Avoid these 5 Mistakes Most Homeowners Make.

today we have a special meet Kevin report we're gonna talk about all of the biggest and stupidest mistakes that homeowners make and I'm not even using this microphone because it's not connected to anything instead we're gonna change the battery on this lightsaber pay careful attention and don't look annoyed so first mistake that homeowners make over in proof look don't get me wrong I too like improving things I love tools especially these Vera screwdrivers that you could turn while you hold the end in your hand you hold that in your hand and you can turn the screw while holding the back in your hands so yes as much as like the next guy I love buying things like tile saws air compressors paint brushes paint sprayers and a bunch of tools to go around and proving my real estate I learned very early in my real-estate investing career that the more money I spend on stuff like crown molding and fancy tiling and fancy fixtures like Brazilian hardwood floors or marble from Italy and all this crap doesn't make me more money see here's the thing most people and I get this because I'm also a real estate broker most people they come to me they say well Kevin we spent $80,000 on this custom kitchen it's the special redwood cabinet everything soft clothes it's this it's that great the problem is my IKEA kitchen that cost me twelve thousand five hundred dollars makes the same amount of market value as that high-end $80,000 kitchen actually it's even better that 12,000 dollar kitchen probably creates about twenty to twenty-five thousand dollars in market value in the sale of my house soft closed cabinets lazy susans I even got a hidden wok okay and this $80,000 kitchen probably also makes me twenty five thousand dollars in market value and that's mostly because the way real estate is valued is everything kind of revert to a mean so if you under spending something look really nice cheaply you make profit if you overspend you get pulled to the mean of value that is in other words whatever all the other houses selling for the basic houses with the basic original cabinetry and all that crap unfortunately you're not gonna sell for much above that or below that if it's move-in-ready so this is why over improving in real estate is like the kiss of death for your finances now obviously this isn't true if you're buying like fixer-upper real estate because for some reason people are fanatical over oh my gosh there's mildew there's lab there's asbestos all I see is profit now the second stupidest thing that people do when it comes to real estate and look you might know me as a real estate agent so this this probably is not a good thing to say because I'm a real estate agent probably also not a good thing to say because I sell a really awesome program for real estate agents but I'm gonna say it because it's the truth don't sell real estate as in like don't sell the properties you own and keep them at least until you fully depreciated them and then we can talk but that's 27 and a half years it could even be as long as 39 years for commercial point being don't sell I literally get people that come to me say Kevin we're thinking about selling our house you know we want to move and we're not gonna be living here anymore so we may as well sell it and then I ask them wait seriously have you thought about just renting the house out and you know what they tell me well you know we don't want to deal with tenants and toilets and besides if we rent out the house then you know we're gonna have to pay a property manager because we don't want to deal with it and that's gonna cost us like $100 a month and you know what I tell them I go okay no problem let's see how much it would cost you to sell this house since obviously cost is a consideration here so I tell them well all right no problem two and a half percent for one realtor two and a half percent for another realtor but then we're gonna have escrow and title expenses as well so let's add a percent for that then while we're at it let's just go ahead and throw in another 1% just to be safe for like things that come up in home inspections and termites repair requests sewer inspections city permit fees natural hazard zone disclose your fees and all this other crap so let's go ahead and put that seven percent to sell the house no problem to save that hundred dollars per month it's going to cost you thirty five thousand dollars in selling costs which if you happen to recognize twelve hundred dollars per year divided by thirty five thousand dollars and costs to sell the property means you could literally have 29 years of property management for free if you didn't sell your house but no problem let's go sell so the next thing that's really really dumb that people do is as they build their net worth in real estate which is a lot easier when you own real estate there's a reason the New York Times says the net worth of a homeowner is one hundred ninety six thousand dollars and the net worth of a tenant is five thousand six hundred dollars and the reason is partially because when you own real estate you get tax benefits appreciation for savings through principal pay down like it's it's stupid not to own your own real estate but the other thing that's stupid is not moving see a lot of people they go into real estate and they go alright we bought a house we're gonna stay here for the next 15 years sure that may be what your parents did but your parents probably didn't retire early and financially rich in fact there's a good chance they're not even retired yet or if they are retired this still barely getting by and so why should you move well here's the beautiful thing in America you could take advantage of this really cool thing known as the 30-year fixed-rate mortgage which means there's no chance the banks can call you and foreclose on you and you can get really cheap interest rates when you agree to live in the property for a year so what do I like to