Exactly how to buy rental property: Cardone Capital or Other?

now it's ready okay so again then we're gonna talk about the outline as far as what we're going to talk about here we go welcome so there we go I'm gonna wave back to you guys wholesale good or no yeah I think you guys know what I think about wholesaling well thanks if Daniel welcome good morning YouTube welcome Andy how you doing thanks for joining Khalid Viktor how do I say Eli Elias Elias perfect what's up all right just kind of get situated here for a moment and then we'll go into the the outline yeah multi-family versus single family we're definitely gonna talk about that took me a little extra minute here to get things started up sorry about that but yeah multi family single family definitely gonna be talking about that we'll go through a little bit of an outline just so you guys know what to expect and we'll definitely be posting this live video and YouTube so that way you guys can catch up after the fact as well if you missed any parts so and then we'll also we'll answer that question as well if you have questions right now that you kind of want me to address through it I'll gladly add them so I'm gonna add that I think that's a great one in terms of a starting point would you suggest suggest investing in something small until you can expand yeah we're definitely going to talk about that hello New York City small verse big will definitely mention that portfolio loans yeah we'll definitely talk about that too that's good oh it's a good one we'll write that down so we'll get started with the outline and then we'll talk about I think we've got a good title today we've got we're gonna be talking about exactly how to buy your first property and and then kind of comparing and buying your first property to investing in something like a real estate investment trust or a syndicate like say Greg cardones card on capital or the other ones that are available out there happy Saturday thank you okay so we'll do that we'll start an outline right now what we're gonna do is we're going to talk a little bit about how to start in terms of when you make the decision that I want to invest in real estate how should you first go about buying a house and and what are some of the first steps what's the process like to buy a house so I'm mostly gonna start with talking and then we'll kind of go into questions well answer the questions at the end I'll try to incorporate them so if I see some some good questions I'll definitely incorporate those but we'll go through and talk about agents and lenders and and something I call the millennial curse unit single-family big and small we'll talk a little bit about credit and commercial versus residential then you know having you know what kind of people you want to have around you when you do this how to look at home showings open houses what it's like to write an offer and what happens when you write an offer and okay can you cancel the deal in fact I kind of just thought about that what's it like they cancel a deal and how hard is it what about the deposit that you need to buy a house we'll touch on that as well and so after we kind of set the groundwork as far as what it's like to buy a house and ideally how much of an income you need to buy a house then we'll talk a little bit about you know finishing up the transaction and closing and getting the keys and then we'll also go into some extra tips like LLC is always a big topic I get a lot of questions on verse non LLC or having a cosigner or not having a cosigner and then we'll also talk a little bit about some other bonuses and then at the end of sort of the whole summary as far as how to buy a house what to buy yeah well I try not to be repetitive to the other videos that we've already made but just some other additional information that to sort of tie everything together that I think will really help as far as most importantly how to start kid or an investment trust or really anything you want to put your money into so we'll have a lot of a lot of cool huh let me see if we've got any other extra questions if you have extra questions that you want me to address give me some questions now I'll filter them in here so that way I can answer them sort of the correct order portfolio loans I wrote that one down definitely happy Saturday folks I'm from Spain that's awesome I my family that goes to Marbella they say my BAE uh but that's because they're German I can't wait to go there one day now beautiful photos they send me all right HOA yes that is a great question we'll touch on HOA as well that's great HOA Homs verse non HOA and it's let's say I guess I wouldn't really apply to units but I will touch on that investing in bad neighborhoods or what about like up-and-coming neighborhoods right I'm gonna write that down and we'll talk about something we call a sizzle hot we'll talk about that - that's a good one I own a rental property you want to sell it please elaborate a bit on giving up some of your points to the buyer not exactly sure what you mean could you please elaborate a little bit on giving up some of your points give me a clarification on that yeah this is going to get uploaded to YouTube and so FHA versus conventional for the purchase of a rental yep we can talk about that so loan hype will definitely hit that and then we're gonna get started here I'll give it another minute or so to get started I just right now if you're just now joining him collecting questions and we're gonna go right into exactly how to buy a property and then the comparison between say Cardone capital and and single-family so I think that'll be a fun part but again the Cardone capital part for single-family or units buying your own units we're doing your own deals will be towards the end and and we'll talk about the market as well I think that's a great idea and for Instagram thank you folks the market price reductions kind of where what I think the markets doing where I think things are heading definitely touch on that that that uh how much should I bend as far as the buyer trying to chew me down yeah yep yeah I actually have I'll touch on the cellar perspective for that as well and sell our perspective it's it's really for the inspections what you're talking about like system I'm assuming you're talking about so we'll talk about that we'll include that in there and buying a house FHA and want to rent it and then do the same as soon as possible do I have to refinance how can you do that yeah absolutely so we'll talk about that converting it or anything wrong okay perfect well awesome we've we've got a really good outline so we're gonna have a ton of information here we'll definitely be posting this full video to YouTube and let's get into it and you know hopefully you can learn and kind of tie all the pieces of the puzzle together I'm all about helping you guys get from wherever you are now to investing in where you want to be and oh well touch on brrrrr or whatever as well actually there are too many arts in there for me to actually say that in in a way that sounds good so the buy and refinance method how about that okay cool so let's let's jump right into it so how to get started and I'd like to start this by saying there are a ton of ways to start investing in real estate it's absolutely endless how you can get started in real estate I like to look at it as there are two directions as far as how to start you can be in control and start yourself or you can take the extra money that you earn and and sort of put it to work to it for you through other means the most important thing though is you have to ask yourself what's your life situation like first what I mean by that is let's say you had a w-2 job which when I say w-2 job I just mean you're an employee of a company and you get a paycheck it's almost you get fired it's a steady paycheck and you can sort of rely on that funding coming in and that's as opposed to being say a commission salesperson where you're not sure when the next deal is going to come in you might consider evaluating the position you're in financial with this and your risk factors if you're an agent maybe you know and you might have a different approach as far as which direction you go do you maybe just Park some of your money and spend more time growing your business and you just invest money and say Cardone capital and maybe you don't do such full-time work because maybe you want to grow your sales business whether that's car sales or being an agent or whatever since you can really put in limitless hours that's as opposed to say you work a 40-hour Work Week you have a bunch of extra time let's say on the weekends maybe you don't have a family yet and you're thinking well I could take this extra time and go invest in rental property and I can go fix it up a little bit myself that is something you want to evaluate right out of the gate what time do you have and and what time are you able to commit to real estate and that's really going to help you determine all right do I really want to go in this myself as sort of a preface you're generally able to make a lot more money if you do it yourself than if you park your money somewhere and let somebody else invest it for you we're gonna talk a lot about that at the end of the video when we talk sort of about the Cardone capital section so once you decide which way you want to go we're gonna dive right into assuming you decide well I want to do it myself I want to buy property myself and I want to get into investing on my own and sort of have control of my assets and the first and most important thing that I recommend everybody do as soon as possible and this is what I call a millennial curse you gotta get a good real estate agent and not just any real estate agent you want an agent that's on your team that knows how to invest in real estate and hopefully follows the similar path of investing that you're looking at maybe they invest in multi-unit they invest in single-family duplexes triplexes for plexus whatever they're doing what you're wanting to do if you can hook up with an agent like that you'll be able to lean on all of their experiences right out of the gate a lot of folks will initially and this is the millennial curse part is well let me go shop for a home myself or or units myself and I'll just call the agents on the sign and or maybe I'll just call the Redfin agent because I'm gonna get $2,000 back and a commission or something whatever to me that is the millennial curse because sadly a lot of us Millennials we don't value the expertise of what a professional can give you and paying that extra to which you're not even paying a real estate commission so maybe for going on that that discount agent Commission refund you can actually hook yourself up with an agent that is so knowledgeable and experienced in