How He Grosses $480,000/Year From Real Estate Investment

a real estate investor Mike Andes shares his secrets for creating a passive monthly income of forty thousand dollars with 23 units across six different properties I just doubled my money that's when you can get a really good deal all right well let's take a peek inside it's negotiation it's it's being able to Value ad I can't add the value of Apple but I can do the piece of property for Real Estate that's the first thing I'm looking at we're gonna go visit this neighborhood yep that's why this property worked now you don't tell the bank necessarily all of these things if you've dreamed of making a killing in real estate investing then you owe it to yourself to watch Mike's rags to Rich's story till the end big thanks to deal simple for sponsoring this video so Mike most of our viewers recognize you as the owner of Augusta lawn care services not real estate investment so when and why did you get into real estate investing well first of all as a home service provider like Lawn Care Landscaping construction you can make really good profits but eventually as the business grows you get to the point where you invest that money you're swing in cash you don't know what to do with it well that is a good problem to have and what you do though you want to do it in a tax efficient way and real estate's a great way to do that in addition to your business so you saw it as a tax benefit mainly well yeah you can use IRAs and 401ks but oh there's certain limits to those whereas when you have a lot of cash and the business is spinning that off yes it's a good problem to have but you do need to make sure you have a place to invest that you're not giving 30 to 40 of that way to the government every year okay and when did you buy your first property it was actually when I was 18 years old it's got my very first one and we'll talk more about them sure later on but it was a horrible deal I messed up massively and for anyone that's listening your first deal will probably be a mess up but you know we've learned a thing or two and definitely not the most experienced people like yourself had ton of experience in real estate and have way more than I but we're making it work absolutely so I'm looking to buy my first property I'm excited I've got the cash lined up I've got my team set up what are some things I have to think about or ask as well pertaining to my first purchase to set myself up for Success does that make sense totally like from a numbers perspective you got to make sure you're covering your mortgage and then you got cash flow on top of that you know if you have a say a three thousand dollar per month mortgage like this house is I'm only going to be able to rent this for about three thousand dollars a month anyways I'm just barely covering my mortgage so the only way I can actually make profit on this deal is either a appreciation like the value of the house goes up takes time takes a lot of time secondarily rents go up that's potential right maybe a couple hundred dollars next couple years but what I was able to make this property work is by having the office for Augusta having the tiny house that's why this property worked and that's why no one else was bidding on it because just in and of itself the house wasn't worth it because you couldn't make any money on top of the mortgage so when you're really looking for the deals now it's a matter of okay if I'm looking for cash flow or am I looking for appreciation right those are two different investing Styles because if I'm looking for cash flow it might be looking for cheaper houses where I can make you know 400 500 a month per rental per door there might be some properties though where you can barely cover the mortgage and that's just gonna depend on where you're living as well as the rates currently so in terms of investing in real estate is it the same process as buying a home for you personally or is it different when it comes to buying an investment property quote unquote yeah you're buying an investment property you're financing you know options are going to be different right now what's really cool about taxes and how you can manipulate this is if you're going to live in a property after a year or two you can live in it as your personal residence and then move from that property and into an investment and turn it into an investment and still keep that mortgage now you don't tell a bank necessarily all of these things but if you're going to stay there a year or two at least and you have the intention of doing that making your primary residence you can get a regular 30-year fixed mortgage move out and that's what I recommend people do buy yourself a house live in it for two years make some improvements improve the equity rent the property out and now your cash flowing a couple hundred dollars per month in addition to your mortgage and you go move on to the next property maybe refinance that first one if rates are good take that Capital move into your next profit so our rates and down payments different when it comes to personal versus investment what is what have you learned so far yeah like you can get as low as three and a half percent down on an FHA mortgage if it's your first time home buyer in and that's great 500 000 property you're looking at less than twenty thousand dollars down now you're gonna need property mortgage insurance when you're usually under 20 down but if you're looking at more of an investment style property look at 20 25 down minimum and it just really depends on the type of loans you get and that's why you want to get a good broker get someone knows knows Banks and creative financing 100 and usually the more creative you get with financing the less returns there are especially at the beginning because if I'm doing hard money or I'm having high interest loans I'm not going to cash flows well on that property and I might not have as much of the the positive returns coming to me but it's just again get your finances in order whether you have a W-2 income as an employee or whether you have business returns and you've been running your business for three or four years get those things in order make sure they're dialed in because that's where you're going to get the best deals because the bank knows you're able to actually produce what you're saying in terms of offers so as a business owner that's cash flowing right how can a property benefit that business and at the same time provide your opportunity to invest in real estate absolutely comes back to zoning you got to make sure it's zoned where you can do rural commercial or have some space so out here for example we brought in like 250 yards of gravel huge put it back here put up the fence just