Buying Below Replacement Costs: Real Estate Investing with Grant Cardone LIVE at 12PM EST

back grant cardone here in the cardone zone every monday i come to you to talk about your money your business your future and you know real estate i can't get away from the real estate game because look this is the best asset the best asset in the world bar none for creating cash flow okay bitcoin does not pass the test and i own some so i'm not hating on the cryptos but bitcoin does not provide cash flow in any way shape or form stocks for the most part do not create cash flow and they they do not provide you with a sustainable sustainable indestructible uh flow of cash flow and number three what else would we have we have uh stocks bit d uh what else could do it bonds don't i mean bonds don't pay anything today i think bonds today are trading at uh point let's see here ten-year treasury which continues to collapse by the way and i've been saying this for a long time ten-year treasury one three seven five two weeks ago it's at 167 and i said it will go down and two weeks later uh we're down 30 bips this is a very very important indicator by the way and we're going to be talking about another really important indicator today called replacement cost but the cost of money the cost of money determines what you should be buying and could be buying okay so what provides the best asset cash for cash flow and if you're not rich yet this should be your target cash flow should be your target protect your first investment protect your first investment you work you go out into the marketplace you work your butt off you earn some income they tax the income you take whatever's left over you invest all of it all of it into the best asset class on the planet what does that do it gives you an advantage you don't lose your money you get cash flow you get appreciation you get passive income and the first target the first target when you're doing this and this is why i love real estate when i was 30 years old all i wanted was i wanted passive income of 10 000 a year i knew if i could get the first 10 000 i would be unstoppable i was earning about uh i think at that time 50 60 70 000 a year and i'm like my next target was to get 10 000 a month in annual income that's as big as i could think i'm 29 30 years old and i'm like if i could just earn 800 bucks a month without working okay so would you rather earn 8 000 or 800 bucks i was i was making maybe six or seven or eight thousand dollars a month the the question is would you rather earn eight thousand dollars that you had to go trade time for or eight hundred dollars that you earned whether you were alive dead breathing working sleeping sexing texting or whatever okay see i'd rather earn 800 bucks okay now the truth is the answer is both you want to earn both once i earned the first 800 once i got the first 800 then i'm like okay my next target the first target was for me it was just 10 000. it shouldn't be your first target you got to pick your first target once you get a little drip going okay the next target for me was i wanted my passive income to equal my earned income that was my next target uh that was 35 years 33 years ago okay today my earned my passive income believe it or not has still not reached my earned income because the crazy thing is as this went up this went up i don't know why i did that i know a lot of people man they started getting passive income and they quit working but the more passive income i get the more i can invest in my main business okay so main topic today is not what i'm talking about right now but i'm just going to show you how i did okay here's a little dude right here you know going through life with a bunch of question marks how can i get rich who am i what is my purpose what is my goal what is my brand when am i going to be somebody like this was grant 25 years old what's wrong with me why are other people doing well and i'm not doing well i'm running around the world like with all these question marks maybe you have questions you know hey why did my dad die when he was 52 years old how long do i have to live i'm 25 years old i don't know my dad died when he was 52 my older brother died when he was 25 years old literally i outlived my older brother and so i outlived my dad that's crazy okay but i just knew that my dad when my my dad and my brother died okay they both had jobs and the day they died they quit getting paid both of them i'm like okay when you die money doesn't come in anymore okay my dad and my brother missed some part of the equation they they had earned income i went to college because i wanted to earned income i wanted a job nothing wrong with a job there is something wrong with a job if you're not going to be great at it you will hate your job your job will hate you it'll never pay you enough you'll never be great at it you won't be known for it so your job produces earned income okay what i did was i took the earned income and then i started getting passive income from that okay i had a main job i did a great job at that job they fired me from the job guess what this is when i learned the power of passive income i got fired from this job when i was 27 years old and i still got in for income from one piece of real estate that i owned i made 200 that month and that was more money than i made from the job i lost my passive income had exceeded my earned income problem is you can't live on 200 so what did i do i went got me another job okay i went got a job to replace this job okay so i'm gonna take it out put it back here still have my job kept working my butt off and i did everything i could to become great at this job and increase my income so that i could increase my investments i literally still today 30 years later ladies and gentlemen just so you know everything you see me doing every every book every webinar every program every conference everything you see me doing today is so i can invest more money in real estate and what happens is my earned income and my passive income keep going up and then my passive income starts throwing off money that i can buy my wife nice things i can buy myself a watch we can go on a big trip we can do all this is where the fun money okay this is the fun money over here this is the work money so over here all this money that comes out of this is about work i put it back to work i work and put the money back to work over here this money goes to work not me the money goes to work and allows me to go have fun or invest take more chances and more risks i could do crypto right here hey i'm gonna take a risk i'm gonna go to vegas right here okay i'm gonna go to spain i'm gonna go on a trip oh i'm gonna take a bunch of this and go buy a dumbass big car that nobody needs but it looks good and then as you keep oh i'm going to buy a jet one day all this is possible but you have to know how to buy real estate to play the game okay so today what i want to talk about is one of the key indicators in real estate is called johnny this is probably where we are to start this for youtube today so the first thing they hear is what i'm saying right now the one of the most important metrics in real estate is what's called oops is called um these are called metrics there's certain things that you want to measure oops there are certain things that you want to certain indicators that you want to measure noi is one of them uh return on investment is one of them ir internal rate of return is one of them and the other one is uh replacement costs rc replacement costs are cost per unit okay what does it cost me to build that asset and that's what i want to talk to you today how do you use this very very vital metric that for me over the last 30 years has changed a bunch and then i'm going to take a bunch of calls from our people in our mentor program if you want to join our real estate mentor program it's grant cardone.com forward slash summit grantcardone.com forward slash summit at the end of this show today i go in and just answer questions and look at deals of students and mentors that want to learn this real estate game the way i know it grant cardone.com forward slice summit and by the way when you sign up for this you also get to attend a three-day workshop at the end of this month here in miami or we can zoom it to you if you can't travel into the country three days me the entire three days it's literally 24 hours of real estate content delivered to you live okay and it'll be absolutely amazing we did a five-hour event what last saturday two saturdays ago there must have been four thousand people on that program um i'm actually thinking about doing it again this saturday in case any of you missed it uh and do a live real estate training this weekend to give you a preview of what i'm going to be doing for three days at the end of this month so if you want to take advantage of that grab that real uh real estate cost per unit or buying below or at replacement cost is what i want to discuss with you today okay when i got when i started in the game i was looking at stuff at 40 000 bucks a door now the reason i was able to make that decision is i knew i was in san diego california the cost the paper cost this is how i made my first real estate decision and knew that i could not lose money and i know some of you like oh you don't believe that there's investments out there where you cannot lose this is how i made my first single decision making on one or my first a real estate investment and that first decision that you make and i always tell you guys don't lose money don't lose money and don't lose money because if you don't lose money on your first deal if you make money on your first deal you will do a second deal the number of people the number of people that failed to do a second deal all have one thing in common the first deal didn't work out so replacement cost is one of the things that you should measure as well as debt noi all these other things that we talk about and go into clarity and understanding for you the real the the actual replacement cost of this property just permits i think that number's probably triple that today double or triple the permits to build in san diego to get one unit approved in san diego was 25 000 i bought the entire unit i don't know if you could pull up cedar woods the cedarwood transaction i know it's online it's still the same color as it was 30 years ago when i bought it the permits in 19 i guess that was uh 1998 1990 what are we in 2021 30 years yeah it was night no it was late 90s okay it must have been 25 20 23 years ago so late 90s the permit the cost to permit that building was 25 000. i think i bought those units i paid three uh 1.9 million divided by i think there was 48 units there yeah i paid forty thousand six hundred and twenty five dollars and and when i was buying the deal guys like man it really the real estate agent you should try to get a paint job from you should try to get a roof from you should try to get credit i said bro i'm stealing this thing now i'm stealing it the guy that built it had spent 80 or 90 thousand dollars building it okay how can you spend 25 grand in permits before you put up a 2x4 yeah there it is same color 48 units the guy built it it was right before the savings and loan bust he owned it for four years he spent eighty thousand dollars i think he was in in the deal for about four million dollars i paid 1.9 million dollars i bought it below replacement