exactly what you're doing they can help you basically save away more money over your lifetime of investing and ideally investing with them and if you're a great client for them they're gonna call you first every time for those great deals that come along which we'll talk about great deals as well so we did touch a little bit on again the direction I just want to clarify that a little bit see an Instagram question here if if your w-2 employee and you work 40 45 hours a week you view and let's say maybe you don't have a lot of other family commitments outside of that you should be totally fine to be able to dive into real estate if you're in commissions maybe you're in car sales or medical sales and your income is flexible and some months you're making zero or you're an online marketer it becomes a little harder not only to qualify but you also have a greater risk because you can't rely on that chemists constant paycheck coming in again you could get fired so there's an asterisk there too so don't get fired if you get a job all right so get an agent first step but not just any agent get an agent that knows investments and gosh if you can get an agent this is something that's missing in the industry if you could get an agent that and be thank you so much for the super chat one buck I will definitely answer that for you if you can get an agent that is knowledgeable in construction which to me I'm blown away I don't know if any you guys saw I called into the cardones own yesterday and as I talked to grant a little bit about construction and I mentioned that I think the real estate industry has a huge disconnect from construction which is sad you got contractors that hate realtors because Realtors oftentimes get bids from contractors in the tractors never end up getting work and then you got contrary then you have Realtors that don't like contractors because maybe the contractors don't respond to Realtors anymore because of the lack of work that comes through them so how do you go about finding this agent that knows how to bridge that terrible gap between construction and real estate which I mean think about it wouldn't it make logical sense that the construction industry and real estate would be somewhat connected it just it blows my mind that it's not already so there are some great opportunities there especially if you're an agent or you're in construction turnkey homes will touch on that as well I'll write that down but let's answer the question of where you find that agent what I recommend is you go out there and you hit all of the open houses you can and the reason for that is open houses are basically your free opportunity they cost you nothing that's usually kind of good to educate yourself on the market anyway by seeing the houses that are out there and getting a feel for okay this is kind of what the marketplace is like and there's something really valuable to Wow I walk through that house on Sunday and it's sold Monday the next day it really helps you put your finger on the pulse of the market so there's something special about that so but how do you find that agent you go to the open houses and what you want is you want an agent that invests the way you want to invest that knows construction and has good construction connections but then you also want an agent that has time for you and isn't gonna pressure you into something so that's that's a big requirement checklist there but the open houses are the free interview it's not that hard when you go through an open house to figure out who's pressuring you I mean that's obvious everybody who walks into an open house knows whether the agent is pressuring yours you know just you walk in and it's like oh dollar sign yeah it's not that hard to find a figure that difference out so you could weed that part out different pretty quickly construction knowledge ask them about the house maybe not necessarily you know sometimes the agent at the open house isn't necessarily somebody that is the listing agent for the house but if they can't tell you just by looking at it hey like how old do you think these cabinets are it's generally pretty obviously the experienced agents and construction can tell you you know what this is probably a 1940's cabinet it's got oil-based paint on it and and we're gonna have to do a little bit of extra work if you want to paint these to be white cabinets you can ask some really quick interviewee questions to figure out okay who knows construction hey what type of roof is this you know I'm new hey how about this flooring what kind of flooring is this oh maybe you already know because you researched it up front oh that's a composition shingle roof how hard is it gonna be to add a/c oh well I know I have to replace the furnace if I have to add a/c and what does that mean for the asbestos ducts and hey this flooring I looked it up I know it's one and a half inch oak hardwood flooring the ages like I don't know is it a laminate well then you know okay then they don't know construction it that doesn't mean that they're a bad agent but it gives you a really good way to weed out okay who's gonna be a good agent so then you gotta ask them hey do you invest in rental property and no I don't invest nevermind you're off the list if you're not investing in your market and you're getting other people to invest as an agent then I mean to me that's that's just a disconnect it's not congruent with what you're doing it doesn't make much sense to me so Mikey we're gonna answer that in a little bit coming up here but we'll talk about flips as well we'll talk about buying in kind of lower income areas and maybe areas that have potential so all right we talked about the millennial curse we talked about getting an agent we talked about how to find an agent kind of giving you the outline already so now what's the next most important step you find an agent that invests in your local market that believes in the market that and look at this if they invest in the market they're gonna be able to tell you if the markets crashing or not usually not always but usually the agents who invest locally know oh man the markets tanking because if maybe they're starting to sell that that's a good tell sigh huh why are all the real estate agents selling their properties like a 2005 anyway next step after that this is a good one and a lot of people don't like this one when you're buying your first property whether it's units we're gonna talk about the difference between units and single-family and then all that stuff you gotta ask your agent hey where should I get my pre-approval letter now let me give you a straight scoop on this you will always get the cheapest loan almost always with the online companies like you know the quick ends and the finance americo's of the world but here's what you lose so you get a better rate maybe it saves you a couple thousand bucks but what you lose when you don't use a lender that's local usually a good requirement is you lose that lender who's able to pick up the phone and when you're writing a deal or you're writing an offer on a deal in there multiple offers you want the agent and the lender that's local and has a reputation saying I'm putting my reputation on the line here saying this buyer is awesome you guys need to take this offer the lender says hey he's super qualified I've gone through everything you don't get that kind of customer service with the online companies now what you have to resist the urge in is after you get a deal with with a local lender that helped you acquire the deal because maybe the online companies took a week to get you a pre-approval letter or whatever and they're not all bad but you know usually in a quick market you want a local lender that can respond quickly that can get you a pre-approval letter fast and can go to bat for you so that you can get the deal especially in multiple offer situations you need to be loyal to that lender the last thing you should do is three weeks into the deal call that lender up and go hey you know I shopped you against Quicken and you're $2,000 more expensive there's a reason for that it's because you're getting that local advocate you're getting that advocate that local lender and ideally it's somebody that your agent recommends because you want your agent and lender to have a good recommendation ship and there are no referral fees between lenders and agents you don't have to worry about that I can't even get a $5 gift card when I refer a client to a lender not that it really matters I don't do it for that I do it so that my clients get good customer service that's why I refer lenders but anyway the last thing you want to do is hey you're $2,000 more expensive I'm gonna jump ship I'm going to the online lender and then all of a sudden now you burn the lender that helped you get the deal the customer service the lender that taught you the difference between points and whether you should pay down or not pay down your interest rate rather you should take a higher all that education and all that paperwork you put together and all that support that you get at the beginning of the deal and to get the deal and then to burn the lender is super messed up so stick to good karma get a local lender with that's I hopefully even has that good reputation with your agent and that's gonna help you get good deals which we're gonna talk about getting good deals here very soon now loan type so how do you buy your first property we touched on you know having an agent and now having a lender but now how do you what kind of loan should you apply for when you pick up the phone and say I want a pre-approval letter for what there are a few different kinds of loans but the most common or what we're gonna touch on here if you're a veteran use your VA benefit you could get a property with 0% down and you could cover the closing costs on the property so you can do what's called a VA no no loan which is hey I'm buying a place for $500,000 and then you get a loan for like five hundred fifteen thousand dollars because you cover all your VA funding fee your closing costs and all that other stuff so people with VA veteran loans they can't get in with literally zero money down amazing they can even get their deposit back say they put a two thousand dollar deposit down then you get that back but that's only available to veterans so then the other option is well conventional and FHA these are your big two there's sort of different little worlds FHA usually has slightly lower interest rates but the mortgage insurance is usually a little bit more expensive and it sticks with the loan forever so you can't get rid of mortgage insurance with FHA on a conventional loan where conventional just means you can put down well FHA let me say first FHA s-- generally three and a half percent down that's why people go