Barbara Corcoran Reacts: Living On $120K A Year In The D.C. Area | Millennial Money

hi i'm barbara corcoran and i'm watching a video i've never seen before and it's paul living on 120,000 dollars a year in the DC area millennial money but before we get started make sure to destroy the like button right there my military experience really opened my eyes a lot and I'm from a suburban town in Pennsylvania where everyone is the same being in the military you meet people from all different walks of life and you get to understand different cultures and share different values that you wouldn't normally share unless you live in a big city I like this guy already he's from a small town so he automatically has good values and he was smart enough to take the ticket out going in the military which is usually the only way a lot of kids get out of a small town so let's see what he does with it [Music] um Garrett ramela I'm 24 years old I make 120,000 dollars a year and I live in the Washington DC area I work as a information systems and financial consultant I'm a defense contractor for a company called Titan 1-0 let me tell you this guys in the right field he's the kind of guy that looks like he should manage money you trust him he just looks the part that's important you got to look the part in my junior year of high school I found out about a personal finance class and everything just clicked I'm like you could go into a profession that you can learn more about your financial situation and also help other people typical monthly budget of twelve thousand dollars as kids got to be making money to afford that that's not not substantial for a twenty four-year-old that was really what planted the seed and ever since then I mean I have been trying to learn everything I can on it smart kids everybody has that kind of lightbulb moment or a few in a lifetime this kid grabbed it and ran with it he realized he could make a living and he realized he understood it was gonna do okay with it but this guy is the future rich guy let's see I can't wait to see where he goes [Music] and so whenever you go into the US Armed Forces you receive the VA homeland which is a guarantee program that allows you to purchase a property as your primary residence for zero money down you don't have to pay for private mortgage insurance when there's not 20% equity in the property you don't have to have those additional payments which is a really nice benefit and you get a really good interest rate which is really competitive in terms of conventional financing pay attention to what he's doing right here is just smart kid the biggest benefit in going into the military it's not while you're in the military it's after you get out there are so many benefits and he immediately is taking advantage of it young kid goes out and buys an apartment right away no money down why wouldn't you buy an apartment yet many people don't bother to even take advantage of that right now for a VA loan you could get one for about 2.7 percent which is about a third of a point less than 3% but there's no insurance no upfront costs and no down payment how smart that he took advantage of this it includes two parking spots I paid $1600 a month even hatton for one car I moved in there I did learn over the past year I mean I'm young so I can have roommates I actually enjoy the company so this year you know I bought a two-bedroom and the goal was you know always have a roommate because one I'm never home and two you know if I could provide one of my friends a place to stay at you know at a cheaper price than what they're getting in DC then I'm gonna do that and help them out and at the same time it helps me out as well rather than renting it out the one room to the roommate the smartest thing he could do right now is to move out of that place and rent the whole whole apartment you get about $3,000 a month much better investment my plan is to not be here forever but to continue purchasing properties pulling equity out of other properties and using the tax laws to really get a sizable real estate portfolio okay let's pause on this because this is an important point it is an opportunity that is available to everyone with not any help from the VA what you can do is you can buy your first piece of property and leverage it up every rich real estate person and the United States started exactly the way this kid is starting you buy the first property and as the rent goes up you don't sell it you put a new mortgage on it because the bank will give you additional money because your rents are going up and then you take that cash out without paying taxes listen to that again without paying taxes legally and then you put it on a second piece of property this is the way everybody who's filthy rich and real estate gets rich the first chip you have on the board gives you the right to play the game everyone always says like hey you spend fifteen hundred dollars to go have to eat all the time and you know being a business major and like kind of understanding economics it's it's really an opportunity cost so I will pay a premium to be able to eat out for convenience and not have to travel back home especially in the DC area where you know traffic could be you know two hours I don't know if I'm buying this it's an opportunity cost no he just wants a nice meal nothing's wrong with that this guy works hard if he wants to go out and spend that money ignore what people say if that's your pleasure I'll tell you what it does it motivates you I did something nice for myself every time I made a deal and because of that nicety that little treat I gave myself it made me want to do more deals know the kid fine thirteen hundred dollars a month let him eat out as much as he wants who cares I wouldn't have chosen that meal I really get to spend more time doing things that I love and not worrying about washing the dishes which is the worst tour ever even with a dishwasher washing the dishes I've been in this pandemic for two months I'm the mom let me tell you my family hasn't seen anything but a paper plate in two months