do I also like to take advantage of fact that I could buy a place with 5% down move into the house a year two years three years four years and then move and rather than having to save up 20 25% 30% as a downpayment I can buy another property with 5% down again because I'm moving now I basically turned my first property into a rental property because remember selling is stupid and I basically just bought a rental property with 5% down see I think that's why there are a lot of people who don't like real estate because they think of real estate and then they start researching real estate and they're like man I need 20 percent down to buy a rental property but even though I think it's 20 percent down to buy a rental property we realistically end up finding out that you need 25 percent down to buy a rental property because you get ripped off if you put less than 25 percent down and if I want to buy commercial multifamily I need 35 to 50 percent down dude I got that kind of money I got enough about 5% down well there you go and that's called bank hacking by the way you literally hack the fact that the banks will let you buy a place with 5% down as long as you agree to live in it for a year if you just move now the next thing that people do that in my opinion is really really dumb is people will end up looking and building all this net worth in their home and they look at their mortgage team and they go wow cool we only owe $380,000 and the house is worth $600,000 we got two hundred ten thousand dollars or two hundred eleven thousand dollars whatever in equity let's refinance now refinancing itself isn't bad especially if you're gonna do you know cash out refinance and you're gonna go buy some below market value real estate which if you need to know how to buy below market value real estate you could buy a below market value real estate program by going in the link below and using that coupon code to literally explode the opportunities in your life and finally make a lot of money but anyway a common mistake that is made is people will take cash out of their house and then guess what they spend it on rather than spending on buying really good deals in real estate like other deals they end up buying a boat or they go on a vacation or they buy a jet maybe not a jet like a propeller plane or a drone I don't know what people spend it on but all I know is in the last recession there were a ton of people who refinance their homes over and over and over and over again and then they come driving home and new Suburbans they got Harley's and matching jackets and the last thing you should do is refinance the real estate that's building you a lot of wealth spending it on crap you don't need and then guess what happens when a recession comes around oh crap now I'm way upside down and people end up short selling their homes and they lose all the investment they made mostly because they took the money and bought crap and stupid stuff after refinancing don't buy crap don't make those mistakes it's very simple but apparently it's not simple because there's still so many people refinancing right now refinances are at record highs and yet there's still a ton of really good deals to buy on the market which you know what that tells me is all the people who are refinancing or at least probably 89% of them aren't going out there and competing with me to buy these really good deals instead they're using the cash to buy stupid things probably pay off their debts from Black Friday last year okay although I will say target stock just got beat up a little bit because retail sales fell a bit in December at least that target although their makeup and apparel departments doing pretty well which does make me want to buy more of their stock all right now the last thing and this is just like oh it's so dumb so dumb people will oftentimes say well I don't want to buy a house yet because when I go to buy I want to buy my dream home why just replace your landlord stop paying rent to your landlord if you're renting a one bedroom buy a one bedroom then buy a two bedroom then buy a three bedroom I have outgrown this house that I'm in with my wife and my two children but we're still in it because we're waiting for that next opportunity not to go to some mega mansion dream home but to incremental II move up from our 2300 square feet maybe to like 2,700 square feet or 2,800 square feet and then we'll do it again to like a 30 300 square foot house because that's gonna making me money and the other thing that comes out of buying a dream home is guess what you're like this is my dream home this is my forever home so what do you end up doing you over improve the house spending way too much money on crap that doesn't make a difference that nobody cares about to impress people that don't care about you or the crap that you're showing off to them then because you spent so much money over improving you end up refinancing to reimburse yourself for all that crap you spent money on you literally end up having no money to get out there and go buy wedge deals because dream homes are stupid dream homes are scam when people tell you that homeownership is a bad idea it's because the American dream home is dumb it's so dumb this is also why I get so frustrated when I watch HGTV like fixer-upper and stuff like that and I see these people spend god-awful sums of money on crap that makes no difference and so there you have it folks I'm sorry you had to listen to my rant here but I appreciate you watching to this part of the video make sure to follow me on Instagram and well folks until next time thanks again for being here we'll see you [Music]

Channel: Meet Kevin

Views: 43,003

Rating: 4.944788 out of 5

Keywords: homeowner mistakes, homeowner, mistake, money mistakes, construction, refinance, remodeling, mistakes in real estate, real estate mistakes, investing mistakes, valuing real estate

Id: _-84MxicYDU

Length: 12min 2sec (722 seconds)

Published: Sat Feb 15 2020