with FHA it also has looser credit standards so it's easier to get an FHA loan the rates are a little lower but you generally pay more mortgage insurance then you have a conventional loan which you can put down 3% 5% 10 fifteen 20 percent whatever you want to put down between three and probably 90% you could do that between three pretty much the bare minimum and 20 percent you do pay mortgage insurance but the difference from FHA is that that mortgage insurance that monthly premium is generally less than what you pay on an FHA loan and you can get rid of it there are two requirements to get rid of it you got to have the loan for at least two years and you have to be at 20% equity in the property so if you put 10% down the property would have to either go up in value 10% or you'd have to pay it down ten percent to be able to get rid of that mortgage insurance and now there are some other requirements so that some banks have requirements that say well it has to go up to 20% equity over what you originally paid for it so just paying down the loan doesn't matter so there's some special requirements and rules but now that you've listened to the first steps where you've hooked up with a good agent and you've hooked up with a good local lender great local lender great agent that knows construction knows real estate you found them at the open house or whatever then you can really ask them and consult them for these little specific details that we'd be talking for three hours if I went into all the little specifics but I want to give you guys all sort of an overview and girls if you're watching as well now a mortgage insurance a lot of people here mortgage insurance and they say to me oh why I just don't want mortgage insurance and there are banks out there that'll say you can put 5% down with no mortgage insurance and here's the trick if you were gonna get a rate of say 4.5% with mortgage insurance usually the banks will that say oh no mortgage insurance they'll say well we'll give you a rate of 4.75% but no mortgage insurance so they're charging you more it all balances out it almost always balances out whether it's in points or it's an origination fees or or whatever the reason lenders have different interest rates is not just because they have different rates they're all using the same Bank they're all getting the money from the same place essentially it's it's all the fees and all the junk in between behind the curtain and that's where you want to talk to your real estate agent and say hey look before you start the process maybe you talked to two local lenders and you say hey I've got to loan estimates by the way a loan estimate isn't just something written on a piece of paper it's an actual governmental form that lenders have to fill out exactly and it's got to be perfect I got a loan estimate from one lender and I got a loan estimate from another agent can you help me compare them a good agent should be able to help you figure out your financing options doesn't mean they're a lender just means I happen to be a lender as well they should be able to do that it's not that hard okay especially if you have to loan estimates that literally compare things line by line all right so now we've talked about getting the local agent we've talked about getting the local lender that maybe has that great relationship with the agent we talked about where to find the agent now let's talk and we talked about loan types mostly FHA and conventional Oh FHA one more thing has a cool little special benefit of being able to have what's called a cosigner that is a non occupant non occupant co-borrower and that means you could go buy a property and your aunt or your father or your mother could go on the loan with you to help you qualify for the property but you don't necessarily have to have them live there with you any time you put down less than 20% you got to live in the property it's got to be an owner-occupied loan and then you say well wait a minute this is about how to acquire rental property right and I'm gonna show you how to convert property that you buy to rental property but first let's talk about a little bit of sort of a a mindset that you have to go into this with and that's a cash flow versus long-term growth so what I mean by that is a lot of folks that want to get into real estate investing spend a lot of time focused on well I want a property that cash flows well yes everybody wants a property that cash flows but there's usually a give-and-take if you're looking for a property that's solely cash flows you're generally not necessarily buying in property markets that can appreciate strongly so you have this this balance of what are you looking for now are you looking for cash flow which if you're trying to buy in an area like California along the coastline it's really really hard to find cash flow right now it was possible at the bottom of market heck at the bottom of the market 2011 you could buy a property with zero money down that is you've told a bank I'm putting 20% down and then somebody else lent you the 20% and they would cashflow the way the market is today the odds are if you're buying in really quality areas or areas that are prone to future appreciation and growth the odds of getting really strong cash flow are tough and cash flow is is basically positive rent above what you're able to rent the property out for so if you rent a property out for $3500 that's a high number if you rent a property out for $1,500 and and your payments are only $1,000 that's in those payments include vacancy and repairs and property manager then you have $500 in cash flow that's just a really really quick example of what I mean by cash flow oftentimes if you buy in those appreciating high quality areas you're buying a property where your payment is say $1500 and with vacancy and management and reserves and all that and you put 20% down and your rents $1,500 it's like so okay once you determine where you want to buy in terms of cash flow versus long-term growth which the other aspect that goes into that is you have to ask yourself what's your goal if you're in your 20s if you're in your teens your 20s or 30s do you really need the cash flow the reason I say that is I ask myself that and I say to myself well I'd rather continue to take maybe extra cash flow that I have and basically put it back into the machine that is real estate investing and I don't care I don't need to retire at 26 because I don't care - I would lose my mind and I would just go start another business anyway because I would be bored so I would continue to reinvest any cash flows that I have and not really care about cash flow what I would care about is long-term growth and then over time the way I look at it is once you build yourself a large kind of portfolio it's really easy to switch gears and say okay now we've got thirty properties locked up now I want to retire all right then turn off the faucet for growth and focus on cash flow and that comes once you're controlling more real estate so and that's gonna be something we talked about at the end as well when we talk about the difference between Cardone and investing yourself is the control and leverage ability all right now units verse single-family we've touched on multifamily verse units or versa single-family before in other videos but let's do a quick summary on that if you are trying to get into real estate and you want to use that FHA loan or that FHA 203k renovation loan yeah definitely you can have a renovation loan as well which is the 203 K sort of division of an FHA loan or you want to use the conventional loan then if you want to use these loan products or VA you have to buy under five units that is it's got to be a single-family a duplex a triplex or four Plex you can't get anything over five units with these homebuyer loans and the reason you generally want homebuyer loans to get started in real estate is because you can put less money down and the interest rates are lower you could get 30-year fixed rate financing 15-year fixed-rate financing you can get these fixed term loans as soon as you go above four units five units 10 units 20 units you go into what's called commercial financing and commercial financing means you generally put down thirty five percent or more and you have to meet something called a debt service coverage ratio which basically means the property is forced to cash flow by the bank and and you and you have about thirty five percent down which is oftentimes what you need anyway to make the property cash flow and now you can go by commercial but looking this way you buy you buy a million dollar property that's three hundred fifty thousand dollars that you need to control a million dollars of real estate on the other hand if you wanna control say a million dollars worth of real estate whether that's one house or a four-plex or whatever and you use a loan that's ten percent down you only need it a hundred thousand dollars or you bought it with an FHA loan and Kush maybe I don't know if you can go up to a million with FHA it depends on the area you live in usually their loan limits like with FHA in our area you can go up to six hundred thirty six thousand dollars so as an example on that you can control six hundred thirty six thousand dollars of real estate for three and a half percent down it's twenty two thousand dollars and you're controlling six hundred thirty six thousand dollars of real estate so it gives you a little bit of the difference there between commercial financing thirty-five percent down plus verse homeowner financing three and a half percent down five percent down ten fifteen twenty percent down lower rates fixed term loans generally safe for loans the banks can't it's really hard for banks to come in and say - you owe us the whole loan we're calling your loan and we're taking all your properties away it doesn't really happen anymore you hear that reference a lot with Dave Ramsey mentions that but that that was a back in the day you know there there are rules in place now to help prevent that from happening so that's a little bit on commercial vers residential now let's touch on each away verse non HOA a lot of people cannot stand homeowners associations and that's because there are rules and in general we don't like rules because I'm in an HOA it's 18 dollars per month these are all single-family houses here and there's eighteen dollars per month for this HOA I leave my trashcan out an extra day and I start getting worried that I'm gonna get a fifty dollar fine in the mail that sucks I don't like that part but what I do like about the HOA I live it and then I'll give you some tips on HOAs is everybody's front doors are painted everybody's house colors are not flaking and peeling and we don't have polka dotted houses and and we don't have dirty houses