because some privacy I don't want to annoy the neighbors or bother them and so we were able to get six seven trucks back here run the business from here now if I went and got a commercial space rented some land I had an office building I'm paying 1500 2 000 a month so if you're a business owner and you're looking for hey I want to do some real estate but I also want to make this worth it good idea yeah I'm able to save 1200 a month and at this property I didn't have to spend a whole lot more some gravel a fence and then we got myself a great spot here where we have privacy we have to dump our clippings dump our material and it's been great for us and saving again adding value that no one else no one else is looking at this property thinking about their Lawn Care landscaping business this is an opportunity this is we teach our franchisees and that is like look for the opportunities in real estate to build this and save yourself massive otherwise you'll just be going out the door in rent dude that's really great because we interviewed lucky auto mechanic Lucky's Auto shop and he operates that business on his personal property so I like this concept but real estate provides you guys if you have a different business think real estate Investments and how that will benefit the business that's really cool give a quick shout out to our podcast you guys if you want to learn more about investing in real estate check out podcast with Emma Powell the founder of Palo Ventures where she shares more insights and secrets about the real estate industry make sure you do that today how has the current environment Rising interest rates economy impacted the real estate Investments business personally for you and what have you heard it from others totally I think what people forget sometimes that the interest rates that people are being charged on their loan is the number one factor deciding factor of the price of the property because when people are looking at real estate they're not looking at the price they're looking at what's my monthly mortgage going to be and so when you pay a million if I could pay you a thousand oh yeah absolutely if I'm able to spend you know buy a million dollar house and put fifty thousand dollars down and 500 a month that sounds great if my interest rates are nothing right right but when interest rates start going up now this property this same exact property just six months ago my mortgage would have been 2400. well now it's 3 000. that's why I wasn't willing to spend six seven hundred thousand on this property and so you have to remember that interest rates as they go up the mortgages are going up and that means people are not going to be able to spend as much on the purchase price that's why we're seeing a dampening of demand as well as just the overall prices going down what's your take on Dave Ramsey's position right by cash no debt because you're leveraging with banks how do you see it how do you understand it I'm an entrepreneur right so I I'm more inclined to take a risk of managing my debt I know that I can get this at five and a half percent interest rate and I'm able to make 12 15 return that's a great deal for me I'm able to duplicate that I'm trying to become you know million billionaire and someone someone willing to do that it's probably gonna need leverage now if you want to buy one house live here for 20 years and pay it off fantastic get a 15-year mortgage pay the thing off as fast as possible live here for the rest of your life I'm personally not interested in that that's why their goals of real estate need to align with your personal goals and financial for your family for your business and I'm looking this and real estate as a business I'm not looking at as this is going to be where I live for the next 20 years of my life so tell us briefly where we are this property what you paid for it and what's your end goal for this yes this is Mount Vernon and what's funny is this property actually came a result of needing a space for Augusta Lawn Care yeah we need somewhere in the country exactly for the Skagit County Mount Vernon area so that's what our primary focus was then it was okay well how do I make this work because it's actually harder to go get a commercial loan get a land loan try to build with a commercial I was able to find this house using regular conventional financing and then I'm able to go take that to a bank and they're much happier to give you know 30-year fixed rates on this type of house versus trying to find commercials what's unique about it though is it zoning What attracted you with you nailed it I think the biggest thing that comes to investing especially in your first property is like okay if I need an FHA loan for three and a half percent down great but how can I make this better than the average buyer the average buyer came to this property and they're like uh it's just not perfect for us we don't like it whatever it might be I was looking at hey I am able to make an office out of the space I'm able to put a tiny house on the space I'm going to make this thing cash flow seven eight thousand dollars a month versus if you ended out just the house maybe twenty five hundred or three thousand and so looking for those value ads on a properties where you can really afford to pay more but then also make that monthly payment a lot more affordable for yourself okay and what did you pay for this so this was 540 it was originally market for 6.50 uh right now we're going through a time when interest rates are going up and people are afraid to buy so I came in lower knowing that the the past owner had already bought another house so when you're making that offer just looking at things like zoning looking at where's the owner have they lived here are they moving they already moved these are all just different tactics and if you have a good Agent like yourself like you're going to be able to find those those type of things and then really you use that to your advantage we got for a hundred ten thousand dollars less than listing price right yeah we're always out there turning rocks exactly how do you find properties you invest in is it Zillow is a Redfin where do you go to find them it really depends on your financing right like if you're if you're going to get an FHA loan which is backed by the government you're not going to get a Big Fix and Flip or like something that's falling apart they're going to need a more standard cookie cutter house similar to this but if you're looking for an investment property that you need to fix it up you potentially might get some hard what's called hard money you go to investors and hey I need some hard money you fix it up and then you refinance it later on but like you said having the team is