exactly how much they're going to make and they get a tenant in there that cares about the property, so they don't have to worry about rent not showing up and they don't have to worry about the place getting trashed. So maybe you don't get quite as much upside because you're sharing that equity growth fundamentally.
- [28:01]
Joe Jensen
But they do share the equity growth. They actually get some of the equity growth.
- [28:04]
Jason Henneberry
Yeah, the tenant buyer is doing it because they get to get into that property two, three years before they otherwise would and they get some upside in the deal. So everybody gets upside in the deal.
- [28:14]
Joe Jensen
That's cool. Yeah, I mean that, like, hey, you don't have to spend any money like, okay, but then you get a piece of equity and you get a cut of the more the rent payments and you're just making this return and it's all real estate backed. You know what I mean?
- [28:31]
Jason Henneberry
Like, this is how I got back. I came back to life. I had good qualification, but I had no capital. So went and did a bunch of these deals and within three years I, I had 50% of all the appreciation across a dozen properties that were all transacting. And I got all that cash out and I was able to look my family and my wife in the eye and be like, look, we're not broke, dude. I love that. You know what I mean? Like, it took two or three years, but, but that's how we, that's how we brought, got our capital back.
- [28:58]
Joe Jensen
Well, and that's what I love about real estate is if you can get creative and find ways to help people, like you can really help yourself, you know. So anybody listening, if they feel like you're sitting on the sidelines, I always say, like, what are your resources? Right. And capital is a resource.
- [29:14]
Jason Henneberry
Sure.
- [29:14]
Joe Jensen
If you got a hundred grand in the bank, you can probably do something. You know, credit is a resource though. If you can just provide the credit, then you can make money, you know what I mean? And you could own portions of deals just without spending a penny of your own. So if someone's sitting on the side like, oh, I don't have this, I Don't have that. It's like, well, what do you have? And it doesn't have to just be for rent to own guys. Like, that's how Jason did it, you know, because of the industry, in the market. And he was, you know, you were working as a broker. He had all these other pieces that puzzle. But, yeah, any random listener, if you have decent credit, go find someone that doesn't, but they know how to make some money. Co sign with them. Bing, you got a piece. Maybe they give you half, maybe they give you 20%. I don't know. Figure it out, you know, but it's like, I did that deal with a friend of mine, and I gave him the tax benefits. You know, he's writing off a ton in taxes every year. He didn't spend a penny. And I was able to use his credit when I didn't have any credit to qualify for the home because I'd written everything off in taxes. But. And so anyway, there's just so many ways to put a deal together. Um, and it doesn't have to be scalable. You don't need to do a hundred. You know, go do one or two or three or do 12. You know, it can really get the ball rolling and. And shift your perspective. So anyway, I just think that's a cool strategy.
- [30:32]
Jason Henneberry
I went from. From 30 doors to zero, where I owned them all to. And lost my own home where I rented for a while and then to like, whatever. At any time, I probably had six or seven of these things active because.
- [30:45]
Joe Jensen
I was rolling through them.
- [30:46]
Jason Henneberry
Right. And. And it was shared, shared appreciation. So totally different approach, but it still works. Yeah. Yeah. So you're right. Yeah. If you're making like, man, if you make, you know, 60, 70 grand a year, 100 grand a year, and your challenge is you just don't have much in the way of down payment savings for any reason. Lots of reasons. We're sharing our stories right now. Just, you know, there's no shame in it. Go find someone that has a down payment but doesn't qualify. Boom. You just buy yourself a place. So, yeah, that's great.
- [31:19]
Joe Jensen
That's cool, man. I love that. And connecting the right people is so important. That's something you've been really good at, is connecting all the pieces, marketing to the different players so you can get people with the people they need to be with to be able to do stuff.
- [31:34]
Jason Henneberry
Yeah, but you don't need all those pieces to make it work. Go to a real estate networking event. Talk to some people. You know what's cool about being at real estate networking events is I found a lot of my deals that way. There's a lot of people. If you're listening to this and you're thinking about becoming an investor, you're new to this world, so you probably have some of the pieces of the puzzle. Whether it's you've got the income and the qualification good credit, or you've got the down payment, but you don't quite have those other pieces. I promise you go to these events, there's other people in that room, they're in the same place and they have the other parts of the puzzle. And that is something that I did a lot of back then. I do less of it now just because I'm busy with other stuff. But when I was in rebuild mode, I was really trying to find the people that had the other parts. And you don't know what comes of that. And you make good partnerships. I still own real estate today with at least one partner that I met back then when I was doing rent homes. And that's 10 years ago and we actually own a property together today.