because there are HOA requirements that the property be painted every so often that it'd be pressure washing every so often that you do take your trashcan sayin and that you don't have a bunch of weeds in the property so there are some cool benefits of having an HOA that actually helped keep property values higher for example there are neighborhoods very close to where I live here that are a similar age or maybe a little bit older or a little bit newer and they don't have HOAs and people are parking boats on their front lawns people are you know one person's building a trampoline park in their front yard and the other person's building a you know waterfall and and like you know Oasis and then the next person is doing drought tolerant landscaping it's like what there's just no consistency and then the next person just has dirt so all of a sudden no HOA and and and you see wow look at all this variance in these non HOA properties because there are no rules there's no consistency so now then you have to ask yourself gosh okay well I'm gonna be in an HOA I better be in a good HOA because there are a lot of HOAs that suck Wow Eli thank you so much I'm gonna answer that in a second here will answer that right after this thanks so much ma'am the yeah and I see here HOAs are pretty cancerous though the reason people say they're cancerous is because they can be if you get into an HOA usually and say condos or apartment buildings and the building is older so you get an older building that has a lot of maintenance and you're in an HOA that has a bad reputation where maybe people don't pay the HOA dues and now they're behind and they need to replace the roof and then they send you a bill to replace the roof or your share of the roof that sucks but when you're buying property and you get into property that is in an HOA what you can do is you can research all the information about the property and the HOA you could do you they're required to give this to you when you get a loan and you can demand it if you're paying cash for property you look at the reserve study how much money do they actually have how many times have they done assessments what is what are the meeting notes like when they do their meetings every week or every month or whenever they do their meetings are people talking about Oh Jane's dog went to the bathroom on my lawn that's not that big of a deal like that's that's okay or are people going you guys are stealing my money there you know there are problems they you can learn a lot about reading the minutes of these HOA board meetings it's really good thoughts on buying land we throw that at the end okay but right now Eli thank you so much so we're gonna end the topic here on HOA then I'm gonna jump into this because this is actually a great time for this so you have a hundred thousand dollars from your parents you don't have a high income or job history so you don't qualify for a loan and you want to buy a single-family house for sixty thousand dollars turnkey in Indiana then refinance and work up my income thoughts so let's answer this is a great great example the the first thing that I would look at if if I were buying or in this situation is I would ask myself how far away am i from that property if you're within 30 minutes great if you're with an hour hour and a half okay maybe I could go for that if you're in a different state or you're like four hours away I would I would find a turnkey property close to where you are so but now so you don't have a high income or job history so I get that you've got $100,000 cash and you think well how do I want to invest this if if houses in let's say let's say you live there if houses in the area are going for sixty thousand dollars turnkey you you have a couple options because you don't have a high income or job history maybe that also means you have some extra time so maybe what you can do is can you buy it's just an alternative can you buy that sixty thousand dollar property fixed up as a fixer you're a cash buyer so you could offer a fast closing to people after doing your inspections which we're going to talk about inspections here shortly and you can also generally negotiate it because you can do a fast deal you can negotiate oftentimes a good deal on the property and maybe you buy a property that needs some work and let's say you have free time which maybe explains why you don't have that job history just yet because whether you're looking for work you're just getting started at a job or whatever you also have extra time and you can now use this extra time to fix up the property and work with contractors or sub tractors that you hire to learn construction remember at the beginning of this video I talked about how construction and real estate are disconnected and how important it is for them to get connected and how much of a disservice it is that they're not now you can learn construction you can hey maybe what you do is you read a book or some YouTube videos or whatever how to change all the outlets in the house and then you kind of leave them all hanging after you change them all and then you call an electrician and go hey let me pay you 200 bucks to check everything I did and tell me what I did wrong and teach me so now you're basically taking the fact that you have free time and this cash available you're buying a property for a discount so maybe you're buying this place for $30,000 or $40,000 and you're coordinating the work yourself you're you're working with subcontractors you're pulling the permits you're going through all that now you're teaching yourself and you didn't spend all your money now you fix the property up and say you bought it for 30 and you put 20 grand into it or 25 into it and now it's worth 60 like that turnkey home or whatever the margin is now you just put yourself through a significant education and you learned how to do it and you probably built yourself some built-in equity as well because generally the turnkey companies are going to sell properties for more than what it actually costs them to buy and fix up and then the selling costs to sell them if if let's say you were too busy and you were not able to to coordinate all that work or you just didn't have an interest in construction yes then that's fine if it's local to you buy that place hey you know what maybe you could get it down to 50 or you can find a turnkey property that's 50 don't buy a second property right away though buy that property find a good property manager and watch how that property manager operates learn from them sink it in feel what it's like to be an owner of a rental property first give yourself six months and then consider okay maybe I want to put the other fifty thousand dollars to work now but but really when you're buying your first property and this advice just it goes for everybody don't be so anxious to get three properties right away or two properties right away yeah one feel it learn homeownership there are a lot of headaches and stresses that go into it and we're going to talk about that at the end we talked about Cardone capital as well so thank you hope that helped all right now HOA and non HOA okay now investing in bad neighborhoods so I get this question a lot folks say well should I just invest in a neighborhood that's maybe not that great and and but hopefully it'll turn around I'm usually not a fan of that I usually like buying the worst house in the best neighborhood I want to I want a neighborhood that isn't developing I want a hello I want a neighborhood that has a strong reputation for what I call being a sizzle hot neighborhood so being a sizzle hot neighborhood means when these properties come up on the market they sell fast they rent fast they get multiple offers because ultimately if you're buying a rental property and you're buying a rental property an area that's a developing area or isn't that great of an area then how long are the tenants gonna stay there and turnover costs money every time you have turnover there are pairs to do there's maintenance that you can't take out of a deposit that you have to do turnover sucks you have to pay your property manager again or you have to pay agents again to rent the thing so whatever you can do to stay away from turnover is key and if that means you can buy in a great neighborhood you can buy a depressed value deal by buying in the wedge of the market like what we talked about when we had a video about the wedge of the market a few days ago check that out we won't go into the wedge again but basically buying something for a depressed value and fixing it up yourself and capitalizing on the equity yourself that that's what I prefer okay now credit so when you go to you get that local lender that's helping you out that local agent that's helping you but a lot of people ask me well hey I got an 800 credit score I should get a better rate right all right I worked so hard for years to get an 850 or then other people say well I'm just starting with credit I'm gonna work really really hard until my credit is awesome you don't really have to you need a 740 credit score to get the best rate and quite frankly even if you had a 700 or 720 you're probably paying maybe another half - you know quarter to half percent on your rate it's not that big of a deal once you have 740 you get the best pricing when it comes to real estate financing so the next thing is you gotta have supportive people around you when you're getting into real estate if you have people around you that say real estate sucks and your family and everybody's telling you it sucks and everybody is negative about real estate and tenants and toilets and all the sort of negative things that are associated with it then maybe maybe you don't want to get into real estate until you have people or mentors that can help you and maybe you create mentors out of your agents or your lenders that you started working with because you know being around negative people it'll make it really hard for you not to get stressed out and buying real estate see Grant Cardone often refers to don't listen to quitters yeah say like hey if somebody quit on real estate don't take real estate advice from them that's why I mentioned in the beginning and find a real estate agent that owns real estate or buys real estate and invests in real estate in the local market all right now you got your lender you got your pre-approval letter from the lender this is a top priority getting at that first now you've interviewed your agent because you've gone to open houses or whatever you found that agent now keep following the market and start educating yourself continue to go to open houses continue to see how properties are selling how quickly they're selling learn about the market ask your agent hey is this a good deal is this a bad deal why is this a bad deal and