so important if you create a good relationship with a realtor and they can bring deals to you before they even go on the market that's a great option they know ones that are you know potentially getting ready to be sold or they might even have deals of their own of sell listings yeah and so don't go talk to agents obviously the MLS services like Redfin Zillow Etc are always going to be there do you spend time scouring those sites as well to educate yourself right look for comps comparative sales in the past week or two weeks look for ones that are currently going on the market in your area down the street from you you get to know the market really well by using those services but ultimately the best deals I've always gotten are the ones where my agents like hey this one's going on the market you might want to put offer here we can get this off Market those are the best deals but again to get those off Market deals typically need one a relationship with a great realtor and two you need to be able to have the wherewithal to move quickly on deals a great realtor isn't going to waste their time with you if they have four other people in their back pocket you've got to prove that you move on deals I've never made an offer on a deal and pulled out ever so my agent knows if I'm interested in something I'm going to close so in a way you're building your reputation amongst the industry locally people know Mike delivers a great realtor like you has so many connections you're the one that really dictates where the deals are going and so I as an investor need to create a relationship with you that you know if I go on behalf and give him this deal he's going to close in this deal he's going to make money for the the buyer he's also the seller and the agent and the Agents it's a great relationship business that's what all real estate is yeah guys keep watching Mike's going to share more tips on how to find the right investment properties and so much more all right so we're here checking out some properties we're gonna go visit this neighborhood yep um this is Zillow zillow.com TAPS in the MLS the multiple listing service and this is kind of how you might start looking for a property let's say for example let's zero in on this 425 000 house it's four bedroom one bath 1800 square feet those are all important things when it comes to comps I'm trying to find a comparable sale to this house ideally in this same neighborhood that has recently sold but you can see here this this zestimate by the way absolute garbage this is not sorry Zillow sorry Zillow you gotta talk to your agent you gotta look at comp this is what we're doing here it's fine is this a good deal do not look at this estimate that's an absolute garbage let's go and look at this really quickly determine is this a good deal could this be somewhere I can make some money would this be a deal I would be buying first and foremost four bedroom one bath this is called functional obsolescence I can't have a massive family living here even though there's four bedrooms because there's only one bathroom that stinks who wants to be with four kids and have one bathroom functional obsolescence I was gonna say I'm learning something new today as a real estate agent I've never heard that term functional obsolescence yeah so typically if you're having four bedrooms you need at least two baths makes sense it limits the amount of people that can live at this property so here's the deal the functionality here's the question can I build a bathroom because if I could build a bathroom maybe that bathroom cost me fifteen thousand dollars to install but produces thirty thousand dollars worth of value add because the functional office is fixed that's the first thing I'm looking at 1800 square feet four bedroom one bath we scroll down we're looking at some other stuff okay great we got uh two large bedrooms that's fine I'm not I don't really care about this here's a little interesting thing sold as is that means first and foremost probably good chances a lot of repairs why because make no repairs exactly it was built in 1905. this is about 120 years old and they're saying this is sold as is I'm also looking at these pictures look at that roof there's a good chance it needs some fixing there's a good chance that front deck wasn't permitted just the way that it's joining the house that'd be something I want to be looking at because that could potentially affect my financing my question is though okay at the top here 2500 is my estimated payment at this current asking price can I rent this out for twenty five hundred dollars well you could actually pull up Zillow rentals and see what's the type of rent going in this neighborhood would I even be able to cover my mortgage if I'm coming lower these these payments are usually on Zillow are assuming that you're getting a pretty good interest rate because they're trying to Allure you into buying this bad boy but again I'm not going to be super interested in this one I don't see enough value add but if I was looking for value-add it's adding a bathroom to solve functional obsolescence and then could I fix this place up could I put a new roof on it could I make it look better it looks like trash on the outside somewhat I could probably paint this thing add a few pictures improve the Landscaping maybe I add some value here add twenty thousand dollars in construction costs add 50 or 60 000 worth of value maybe this is a good flip potentially some of you may know that along with being the upflip host I'm also a full-time real estate agent and a successful one and today I'm I'm super excited to share with you this software called deal simple deal simple is the fastest simplest and best deal analyzer with deal simple Real Estate Investors can analyze all the deals and send out offers on the go as quickly as possible they're a cloud-based platform that allows you to analyze flips rentals Burrs at home or even on the go generate PDFs custom web links for sellers lenders and partners with absolutely accurate numbers which makes you look like a true professional so get your business to the next level deal simple is offering a 10-day free trial to the upflip viewers so click the link in the description below or scan the QR code on the screen right now and start the free trial today deal simple makes deals simple it's truly in their name what are some good resources for cash and money to buy more real estate I think the first thing is find yourself a team right you got to find yourself a good Agent you got to find yourself a good Banker you got to find yourself a good insurance broker those are the things that if you can have now a letter that says hey we are going to back this person we're going to fund this loan