costs i bought it below what it would cost to build it today and if you started building it right now today understand that it would still not be up for three years okay that property today guarantee you that property today is worth at least bet you money now i paid 1.9 i'll bet you money that thing today is worth 19 million dollars that would be called 10x that's 10x without debt i only put 350 000 down to buy the deal divided by 19 million dollars are you still showing it johnny 19 million it divided by the 350 i put down in the deal the return on that deal would be 542x if i did my math right 19 million divided by 350 000. i'm sorry i'm sorry 54.2 x pretty damn good return before before the cash flow that's before cash flow so when i bought the deal it was paying me 12 a year times 350 times 30 years it's paid me one point by this time it would have paid me 1.2 million dollars in free cash flow okay i don't think that's right let me see 350 times 0.12 i was earning 12 i was earning 42 000 a year on the asset times 30 years yeah okay yeah no oh i'm sorry yeah let me see yeah 1.2 million dollars not bad for a 350 000 investment i'd make 54 times my initial investment plus the 1.2 million dollars and still have an asset that i could sell today flawless victory what was that flawless victory yeah yeah so you want a flawless victory okay one of the things you need to understand and study is replacement call what does it cost you to build now i'm buying a deal right now for 285 000 a unit i don't know if you could show that johnny i'm not supposed to show these deals yet i'm gonna show it on my computer johnny so we don't show it on your computer that way nobody's gonna get get you in trouble they just get me in trouble uh let's see here what's the name of it um ryan's got him um i can't show you that one let me see you have the pictures yeah okay let me see i i look i've been trying to buy this particular neighborhood for um since i moved to houston texas when i was 31 years old so it's a beautiful neighborhood it's very very tight neighborhood if you ever shop in houston texas houston texas when ryan and i first went into houston he had never been there except for a flight or two in and he's like what are we looking for here so look in houston location is more important than in miami because it's flat anytime you get a flat place a flat place that has where you can go this way houston dallas not austin houston dallas maybe probably even san antonio but a little less so atlanta georgia would fit in perfectly orlando anytime you get something that's very flat where you can just keep building out suburban areas you have to be very very very specific to location so there's a part of houston called the heights which is a very it's a whole it's almost like a whole hippie community okay i'm gonna buy an asset there for 285 000 a door it's brand new assets how can i make sense of that number okay let me show you uh i was buying a deal some of you know i lost this deal um this is brand new 2019 to 21 build okay it's literally in the lease up right now i was trying to buy on the other side of town the same asset class i was trying to buy a 1970 asset that's why you guys want to shop different asset classes in this asset class 145 million divided by 1410 units sold for 145 million no no no 245 million sorry divided by 1410 units sold for 174 000 a unit and it was built in 1970. this is not below replacement cost by the way okay because they're going to tear that 170 down then they got to build something new so the new guy that came in cannot just tear this down and build new because his cost to build would be 375 he cost he'll spend about 200 000 a unit to build this the cost over here is probably 240 to build this so you're like okay but you're not below replacement cost yeah i kind of am i kind of am below replacement cost because you can't build it today and have it today you can't have it probably for three or four years if you could get it approved okay in this particular case you cannot approve another deal in this market these are called barriers to entry okay your replacement costs your cost to build a unit even though you might not build a unit creates a barrier okay it's why i wanted this asset right here it's why i was willing by the way to pay a hundred and seventy four thousand dollars for an asset that is forty years old dirt than this okay so look look at this cost okay what would you rather would you rather this at what's yes would you rather this this is your cost per unit would you rather 174 that's renting for 1100 or would you rather brand new product that you pay 285 a door for that's renting for 2 000 in this case it's running for 1800 and it should be 2 200. okay now i don't know that this should be more than 1100 i think it should be in all fairness which would you rather have you're basically almost the same watch 1100 divided by 174 equals 0.63 okay so i'm going to write the 0.63 down 63 of every dollar collected in rent is your cost per unit you have to start understanding getting your mind wrapped around what the ratios are okay this property by the way probably rented 30 years ago for 300 400 bucks a month the rents went up and maybe the rent should still be higher i'm going to take this 1800 1800 divided by 285 and i come up with the exact same 63 pennies if you divide the payment i'm sorry the rent 1800 by this cost per unit you come up with the same number but i don't need to spend any money to fix these units because they're brand new johnny i don't know if you have any pictures of that did they give it to you just show them the pool which one is that okay yeah that ain't the good pool though i don't even know if that's the right deal i'm not even supposed to be showing you guys these deals okay okay but check it out th this is brand new i do not need to spend money on this brand new asset call call uh call ryan and ask him for the name of the big the monster uh johnny this one right here 1100 they're gonna spin just so you understand to when they bought this property i lost this deal another group got this property they're gonna spend 15 to 20 000 per unit to fix this up which means they're not going to be at 174 they're going to be at 194. okay now if i take that 1100 divided by the 194 now it's down to 56 i'm actually per dollar per unit per unit based on rent cost per unit and my rent per unit i'm actually lower in the more expensive asset classes i don't want to over complicate this you need to know your cost per unit and you need to know what what that cost per unit how that cost per unit relates to a replacement cost i'm going to go to a market right now uh maybe some some people on the zoom call tell me what city that you're in right now and i'll pick your city out if i see one i understand uh let's see mcallen texas okay so i'm gonna go to mcallen texas i've never shopped this market and i'm gonna look at i'm gonna see if they got any enter a property i'm gonna go multi-family uh this holds true by the way for single-family homes probably even more so with single-family homes uh retail mcallen texas there it is let's see if we got anything okay and then i must just start i'm gonna start figuring out what it costs to build okay so look here's the deal right here 10 units i just found 10 units johnny i don't know if they can see my screen 10 units in mcallen i have look i have no clue i just randomly picked a city this came from my friend my mentor in the mentor program who's the gentleman that gave me this goddamn i got so many people honolulu post falls idaho flagstaff honolulu you know the reason we do this mentor program just so everybody knows los angeles teleware cal california gretna louisiana miami portland west palm kalamazoo michigan naples florida the reason i do this mentor program is i can get access to deals debt and equity it's a reason i do this program the reason we're doing this summit at the end of this month deals debt equity i'm gonna put it all three in the room i'm there i'm bringing a thousand people in a room we're gonna talk about real estate for three days and i guarantee i'm gonna find a deal in that room that i can do a deal a partner debt equity partnerships man you got to find deals with other people i don't know mcallen this guy knows mcallen erica flores erica eric thank you okay so look i'm fine i found a 10-unit deal in mcallen and then we'll open this thing up to questions here in a few minutes 10 units in mcallen no i don't have a clue about mcallen jobs economy uh incomes all the things that you would have to know to invest in it 10 units 550 000 okay now is that cheap seems cheap to me ladies and gentlemen okay 55 000 a door i don't know what it cost to get a permit over there but i'll bet you it costs i bet you cost something let me call this guy and ask him john you got a different phone so i don't use my phone yeah yeah so here i'm looking at the principal i don't know if he owns that property okay i don't know if this is a good location all metrics that are really important i don't know what the noi is but it says 10 unit complex system on the corner of galveston south street is three blocks away from dining shopping and employment that's not good because if it was three blocks away from whole foods he'd have said it thank you okay so i'm gonna ask this guy a simple question let me see let me see this guy might know who i am 956. hey man hey man what you doing man hey i'm just wondering do you know what the replacement calls daniel will be on that property this this is one of the great the great skills of real estate is how to talk to a broker 50 50 chance he doesn't pick up the call so busy three rings see ross yeah see this is terrible man this is mobile phone he can't pick it up come on man you ain't that busy son your call has been forwarded to an automated voice messaging system i should always leave a message but in this case i'm not 2983. it says it's 100 occupied 10 units and it's an 8.46 cap rate okay these are metrics that you need to know uh this is the the this is the cost per unit what is replacement cost i don't know would anybody even build anything in mcallen i don't know this is the second number he gave me he didn't answer this one either okay i'm such a hustler i can't pick up my phone okay so i'm gonna look at some of the other properties in the marketplace johnny come to my computer so here's another deal i got an 8.46 cap over here freaking massive this is like a 19 annual return on that asset some of you're gonna go in and try to butcher the price price is the least of your problems in this purchase okay what you need to know is whether it's the right deal or not okay so here's another deal uh four family four multi four properties i guess it's four units and the cap rate is seven seven point five and they want one point nine million so two million dollars divided by four units fifty thousand a unit okay okay that's a comment that's a that's a what i can buy a unit for there here's north sugar road four four four million three hundred fifty 000 divided by 40 units uh oh now we're at 108 a door 108 000 a door now why is this so much more money is it the location four units um let's see what year this is this is edinburgh again oh yeah it's a much nicer product it's got carports it's got brick okay so let's see uh excellent opportunity to purchase the new construction cash flowing 108 multi-family low-rise b b quality the