start looking at as many homes as you can the more homes you see the more you'll know how fast the markets moving and the more you'll be able to identify what a good deal is when you go to have showings it's okay to go to open houses if you already have an agent just tell the agent that's at the open house I already have an agent and I generally don't recommend looking for the discount services that are going to give you a refund on their Commission mostly because if they're able to give you that money back how much are they really valuing you and your investment success over the leftover portion of the commission they're getting and then you're happy because the Commission refund it's it's the millennial curse I don't recommend it get a professional on your team so uh but Papa but writing offers when you go to write offers know that it doesn't cost you money to write offers you could put on for us out there put your feelers out there don't be offended to write lower offers if a property's been on the market for thirty days there's a problem in real estate where people don't want to write lower offers often sort of a psychology like I don't want to offend the seller who cares right the offer and I mean there's a fine line if a house is listed for five hundred thousand dollars and you come in at three hundred fifty thousand dollars it's a little insulting it's probably crossed the line if you you know offer for fifty that's pretty low ten percent off is pretty low but I think that's probably where the line is where it's like that's pretty low you know maybe maybe four sixties a little better and it's okay just put it out there unless you love the property unless you think it's gonna get multiple offers obviously then you have to be competitive you have to offer list price or above and that's fine because you should be able to value well hey this property is on the market for four hundred ninety thousand dollars but I know it's worth six hundred after I fix it up buying the wedge of the market it's great so people then wonder what about negotiating in real estate like how do you negotiate the best deal if all a factor of how long the property has been on the market if a property just hit the market and the days on the market is under seven it's hard it's hard to get a lot of money off the property's been on the market for 45 days the bottom line is it's overpriced and it needs the lower offer the only danger is how overpriced is it and is that low offer you're making actually a low offer or is that really what the market value is or are you overpaying at even that price now somebody could list a house for a million dollars and it's worth $800,000 and you go well I'm gonna get a hundred thousand dollars off I'm gonna pay nine for it still overpaying by 100k so you really got you got to know your market and you're gonna learn that by going to open houses and having that educated agent on your team that can help you walk through this so every time you by a property you have to put down what's called an earnest money deposit and contracts are different in different states so really talk to your agent about how the contracts work but generally in California when you make an offer and you to put you put a deposit down to say $5,000 or whatever that deposit is fully refundable until you remove all of your outs that is an out is your contingency or right to cancel there are three main outs when you buy a property appraisal contingency out appraisal out loan contingency and inspection contingency and generally the inspection contingency is what I call your ultimate out the ultimate reason to cancel because you can inspect the property and go I don't like the way the wind blows in the backyard and cancel you generally don't need a reason to cancel a deal as long as you have your inspection contingency in California on the California Association of Realtors forms you actually don't even have that contingency expire automatically so you say to a seller hey I want a 17-day inspection period and then you wake up on day 18 and you're like oh my gosh my inspection period is over as long as you didn't sign a removal of your right to cancel you can still cancel and get your $5,000 back obviously talk to an attorney for legal advice or your age and or whatever but this is generally how it works at least here and every contracts different so read your contracts so the other thing people sometimes get scared by this and there was a question about negotiating for repairs and we're gonna hit that here but generally every contract in real estate is written as is and so a lot of buyers say oh my gosh this house is listed and in the description it says as is sale as is where is doesn't mean anything they're just words and as this sale does not mean you can't go in there do your inspections and ask for repairs it just means the odds are the seller won't give you a lot of money in repairs sometimes not even anything and that's all it means but it does mean you're buying a property that that you can't cancel on now if you buy a property and and now generally all transactions are as is sales if you buy a property and it has mold in the walls and you didn't find out during your inspections and maybe the seller didn't know or had a reasonable excuse as to why they didn't know that there was mold in the wall and then you closed the deal that's your problem now and that is the nature of asses so when it comes to negotiating usually what I recommend to sellers is you want to set aside go away money so when you sign a deal set aside 1,500 to 2,500 dollars for go away money because the buyer is going to do their inspections and as a buyer you should know this as well at least in our area it's customary the bio does their inspections and then they ask for repairs and if they get 1500 bucks great it solves the problem the deal just keeps going the buyer goes in with that expectation the seller goes in with that expectation you kind of just basically negotiate it out up front anyway based on the price of the property yes it will be posted on YouTube and and then the deal can close and you get over this hiccup where it becomes a problem is when a seller isn't told by their agent to have this expectation based on local norms some areas it might be a local norm to always replace the furnace when it's older than 20 years I don't know that's not a norm here but maybe it is somewhere else well the agent should tell you what those local norms are and you should be expecting that when you go to price your property and you go to sign a contract to sell your property so you know now if you get a buyer that comes in and say a $300,000 deal and they say I want $30,000 off well now you have to evaluate if I put the property back on the market can I get more than what I just sold it for - $30,000 or was I on the market for six months and this is the best I got and maybe I was overpriced by 30 grand so you kind of have to evaluate this and you really want to determine there's no one-size-fits-all rule unless of course you had multiple offers you have multiple offers it makes it a lot easier to say hey I'll give you maybe 500 bucks but hey the rest is on you I hear you as a seller there multiple offers you can be pretty cavalier because you could generally just pick up the phone and call it back up higher which people do that during the transaction to fire will come home and come in with repairs or repair requests and the seller will say hey let's call the other agents to see if they're still interested so keep that in mind if you're if you're a buyer alright so but now you're in escrow the biggest part of being in escrow which means you're in the transaction to purchase the property is what I call doing the loan hot potato loan hot potato is anytime your lender ideally it's that local lender that's giving you the best customer service possible anytime they say hey we need an updated pay stub we need bank statements we need this we need that we need your blood type whatever we need you to fill these forms out all the paperwork sucks it's all a hassle it's all annoying but you got to do it and you should do it in a hot potato method that is you do it right away whatever they asked for shoot it right back at them because the last thing you want our loan delays that risk costing costing you more fees which is possible if your loan gets delayed because you didn't bring paperwork in timely then you could be at risk of having to pay what's called a rate lock extension hey thanks again and if you have to thanks for saying it's okay to take a break and drink water I should have water here that would be good you know it will cost you money if if you lollygag on your loan and usually you want to know that you're okay on your loan during your loan contingency period which is also the first part of the deal so you want to make sure okay yeah I'm getting my loan approval pre-approval is different from loan approval pre-approval just means looks good what you told me sounds good and I looked at your tax returns and bank statements and it looks good but you need to get what's called formal loan approval subject to conditions every loan has conditions and they could be as simple as send me you know a verification of employment at the end of the day or send me an updated bank statement or it could be your loan is approved and you need to fly to the moon and back and bring some soil samples you get a loan condition like that you better cancel the deal and get your deposit back so now let's talk about the appraisal myth and then we're almost done with how to get started in the process section and we're going to talk about the Cardone capital part the appraisal myth is we like to think that an appraiser is going to tell us exactly what market value is what is the market value am i overpaying did I get a good deal that's usually not what happens usually what happens is the appraiser comes in and they get an assignment that says hey here's a purchase it's a $250,000 purchase is this $250,000 deal a justifiable deal in the opinion of the professional appraiser and so what that means is the appraiser gives an opinion saying I agree that the value is at least $250,000 so 90% of the time because the appraiser has the contract and it's just easier which people like doing what's easier you just the appraiser just brings in the property value at the purchase price that's why they oftentimes match the purchase price it's not a conspiracy it's super normal now if they don't have what they need to substantiate the market value then the appraisal comes in low that happens maybe say 8 percent of the time and then maybe 2 percent of the time it was the appraiser put all the comps together and they you know pushed calculate on the algorithm that they used or the formulas they use and then