a pre-approval letter and you go and go out and find yourself a deal that that carries some weight so the first thing is go get pre-approved go talk to a banker really have this in line so that when you come to the deal and you make an offer people take you seriously and that's for me when I was really young especially even now it's like he'll be like I don't know about this guy he's young like I come now with hey here's proof of funds I'm ready to go I'm going to move on this I'm gonna there's no I don't take my offers back we're gonna close and so I think the first thing is if someone's looking as a business owner is have the proof of funds have your team in place have a pre-approval letter and get ready to look for those deals and then make sure you you really create a good relationship with a broker where they're going to take you to the good deals they're going to give you the good deals first because they know you're going to move on it and then if you're just getting started you don't have the money you don't have the business and what would you recommend a thousand two thousand dollars you know honestly you gotta educate yourself and at that point you have more time than you do money and if you don't have money and you have time go go try to do an internship go work with a contractor as rehab you'll ask a real estate broker if you can help in an open house learn the business of real estate because two thousand dollars ain't gonna make a big dent in a real estate investment but can absolutely invest in yourself and that's the number one return you can have your first property I want to go back to that you bought it at 18 yeah what did you pay for it and uh where did you get the money yeah so besides the business it was a cash deal is what's called a wholesale deal which looking back on it maybe wasn't the best thing they bought it for 75 they wholesale the deal for you I mean 95 and I think it was 1911 property just completely old like it should have been bulldozed over but I was like oh you know what come on put lipstick on it put some paint put some new carpet and I'll sell it for 200. yeah that ambitious first purchase absolutely and I just bit off way more than I could chew I never renovated I couldn't look at siding and tell you what it was like I had no idea what I was doing so by the time I bought into it and then had to renovate the thing and put another I think it was almost 200 000 into the renovation the valuation the property was probably less than 300 000. so I was maybe break even on that but uh you know I made an Adu and that was like my first time I was like look I'm gonna make this property I'm gonna I'm gonna house hack it I'm gonna try to figure out how to add value I think it's a big part of your first deals like how do you add value and I added second tenant having an Adu having another tenant and now that property cash flow is almost three thousand dollars a month and I still only have that 95 000 into it so you hung on to it yeah and that's the beautiful thing about real estate typically Time Heals all wounds if you hold on the property long enough the fortunately the equity will usually rise and it'll make it work for you money wise where did you get the money for somebody watching us right now and is excited about making their first purchase it doesn't have that much money that's when I go back did you just earn it with the business it's the business and I think most people listening to this should not yet get started with real estate they should focus on their business right now make that profitable so that they have the cash flow and the cash Nest to go invest in real estate trying to do all these things at the same time when you're first getting started doesn't make sense at that point I'd already built the business past seven figures and where it was it was really cash flow positive and I needed to put that money somewhere right if the money could have otherwise been spent in the business more efficiently that's where it should be spent first okay but uh you know that's where I got it from that first 95 000 and it was scary it was very scary uh but I think it's it's always gonna be scary getting something new and knowing something like real estate has been around for generations and gone up in value consistently I had a lot more confidence knowing that even if I mess up on this first deal I know in the long run I want to own hundreds if not thousands of units and you got to start somewhere right what is the most passive real estate investment and what is the most Hands-On quick yeah most passes is gonna be when you have a property manager in place handling everything with the leasing and the tenants and your multi-family or even residential single exactly you're going to be giving away a good chunk of change you're looking at probably a good chunk of your profits but probably eight to ten percent of your revenue is going out the door to Property Management that's gonna be the most passive in terms of the most Hands-On you'll probably look at when you're self-managing and living on the property because now all the tenants know you're the owner they're going to come talk to you they're going to be the ones texting you at 12 o'clock about the toilet so it really comes down to management if you have a great manager and they are handling all the problems least amount of income but also the least problems and most passes yeah but you're doing the Airbnb I would say that's pretty Hands-On I'm not involved though I have someone else that's going to be cleaning managing the people texting them giving them codes and so I'm giving a good chunk of change away for that but it's going to be completely hands off guys if you're enjoying us we would appreciate if you support our Channel by hitting that like button thank you so much demolish it boom smash it kill it let's check out some comparables right so here we're just zero in on this neighborhood what everyone does is they start to think about okay well what else is for sale that's what my comparables are no that's not what your comparables are because they haven't sold the market determines the price when there's a sale that happens so I'm going to do is I'm going to go up to here instead of for sale I know we got sold properties and what I'm going to do is I'm going to zero in down here now this is what's so important real estate is very very local and it's very very time sensitive so the first thing I'm looking at I want to be looking at properties literally within a block two blocks as close as possible to this house to get an actual accurate estimate of the value and if I look over on the right hand side I can see with a date at which these were sold and what's really really