other was definitely c quality i think everybody you know you you've got fences on it uh it's newer property washington dryer's inside the other one probably doesn't have that nice closets nice floors you know cool man so like what do i want to know about about this unit hey man what's it cost me to build to build this this property this is one simple metric of many that you need to understand okay would i build there are people building there if they build there what is the cost to build there okay and once i get a cost to build you got to understand that if they start today we're july 2021 when are they going to be done when do you get approved right is it july 2022 23 24 what are the rents going to be then are they going to go up when do you start filling it up by the way because you can build it but you lost income you lost income for this whole period of time so if i come by this deal this let's say this was a six cap this four million dollar deal is a six cap four million dollar deal is it uh uh let's say it's a six cap i earn 240 000 a year cash flow on it if i paid cash and i would never do that nobody would do that you shouldn't do that nobody should ever pay cash and let's say it takes me four years to build they're gonna tell you it's gonna take two and a half or three nobody ever hits their target okay and you're going to have 960 thousand dollars is that right i think that's right 960 000 in cash flow for four years that you need to add to the cost of the other deal that you didn't earn because you didn't have any cash flow for three or four years so that's the cost the opportunity costs so i know i'm giving you a lot of information here today but it's simple what is the replacement cost okay i just bought a house does this apply to single family i just bought a house i paid 24 million dollars for the house okay people like oh you overpaid for the house guy down the street worst location a half lot paid 21 million dollars okay it's garbage it's next door to where i live now regalia at the condo building three floors over i literally see it i throw cigars on the house every day every night okay just kidding i don't do that but i have thought about it okay so 21 million and i know he does not have half he's probably got six or seven thousand square feet i'm at 14 000 square feet okay if he tears this building down which he might do okay he will spend at least 30 million dollars building a new house he'll have 51 million that's how you start figuring replacement costs when i start tearing down the neighborhood they're going to tear down the entire golden beach i've i've been i've been anti-house for a long time and i just went and bought a house in fact i tried to buy three houses on the same block that i bought put an offer in two other houses another house here's b okay another house just sold for 22 million dollars four houses down from where i'm at and i know for sure they're gonna scrape the entire property it's a double lot it's bigger than my lot but they're gonna scrape it i paid 24 million am i below replacement cost seems like it to me okay if you built this when would it be built this property if you scraped my house today and got permits on it you would not have a house up until 2025. so those are called barriers to entry they're barriers okay to entry they work in multi-family they work a little less in shopping centers but they still work office buildings they work there like i bought that office building next door to me i can't build it for what i paid for it i am below replacement cost the deals that we're doing in in houston right now it's uh 646 units i know for sure you could not build those units today for 285 000 a unit uh because i met with the builders there and said hey if we were going to build that property today what would i be at 315 so i am 30 000 below replacement costs and 30 000 below replacement cost means the next guy that bills and they will they're going to need to get another 200 a month over me at least to be equivalent to their cost to build and their rent collected okay i know i'm giving you a bunch of information today i just want you to go out now and shop replacement costs for those of you that are coming down to miami you're bringing deals one of the metrics that you need to bring with you is the replacement costs of the property so if you're going to bring me a deal to show to the audience and i'm saying hey here's 200 units in san antonio here's 200 units in baltimore here's 200 units in boston here's the cost this guy found the deal loves the deal he knows the rent the noi he knows the location's sick it's unbelievable this is how much equity you need i'm gonna i'm gonna literally we're gonna do deals in the room so bring your deals bring your metrics okay what metrics do you want one of them is replacement costs okay replacement cost what's it cost to replace can it be replaced okay these are barriers to entry that's what's made california such a great market for so long the barriers to entry uh miami's got a lot of barriers to entry here this kind when this condo fell to the ground or whatever happened with the condo it increases the barriers to entry because regulators are going to now come in they're going to look at every 40 year old building in miami they're going to force reinforcement on every single building in miami and the cost to build and maintain okay is going to go through the roof new york city chicago uh oh there's our there's our swimming pool okay you can't you can't build that go show back go back to that when you look at your cost to build i want you to also look at can somebody build this asset next to me there's four assets maybe five assets around me that have a similar rent i have a pool i have a pool that they don't have okay i'm actually going to try don't i hope the brokers aren't listening to me right now i'm trying to buy everything in this neighborhood right now i'm going to try to become the mayor of the heights why not okay the other thing about replacement costs you need to understand is once i buy this asset when you're looking at assets in a marketplace and this is for a little more sophisticated investor when i buy this asset okay and i pay 285 a dollar yeah for example okay so 285 a door times 646 units i'm paying 172 million dollars for this this project i'm not supposed to tell anybody what i'm paying for it because it's not going to be public but let's say that's what i was paying for i'm just giving you an idea right and um and and also none of this information is pertaining to any specific deal i'm just telling you if this was the numbers okay a 285 a door if there was 600 units or so you understand that when i buy this deal okay and then we'll go to questions i'm going to put probably 60 million dollars down on this deal and i'm going to finance 112 million dollars okay this is a little more complicated but i want everybody to understand this because your your replacement cost and your barriers to entry have something to do with how much inventory is in the marketplace now if you've been reading the news about like houston texas okay for example or even miami fort lauderdale or you you or scottsdale arizona and phoenix they're like oh there's a lot of inventory a lot there's a lot of assets people are building apartments you understand that this asset right here if i put long-term debt on this asset then i cannot sell this until 2031 which means this is no longer on the game i literally have taken boardwalk and park place off the monopoly board for 10 years you can land on it and pay rent there but you can't trade it it can't be traded in monopoly things can be traded over and over and over again right okay but in real life because of debt because of debt because of long-term debt when you put long-term debt on a deal like this if i put three years of debt i could trade it in three years if i put 10 years of debt on it okay that asset is not going to be traded or replaced in most cases okay i know i've given you a lot of information today i want you to just go look look at the deals that you're looking at look at the deals you've been underwriting look at the deals maybe where you live and find this one thing out what's replacement cost my name is grant cardone you've been in the cardone zone every monday i do this for you if you you guys are digging this channel if you're into real estate if you like it if you got questions post them below turn your notifications on get that bell notifying you so that you can start building on your real estate career i wish somebody had done this for me when i was 30 years old man it was sped up everything i did there's so many things i would not do again in my real estate career and i would be so much further ahead today i mean i'm really happy about where we're at but had i known back then would i know now and the same is going to hold true for you by the way if you could speed up your learning process in real estate you don't need money you do not need debt you don't even need good credit but you do need information you've got to have the information because the information is what warren buffett says if you want to reduce your risk increase your knowingness the more you know for sure i mean i don't mean no with a bunch of data just running around in your head probably like this today okay but if you start putting together all my shows on real estate you start really studying everything that i'm saying it's going to increase your knowledge knowingness your knowingness which is about your certainty it's not about being the smartest person it's about increasing your certainty so that you know like when i found that first deal that i bought i knew for sure based on one metric replacement cost that i could buy that deal and never lose money in fact i could buy that deal and never lose money and sell the deal for a profit and the next guy wouldn't lose money either as long as he didn't over leverage it which is another metric in fact it's going to be the metric that we cover next week debt how do you grab debt how much debt do you grab when do you say no to debt what's good debt what's bad debt where do you get the debt from and if you guys want to please turn your notifications on take a moment to comment if you don't like do like please make a comment don't just be a spectator because being a spectator in real estate means you a renter not an owner okay and i really appreciate you watching today you guys in the mentor program hang on a second also lastly if you want to come spend three days with me in miami we're almost sold out grantcardone.com forward slash summit grantcardone.com forward slash summit when you join up for the summit and reserve your seat i can either zoom it to you or you can come be here in person uh it's mark what is it july 26 27 28th okay uh it's going to be fantastic i've never done a three-day conference on real estate i've got guest speakers coming in talking about deals where to find them how to talk to brokers real estate commercial brokers i'll have some of the most successful in the country here i'm going to have debt in the room banks and lenders talking about where and how to get the best debt and what they like to give debt on and i'm going to have in the room money equity cash ola people investors there'll be a thousand people in the room all with this serious intention of either buying their first deal their second deal or expanding their current