it maybe came in at $255,000 great doesn't necessarily mean that it's not worth two hundred seventy thousand dollars so you want to take the appraisal with a grain of salt because the appraiser is not saying how much is this property really worth at its max only the market can determine that they're just trying to help you substantiate the value for the lender it's love appraisers work with them all the time but there is a myth regarding what their actual job is and I mean the bottom line is nobody knows market value agents don't know market value appraisers don't know more can value-- we just have opinions of well it's probably between here and it's probably between here so it's probably somewhere in here market value is just what somebody's willing to buy flip property or pay for the property so you know we talked about loan paperwork lender agent you know credit we talked about you don't need to have perfect credit once you're above 740 you don't need anything better if you're at 700 you can still get a loan quite frankly you can get a loan as a 640 credit score it just pay a little bit more so now you close the deal on the property it's yours and closing is is at least in California as a joke you just do a walk-through before the deal closes the deal closes you get the keys I mean I have to restart Instagram it looks like in a minute and 50 seconds so after you get the keys if you're going to do work on the property start doing work on the property do the nasty stuff first scrape the ceilings do the paint before you move into it now when you go to move into this property because this is what you do with the trick with real estate is you buy the property to live in it so you get the cheaper interest rates the better loans and then eventually you convert that into a rentable property in the future now you move in you fix it up another trick you can do and it sort of depends on your financial setup is maybe you start renting out some of the rooms you buy a three-bedroom house and you and your girlfriend or boyfriend or whatever you only need one bedroom maybe you rent out one room and you keep a guest room or you rent out two rooms that can help you make the payment pretty substantially then you live there and you've got it fixed up and then maybe after a year you decide you know what I'm gonna buy another property and you do it again usually the hold for properties that you live in is one year and after the year you can move out and you can rent it do you have a change in circumstances you can do it before that you lost your job you can rent it a month after or you had a relocation or whatever then you could do the brrrr method which you buy it you'll repair it and then maybe after a year or whatever or half year you refinance it and usually the refinance refers to doing a cash out refinance where you pull money out uh and then you repeat you buy another property I'm gonna start a restart Instagram here sorry folks uh there's a one hour limit on this I don't even know if I can do it on the same day but we'll keep you know what will keep going on YouTube go to youtube because I don't know if I could restart alive so go there I'll see you there alright well that ended itself okay so now we've talked about you know you you own the property you could refinance that you could take cash out of the deal and you could buy your next property remember you buy your next property again you only need 5% down but what you want to do is you talk to your lender again you got your local lender your local agent you talk to them about qualifying the rent that you're getting from this property and applying it to the next deal so in other words you're able to use the rent or 75% usually of the rent that you're getting to help you with the income to still be able to afford the next property I'm gonna work the numbers and there are obviously more details to that but that's a great way to continue to afford property since sort of you build this ladder so we've kind of gone through this whole process how to buy a property how to find an agent how to buy a lender or how to find a lender and how to work with it how to go through the deal as is repairs negotiating all of that and units force multi-family everything I just mentioned here is exactly the same for a duplex a triplex a single-family or four Plex it's all the same the benefit of getting units is you got more doors that you can rent out which is great and sometimes those have more appreciation downside of units is usually harder to get good deals on them because there's so much competitiveness coming at you from investors so if somebody asked about land I generally don't recommend land because you can't rent it out I guess you could to something like a farmer or something like that but generally or hunters or whatever generally it's not rentable I don't recommend it because it's it we call it an alligator it takes your money and usually it keeps taking your money because you've got to maintain it you rent it if you want to build it's a hassle all right so a couple little extra tips and then we're going to talk about the Cardone part people ask should I buy a property in an LLC when you live in the property usually you don't have to once you move out of the property and you turn it into a rental the reason you do that is because there's this appearance of liability protection and you really want to talk to a tax person you know CPA an attorney because I'm not a CPA I'm not an attorney and you know I'm not qualified to give you that kind of advice but this is what I do and I could be wrong I don't put properties into LLC's because I live in California and every LLC I have cost me an eight hundred dollar filing fee every year uh to keep that LLC renewed so it's kind of like no I don't want to do that so you know usually I don't do that what I recommend is a good insurance policy on the property because people are afraid of liability and insurance is there to help you mitigate your liability you get insurance on the individual property and then you can get an umbrella insurance so it covers multiple properties above and beyond with the individual insurances cover great so yeah that that about covers it for single-family multi-family deals that you can buy now let's let's talk about Cardone capital and we'll keep this this short but real estate syndicates investment trusts Cardone capital they're all essentially the same what you do is you take your money that say you have $50,000 saved up or you have $100,000 that you got from family or you have a $500,000 401k and and you decide I look I'm a doctor or I'm really busy I work 70 hours a week I don't want to deal with finding properties I don't want to try to bind the wedge of the market I don't want to spend money to fix it up maybe I don't want to have to deal with with lenders and paperwork and I don't want to go to open houses I don't want to figure out what the market values are I don't care about the wedge of the market and if you don't care about any of that stuff which the wedge of the market is beautiful aspect of real estate you take advantage of an inefficiency in the market the buy properties for less than what they're worth and capitalize on the equity just great thing if you don't care about any of that because you don't want to put the work in then a real estate investment trusts Cardone Capital a Vanguard fund that invests in real estate or your Vanguard total stock market index or stocks or all of it to me a trust or Cardone Capital is just basically a type of stock that gives you dividends it pays you money every single month and you don't have to do anything then that's okay if that's what you want it's totally okay but you miss out on two things the number one thing that you miss out on is the ability to catapult your leverage if you can go into a property with ten percent down you buy a four hundred thousand dollar property with ten percent down you're controlling four hundred thousand dollars of real estate for forty thousand dollars plus closing costs and any kind of fix-up or whatever that's awesome because now if the market appreciates ten percent you kind of on an equity standpoint you know if selling costs to consider in that but from an equity standpoint you put in 40 grand and the property value just went up 40 grand you just made double what you had initially you had 40 now essentially you have a net worth of 80 and then it gets catapulted by the second thing which is buying in the wedge of the market so a little more clarity on number one hold on one second [Music] with with you and control you can buy with leverage which means you can control more real estate than what you could otherwise control paying cash for real estate when you buy stocks Cardone Capital Vanguard funds and REITs you generally can't leverage your way into that unless you're using some kind of other form of collateral like for example if you had a house and you had a credit line on it for $100,000 and then you took that 100k and put it in the cart on capital that's fine but you still your hundred grand still now controls a hundred grand at Cardone yeah if you took that hundred grand and bought a $400,000 house your hundred now controls 400 so that power of leverage and then appreciation on top of that leverage is huge at the beginning of the video I talked about you can invest with two different mindsets you can invest in the cash flow mindset or you can vest in the equity and growth and net worth building mindset if you only care about cash flow and you don't want to do anything then it leverage doesn't matter that much what you care about is more cash coming in you want the dividend check you want your simple life if you really want to build a big portfolio and you want to grow your wealth substantially faster then you have to use leverage in a safe way a safe way for example would be in my opinion if you put 25 percent down on a property then you're pretty insulated from volatility in the market you have a good position of safety there but you're still able to control four times as much put a hundred grand down on four hundred grand you're controlling four hundred grand of real estate but you only put a hundred into it hope that makes sense we're gonna go into I'm just gonna open it up for questions here in just a second so start thinking up some good questions well answer some questions here so kind of in a big summary of all of this ask yourself where are you in life if you're under 30 under 40 heck even if you're under 50 years old you can do a lot of this stuff you probably you should hopefully have the energy the capability that the job to help you qualify for a loan to buy in the wedge of the market and to take advantage of a really good equity build-up that you can control yourself and you could use that