interesting in this couple neighborhoods that I'm zeroing in on here only a few properties I've sold in the past few months what's the most recent one this is a week or two ago let's click on this one okay so this property here sold for 440 000 okay let's go ahead and take a look at it it's similar but here's the deal compared to the one we were looking at before it's now built in what 2004 versus 1905. this is a hundred years newer okay first and foremost it has three bedroom three bath no functional obsolescence I'm able to have more people live at this house because of the three bathrooms now my square footage is a little bit less however I think that this deal at 440 means that my other deal the one I just looked at is probably only worth 400 because this deals over 440 last week so these are the type of things you're looking at I'd be going back here looking at other houses that were sold but you can't look back four or five months ago it's inaccurate data six months ago we're talking about different interest rates different Market completely different landscape when it comes to real estate and so you're looking for recency and comparable sales in terms of square footage bedrooms bathrooms Etc all right so this is really cool I mean Zillow free accessible to everyone ton of data uh and a great place to start why don't we go check out this neighborhood and actually maybe just take a look at the house from the outside and see where we go from yeah maybe buy yourself a house let's do it wrap it up let's go check out the neighborhood that we actually looked on Zillow and take a look at the houses and go from there all right what are some common mistakes Mike that the Real Estate Investors can make initially right and how do I avoid them everything is not having the consult and the education to make the deal work again back to real estate is a people business not having that team not educating yourself and jumping into a deal too quickly you should always learn with experience but that may cost you quite a bit right absolutely you're either going to pay with Time by educating yourself or you're going to pay with your money by making the wrong deal I love that dude I'd rather take the time and yeah money or the time and experience in education as well exactly right I'm not interesting number one this is like a main road I don't like that right I can't have kids here they're gonna run out in the street I'm looking across the different houses here this one looks like it's been slightly improved and the road isn't super like loud or or a lot a lot of traffic but you know it's right out the front door like yeah we didn't see the shop that was on the pictures I did have a garage here yeah so they've got extra space here yeah honestly though like again that could very well almost not be permitted it doesn't have a foundation and that roof needs to completely repaired and probably it looks like it needs to come down but we're looking for Value add correct that potentially could be an Adu if it's zoned in this area maybe you make this into a one bedroom apartment and if I'm looking to do an improvement to this building like you said if I'm looking at the next door neighbors and the neighbors and everyone else and they're not improving their house I don't want to be the best looking house in the neighborhood in the world it's not gonna that's not the value the value would be if this was the worst looking house and I was able to improve it get it to the level of everyone else around it that's what I can get some real value at out of this one we've got two chimneys on this one which was original on the left the one on the right was an add-on with the brick and that potentially has a leak on it so things like that you just don't know like you know you obviously want to see inside this house but I don't think this is one that I'd be buying as an investor maybe it's a potential homeowner but not an investor in this one so do you invest Mike individually or are you part of some Investment Group and what are the advantage or disadvantages and what you've learned so far yeah like you want to be totally hands off and not have to do any Property Management do it in a Reit or potentially like of some sort of a capital fund where there is a capital coming together in a group that's fine I like to do it myself I think part of investing in real estate is just learning it learning Property Management learning how to find tenants and and Screen them out so I do it for most of my own learning process at the beginning but also your the upside is way more if you do it yourself too so there's definitely downsides though because now you make mistakes you buy the wrong deal you money rather than the retail out of your fun right so uh you know there's plenty of other options that are lower risk but maybe lower reward if you don't go by your own and do your own investing so the 23 units across six different properties that's purchased individually by you managed by you fixed up and all all that's involved I do have a property manager they work directly for me I'm their only client and they do a phenomenal job but I and more Hands-On than if I was just doing a real estate fund or investing with a partnership where I'm very hands off never see the deals never vet the deals never walk the properties and I think there's definitely value to that and that's why I decided to kind of take more of a Hands-On approach that makes sense man you learned a lot yeah and then can share that wisdom like you're doing now with our viewers so thank you for that is your best investment thus far what did you pay for it what is it profiting you today yeah just share a little bit I'm hoping this one is probably the most obtainable for a lot of listeners um you need an FHA loan on this you can get a standard mortgage but really for me personally that's attending apartment complex out in Bellingham I saw that yeah you had a video about that yeah well what was cool is it was middle covered the person didn't want to deal with the tenants and all the issues that were going on and whenever people don't want to deal with problems you can get a better deal they didn't want to raise the rents they didn't want to deal with people that need to get kicked out yeah and people weren't paying rent so I came in the rents were seven eight hundred dollars a month they needed to be significantly higher but they didn't want to do the work and so if you're willing to get your hands dirty and actually do value add improve the property really bake in that appreciation with just Sweat Equity that's when you can get a really good deal so now that that property does almost twenty thousand dollars a month in cash flow and the mortgage is only five