portfolio and to do that you need people in real estate information is one thing but you can't do this game without people you got to have people in the deal you got to have partners so the website's grant cardone.com foreign summit i think we've got maybe 50 or 60 maybe 70 seats left grant cardone.com fortnite summit this event will be sold out i sell out every event i do you guys know we're actually oversold right now uh based on the first number that we wanted um so but we made we made uh some more seats by calling the turnberry fantastic venue great hotel great food great people in the room and i promise you i'll promise you there's going to be a hundred or 200 people walk out of this room and their real estate life will never ever be the same again okay there'll be somebody walk out of this room and build a billion dollar real estate portfolio because of the information and the people they meet this weekend okay thank you for being here i'm gonna go to my mentor call right now and anybody that signs up today by the way i'm gonna get you involved in our mentor calls each week see you guys next week okay mentors let's talk man who we got today we got 500 strong in here uh let me see uh let's see we got let's bring jonathan trevino in he's underwriting a 216 unit deal if you have a deal folks just throw it in the chat box and then i'll find some of these and ask you about them man there's leonardo he's got a good deal check out this deal um okay let's go to jonathan trevino can you find him johnny hey can you hear me yeah i can hear you jonathan what's going on i don't see your face but i hear you um here let me uh let me get that for you yeah it's always suspect when you don't have a face on like you ain't kanye or something right no i heard kanye went to this thing this weekend with a full face mask on i didn't hear about that yeah i keep up with kanye i'm always interested in what kanye's up to i don't know why i find that guy so interesting okay tell me about your deal okay so it's a 216 unit apartment complex in san antonio texas okay um so as i was underwriting it the current owners are trying to sell it off of a t3 because they just put 2 million into renovations in it okay so that's where i'm kind of running into issues if i go off of the t12 my offer price should be around 11.5 million oh okay well you're way off you're way off here so so first of all let's just do one thing at a time okay they want 22 million for it divided by 216. are you looking for reasons to buy the deal or reasons not to reasons to buy it okay good it's 101 000 a unit what year what year is the asset it's an 84. okay 1984. so first of all we can't go back i can't go back and build 1984 again you guys understand that right oh man in 1984 man it probably only cost twenty thousand dollars to build this deal good you can't go back to 1984. i don't care how much elon can't go back there you put jeff and elon together i'm like go go back to 1984 guys they can't you cannot go back and build that you wouldn't build it what the question is would you build it there is how do you like the location the location is good it's a c plus neighborhood okay i would call it a b class building okay so it's a b and a c it's a b class building in a c neighborhood and and why do you like it um well right now the occupancy they're claiming 100 when i first got the numbers they were at about a 96 97 occupancy rate okay um and then there's room to increase rents because a lot of their tenants have ban long-term tenants okay they're renting at about 7.75 market rents are about 9.25 okay good so so this is the the information you guys need okay what do you think it would cost just because our show today was about replacement costs to build in that location first of all would they ever build in that location um i would think so there's no no so so where where are the new buildings going up where do you see new buildings in san antonio how far away well it's a few miles uh west okay good two miles west they're building how far is the rim from where you are the rim oh man that's several miles that's about 10 miles north okay so just so you know to build new today in san antonio you need to find out what that cost to build this but i'll bet you i'll bet you somewhere's around a dollar sixty a square foot okay so that sounds about right so that's 16 that's a so let's say a thousand square feet times 160 bucks it's going to cost 160 000 to build a new unit there okay so you're paying 100 and 1 000 so right now i'm like check i'm below replacement cost okay don't don't don't go into these deals beating people up on price it is the one of the least important things on a deal is the price now i know a lot of you're shaking your head right now saying how can that be the least important because price is not the problem on these deals okay you're not going to pay 101 a door anyway you're going to pay probably 30 000 a door how do you pay 30 000 a door because you're gonna finance it okay so if it's a hundred thousand dollars a door and you put down thirty thousand dollars or if it's how much is the total deal 22 million twenty two you're going to put down seven million dollars and you're going to finance 15 million okay 7 million divided by 200 and how many units did you say are there 216. 216. by the way i love the size of the deal love it i love the size of the deal for your first deal but if the bank will give you a loan for 15 million dollars that's a loan we're gonna put little brackets around it like that that's a loan the bank believes in it the bank thinks what divided by 216 units the bank says hey it's worth at least 70 000 a unit that's what 15 000 is in fact it's worth more than 70 000 a unit or the bank wouldn't give you a loan for 70 000 a unit they wouldn't the bank will not give you a loan if they don't think that they're stealing the deal that's how banks work the bank's like we'll lend you money against a real asset will give you less than the assets worth and we know that if you fail we'll pick it up and dump it and get our money back okay okay does that make sense so first of all you're not paying that's why i tell you guys so what is 22 million it could be 24 million you're still stealing it because you're only paying 7 million for a 22 million dollar asset so now let's look at the rent you said the rents are 7.75 i'm going to divide that by another number that i used earlier today the 101 000 and that means i'm paying 76 76 pennies of the rent per unit okay so you understand what i'm saying here it's like the if if if the unit cost me a hundred thousand dollars and i've always said if you can if it costs me 100 grand per unit this is the ratio of the price per unit to the rent and the rent's only a thousand i'm like okay that's point what is that that's a one okay dude if you guys ever see a one one percent it's a one percent rule if you ever see a one percent rule great buy everything you can in that whole neighborhood the one percent rule would have made you so rich in the last decade it'd be unbelievable you probably can't find the one percent rule today okay his in his case he's at 101 if i divide that by the 775 i'm gonna be at 76. okay the one percent rule you just buy everything you put a blindfold on and say let's rock okay in this case you're saying okay now i might want to do a little homework now okay but what you told me sir jonathan was you said the rents could be raised to what number 925 now what do i need to do to raise the rents just raise them or do i need to go in there and buff something out or uh so they put 2 million into renovations there's approximately just slightly more than half the units have been renovated okay and the rest need to be renovated so there are some long-term tenants that are at that 775 and some of the newer renovated units are already renting at 9.25 there you go so now now now if he can if he can hey david can i call you back sure i just want to let you receive the funds oh beautiful brother beautiful thank you i'll call you back um if he raises the rents to 9.95 let me just tell you i'll tell you guys a little secret the guy that owns the deal will never raise the rents to the maximum amount he doesn't need to do do you know what they paid for the property jonathan i believe it was around 14. okay good so look this is how you this is how you guys play the deal out they paid 14 plus they spent 2 million how long ago they buy it uh they've had it for about three years now going on three years they've had it for three years they busted their ass okay they busted their ass they did a whole bunch of freaking work on the deal they took a bunch of risks they got a loan they did a bunch of damn work they deserved to make six million dollars i would not even be worried about the price on this deal so so now i don't know how you came up with 11 million but while you sit there and about the price of it a guy likes me going to go buy that's what's going to happen this deal is going to be removed from the marketplace so give me the noi on the deal now i'm going to move to another metric the noi is 1 million 155 000. okay so one and that's is that before new taxes yes okay divided by uh 22 million okay that's a five two five cap so i'll tell you based on the cap now based on the noi this is too expensive so because because you're going to have it you're going to have new taxes in the state of texas is taxes because they don't take income taxes they're really really tough on property taxes that's how the state of califor texas funds itself so um i think your taxes are going to you you need to you need to get an assessment on what your new taxes and your insurance is going to be on this deal and the effect on noi okay now i'm going to do a little different figure on the noi than you did 775 times 200 how many units did you get this is after tax so they already have the two i know i know it's after tax but it's after the old tax see they paid taxes on 16 million you're going to pay taxes on 22 million right so their tax basis is different than the one you're going to have your taxes are going up yeah that's one thing you need to find out what's the increase in taxes going to be the st there's going to be an assessor a assessor in the state of texas if you call ryan today or ask my office they can give you who to call or talk to to find out who that is maybe uh just uh grab ryan johnny or i'll just call him off my phone call ryan i got it i got it johnny and so watch i'm gonna do a little different how many how many units are there two what 216. okay watch what i'm gonna do i'm gonna do my napkin man hey johnny uh orion hey hey how much who can tell me what a 22 million dollar two million dollars uh a 22 mil 22 million apartment deal in in san antonio texas will assess for um is food you want cap rate or you want per door the tax assessment oh the tax assessment yeah man somebody give me that and call me back all right okay and then and then jonathan you need to know you need to find out what the taxes the total taxes were last year if you can find that okay now now i'm gonna do i'm gonna do my napkin math okay so i don't really need their numbers to do a deal and a real professional real estate person should not need their numbers because their numbers are probably lies anyway let's keep it real okay 775. it's 296 000. they paid 296 in taxes last year yes okay okay so i'll wait for uh i'll wait for my guy to get give me