good agent and that good lender to help you get control that's awesome if maybe you're retired and it's hard to qualify for a loan but you have money sitting in an IRA or 401k or whatever and you just you want to diversify and you want to put money into Cardone capital that's great I honestly I think it's a great model I love what gray Cardone is doing a lot of people think Oh Kevin's just the troll he puts his names and videos and talks bad about it I love like 90% of the stuff that Grant says I think it's inspirational I think he has a lot of experience especially people experience a lot of things you can learn from them I like to share the perspective that you could take control of real estate in a different way now he's right in saying you can't go out and buy a hundred unit complex by yourself or at least usually not because again if you spend so you spend a hundred million dollars on a complex and maybe it had five hundred units in it you're gonna need thirty five million dollars somehow and not a lot of people have thirty five million dollars sitting around but a lot of people have twenty thirty forty thousand dollars sitting around and can get into a controlling with thirty thousand dollars can control a three hundred thousand dollar asset that over time generally and historically has gone up in value obviously no guarantee that it continues to but I mean the trajectory of America is that it will continue to now you're using your thirty or forty grand and you're making a 300 or 400 thousand dollar asset grow rather than I got 30 grand I'm buying Apple stock this is this a famous thing I always the reference that I always make is alright I got 30 grand to invest into something what do I want to put it into well if I put it into Apple stock I will be cheering if it makes a 10 percent return I'm like I got Ted for said yes you know I'm sitting at the Tennis Club or I'm having to be here I'm getting 10% on Apple this is great great I made 3,000 extra bucks hey who cares but if I could use that and turn it into a $300,000 property Oh real estate prices went up 5% even oh sweet I just made 15 grand of net worth essentially I like that power of leverage really like that so so you know you know you don't get to take advantage of that when you're essentially buying stocks or shares in a company be it card on capital a real estate investment trust stocks you can do margin loans but I hate margin loans so you know what a margin loan is and I'm gonna go to questions margin loan is you have $30,000 in stocks and Scottrade or whatever says or fidelity says hey will lend you 15 grand against your Sox so you can control forty five thousand dollars of Apple stock instead of thirty thousand dollars of Apple stock that sounds great I am you know really bullish on Apple then that would be wonderful I am betting that I will make more money by doing that and then you pay seven percent interest or whatever the only problem is if the market crashes they have the right to sell your stock at a certain sale point and that's horrible because now you're forced into selling at the bottom of the market bad really bad don't like that at all so you know margin loans all right so let's see some questions will I upload this later yes would you buy houses in cash then refinance them if you had the capital it's more expensive to do it that way so if you're buying rental property out of the gate yes buying property cash could help you get a better deal so it could be worth it but it needs to be a better deal by probably at least $3,000 for it to make sense because refinancing is going to give you a higher interest rate and it's going to cost you a little bit more now that's different because or there's a difference that if you buy a property cash and then fix it up and then refinance because maybe you would have bought it with a loan and then refinance it again later anyway then that's okay yeah then it's just buy cash I personally like buying houses in the wedge of the market with a loan fixing them up and then not refinancing obviously it makes it harder than to continue to buy other properties but your margin of safety goes through the roof I mean now you could be sitting at you can put 25% down you fix it up because you bought on the wedge you can be sitting at 50% equity pretty fast so that's a nice insulated position to be in and then you could always pull out secondary financing like hard money loan okay would you do Grant Cardone show or have him I doubt he would ever come on my show and I'm probably banned from ever being able to go onto his show although yes although yesterday I don't know but personally I think I shouldn't be because I think there would be a really cool dialogue I'd definitely be you know a cool little debate said least but yeah you know I'm open everything so which is better twelve okay this is interesting well it's better twelve percent cash flow with low appreciation or five percent cash flow and better appreciation you know Eli um we want to value that out and then do the numbers so you ask yourself well if I'm buying with twelve percent cash flow that's obviously better but am i buying cash now if you're buying a sixty thousand dollar property cash and has a twelve percent cash flow but low appreciation that's awesome milk it and then you say well maybe the appreciations one percent so it's six grand a year well then you have to compare that to say another sixty thousand dollar property and it maybe only gives you five percent on your cash but what if that area is booming and and now it's going up ten percent a year you know that now all of a sudden you can or I guess one percent is actually only six hundred dollars sorry so on let's reclassify this twelve percent cash flow on a sixty thousand dollar property goes up one percent of years six hundred dollars in appreciation sixty thousand dollar property goes up 10 percent a year because it's in a booming area so now you're getting six thousand dollars on your equity that's a fifty four hundred dollar difference now you really got to evaluate well am I making about fifty four hundred dollars in cash flow or am I only getting an extra $3,000 in cash flow or am I getting eight thousand dollars in cash flow and it just makes more sense to have the cash flow if you do the numbers you don't want to spreadsheet you'll be able to answer that question do you have to go to school to know the construction business wouldn't be a bad idea there are a lot of construction training schools not a bad idea especially to learn codes and basics I didn't but is it true that it's nearly impossible to get a foreclosure with an FHA or conventional no different kinds of foreclosures they are trustee sales which I'm not going to talk about now because I could really go into these in detail where just by cash you don't you don't ever see the property and then you could get foreclosures that are on the market which are usually called REO real estate owned or short sales you can buy those I bought my first property with three-and-a-half percent down on an FHA loan it's actually on FHA 203k the renovation loan but we didn't even need to do the renovation loan we could have bought it without the renovation loan or conventional that's just the concept of leverage you can use that in both stocks and real estate yes so what if you go on margin for a house which using a mortgage you would be then the value goes down on your upside down so here's the difference Josh that's a really great question it's different because real estate financing gives you the option to have a 30-year fixed-rate loan or a 15-year fixed-rate loan with no call option call option means if the value goes down 4-cup pay off the loan that doesn't exist in real estate so you could buy a property va which means 0% down usually for $500,000 and then the market tanks and it goes to 300 grand as long as the person who owns the property can still make the payment let's assume they didn't lose their job and they were very qualified when they first bought the property which VA is generally makes sure that you're qualified for the property anyway always do they don't give you a VA loan unless you're qualified then the market value goes down who cares if you're not selling and you could still rent the property out to cover your payment or you can make the payment because you're living there it doesn't matter if the value goes down you are at no risk of having to sell at the bottom the market so a real estate loan is not a margin loan margin loan is toxic and it's dangerous because the fact that they can just automatically split-second trade sell to protect their loan thoughts on that but but the good question that's a really good question so is it is it better to place as much money down as possible on a property or as little as possible it's an aggressiveness question it me being in being 26 years old I don't care to put more money down I would love to move out of this house and buy another house and turn this one into a rental and I put 5% down even if I had 20% of the bank why would I do that I could put the 5% down then I could use the other money to fix up the property and then I could save the other money to do it again in a couple years when I move out of that next house and buy the next house right then just rent them all in the meantime if I keep putting 20% down all properties it's it's safer it is you know we want the margin of safety you're going to have more cash flow when you rent the property out but if you get a good deal then you put a little money down you set yourself up for the next property so you want to ask yourself what are your goals do you want many properties or do you want one property and this is a big thing that Grant Cardone always says is in our single family sucks because it's one door one door sucks the doors for the he said if you have multiple single families you got multiple doors just like you would in multi-unit and I'm not negative on multi-unit I'm all for multi-unit but I'm for diversification and you have to start somewhere and starting with duplex triplex single-family starting what small deals is a lot easier because you can leverage into them uh thanks pal yeah you don't want to say I really do like a show they say I mean sometimes it's just funny yeah so I like that too we have over 100k equity in our house credit 7:40 if we want a $400,000 property doesn't our income have to support the foreigner thousand dollar property yes so if you want to buy a $400,000 property you have to be able to afford the payment so what that means is we'll do some quick math this is gonna be super super quick math and I'm gonna use a what I would use as sort of california numbers so let's say you took that $100,000 and you basically had a loan of let's just make the math super easy so you're