thousand dollars a month oh wow because the interest rates were so low when I bought it so it was like perfect timing interest rates are really low got a great deal on it was able to move fast and the right to more than double now the rents are there Seventeen hundred to two thousand dollars a month now fully leased with two airbnbs which are making three to four thousand dollars a month that's smart yeah we'll talk more about the Airbnb aspect the tiny home on this property which is pretty exciting because the markets are shifting and that's definitely a market disrupter in some way for sure so walk Us in here what's your plan for this little tiny home yeah so we like I said it was at 74 000 on it we spent about ten thousand dollars Furnishing it getting it hooked up to the septic to the power in the back here we're going to be adding this deck here with Trex and then actually having a hot tub in the center then we're going to make a nice sitting area pergola and a fire pit and then once you're on here you can actually see the sun sunrise right over the mountains it's gonna be a great area well like man just adding this hot tub along Airbnb this will probably add 40 50 a night just having a nice hot tub with this outdoor area some nice lights above it's just a beautiful spot super quiet got goats behind us here at a farm so we're really counting on is those Seattle City Slickers to come here for a weekend spend a few hundred dollars free the farmlands trust me you can smell it so we're still working Landscaping to do pretty nice and again this is this is going to be an Airbnb short-term rentals are different than long-term rentals different regulation and that's a big thing when it comes to short-term rentals and tiny houses you can't just throw these in any lot in your local area you can't just like oh I got a quarter acre lot downtown can't do that you've got to make sure you've got to have the regulation especially with airbnbs it's getting more and more regulated and so this has been a great option for us like I said 74 000 about 10 000 improvements and Furnishing it our goal is to be able to rent this out for 200 250 per night and make about three to four thousand dollars per month in cash flow wow just from this and we were doing all with cash because it's hard to find financing for these it's a little bit more difficult finding you know for Furnishing and all the rest of it but it's a different business model and when I look at short-term rentals I look at Airbnb it's a business it is not as passive as renters when I do a 12 month lease I don't have to think about it very much after I sign on the dollar line with short-term rentals you're cleaning that bad boy you got a property manager more involved so it's a more of a business when you look at this okay but still real estate baby that's right any negotiation tips tricks hacks I think the biggest thing is just realizing that you're dealing with other people they also have objectives realizing what their objectives are and trying to make your deal work good for those objectives for them and then also in your own purpose and interest as well I realize that the highest price not always the most accepted offers it's also who is going to deliver again if your agent knows that you deliver you have the funds you're going to close they'll go vouch for you they'll talk to the selling agent and like hey my buyer he's going to close this deal he's closed the past five he doesn't take uh no for an answer he's going to make sure that this deal closes they want to make sure that they have don't have people backing out of their offers so there's a lot of intangibles things like you can waive your inspection whatever it might be if you're really handy and you can fix a thing or two maybe you wave inspection so you can get a better deal it's not always whoever is the highest price talk to us about long-distance real estate Investments right we're here in Washington state Pacific Northwest have you considered buying property in Arizona because there's a ton of markets out there where you can buy a house for 200 000 and rent it yeah for one percent of that value right I think we'll get that here so yeah I think a lot of times people jump to that because it is the new flashy shiny thing as like you know buy a property outside the country and rent it out and a lot of times people are doing that because they think oh I can buy cheaper property someplace else right yeah well you could true the thing is typically in a market that's cheaper usually your appreciation is going to be less right so I might buy a 200 000 property if it goes up ten percent in value okay two you know it's 220. if I buy a 600 000 property that goes up to say 15 in value I just made myself ninety thousand so it's not necessary to say that a cheaper Market is better or worse it's very local when it comes to real estate and so when it comes to long distance real estate investing you got to be careful don't I would not recommend someone doing this as our first deal right it's it's shiny it's flashy people talk about on social media but you've got to have a great property manager that's the bottom line if you're talking long-distance relationships because you have someone on the property able to talk to the tenants able to walk someone through release able to deal with a leaky toilet you've got a great proper manner that you can trust and I've been very fortunate to have Liz she also works at Augusta but she's my property manager she handles everything I've never signed a lease I've never talked to a tenant never dealt with a handyman she handles all of that if you found someone like that on the other side of the country you could probably do long distance real estate investing but I'd be careful especially in your first deal because you could get burned all right Blitz time what do you do with your profits besides obviously what we're talking about today yeah so what's a little bit unique is I look at real estate is kind of like my piggy bank it's a long-term piggy bank but ultimately I'm more passionate about business and if people are watching you know this is a business Channel people love business maybe you look at real estate is kind of your piggy bank you build equity there you get some cash flow But ultimately you're looking for the play you're looking for an option maybe one day you buy a business out by selling that piece of property 30 cashing out on the equity using it for tax purposes doing a 1031 exchange there's so many creative ways to make it where it operates like your investment account your bank account your savings account compared to going and getting one or two percent of the in the savings bank account yeah so I that's how I look at