- [32:37]
Joe Jensen
I love that. So I just have this idea for any listeners that especially this would work really well for younger people that you know that no family yet, just a single guy or girl and they're just like, whatever. In, in the U.S. you can get, you know, 5% down on a primary, even up to a 4 plex. You can call your primary and only put 5% down. If you do a USDA, you could do 0% down of, you know, anyway, you might have no money, you might not even have the credit. But if you can go and say, hey, I'll make it my primary if you buy it, but you can use my primary. So you only have to put 3% down or 5% down and you'll get a way better interest rate. This locked for 30 years. Let's go do this. So I'm saying like, so if you're a young kid, you're 20 years old, you don't have the income, you don't have the down payment, you've got. You don't even have the credit, but you can say, hey, make it my primary residence. I bet you could find investor that's like, hell yeah. So now I only have to put 10 grand into this thing, 20 grand in, and I can get this beautiful home because I'm only putting 3% in and I get a lower interest rate. And I'll give you a piece of.
- [33:46]
Jason Henneberry
The equity because you just touched on something super cool. So I, we might end up in a place here where the similarities aren't perfect, but what you just described is, is something you can do up here in Canada. And it's something that like I've got, I've got three kids, you know, 19, 17 and 15.
- [34:03]
Joe Jensen
Okay.
- [34:03]
Jason Henneberry
They're entrepreneurial, they're, they want to get started. So they'll like, they'll, they'll start buying real estate almost immediately, as soon as they can kind of thing. So that's just the way our family is. So. But one of the strategies there for a young person that is it, it is trying to get on the property ladder in Canada you can own. You talked about like put 4% down, 5% down. We call that a high ratio loan up here because, you know, high ratio relative. Sure. Okay. So same thing. We're allowed to only you can only get a high ratio loan if it's your primary residence.
- [34:39]
Joe Jensen
Yep.
- [34:40]
Jason Henneberry
So the coaching that I'm giving my kit, but you can, you can do this multiple times and you can convert the use of the home within reason. You can't like say I'm going to, I'm going to live there and then rent it out on the first day. But you are totally allowed to change the use of that property and go buy another one. And so you can do this up to three times. And so you, so my coaching my kids is, hey, let's, as soon as we can, let's go get you a small one bedroom condo downtown in a highly rentable area. Five percent down, boom. You're going to live there for a year while you save the 5% for the next thing of similar value and you can maybe ladder up a bit on your value because your income earning potential might be a little bit higher. But as soon as you can, it might take a year, might take two. We're going to buy the second one and you're going to rent out the first one. But now, now you've bought a rental with like 5% down. Basically. Yeah. So we're going to watch and repeat that. And then on your third, when you're moving from your third to your fourth, you're going to save the, you know, the 20% that you need or whatever it is so that you can go buy your, the home that you're going to live in for a while. It could be a condo or a home, whatever, but that allows them early to get into having like multiple units with very little down payment that are now, you know, cash flow positive or whatever. So yep, that's the strategy. If you can pull that off, it's a great thing. I literally teach my kids how to do that. That's going to be our strategy.
- [36:05]
Joe Jensen
Yeah, it's what I call the pop pop. The power of the primary residency loan. Like the power of the primary residency loan. You just get so much benefit. And again, and here we can do it every year. It's not limited to three. You can do it every year for your entire life. So it's like, you might as well. And then like I said, the thing I was adding on to is like, you don't even have to save the 5%. You don't even have to qualify, find a partner, but just use your pop, your power of the primary, and then go move into it for a year. That's what I'm saying. It works. As a young kid, you're like, hey, I'm going to go move to this guy's house for a year. Now I'm going to move into this house for a year and I'm going to move this house for a year. And you're walking away from each of those with equity ownership. And you didn't put a penny into any of them. Like me as an investor, if I have capital, I would, I would love to partner with some kid and then make the down payment to do everything but use his primary residency to make. So I don't have to put 25% down on a fourplex. I can put five. That's all.