what i need 775 times 216 times 12. that's 2 million and 8 000 okay so i'm gonna take times point ninety percent of that oops i'm gonna take point nine because i don't like i don't trust the 95 even though you said they're at 95 okay good i got to go to worst case scenario so i'm to always use a 90 and a 50. i'll show you what i mean by 90 and 50. i'm going to use 90 of the the total possible market rents that gives me a hundred and a 1.8 million dollars how much do they have for other income do you show that yes they have i'm going to guess i'm going to guess 265 000. oh it averages about between 180 and 200 per month okay so wait a month i'm sorry i'm sorry it's 20 20 000. yeah 20 240 so i was 25 000 too high 228 yeah 228 total see okay so i guess 265 i don't know anything about the property though but i was close pretty close i was off 37 000 i say that pretty good it should be about four percent by the way so they're way low on other income so that's an opportunity what's other income trash pickup we we force vip trash on our properties you don't even have a choice it's 25 bucks i'm picking your trash up from your front door you're not going to drag your trash through my property down the hall leaking off your your grease your bacon grease all the way down my hallway down the driveway across to the trash can we're gonna pick your up and we're gonna put it away and i'm gonna charge you for that okay and if you don't like that you don't get to live like that okay they currently don't have that yeah good so that's 25 bucks times 216. i mean you start thinking watch this i'll show you how to make money dude that's 65 000. bam shazam we got vip parking boys and girls you want to park right in front of your place 37 a month you don't then don't call us and about having to walk across the damn property if you don't want a then you got to pay okay all right so uh so now i'm at 2 million i'm back to the 2 million i'm back to the 2 million right 2 million and 28 000 i'm back to my 100 percent by the way 2 million times 90 okay now i'm going to take 50 of this number in the state of texas because of taxes okay now ryan's going to call me back at some point here unless he doesn't but i got 1 million 14 000 for noi and i'm gonna divide that by the 22 million dollars that the guy wants and i'm at a point four six cap so i agree the the property is too expensive because for that number bro i would tell you to come invest with me in these new properties in the heights okay now because i don't love the location of your property and you don't either i don't see a whole foods i don't see a starbucks but i tell you what i do like i do like to in 775 rents bruh because i think i could go piss on the property and raise the rents 200. i'm just saying something i've done this before i walked on a deal literally walked around it closed on the deal i was so confident okay there's an old story about just pissing on the property thing okay i know some of you find this like unacceptable but it's a true story grant cardone did this in austin texas i couldn't find a place to take a leak so i went to the back urinated and raised the damn rents and we made four million dollars on that deal that's my that's my that's called added value value add proposition okay so is this a property you would just pass on or would you negotiate on that price uh uh well i'd do a couple things i'd probably try to get it under contract uh because now if i take my nine i did my worst case scenario now let me take the 995. the 995 times the same math times 216 times 12 times 0.90 times a plus the plus the 228. uh no i'm going gonna go to i'm gonna go to like uh yeah yeah i'll just do the 228 plus the 228 plus the 228. now i'm at 250 i'm not i'm at 2.5 million 49 000 noi um divided by 22 million that i paid for it yeah 2.5 million two five that's my new noi noi big deal big number big thing you got to know how to use it okay 2 5 49. i'm taking a lot of time with you man divided by 22 million now that can't be right 2.5 how much am i paying for the property 22 million oh oh no wonder because i need to cut this bad boy in half okay so 1 million 258 000 divided by 22 i was getting 11 cap i'm like yeah damn i don't i ain't that good now i'm in a 5.7 cap okay you guys it's almost impossible to find a five and a half cap in this country right now but i still would not do a 5-7 what would i do on this property i'd probably you know i'd probably call these guys up say i love the property property's insane bro look i'm i'm underwriting this closer to like 19. yeah that's actually what i was getting at like 18 and a half oh i thought you were at 11 million no that was going off of their t12 because of coven months and before renovations like they were losing a lot of money but their last their t3 that they were trying to sell it off of is what's been stabilized yeah you see dude like 19 million i'm all over this deal i'm like i might even throw some money in with you all right i'll hold you to that let me get it under contract yeah what you can't fix in this deal is the location so guys what you want to do is you want to look for the two ws is it closer to whole foods or is it closer to walmart close to the target okay target's good if it's a good target but if it's one of those beat up targets no that's a good target and there's actually a starbucks in front of the target oh no the other that's not a real starbucks man let's not kid ourselves no no there's a like outside the parking lot in action that's good that's good that's good okay all right man i like the deal are you coming to the summit um trying to working out some issues with you we're trying to quit trying don't try and do it okay if you guys try to buy real estate you'll never buy any and let me just tell you something if you guys don't get around the right people you'll never buy any real estate it will not matter in real estate you gotta have three things debt equity and deals and those three things come from people always how do i talk to them how do i get in front of them what do they know about me there's a people game real estate is a people game man you got to get in front of the right people with the right deals i love this deal by the way i just need a little note i like the size of the deal i like the potential in the deal i like that these guys are making some money on the deal i like that the bank you know that this deal's already proven itself for the last two or three years to produce cash flow it's been through covid there's a lot of things i like about this deal and especially the replacement costs i'm under a hundred grand a unit or just about 100 grand a unit okay now let me just look at one other thing on this deal you'd want to know uh what what what it costs to buy a house in that neighborhood what do you know jonathan what do you think it cost to buy a house around there in in that neighborhood he just want to know that right hey ryan what do you what do you think the expenses of their taxes are going to be on a 22 million dollar deal just plug in 450 and you can be plus or minus okay thanks okay his taxes on that deal could go up to uh uh a hundred and sixty thousand dollars jonathan i think the 450 is a little heavy i think they came back in at 450 for taxes um so you're like oh my god 450. you're not paying for them diva you with me diva yeah girl come on let's buy some real estate folks okay let's see johnny who we got next um let's go let's see uh stan cherry has a 110 unit deal carlos estrada has a 54 unit deal let's let's pick one of these guys johnny i'm gonna go with stan cherry tricia wants to know what's the perfect cap rate there's no perfect cap rate guys i bought three cap rates i bought seven cap rates like there's no perfect cap rate there's a perfect deal though so like if i had my whole career to do over again i would start with a lower cap rate i would buy lower cap rate deals over the last 30 years have made more money for me than the higher cap rate deals higher the cap rate the higher the cash flow lower the cap rate the less cash flow typically the better the property the lower the cash flow or the lower the cap rate stay in the man what's up hey how's it going grant good brother appreciate you being part of this hope you're enjoying it yeah definitely enjoying it thanks for the opportunity so my buddy craig and i have a deal that we're looking at in wilmington north carolina it's a broken property it's condos uh-huh 110 out of 284 i hate the uh nry i hate it sorry about that i hate it no okay yeah if you told me you could get if you told me you could get uh control the hoa um yep but i don't think you can at 110. if you told me you could get 250 of the 284 units yeah i'd be good with it man but look bro you're always going to be battling people you're going to have 174 people that are not going to want to spend money on a property that you're going to want to spend money on yeah we have 40 percent so that's not enough leave this deal alone okay okay and for everybody watching right now one of the best things you can do is know what to leave alone this this is this is this is harder than a marriage right now you cannot get out of these deals when you get in them you're like divorce ain't 50 50 in these deals divorce could like bankrupt you so i would i would you know if you guys avoid making mistakes on your first deal if you find your first deal it took me three years to find my first deal and and it wasn't that the deal wasn't out there i didn't know what to look for so i was even passing on deals i should have bought because i didn't know enough if you don't have confidence you're not going to pull the trigger or you're going to pull the trigger on something you don't that you don't want to be in remember what i said earlier if your first deal works you'll buy a second a third and a fourth deal so i would just leave this deal alone i like the size of it i just would suggest find 110 units where you own them all got it okay control is the name of the game for money folks control equals income control equals wealth the more control you have the more wealth you create for yourself okay how about d did you get the next the next uh uh i gave you another name but let's see here yeah guys don't don't spam this uh don't spam this uh the chat box guys i see somebody in here don't invest with them they're scammers i don't know who they're talking about but please don't like what you want to do is you want to get in a room with people okay and start showing deals the beautiful thing about real estate i watched this show movie last night elaine and i watched uh billionaire boys club and it was basically it's a show about this kid these kids in beverly hills that started uh this pyramid scheme and they started raising money from a guy and then they give some of the money that they raised from one guy to the next guy like it's like it's crazy man don't don't you know real estate real deals real addresses real tenants real profit and loss statements dude it's such an easy game to play and it's almost impossible to get ripped off like i have never lost money in a real estate deal ever in my entire career i bought 40 or 50 deals now for probably 50 50 plus deals over 3 billion worth of real estate the only money i've lost is selling something too soon um let's go erica hi so i was actually wanting you to look at the deal that you looked at before it was on mcallen texas um it said