gonna have closing costs in that - so you got a $300,000 loan and let's say your rate is four point seven five percent and so now your monthly payment is 1565 plus property taxes of about four hundred bucks plus insurance of about fifty bucks if you had HOA dues I'm just gonna leave that zero and then let's say you put 200 bucks aside for repairs and stuff it's 2200 bucks a month the bank is gonna say you have to qualify for that 2,000 they don't care about that repairs part and they're gonna say well that needs to represent about this is super rough about 43 percent of your income so you took qualify for that house you probably need to be bringing in about 46 50 per month on top of not considering other debts which would - off of that so you probably have to make about 56,000 bucks unless you had a bunch of other debts I recommend any real estate school is not really honestly the real estate schools for licensing they it's also basic just flash cards how do you calculate how much it go up in value ah it's um it's a guess it's uh I don't I look at historical I go and even historical for us in the last seven years it's like 7% 7% 8% 10% 10% when I do my projections I don't use those numbers I usually use use 3 percent 2 to 3 percent above inflation I just like to be more conservative in that sense even though people say I'm not very conservative in terms of investing not politics I'm not getting into politics six months ago I bought my first property with $3,000 down nice in Florida awesome I used to live in Florida and it's now worth 200 plus I love it that's that's a that's a perfect example great yeah houses are expect okay should millennial welcome to millenia shouldn't rob a bank or hang themselves no neither let's see west coast yeah prices on west coast are high so well that's pretty good this is probably the longest live I've ever done 120 minutes so probably gonna take off especially since I haven't had a sip of water in hundred twenty minutes I'm starting to really feel that I'm gonna answer this question here Dreamchasers this actually looks pretty interesting let's see what we got I'm a real estate investor thinking about getting my license seems like there are a lot of benefits to that do you recommend it yourself what is your primary investing or being the agent my primary is being an agent and then of course profits from that can go into investing but I recommend getting your license if you do so much business and you don't rely on the help of a good agent sure you can get your license but if you're just doing one deal a year or one deal every two years you probably want to rely on having a market expert that can help you find good deals because they're gonna more than pay for themselves help you connect with vendors contractors a professional set and inspectors and help prevent losing you money that's way more valuable than getting your own real estate license to save a commission or two I've never had to deal with squatters I usually recommend changing all the locks if you have a vacant property and making sure that place is locked up all the time yeah hey 100 percent Jonathan buy a house ran out the other side or buy a duplex if you can get into a duplex especially get a great deal go for it LA market you know I'm up in Ventura Santa Barbara County so I don't know too much about the LA market but I know it's crazy out there right now a lot of people are like I'm investing in Compton because it's gonna go up in value then you got to ask yourself do you want to work in there do you believe in the area there's nothing wrong with Compton it's probably a great area that will gentrify and go up in value but me for example I'm an hour and a half away from Compton so my rule of investing in 30 minutes wouldn't apply for that so I would not invest there just sort of some other examples oh yeah and that's that's a great line too unlike stocks you can improve a property and increase its value and then you can rent it out to create positive income stocks are controlled by others exactly we touched on that a little earlier in the video about control do you want Cardone capital where you send your money in and you get some checks back or do you want control do you want to take advantage of the market yourself find in efficiencies fix up properties because you're buying in the wedge of the market and make more money hey we're 22 subscribers away from 33 thousand so if you have not and I rarely ask this if you haven't subscribed yet you got to subscribe they kind of cool actually if you haven't subscribed and you're watching this you might be able to see that thing go +1 if you hit subscribe so give it a try I'll kind of I'll be over here it's kind of cool with it that's that I don't want to answer another question or two here let's see what we got I started my career with open houses door knocking cold calling everything I did everything when I started and I still gotta make a video on that unlike oh yeah we answer that one okay so have you heard about nerado real estate or home Union no but like that plus one somebody did it that's pretty cool so if you haven't if you haven't tried that press the button and then you'll see that go plus one so the coolest is if you guys time it until you hit subscribe at the same time it goes plus two that's pretty cool that makes me feel special yeah so turn-key properties look turnkey is great if you just want if you don't want to deal with construction fine buy a turnkey property the thing that I would look at with turn-key properties is you really this is what you need to be careful of you know and this is actually a great topic for another video so I write this down here look at the detail if you open up the kitchen sink and they replace the kitchen but they didn't replace the $2 angle valve that's beneath the kitchen and you have a 50 year old Engel valve down there then I don't think I'd buy from that turkey company because that means they only cared about the stuff you see and they didn't care about the longevity of the property and functionality the property and that scares me I don't know about these turnkey companies in specific so I won't comment specifically on these individual companies because I don't know them maybe they're great companies if I ran a turnkey company obviously I would tell you guys all to buy from it because I'm biased but I'm also the kind of person that doesn't like setting up other people for failure I would rather lose money myself then go to sleep at night knowing that I screwed somebody on a remodel that that just that just a me Oh Victor hey man oh wait I went to 82 uh-uh 3 y'all just did it that's awesome so I don't know if you guys saw it plus why I stopped looking there for a second uh okay Jack is slamming on the soundproof door right now it's not really soundproof but it's a pretty thick door it's like a 400 oh man it's like a 450 pound door what 1/2 is 450 pounds they come on up it came out of pallet that was like a thousand pounds anyway hmm let's see yeah I'll make a whole video on it absolutely you know I just take you guys through oh you know what I should I should do that okay I mean I got an idea I'll film it and I know exactly what to do hey thank you guys for the thank you thinking of getting my real estate license I'm assuming or real estate but don't see long term growth population the area I live should I move the war family is uh you know everything sucks if you're not around people you love and care about so that's my recommendation and wherever that is you can find opportunities in every market buh buh buh millennial Mike and taking your and gram advice step-by-step documenting it on YouTube oh good for you man my question is I have a friend who's going to invest with me 50/50 how do you buy the property hmm ah I haven't run into that before because I don't know that's a good question can you finance it with unrelated co borrowers maybe I see people like cousins doing this but people are someone related but I don't know that's a really good question if you can buy as a partnership I know that in the future if like you had a corporation or an LLC in that corporation at LLC built equity now that and built a credit rating now that company can can buy and qualify for loans but if you guys you guys could obviously buy cash together and just take title as joint tenants or tenants in common or whatever talk to an attorney and a CPA about that but being unrelated and getting financing I don't really answer that it's a really good question but how do you think your real estate portfolio would do if we were in a downturn how to make sure your portfolio is protected in case the scenarios up yeah very valid question I I think all the properties are at about 35% equity right now so we'd have to have a massive massive collapse for any of them to be upside down and I might be tempted to if I saw the market folly and is because I'm a real-estate agent and I can I could be a very busy agent in a down market because the short sales and foreclosures but just in case it probably be good to have a little bit more of a reserve alright folks hey that's all I got I'm I almost said an hour and a half and I really need to drink some water so I am now we're going to start posting daily by the way to Instagram TV it's gonna be more like unedited vlog II like there won't be music and I don't know maybe it's boring and you guys won't like it I did post one this morning at like 5:30 in the morning it was about yesterday so you can kind of see little snippets of behind the scenes I'll be doing that again as well today so I think I'll just I'll just start it right now and yeah you know then then we can kind of catch up and you guys can come and let me know what you think of that and thank you guys so much if you haven't subscribed subscribe and I will be posting this whenever it's done processing thanks folks see you later YouTube flip is still coming it's coming I promise I check out the last video I gave a reason for it where Lauren went to the hospital there's there's insight in that video about the game plan and why it's kind of hanging out but yeah look for 911 call that was the title of the video see ya

Channel: Meet Kevin

Views: 218,946

Rating: 4.9025626 out of 5

Keywords: grant cardone, how to buy first rental property, how to start, start, millenial curse, appraisals, loans, contingencies, cancellation, viewing homes, open houses, showings, credit, credi tscore, portfolio, HOA, HOA vs, preapproval, loan, lender, agents, realtors, meet kevin, cardone, cardone capital, REIT, extrapolation of money, margin, your job, money, entrepreneur, income, real estate, wealth, cardone capital vs, houses vs units, multifamily, single family, rental property

Id: UVzcey-lghg

Length: 88min 25sec (5305 seconds)

Published: Sat Jun 23 2018