- [37:03]
Jason Henneberry
Let's do the math, right? You could do 25% down and own 100% of the equity, or you do 5% down and on half the equity. If you take that 5% and go five times, you own 2,250% of the equity.
- [37:16]
Joe Jensen
Yeah, exactly.
- [37:17]
Jason Henneberry
Right, right. That's the logic.
- [37:19]
Joe Jensen
Like it makes. Or if you can't do it five times, you could only do it one. You own something. Because if you only have the 5% and that's it, you know, it's better to own a piece of something than sitting on the sidelines until you saved up 25%, you know, so do you.
- [37:34]
Jason Henneberry
Guys have the same. Like, for us, the qualification is the hard part up here. While saving down payments hard too, because the property values are high. But like, you know, your income only goes so far in terms of qualifying for the loans. And so that's like. So the, the coaching that I have to give my kids, I'm like, we need to get your income up as fast as possible. You know, coming up with a 5% down on a $200,000 condo is not the hard part. But owning three of them means you're now, you're now qualifying for like 600 grand worth of debt kind of thing. And so it becomes harder and harder to buy the next one, even though you could potentially do more.
- [38:06]
Joe Jensen
Yeah. So I mean, so here, I mean you definitely need to have, so if you have a co signer that has the, the income qualifications, then you're good because they're going to co sign on it and you're, they're using you as the primary essay, but they're, they're actually putting the loan in their name as well. So as long as you have the cosign, you're good. But for everybody listening, once you have a home and then you go and you rent it out and you have a full year's worth of rent payments, then on your taxes you can show that it's been, it's what's called serviced. Like the loan is being serviced by someone else, by the tenant. And when you have a full year of payments and you file those taxes showing this mortgage is paid by those tenants, then it's a wash. So your debt to income won't be messed up. Because yes, you have this fifteen hundred dollar a month commitment on this loan, but you're bringing in sixteen hundred dollars a month so that covers that. So your dti, your debt to income is, isn't ruined. Even though you're owning 3, 4, 5, 6, 10 homes. They're not saying, hey, you're responsible for 10 mortgages, you're only responsible for the latest one that doesn't have a year's worth of rent to prove it's serviced.
- [39:11]
Jason Henneberry
So we have, we have that and it's very similar. We have a new thing, remember we talked about some regulation earlier on. We have a new thing called a loan to income ratio. And so now they also measure on like total outstanding debt to income. And so there is a limit to just how much debt you're allowed to take even if it, even if it's serviced. Yeah.
- [39:35]
Joe Jensen
Interesting.
- [39:36]
Jason Henneberry
Now they're not measuring, currently they're introducing this, they're not measuring the individual, they're measuring the institution. And so the institution has to maintain loan to income ratios across their portfolio. Oh wow. I think eventually they will push that down to the individual. But it does mean that institutions think twice before giving one person more credit because they have to manage that loan to income over the whole portfolio. And what the institutions care about is they care about the relationship because they want to cross sell all the other products. And so once they sell you one mortgage, they have the relationship. So there's no upside to selling you a second mortgage or a third mortgage. They want to go find another person to bring into the ecosystem.
- [40:18]
Joe Jensen
So let me ask you this, and maybe there's not. It seems like in, for the most part, Canada is stricter and has less advantageous policies for this stuff.
- [40:26]
Jason Henneberry
We're not as fun as, as we're made out to be.
- [40:29]
Joe Jensen
Yeah. Is there any niche piece of real estate in Canada that would maybe make a US Investor be like, oh, I should go up there and tap into that, because I can't do that here.
- [40:42]
Jason Henneberry
So I just did. I write a, I have a blog that I do and I look at all financial strategies and I write about all financial strategies and they're Canadian focused and they could be like, from real estate to finance to wealth planning to tax. I'm just, I kind of geek out on financial strategies. It's my thing. So just recently, just like in December, I did an analysis. So we have, there's a, there's an investing rule called the 816 rule. It's a very loose rule of thumb. You might have heard about it before. But basically, if the property that you're buying as an investment, if, if the monthly rent is, or the annualized rent is between 8 and 16 times like the value of the property, basically. So like, if you had, if you had a, you know, a $200,000 condo that you were buying, divide it by eight. Right. So if you can get that much monthly rent, you're cash flow positive for sure. So if you, if you take the rent and you divide it by the property value, if you get a number that's between 8 and 16, that property is probably going to cash flow. If you're below 8, you're golden. If you're above 16, you're probably going to be underwater. So we analyzed in December for the blog, 21 Canadian cities, and there's a surprising number of markets up here that are, that are between 8 and 16 right now, even with like the weirdness in the economy and all this kind of stuff.
