2236: The Hartman Risk Evaluator: How to Mitigate Downside Risk in Real Estate

Jason shares his thoughts on the future of the economy and real estate market from his penthouse in Mexico City. He believes inflation will be a major issue for the next few decades, but this presents a great opportunity for real estate investors.

He also recommends investing in income properties for long-term gains and offers a free software (Property Tracker) to help you analyze potential investments. He showcases a sample property in Birmingham, Alabama with a projected 26% annual return on investment. He then  invites his listeners to contact their investment counselors for more information.

Jason then shares his Hartman Risk Evaluator, a concept for assessing real estate investment risk based on the land-to-improvement (LTI) ratio. Properties consist of land value and improvement (building) value. High land value markets tend to be cyclical and riskier, while high improvement value markets are more linear and stable. Jason discovered this by comparing insurance costs for properties in different markets. Improvements have intrinsic value as packaged commodities, while land values are more volatile. To reduce risk, investors should focus on properties with low land value and high improvement value. This provides a "floor" for the investment and limits potential losses if land values decline. Overall, low land value markets offer more conservative investments.

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Key Takeaways:

Jason's editorial

1:19 Greetings from Mexico and the 

2:30 Excited about the DOGE

4:58 Rising Housing Costs are Creating Sticky Inflation

6:15 1 Year Performance Projection

https://propertytracker.com/

 

The Hartman Risk Evaluator

15:20 An Orange County house

21:57 My tax bill and the LTI ratio

26:32 A $400K appreciation

30:05 Investment strategy

 

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