it and in fact I might sell one or two of my properties here pretty soon to build our headquarters for August along there so that's awesome content and value uh you just broke the cardinal rule of Blitz 10 seconds or no Blitz I forgot we'll work it with it we got a couple more questions so this is if something happens to you what will happen to your business property manager is in place for the real estate and in terms of businesses great managers in place that do a far better job than I could ever do so it'll continue operating absolutely all right if you could change one thing about your business what would it be um think about it the next one would be if you could have anything in if you can have anyone in this world endorse your business who would it be in a wife oh Elon that'd be great just because it'd be super controversial and be fun and I just like him to know that I exist on this planet it'd be kind of fun so would he be endorsing the real estate business or the landscaping business let's go with the landscape business because why would it be controversial I'm just curious a lot of people hate Elon when you're looking at a property how do you know it'll be a smart investment so what are some Key signs for you yeah we're looking for those opportunities to increase rents to improve appreciation and make the income of the property better but I'm also looking for cosmetic issues right even little signs that this property was not maintained well that the bones of the property aren't doing well things like the roof for example you look here the roof is a big one right because if the roof is messed up you're everything below it's going to be affected so you got the garage here we're actually using for the shop for Augusta um but you look at the other building that one has metal roof you got they just did that relatively recently it's going to last forever and so those are the things you want to look for another thing I'm looking for is was it maintained well was it taken care of did they add things that were not really adding to the value of the property but they were taking care of it and this place is three stories right you've got the basement in two stories exactly and all of it's finished yeah it looks it looks like it's small but it's actually 2500 square feet and it was very old these are old and back to your point about red flags it can be a red flag when this thing is built in 1925. however when you start looking at the properties oh they updated all the heating all the air conditioning all the electricals and the plumbing has been ripped out and trained that's when I start to say okay someone lives here 20 years invested a lot of money and time in improving this property and it took really great care of it because they're the owners this wasn't a rented out property this person's owned it for 20 years and maintain it to a t that's again another indicator that okay this could be a deal I can make work even though it might be older what are the advantages of investing in real estate as opposed to stocks Mutual bonds Etc yeah like there's two things one is the fact that Leverage is incredible we've already talked about that but the fact that you can have 70 80 90 leverage on real estate allows you to grow your wealth much faster the second thing that is extremely valuable when it comes to real estate versus say stocks is the fact that when it comes to a stock you can pull up a price for example I could pull this up right now go in my stock I go pull up Apple right right now it is 150.70 that is the price it's determined you can't get a better deal than 150. there is no wedge deal there's no opportunity to get Equity from day one whereas real estate if I buy my deal correctly right I will start with equity in my pocket because I made a great deal it's negotiation it's it's being able to Value ad I can't add the value of Apple but I can do the piece of property for real estate and that is the beautiful thing about real estate is getting the deal that's awesome and how does investing in real estate help you build wealth like where do the profits come from yeah versus any other investment vehicle is you get to use leverage right for every dollar that you put into a deal you can usually get four or five dollars worth of the bank's money and so if I'm able to get a property like this for say 500 000 and it goes up by a hundred grand 20 percent well I only have to put down you know say 50 or 60 000 to get the property I just doubled my money that's almost unheard of in a lot of places where you can use leverage that much in the United States some people just forget the fact that 30-year fixed mortgages are not a common thing around the world you go to Canada Europe that's unheard of that's true so it's also the government really incentivizing us to own houses and a big part of part of it is like just owning your own house in America has a 20x multiple in your net worth the average renter in America's net worth is five to six thousand dollars the average homeowner in America almost a hundred thousand dollars and so just that alone is reason for someone to start buying houses and then figure out how can I actually make it a cash flow property and not only have appreciation and net worth but now cash flow definitely a good build a wealth building platform form absolutely all right well let's take a peek inside I'll follow you in let's do it yeah still some construction going on last week okay but that's really neat though like yeah we had to paint everything we wanted to put some semi-gloss or eggshell on the paint instead of having the matte finish these are all little things that you pick up on over time when you start dealing with tenants it's like I don't want to have a matte finish it's going to show every single Mark it's harder to clean so little things like that you can learn though you can learn on YouTube you can read books and podcasts and learn okay like what type of materials are going to last along it's like this is pipe like this is not going anywhere no one can break it it's not pressboard right like that especially in the Airbnb it's people use things harder it's more wear and tear not a turnover so you got two beds here you got one up here you got locked up here got steps to go up there and then this ladder actually connects back behind us to another loft where there's another queen size bed so theoretically you could get a four people in here it'd be a little bit tight I'd say 90 of the time it's gonna be two people but it's really cool because in the back you literally have a full walk-in shower with glass nice put your block countertops and a full kitchen you got everything from a hot water heater underneath here kitchen stove washer dryer