- [42:08]
Joe Jensen
Sure.
- [42:08]
Jason Henneberry
So there's a lot of markets where you can still get positive cash. You'll never get in Vancouver, Toronto or the big cities. Like, that's impossible. Your, your run in ratio is like 25, 28, 30. It's bad. But in like, rural settings, like just smaller towns, you can get good cash flow. So the arbitrage opportunity for Americans right now, honestly is The US Dollar is so strong relative to Canadian dollars. Not only can you pick off like a bunch of markets that you can get like cash flow positive real estate, but you could do it at 50 cents on the dollar with the exchange rate. Maybe not quite. And then we have a very, so we have no vacancy. Like we're, we have a housing shortage. Really. And so which is why our, even though in a tougher market our home values haven't come off, we have a ton of equity, we have a housing shortage, people don't need to move. And so rental rates are pretty high and, and demand for rental is, is pretty high. With some exceptions. Someone's, someone's going to listen to this and be like, I'm in this town.
- [43:15]
Joe Jensen
And not in Vancouver, downtown where my condo is.
- [43:19]
Jason Henneberry
Yeah, if you're Vancouver, if you're Toronto, yeah, don't call me. I get it, it's bad, bad, it's bad situation. But in a lot of markets it's fine. And I tend to own my investments in smaller, smaller markets.
- [43:30]
Joe Jensen
That's interesting. What I hear you saying is they have a good purchase to rent ratio, like the amount of it cost to buy it, the purchase price compared with what you can rent it for is actually cash flow positive in some of these smaller towns and cities. And you have a really high demand. And so with the housing shortage that creates good tenants. You can have your pick of the litter and they're gonna stay in and they're gonna take care of it. Cause they don't have anywhere better to go. Those are good strikes.
- [43:59]
Jason Henneberry
And I have a smaller portfolio today. Like I'm mostly into business and stuff. I have three or four businesses and I just, I spend my time there. It's where I invest my energy and my capital. But I own a half a dozen places. Nothing crazy, but every single thing that I own, if you sold that property today at current market value, you would for sure break even. Like none of them would be underwater cash flow wise. And, and some of them are positive cash flow or, or right around that, break even mark. So, and you know, I, I live in Victoria, Canada and my investments are close in proximity to that. So there you have it. Like, so there's lots of opportunity up here. You just have to know where to find it.
- [44:47]
Joe Jensen
That's cool. I wanted a quick. We're going to go into our final four questions, but I wanted to get that, that math you did there. I want to dive in that for a second, that 8 to 16% thing. So here I think it's Similar to what I call the 1% test here, where if you. If 1% of the purchase price, can you rent it for 1% of that? But I want to run the numbers on that and see if it's similar. So. So let's say we have a $200,000 property, and then you would say, what was the 8 to 16% thing? How is that.
- [45:18]
Jason Henneberry
So you're saying if it's two grand a month. Right. That's your 1%.
- [45:22]
Joe Jensen
Yeah. So whatever scenario you want to use. Yeah. So let's say that's 2,000amonth. Sure.
- [45:27]
Jason Henneberry
Perfect. So I'm just doing it on an annual basis. It's the same rule. So go 24,000.
- [45:32]
Joe Jensen
Okay.
- [45:33]
Jason Henneberry
So take 2,000.
- [45:34]
Joe Jensen
That's your monthly rent by that 200.
- [45:37]
Jason Henneberry
Now you get 12. You're between. Smack in the middle between 8 and 16. Like, the 1% rule is the. Is the center point between 8 and 16. So if you're. If you're leaning towards 8, it's great. If you're leaning towards 16, you got to think twice.
- [45:51]
Joe Jensen
Okay. So what was the 816, though? How did you get to that number? The reverse way. How did. What was your math on that?
- [45:56]
Jason Henneberry
But it's the same. You just take. I may have. I stumbled on my words. You take the annual value of the rent and divide it into the rent into the purchase price. It's the same thing that you're doing.