uh four plexes but it's 16 units okay do you have an address it doesn't have the address on there but when you looked at mcallen texas it was a second listing you you looked at oh okay you want me to go back to mcallen texas okay uh let's see here the title on the top is four plexes mcallen with garages that's what it says that one that one's it the second one okay what about this deal so i was just wondering the price seems i know we don't the way you're talking about the prices but when you mention when the other guy or other people mention 100 units or 200 units and the price is four or five million versus these 16 units at one million nine i guess my question is if it's something like this that i see in the valley like would it when i looked at it it looks like a good deal okay good so so it says the price per square foot the number of properties for so you guys understand that there's there's more than four units here i think yes there's 16 there's four four plates so there's four four plexes okay so let's do the math on that one million nine hundred and twenty thousand divided by sixteen units is one hundred twenty thousand a door that's nineteen thousand dollars more door than the other the other property in mcallen and you're going to do this this is a great example okay you're going to do this you're going to look at one property in mcallen go to the second unit the second deal the third deal the fourth tail it doesn't mean that you want to buy the third and the fourth and the fifth deal it means you need to know it's like me going into a club i'm single guy looking for women man i got to compare hey what's my deal i don't know what my deal is i don't know my deal until i see my deal and sometimes i don't know my deal until i see what i don't like to see what i do like right same thing with drinking tequila how do you know what tequila you like the most you got to try a few different tequilas okay so definitely you want to do comparison shopping so this is 120 adore a unit 19 000 more per unit doesn't bother me any i paid 460 a door uh we bought a door we bought a deal uh uh in boca raton 404 units i paid 165 million dollars divided by 404 i paid 408 000 everybody thought i was an idiot it was the second biggest transaction in the state of florida last year that property's worth 500 grand today i've owned it one year i know for sure it is because i know an asset down the street is going to sell for more than i paid for mine mine's better location better product better everything okay so on that deal i made because again i used my cost to build i knew i could not build this for 408 okay because i know i can't build it for 408 the next guy's gonna have to spend x so the property down the street went for 500 grand a door because the next group intelligent group coming in saying we can't build for 500 a door now if you've been in florida for too long you're like i ain't ain't no way i'm paying that much a door but if you're coming from california and new york in california and new york they're like that's that's 1.4 million dollars per unit okay that that's whose influence in this market so let's go back to your deal at 120 a door uh my computer died johnny hey guys i need some charge on my computers my computer doesn't last forever like y'all's and y'alls don't either okay uh-oh you don't want me to take this off to you johnny this thing can i use this okay so let me see uh how many units 16 units 16 units uh so so what do i got i got uh uh how much is this deal then it's one million nine hundred and twenty thousand okay one million nine hundred thousand so i know that you're gonna be able to buy this thing with about six hundred thousand dollars down do you have the noi on the product on the asset uh no i have the cap rate at 7.5 okay so you have the noi then if you have a cap rate you have an noi so i'm going to do 0.75 .075 times the price so if you do this times the 0.75 you're going to have the noi times 1 9 man i love doing this with you guys okay so you're going to have one million uh you're going to have 142 500 is going to be your noi okay the noi comes before your debt so what you need to know right here is your noi then you need to know your debt so i can see my cash flow noi less debt equals cash flow that's fine johnny i'll just use this unless you need that oh you disconnected over here it's fine it's fine me and johnny a team we a team you've done this more than once huh johnny okay so so noi is 142.5 how do i figure that out seven and a half percent of one nine okay now i got to figure out my debt you got to know your debt right here 1 3 times .04 i'm gonna i'm i'm i think you guys are going to borrow money right here at about uh four percent it's 52 000 that's four percent money i'm gonna borrow money for three or under right now but but if you don't have experience maybe it's a little higher okay and this deal makes you uh 90 000 bucks a year if i did my math right one million three hundred thousand times point zero four okay fifty two thousand um if the noise right you said the no is seven it's a seven and a half cap right seven and a half times uh 1.9 million 142 thousand dollars 142 000 i make 90 grand how much did i put down 600 000 freaking deal is a screamer man we have 15 i'm good let's go why y'all bitching and groaning and moaning and freaking hammering people on price you give me 15 i'm all in okay now now i love this deal for you and the reason i do is because it's only 16 it's 16 units 16 units is a critical number in real estate okay now the rents on this are how much do you know what they show for rent they they range from 1050 to 1200. okay so look back back to our buddy our earlier guy at 775. if these rents are 1200 bucks a month and he's at 7.75 i know there's two or three hundred bucks and i don't need to improve the property so so these rents are a thousand to twelve hundred how close to whole foods or what a walmart which one they're closer to uh walmart hiv plus um it's close to within five miles of everything pretty much okay you like the location great location would you great location my buddy earlier said uh give it a give it a c location b b product in a c location a b or c on the location what would you give it a she's gonna give it an a i'm like dude i want to buy this asset okay it's a thousand it's 1200 bucks a month to build this product right here i call real estate product it's a product to me it's like coffee right um she's paying 120 000 a unit let's go to our replacement cost now what do you think it would cost you to build that asset today knowing you wouldn't have it for two or three years johnny i think i lost my my zoom here did y'all lose it what do you think it would cost to build any idea i really don't i know somebody that build a six plex for 300 000. yeah good well there you go six bucks so they're at 50 000 a door but guys it's only six units six people does not solve the problems of san antonio you know so you you should start looking at is anybody building a 16 unit community no this one this one right here hey don't worry about it you can walk right in the scene dude this ain't a tv show man um nobody's going to build a 16 unit deal in san antonio re why and nobody's going to be able to see product either or be product they're going to build a quality assets and they're going to build 200 units at a time the reason nobody's building 60 units folks is because it does not work the finances don't work in no city in america are you seeing anybody build b and c assets nobody's building affordable homes nobody's building like literally one percent of all the housing stock in america is under 100 grand because they can't afford to build it okay also when you're building apartments if you drive around your city i want you to send me a picture of somebody that's building 16 units they're not because the risk to bill 16 is no greater than the the risk to build 160 and the builder knows they're going to make more money on 160 units they can't even get a loan on 16. the risk is too great does that make sense so if you like this location okay if you love the location like you say you do you could get a 15 return now the question is well two questions one do you have the down payment the equity i would have to borrow from my mom a hundred thousand so i was wondering also how would you structure it like you know how people say and i heard i've heard you mentioned so let me ask you this again did you say you you have a hundred yes okay are you coming to the summit i am going to do it virtually okay i i want to just just encourage you like if you could come here i'd bet money i bet money i'd bet you 500 grand that you could raise the 500 grand at the summit rather than raising it from your mom yeah that's the thing i was wondering if i asked her for the other five how would i yeah so look if you're gonna structure the deal with your mom okay there's two ways to do it with your mom say mom i'm gonna do a hundred you lend me 500. the problem with borrowing money from family folks is if you guys if you guys feel about your family like i feel about mine you are going to be more worried about your mother's 500 then you're going to be worried about your 100. yeah so i don't i don't know how many of you can relate to that but anytime i've taken money from my family i worry more about their money than i do my own because i was willing to take the risk with my money and i can tell you're willing to risk your money right but but what i don't want you to do is i don't want you to second-guess yourself so one thing you could do with your mom and the thing i would do with i did this with my mom is i would do a loan with your mother and pay her like eight percent and not have her be part of the deal okay and just say mom i don't want you to be my partner i want you to be my bank okay okay and i want to do a deal with you mom just the way i would any bank okay now now here's the problem with that when you do that the lender is not going to love that the lender wants to know all that money is coming from you and that you don't have two loans so you and your mom this this view view changed johnny i don't know if you see it but it's all bored and there you go uh you the bank is going to want to know that you have 600 000 down in this deal and that that money came from you so that's a little bit of a problem and they're not going to like the idea that any one investor has more than 50 of your down payment so you and your mom got to kind of cut a side deal okay and the side deal should be like done now and that money needs to get transferred into your account and then you need to go get a loan on this deal with your cash the second problem you're going to have is the management you need management experience so one of the things that we're actually throwing around doing i'd love to know from you guys if y'all be interested in this is we're looking at doing deals where where grant actually comes on as an extension of your bio so that you wouldn't be going into your first deal um what is your name erica yeah erica you wouldn't be going into your first deal is this your first deal yes you wouldn't be going into your first deal by yourself you'd be going in like hey grant cardone's my partner he provides the management on this deal he's got a lot of experience buying real estate okay and and basically i'll be giving you the thumbs up on it okay okay so if you guys would be interested