if you should get paper plates the point of having passive income is to be able to have it rented and not have to worry about it but that's the long-term goal and then you also have the debt repayment so a pennant is in the property they're paying off your mortgage so over the course of ten or fifteen years you're building up all this equity in a property that you could later take out and invest into other properties listen to again what are you saying he's saying the tenants paying off your mortgage and that's the golden ticket right you just have to take the risk the tenant pays off your mortgage and you're getting income all along the way mmm pretty easy formula to properties wait a minute so he goes back and gets another VA loan and buys another property the guy's a tycoon [Music] so he's making about two 250 a month on that property that's for now let's say the rink goes up 10 percent then what's happening is he's collecting like nineteen hundred two years later the rent goes up another 10 percent cuz we'll ride with the market then he's getting twenty two hundred that's when you go back to the bank and say I want to shake this property like a piggy bank can you give me more coins out of it and they're gonna say yes we'd love to do business with you with both of the properties yes you know after all the expenses are paid they make only a few dollars a month three hundred when everything's added up but you have to take into account the appreciation that that goes into place so for example the Alexandria property it's actually located in North Old Town and if you have watched the news lately amazon has come in the Crystal City and just over the past year the property values have won up twenty percent this kid just got lucky and you might say wow is he lucky the company's moved in and the well-educated people came in and rents went up no no no he was lucky because he was in the game he was there to catch the gold when it came and you know it you don't even have to wait to read about Amazon moving in or this is that everything is announced and negotiated way in advance and if you're on your game and you're reading the news you could locate the Knicks up-and-coming area if you just stay informed a lot of changes have happened in the last year that has required me to buy furniture or purchase renovation materials and a lot of that was financed with short-term debt you know credit cards [Music] instead of putting more into a savings account or into a retirement account my main focus now is to get the debt repaid as quickly as possible I don't think Garrett needs to worry about the debt quite honestly I think it's a very good thing that he's wanting to pay it off but remember it's what you put on your credit card what did you actually buy with the money what he bought was improvement cost in solid real estate best use of the money that's a business expense to think about he should have an IRA at this age no no I just don't believe in it IRA is a so grossly overestimated for kids it's almost like if you're 25 you don't have an IRA you feel guilty it's a nonsense you should feel guilty that you haven't figured out a way to make a fortune for yourself and IRA ain't gonna make your fortune forget it Garrett taking off your worry plate come on come on what a hustler my god he went back to school to schools he's working at the same time and he's investing in real estate which proves one thing if you want to get something done ask a busy person to do it I want to be a CFO and I think CFOs in the future really have to know how to use IT clear as a bell quote I want to be a CFO lovely I love hearing someone clearly say where they're going because that's the best shot at getting there so with my girlfriend Indu she lives in Seattle and I live in DC you know every was always like oh it's long-distance but it's not too bad cuz we get to see each other like once a month or once every other month a long-distance romance is fabulous you stay interested forever and you don't see what's wrong with the other person yeah he's got it all he's not gonna get married I do want to get to the point where I don't have to just live in one area I could just travel safe to Seattle for two weeks he said I don't want to live in an area he said I don't want to live in an area he didn't say we don't want to live in the area after you introduce the girlfriend not a good sign I mean not a good sign for the girlfriend and to do that you know I have to focus on on the real estate and you know buying real estate in different areas well thank God here's something I don't like at all everyone I know who lost his shirt in real estate after they did a couple of acquisitions lost in somebody else's ballpark if you know your neck of the woods stay with it until you've saturated it I only bought in Manhattan until I really couldn't find anything else that I could afford and then I went to Brooklyn I only bought in Brooklyn and then I went on the minute you go out to a different city and and learn to market all over again you tend not to ever do as well again I think I live nice I mean much more than you know where I came from but I mean I could be more frugal but the thing is I enjoyed the lifestyle that I have and like I'm just you know traveling every day or honest experiences you know I try to buy things that'll be around in 20 years that's it the title of this show doesn't really suit the garret cuz it says make it know he made it ma de made it he made it already he's on the road to riches you know it's great about real estate it's a slow way to thanks very much for watching don't forget to subscribe to CNBC make it and check out my podcast business unusual anywhere you subscribe to podcast see ya

Channel: CNBC Make It

Views: 215,959

Keywords: CNBC Make It, Make It, CNBC, How To Make It, Entrepreneurs, Starting A Small Business, Business Success, Small Businesses, Finance Tips, Career Tips, Work Hacks, Lifehacks, Money Management, Career Management, Managing Business

Id: DTtwRABBHx4

Length: 12min 54sec (774 seconds)

Published: Thu Jun 18 2020