- [46:04]
Joe Jensen
Okay. So you just. Yeah. You take the annualized rent and divide it by the purchase price.
- [46:10]
Jason Henneberry
Yeah, exactly. In your case. In your case, you go 24,000. Divide that by 200, you're gonna get a number 12. It's like, perfect. So the 1% rule is exactly the middle ground on the 816 rule.
- [46:22]
Joe Jensen
Perfect. Cool. I think it's a good test to, you know, get a ballpark where you're at. And, you know, and every market has different property taxes and insurance. I've been buying in some towns in Texas right now, like, my gosh, their property tax and their homeowners insurance is insanity. You know, the number, the one, it passes on a really good 1%. If you just look at purchase to rent, there's some. As you throw in taxes and insurance, it's half or a third of what it should have been. It's crazy.
- [46:49]
Jason Henneberry
Yeah.
- [46:49]
Joe Jensen
So.
- [46:50]
Jason Henneberry
Well, there you go. So that's why with the 816 rule, there's. There's a much wider range as opposed to a specific number. Yeah. Then you're like. If you're pushing this way, you really need to look at all those other costs. If you're on this side of the number, you're. You're probably. You're going to be fine. And so that deals with that discrepancy.
- [47:08]
Joe Jensen
Yeah, that's cool.
- [47:09]
Jason Henneberry
There's lots of ways to slide. At the end of the day, we're looking at the same number.
- [47:12]
Joe Jensen
And Jason, this is super fun. I know. We didn't even touch into, you know, most of what you do in real estate and the tech you've built, the next networks you've built. If people do want to learn more about you and research kind of what you've done and connect with you, what's the best way for them to stay in touch?
- [47:29]
Jason Henneberry
Yeah, you can find me social media. My handle is at Jason Hannibary. So I don't know if there's show notes or whatever. We can drop that in there.
- [47:36]
Joe Jensen
Yeah.
- [47:37]
Jason Henneberry
And, you know, shoot me a DM if you want to track me down.
- [47:41]
Joe Jensen
Yeah, I'm very well for your business stuff.
- [47:45]
Jason Henneberry
What's that? Sorry?
- [47:46]
Joe Jensen
You have a website as well for your business stuff?
- [47:49]
Jason Henneberry
Man, I got lots of websites. I got lots of websites. I own. I own a bunch of companies.
- [47:54]
Joe Jensen
Cool. We'll throw some stuff in the show notes, whatever you send over, we can do that. But this is great, man. I appreciate it. I want to ask you our final four questions. We ask every guest. And you can make these fire round or you can go a little in depth on them. Whatever you feel comfortable, man.
- [48:09]
Jason Henneberry
I didn't. I have no advanced notice on this. So let's go. Let's do this. I like it.
- [48:13]
Joe Jensen
Say question number one. If you could send a text message out and everybody in the world is going to receive this text message, Maybe some homing pigeons and places, they don't have cell service, they're all going to get the message. What's it gonna say?
- [48:27]
Jason Henneberry
Don't take yourself too seriously.
- [48:30]
Joe Jensen
I like it.
- [48:31]
Jason Henneberry
Give yourself a break. And, and, and that, that. And take your time. That opportunity that you think is like, I gotta jump on it now. I. I promise you, man, it comes around again. It comes around again and it comes around again. So take your time and don't be, don't be too aggressive. Just, Just really. Yeah, that's all. That one message like that.
- [48:55]
Joe Jensen
I love that.
- [48:56]
Jason Henneberry
Yeah.
- [48:57]
Joe Jensen
Question number two. What is a recent book or podcast recommendation you'd have for our listeners?
- [49:03]
Jason Henneberry
Dude, it's this one, man. This is the best.
- [49:06]
Joe Jensen
Besides the ones we're associated with, besides.
- [49:08]
Jason Henneberry
The one we're on right now. Yeah, question, wasn't it? Shoot. Okay. I'm gonna be honest, man. I haven't read a book in a long time. I am so busy that I just, I haven't picked up anything new in a very long time.
- [49:25]
Joe Jensen
You know, that's probably some listeners, they probably want to hear that because there's a problem that aren't big readers and they're like, see, I can be fine without listening to a hundred books every month.