in that by the way let me know because we're actually thinking about providing that service we've had a lot of people reach out to me about it and and i'd love to know you guys would be giving me a piece of that deal obviously i'm not going to go into risk on it for nothing okay but so you could do this you could do this deal erica you could do this deal where you give your mom eight or ten percent which is a screaming deal for your mom because your mom is earning maybe point zero one five your mom's earning your mom would earn six and that can't be right point zero ten percent divided by .015 yeah your mom would be earning 666 times what the bank's paying right now because they're paying the bank is paying your mom one eighth of one percent max today so i would go to your mom and just say mom i just want a loan do you think your mom would do that erica i do but i kind of brought it up the other day and she she was talking about you know how family is she's talking about needing two signatures for everything and i don't even know it didn't make sense oh yeah dude i'm sorry i'm not coming to you for a signature mom you have no control in the deal this is nobody else is going to give your mom two signatures you need to tell your mom shut up quit acting stupid for you you gave money to the bank and you don't even get two signatures on that like that's stupid mom you need to get your money working so you need to come to your mom with it from a different spot and just say we're not doing a partnership i want to know do you want to lend me the money or am i going to go to grant's friends and they're going to lend it to me do you want to earn 10 or do you want grant and his friends to earn the 10 percent was the biggest question i had to be yeah yeah you do when i went to my family look my family's involved in my deals i said guys you have zero say-so if you want to say one thing about any deal you cannot put money in my deals so you you don't want two generals running a war thank you thank you i hope you come to i hope you come i promise you yes i'm gonna try to don't try to just do it i'm going to yeah okay like everybody here everybody watching here guys if you have said that you're going to watch this from your home make it happen to get in the room i'm going to sell the room out anyway i would rather you guys that have made a decision to zoom in to come in okay yes it's going to cost you a flight yes it's going to cost you a hotel look you're going to spend money doing this but you're going to meet people that are going to make money not your problem you cannot make big money with the group of people you have in your life right now if you want to make big money you got to leave the people you got to leave the team you're on right now i'm sorry you know i my finances did not improve until i left until i left the people i was hanging around i've moved six or seven times now and i'll move again i'm gonna keep moving up the food chain you cannot move up the food chain staying where you are so i plead with you guys if you've bought a zoom seat get yourself in the room three things you need in real estate you need a deal and you guys are showing me deals today by the way you're showing me great deals how many have been inspired by some of the deals you saw today you know what people in san antonio are saying oh man too expensive people in texas shit's too expensive i found three deals today that i would buy myself you need deals you need debt and you need equity what are most people talking about oh man i need money man you don't need money man you need deals in this order first the deal then the debt then the equity if it's the right deal erica's got the right deal by the way erica i guarantee you erica you'd get debt and equity on that deal because these two things follow that most people are looking for the equity first and you shouldn't be you should be looking for the deal first because the debt and the equity erica would find the money in the room guarantee you all right now what's that what's the point of that where do all three of these things come from they come from the big p and it ain't the p i'm talking that was talking about earlier my p-value ad people man you need people okay you got to find the debt is a person the equity is a person and the deal is controlled by a person let's go to my friend carlos estrada vega what's up my friend what's going on grant thank you for the opportunity man and thank you for last week i'm the one that you know your director and you know me back so um thank you thank you man appreciate your service too no man i'm trying to do this about to retire and i got i got to get i got to create wealth for the family yeah so hey i have a deal and also a couple questions so if you don't mind let's go let's do them both all right so let's go for the deal first so i'll give you the address um i also um send the link to the guys just in case they want to put it up so the the actress is 3507 147th street from flushing wings new york 3507 147th street flushing new york is it in the bronx no in queens okay okay yeah i see it okay you see here all right so the location is great so i'll tell you what about the location is this a single family no it is a building of 54 units okay 54 units wow okay four units yes okay so location is great it's about three minutes from the subway about two minutes for the long island railroad um it has laguardia of the airports from five minutes to 20 minutes all three airports from north to queens in the balkan queens um it is of 54 units price per unit is about 315k right now okay 315 000. so the total price of the project is what it is right now the asking price is um what is it uh 70 millions 17 million okay so for all of you out there hang on one second for all of you out there remember i just showed you i just gave you an example of a deal i paid 404 000 a unit and i said everybody in florida said oh my god i can't believe you paid that a real deal even said grant cardone overpays for property i'm like okay whatever bro okay this this right here was built when this this this brooklyn 1931. 1930 90 years ago and it's 3 15 a door i'm brand new and i paid 404. johnny can you show them altis boca 10x living at boca look at his look at his deal and then look at my deal johnny uh what are the rents at this place so the rents right now are between 1550 to 1600. oh my god 20 of the average in the area so the rents in that area go from 1750 to almost 2 000 right now and that's average the replacement code for a cost for a unit like that right now it's half a million per unit okay you mean if somebody was to build it it's somebody what the building yes okay there's my property by the way johnny i don't know if they can see mine okay and then let me show you this yeah okay hold on let me see let me see let's go back and forth take a listen stop laughing hey so that's cool so watch let's go back to his deal so they want 17 million dollars you're probably going to have to put more like eight million dollars down on this deal you know that right yes well actually i put it 25 i was uh 4.25 you put 45 percent down no 25 yeah i don't think you're going to get there i don't think you're going to get there because i don't think they're going to you're going to have to probably put more money than that down got it okay but let me just go over the numbers what do you say the rent is right now it is 15.50 to 1600. okay so we know the rents are too low yes like i think they're too low what's your occupancy at right now they are a hundred percent right now yeah well that tells me they're too low i mean like i don't even i don't know anything about anything i just like goddamn 1500 anywhere in new york how can it be like yeah like i said so the median the median or the average rent in that area for a two-bedroom is between 1750 to 2000 and that's very low now the highest it could go over to 2800 all the way to 4 800. yeah okay all right so so you like this deal why you like the location right location is fine okay how do you feel about this replacement cost i mean it's it's high so i i i think that there's um there's potential in this property yeah i mean i don't think i don't think i want to i wanted your eyes on it yeah well first of all i think first of all no nobody let me speaking about replacement costs nobody is going to build um how many 54 units there like that's not going to be a 54 unit build it's probably going to be a sky rise and they're not going to build that right now because of the problems in new york right so you're just not going to see that happen there right and if they did it would be way more than four or five hundred thousand bucks a unit probably be a million dollars a unit so i know you're below replacement cost that's cool uh they're telling me that there this is an noi of four percent yes so it's a 4.1 right now yeah yeah so for everybody else let me just show you the math on this there's a 4.1 percent cap rate which means this thing's gonna make about five hundred and ten thousand let me see now grant something that i saw that i saw kind of low they have expenses about 300 and 7 000 that's about 36 to 37 of the yeah i don't believe that i i i don't believe you can operate this for that price so i don't believe that you can operate that property this size property for 30 of the gross collected yeah don't believe it nobody else is going to believe it and the bank's not going to believe it so you know i i would ask these people hey dude are you guys really sellers are you just jerking people off here imagine i called the the uh broker this morning yeah he's supposed to be getting back to me about cob today i'm close to business today okay hang on a second i'm gonna call him too i'm gonna talk to him like a new yorker there you go hey man you y'all just jerking people off here are you real this is a smart thing to do by the way if you're interested in something have somebody else call and collect information not just yourself yo hey promise son of a young ken yeah yeah young kim hey yo yo yo it's got a walk score of 97 that's awesome it is yeah so it's very central so flushing is one of those areas where you this dude doesn't answer his phone man what's wrong with you dude see this is why so many people are investing with me from new york though they're like you're buying brand new at 400 grand a door hey hey what's going on my friend how you doing this is grant cardone i'm calling about your i'm calling about your your uh 3507 147th street oh the apartment thingy yeah the the apartment building you have listed okay you want you got a minute to talk to me about it yeah yeah i'm a principal i'm trying to i don't own 10 000 units right now i'm trying to add something in new york i love the location good yeah love it love it look how did you get this listing is this yours no not mine i'm the broker okay you're the broker um let me ask you look there's no way i mean can can i just shoot straight with you honey yeah yeah there's no way how how are they running expenses at 300 grand they got they got you got expenses at three hundred thousand on this thing and yeah because the tax and uh everything yeah what rent yeah yeah i understand but taxes on this taxes on this would be would represent over 250 000 of the 306 well but the income is about more than one million gross income so you will get the net income that open income will be about more than seven hundred