- [49:36]
Jason Henneberry
Like, you want the real deal. Like, I run, I run three fully operational companies, multiple seven figures I've had on all of them. I've got a brand new startup that I'm launching right now. Uh, it's the newsletter blog. I've got some pretty cool like things that I've done, like super unique things where I've, I've been able to grow an audience to a hundred thousand people in 90 days off it. Like I've got some really cool stuff that I do. I sleep in, I don't get up early, I go to the gym when I feel like it because I'm like, I need to clear my head. I have a hot tub every day in the afternoon I'm, I'm at home with my family having dinner in the evenings. I don't work too hard. I staff out most things. I do the work myself. And then as soon as I can, I hire people. I'm not greedy. I don't, I try to, I push most of the money that I make down. So I've got really amazing teams, frees up my time. All the stuff you hear online, like, you know, like, there's a lot of advice out there, man, if you want the real deal. Like, I don't read books.
- [50:37]
Joe Jensen
I don't wake up early, I don't hunt.
- [50:39]
Jason Henneberry
I'm the opposite of everything that they tell you to do to be successful, let me tell you.
- [50:44]
Joe Jensen
I love that that is such a good answer. Because one thing I think so many people do is they get this. Let's say it's a game. Let's say we're trying to win this game, right? They're getting this fulfillment, their wins from reading a book, from posting a thing, from being told they're special, from looking cool, from doing the, the morning routine. And they feel so accomplished by the time they're all done with that, it's like, oh, I'm good. But they actually haven't done anything that builds anything. And you're like, no, no, no. When I'm working, that's what I work and I get shit done yeah. And then the rest is fine, you know, so if. If you're lost and you have no idea what to do with your life and you're very confused, you're wasting your day playing video games, go read some books, wake up early, hit the gym, figure out what you're doing. Once you have a machine and you know your system, you know what you're doing, go do that. As opposed to just getting your fulfillment off of another meme or a podcast, feeling like you're doing something because you learned something.
- [51:42]
Jason Henneberry
I will agree. When I've had down moments and stuff like that. Like, I look, I go to. I go to the gym like, three times a week. It's not that I don't go to the gym. I just. I'm not like 4 in the morning, go to the gym guy.
- [51:52]
Joe Jensen
Yeah, yeah, yeah.
- [51:53]
Jason Henneberry
That's all. So I. But I believe it. You know, you got to move energy. I'm big on energy and stuff like that, and I'm big on just respecting my own energy, so. But you're right, like, if someone's lost, if someone doesn't know what to do, well, then the first thing you should do is get that energy flowing. So, like you said, like, you know, get that body moving, get the energy flowing, pick up a book, get inspired. And I think those are all very healthy things to do. And then once you find your idea, then. Then work hard at that.
- [52:22]
Joe Jensen
Yeah, See, and I think the problem is so many. And I've seen myself do this as I'm kind of like rapping on this is like, you get the idea, you find something to do, but it's not as exciting as learning the next thing, you know, so. So you keep going back to the podcast, back to the next book, back to the next seminar, back to the next coach, back to the next instead of just doing the thing. Because once you find the thing to do, it's. It's hard and it's boring and it's consistency and it's headaches and it's not as exciting as learning something new. But you won't ever grow and build unless you do the thing. So find the thing, start doing the thing, and just stick with it and kind of remove a lot of the distraction, which isn't as exciting. But I think a lot of people.
- [53:05]
Jason Henneberry
Miss, like, yeah, like, it's our brokerage. We have the largest national brokerage in Canada. We fund our group funds 1% of the Canadian market. There's about 500 billion worth of mortgage transactions every year. So now I spend Most of my time in that business, like fixing compliance and payroll systems and shit like that.
- [53:27]
Joe Jensen
Yeah, you're, you know, putting out a fire, fixing boring stuff, but you're doing the work that keeps the machine alive, you know?
- [53:34]
Jason Henneberry
Exactly. I will tell you, though, back to the book I did. I have read a lot in my life, and maybe I'm just going through a phase where I don't need to read. Great book. If you talk about, like, do the thing, like, don't. Don't get distracted with other stuff. The. This. People talk about this one all the time, but good to great. Jim Collins. That's such a good book. There's a. There's a philosophy in there, and I can't remember what he calls it, but think of. Think of everything you do as, like, concentric circles. Like, so you've got your core, and then you've got things that are outside of your core. So how I got to a place where I have multiple businesses is I had my core thing, and my core thing never changes. And I make sure every single day that that stays alive. And it is my first priority because it is the thing that gives me the cash flow that allows me to do other things. And then what I. What I did along the way, though, is related to that core business. I wanted to express my creativity. And so to your point, like, learn the thing that's new and that's sexy and it's fun. Yeah, for sure. And you need to bring in the, you know, that. That kind of energy. And so I, at any given time would have two or three projects that were outside of the core where I could afford to, like, any money or any energy I put in that if they failed, was fine, but it didn't affect the core. But if it. If I had a win, it would augment the core. And so I always focus my energy. And so my whole way of being over the last 10 or 15 years is I would have two or three side hustles, which essentially. And then. And then one would maybe work, and I would drop the other two. And. And then I would focus intensely on making that thing so good that I could bring it into the core and it expanded my core. And then once that process was done, I would try two or three new things so I could get my kicks. And so that is Jim Collins concept from good to great. Again, I can't remember what he called it, but it was like, protect the core, expand. Like there's some kind of terminology gives it. He writes a whole chapter on it. It's awesome.
- [55:30]
Joe Jensen
That's cool. And I've read that book. I don't remember that part as a while ago, so I should go back and read it because I love that.
- [55:36]
Jason Henneberry
It might be another book. It was like 15 years ago, so. Yeah, I don't know.
- [55:40]
Joe Jensen
Well, essentially, when you read a book, you know, say today versus five years ago versus ten years ago, depending on where your head's at and where your life's at, you pick out different things that matter, you know?
- [55:51]
Jason Henneberry
Yeah.
- [55:52]
Joe Jensen
I love that concept, though. Like, find that core, get that core solid. Never sacrifice the core, but still branch out and expand. And then you can build the core bigger and bigger. And that's where you see these people like you. They're, you know, vertically integrated. When it's like, oh, we do a broker, but we also do marketing, but we also do this. And, you know, a lot of investors, they. They own rental properties, but they also flip, but they also wholesale. And they also. And the marketing for all of them feeds all of them. And it's like, it. That's a really good way to grow. But start with one. Get the core. Do the boring.
- [56:29]
Jason Henneberry
Also allows you to have a decent life. Life, like we talked about. Like, I, you know, I have a bunch of projects, but at the end of the day, they all feed each other and they're all related to each other. And so. And I have different partners in different businesses, but the work I do over here feeds this and work I do over here feeds that. Yeah, at some level. And I don't have anything in my world that is a distraction from ultimately what is like the core group of projects. And so that's like, really critical. Don't. Don't just go build a bunch of stuff that's unrelated because you won't have the bandwidth. Do it. And you hear guys like Dan Martell and Alex Hermosi, and they constantly tell entrepreneurs, they're like, do one thing. And that is what. What they really mean is do one thing until you're ready to do the next thing. Because all those guys have multiple projects. Like, none of them only have one thing. But the problem with most entrepreneurs is that they start out and they get the kick. They get the endorphin rush from, like, learning the next thing, like you said.
- [57:25]
Joe Jensen
Yeah.
- [57:26]
Jason Henneberry
And then you don't actually get the first thing to a place where it's self. Sustaining.
- [57:29]
Joe Jensen
Sustaining.
- [57:29]
Jason Henneberry
That's what they mean by that.
- [57:32]
Joe Jensen
Love it. Dude, that's awesome. We could do a whole podcast just on that principle. I'm glad we hit that okay, last.
- [57:38]
Jason Henneberry
Two questions, we were like, don't talk about the businesses, talk about real estate. Here we are, full circle.
- [57:41]
Joe Jensen
I know it's good though. And I, you know, it's exciting. So that, that was a good answer for not having a book, a response. You know the question, like, I don't have one, but let's talk about this.
- [57:53]
Jason Henneberry
I felt like I needed to defend myself. Bit.
- [57:55]
Joe Jensen
No, I loved it. That was good. Okay, next question. What is the most expensive or interesting mistake you've made in real estate investing?