thousand yeah where where what do you think the real number is if i could close this in the next 60 days and you have to offer it because i understand i'm [Music] yeah i understand look i own 10 000 units i know how to negotiate so what i'm asking you though is for some help some guidance what do you think the real number is here yeah well the it's more than 15 million okay okay you it's got to have a 15 on it have you had much have you had how much you've seen have you had much action on it have you had many uh have you had many walkthroughs yeah yeah who do you think who do you think the buyer is for this individual or local or out of state you mean who will buy yeah yeah who's the buyer like a guy like me yeah investor investor yeah of course i know i know an investor but like a big group or you think a little guy no in the middle huh maybe a u.s army guy you never know huh okay okay how much time how much notice you need to show me the property i might send my guy over there well uh everybody every tenant no no just to show it just to what i don't i don't want to see every unit i don't want to see every unit i just want to go okay okay yeah i'll give you a call back okay okay i'm probably going to have my guy carl carlos my name is grant cardone c-a-r-d-o-n-e you can look me up man look me up follow me on instagram too yeah okay let me know okay thank you thank you my friend so carlos you should just go see him right so now we know the numbers of 15 probably less than that and the part of that call is when you're on that call folks don't make it about the money man hey i love the property love the location hey what do you think the number is he didn't give me an answer i said hey what do you think the number is he didn't give me an answer i'm like hey bro what do you think the number is the real number got to have 15. they all know dude they all know they'll all tell you too it's like a lawyer never tell the lawyer the full truth even your lawyer you need to worry about your lawyer more than you need to worry about the other side's lawyer so like i don't i don't even tell my family the real truth when i'm doing a deal she and i ain't telling if i want if i i tell elena stuff because i know elena's gonna leak it out i'm like okay i'm gonna tell elena a little bit hope that she leaks this out but i ain't telling her everything i never like ryan secco my team when i'm buying a deal i never tell my team everything i tell them i tell them what i want them to believe so so uh so look the problem i have with this deal is is let me explain to you that new york's probably not going to be treated fairly right now uh everybody will regret that 10 years from now so there's no way new york's not going to be there 10 years from now new york grew because of 9 11. like the growth in new york city the day 9 11 everybody's oh my god new york's over new york was like it's like it's almost like a fire you know when you burn something down man it comes back stronger so you know this thing's gonna trade for 15 million bucks probably okay you're gonna have to put seven million dollars down i'll bet you because of the noi i do not trust the noi it's a noi number this group is self-managing it they're not paying themselves anything uh they're probably cheaper than they probably have not that that means if they're cheap by the way if they're cheap that means they got a bunch of deferred maintenance on the property so you're going to find a whole bunch of you got to do to the property because cheap is cheap um they're probably liars so you got you gotta you gotta you gotta i already know that they're lying about this he's like he's like this is my noi cause i don't pay anybody anything so but if they're cheap if they think cheap then they can't get the rents it deserves either see it works both ways if if the operator is cheap then they don't actually don't maximize the rents okay so you just got you got more due diligence and i'd get two or three other deals in the pipeline so that you can start bouncing around this asset and see you know awesome yeah and i got a couple of other ones but this one that i have the most uh information now with that said you see the prices in new york so going through some of the the calls that you did with this team uh i saw that you said please concentrate your area in the market but at the same time i saw that you talked about is to start dealing with the migration where people are going to the sun belt is that something to me from new york obviously we got some capital over here some of the ones i think bro i think everybody that's left new york has left new york so okay does it continue to happen yeah if they continue to put idiots in there to run the run the city and and the state yes but and they probably will it'll probably be another probably another four years or maybe one more administration before the people they're like okay enough that that's it at some point they're going to fix their problems there and the federal government will have to bail them out yeah so i just don't understand why the rents are 1500 bucks there or whatever the number is it's ridiculous yeah i'm gonna go by um in the next couple of days probably tomorrow yeah now i'll do a little more research on this and maybe the maybe the units are really small you know what i don't see is anything about the interiors what they show you in photos and what they don't show you by the way is more important than what they do show you because they're showing me this beautiful brown big brick brown bit brick buildings but what they're not showing me is i don't see anything on the inside number one number two i bet you money is like the united nations there now now that being said i know that that that can be taken incorrectly by a lot of people out there the point of that story is you need the right manager to handle the united nations okay if you're gonna handle an all-white community you need one kind of manager if you're going to handle an all-black community you need one kind of manager if you're going to handle an all-hispanic community you need one one kind of manager if you're going to handle korean in in downtown l.a korean town you need a different kind of manager if you put all four of those together man and you got the koreans the blacks the whites the hispanics throw in some but bro you you got to have a different kind of manager because you got all this stuff going on right and everybody thinks different does different acts different you know you got different people different walks of life so that's just the real deal in real estate have the right people running your property and that means you need to pay people so like on that property i would expect on that property if the income on that deal is two thousand dollars a unit times how many units 54 times 12. if you got 1.2 million dollars 1.2 million dollars in gross income you need to be paying 100 grand for management for sure their home all their expenses their entire expenses are three hundred and twelve thousand dollars i would pay one manager a hundred and grand a hundred grand just not to steal from me that leaves two hundred and twelve thousand dollars and you know the state of new york and the city of new york and the queens is going to freaking cram some taxes down on you on that deal of course so you know their their operating expenses are yeah no actually i made some math so the so if i if i raise it by 200 in each unit that would give me 130 000 a year so it would be easier for me to put towards a management company yeah but you're at the same noi right okay if you do that if you raise the rents and then give it away your noi didn't go up so you probably can't afford to do that but or you need to sell you need to manage it yourself either way either way the point is you guys are gonna either manage your own deal or you're gonna pay some company to manage it typically a company on this size deal they're going to want 10 of your gross income to manage that deal at cardone capital we pay 2.5 on management on a smaller deal you're going to pay more more money so that again that's why if you guys don't need to own your own deal you're like okay i want to make money i want passive income let me go back to what i said earlier today your target right now should be you should have a passive income target okay the easiest way to easiest way to get passive income is to buy it you don't have to invest i mean you don't have to go buy your own deal you need to buy the passive income okay you could simply invest with me and i get you passive income your first investment could be in a passive income that way you get experience getting passive income your second target this is your first passive income target your second passive income target should be to equal your earned income okay your third passive income target in life and if you don't have these targets that's a problem if you don't have the target you're not going to hit it your third one should be to exceed earned income okay your fourth target in life is to never earn money again you don't need to earn money so like i don't want to earn money i don't want another salary i want passive income that i don't work for i want that number to keep going up and hopefully i can do everything i do for zero because i just love doing it but you can't love to do what you do for nothing if you got to eat if you're hungry you freaking you can't be happy so all these people are saying money won't make you happy empty stomach ain't gonna make you happy either so as long if i'm hungry i'm angry as how many of you out there get angry when you're hungry i'm like i kill people my kids like you love me pop i hate you guts i'm hungry god damn it okay all right guys hope you enjoyed today i know i didn't get to everybody's questions i'll try to do a better job of that each week we handled three really cool deals uh each of these deals by the way the deals are getting better every week and uh and and one of the reasons i did this mentor group was to to see deals to meet you to see you the reason we're doing this three-day event at the end of the month is to meet you okay i'm not going away from real estate i'm i'm young in my career in real estate we owe 10 000 units i want to go to 40 000. the best way for me to get to 40 000 is by having relationships with people that i can meet i love it if you guys zoom in that's awesome but when i meet you it's different than when i zoom with you okay and i'm just telling you you become more real to me get on a plane come to miami spend three days if you can spend six days and do the boot camp and the real estate workshop do them both if you can only do one of them come do the real estate workshop with me so get on a plane fly down here do whatever you got to do hitchhike down here drive a car down here sleep in whatever you got to do dude get in the room with people not just me get in the room with other investors other people that have debt other people that have deals and other people that have equity thank you for being with me today i'll see you guys again next week god bless be great remember peace peace love in cash flow you

Channel: Grant Cardone

Views: 38,711

Keywords: grantcardone, grant cardone, 10x, money, finance, business, sales, motivation, yt:cc=on, WeAre10X, 10XNation, 10XStrong, 10XLife, 10XEverything

Id: C4qbc8QoJ3Q

Length: 107min 35sec (6455 seconds)

Published: Mon Jul 12 2021