- [58:06]
Jason Henneberry
Well, I mean, you heard my story earlier where I wiped myself out. I didn't have. I got too aggressive in one area and that risk I took affected the other areas. That's a really good example of what we were just talking about where I was trying to like expand and I wasn't prudent enough to make sure that that expansion didn't kill me if it went wrong. And so it was huge, man. It set me back like many, many, many years.
- [58:31]
Joe Jensen
And I'll just point out for the real estate, passionate, you know, it wasn't the real estate, it was the business. Right. Not saying you can't, it's just they're different worlds. My dad would always say that. He's like, I know a lot of people that have lost money and almost every time it wasn't from the real estate, it's cause they pulled the money out of the real estate to go fund something else that blew up in their face.
- [58:53]
Jason Henneberry
I have never lost.
- [58:54]
Joe Jensen
They're not the same thing.
- [58:55]
Jason Henneberry
I've never lost money in real estate. Yeah. But I've had expensive real estate related mistakes. I've had mistakes in my life that have caused me to lose money.
- [59:03]
Joe Jensen
Yeah. So it's just interesting.
- [59:04]
Jason Henneberry
Right?
- [59:04]
Joe Jensen
And you know, and obviously business is a whole other world where you can build a whole different level of wealth. So not saying it's not worth it, but they're, they're just different. Okay, one last word. What is one or one last question. What's one word or short phrase to encapsulate why you love real estate investing?
- [59:28]
Jason Henneberry
It's not one word. I'll tell you what, I think about a lot. I think about a lot. Inflation adjusted returns. I love the fact, I love the fact that I know, let's say I have a property today and it kicks out whatever, three grand a month in positive cash flow. I love the fact that relative, I'm pretty confident that 25 years from now, no matter what happens, that I will be able to buy $3,000 a month in adjusted for inflation goods with that cash flow, that cash flow might be nine grand a month then, but a pound of butter will be three times the price. So I love that. I know that I can buy the thing today and I can do an analysis and say if that mortgage is paid off, this thing will kick out this much today. Like let's say it's a thousand bucks a month in positive cash flow. I know I need to own ten of them to own a, to get ten thousand bucks a month of positive cash flow. I know that if I just go do that 30 years from now, I will get $10,000 a month in relative cash flow. And it's predictable and I don't have to freaking think about it, man.
- [60:34]
Joe Jensen
I love that concept. And would you inflation adjusted returns, Is that what you said?
- [60:40]
Jason Henneberry
I don't know what I said.
- [60:41]
Joe Jensen
I don't know.
- [60:42]
Jason Henneberry
But yeah, inflation adjusted, yeah, inflation adjusted returns. Inflation adjusted cash flow, something like that.
- [60:47]
Joe Jensen
Cash flow, yeah, that's so. And that's something I love about it too because I'm like, look like people say, oh, how much you need to retire on? You know, you, oh, I need $4 million. I'm getting this. It's like, but that's all going to disappear and go down and be worth less and less and less and less. Like I say anything I buy today, it's gonna, yeah, the world will become more expensive, but I can rent these out for more and their equity goes up. It just moves with it and protects you in that most investments don't with it.
- [61:13]
Jason Henneberry
And when you look at, I know this isn't one word, but when you look at, you go buy a rental and yeah, it might be a little bit underwater today from a cash flow perspective, but there is a point in time where it's never underwater again. And that's because you get, you get a pay down on the debt and you get appreciation on the rent. Forget the property value. There is a moment in time for all real estate that all of a sudden it's like I can't not be positive cash flow. Right. And so I like that. And I also like that the debt just gets paid off. And the thing I love the most is that you can always just go live in the thing. You can't go live in your Nvidia stock portfolio, but you can go rent, live in your one bedroom condo if everything goes to hell.
- [61:54]
Joe Jensen
Yeah.
- [61:55]
Jason Henneberry
Now I'm not saying it's the best investment. I'm just saying I like those things about it.
- [61:59]
Joe Jensen
That's the cool thing about it. 100. Dude, this was super cool. Jason. We. I really appreciate it. Excited to. I wish we could spend a whole hour just time out. Business interested in learning about that. And that's. Well, this is great. Thank you for your time. I'm glad that we got to have you on the show, Sam.
- [62:17]
Jason Henneberry
Thanks for inviting me on, Joe. It's been a great conversation. Appreciate it, man.
- [62:20]
Joe Jensen
This is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you to find your core.