combination here as well as a freezer fridge so is everything you need um and and it's really a romantic thing to live in a tiny house it's not super practical No One's Gonna raise their kids well some people have right it's not super practical they're gonna raise a family in here but it's definitely a great getaway for Airbnb okay for somebody that is interested in real estate investing but is it on the crossroads on how to decide to pursue it I'm just wondering how you know in general how do they what questions should they ask themselves if that's something they really seriously want to pursue well like on a full-time basis totally I think like this you know this video is made the start of their education honestly it's like there are so many resources online courses books podcasts biggerpockets.com there are so many different ways to learn from other real estate agents other Real Estate Investors communicate and interact and network with other people in your Market real estate is very local what's great about that is you can can literally meet agents who will give you lots of advice they've been in the industry for 10 15 20 years other investors that want they just love and are passionate about real estate meet up with them talk with them that doesn't cost you anything and doesn't cost you getting a bad deal like I did my first one and then potentially running away from Real Estate when it was just a matter of learning educating myself that I needed that first deal to get through it and then be successful later on earlier in the interview you mentioned REITs like investment groups right you don't have a ton of money you can invest through them in real estate what else can you share on that the advantages or disadvantages per se right because I would imagine your returns are much less yeah like the positive part is hey you have to go find the property you don't have to come up with capital usually you have access to better financing because you're grouping a whole bunch of investors together billions yeah the thing that downsides I would say is you don't get the education because you don't get the Hands-On you don't get to see the deals you don't negotiate it's massive secondly you don't get as much upside if the property doubles in value you're not getting all of that appreciation there's going to be management fees there's going to be different distributions to different types of principles or Brokers inside of the deal right and that's all part of it just like how passive do you want it if you want a completely passive you can have yourself a great property manager or B you're going to be investing in a real estate group or some sort of fun there's plenty of them I'm a part of some of them and hey I literally just get a check every single month it's great but that percentage is maybe four five six percent return a year we're looking at 40 50 return on a good property that I buy rent it increase the rents and then refinance it besides REITs Mike like is what other groups or crowdfunding options for financing a deal do you know about there's a bunch of them online now where you can actually buy properties like 100 200 unit buildings and be just own a little sliver of that own you know put 5 10 15 20 grand sometimes they need you to be an accredited investor and you do need to meet certain financing requirements but you can usually buy a little sliver of a big piece of a pie but again bigger I'm talking like is there options out there that I can be an 80 owner or 90 percent owner totally and that's where it comes to making relationships in your local market typically there's a doctor there's someone who's an entrepreneur they have money and they're like hey I'll partner up with you on this deal I'll be the money but I need you to be the Sweat Equity I need to improve the property I need to manage the property so it's about getting created with financing but also if you have more time than you do money you can be of value to someone who has Capital that needs to get deployed and you can be their Sweat Equity on the property managing a property is the hard work it is the business side and the same way I talk about Investors with their Realtors it's relationships property manager is about tenant relationships and if you can be that part to an investor you could potentially get yourself some Equity without all the capital requirements great idea so what kind of systems do you use to manage uh your properties basically yeah we use currently apartments.com I actually really like the new Zillow apartment manager uh if you go on zillow.com go to the top right hand corner great software to be able to manage your properties with their property manager tenants can pay their are bills on there they can submit requests for maintenance obviously there's a cost for that absolutely um but it's very minimal um it's much better than people texting you and calling you they submit tickets they have their bank account set up they have automation set up the fees get added automatically a lot of software can help you in your in your real estate really need it when you have one or two properties right that changes when you get to 610 and so as soon as you can sweat that yeah I want to get 10 15 though you don't want to be taking checks like we don't allow checks anymore it's like you've got to pay direct deposit through the software you're encouraging Digital World this is the hey you know I'm telling you it makes you more efficient you know some people flip homes right some people like you buy and hold and add value which is what you're doing here what's the disadvantage major difference why are you pursuing this versus flipping and so on what can you share on that I think it's your time Horizon like if you're looking at flipping you're leaving looking at six to 12 months where you're gonna get in you're gonna make improvements make 30 40 100 Grand maybe on that deal best case yeah yeah and and honestly it's sometimes risky especially an environment where rates are going up or down very quickly the markets can change six or twelve months that's a game changer in terms of your your buying and selling price you can be caught with your pants down quickly in fact my family back in the day in 2007 2008 was doing the flips and got caught with the pants down two or three houses in 2008 it killed us I still remember that losing your house and everything and so I take a much more of a longer term approach and that is I'm not going to be caught with a property that I can't sell or I have to take a massive loss on I'm going to make sure that from day one I know I can build equity in by raising rents improving the property and I'm looking at 20 years down the road and maybe I sell it in 10 or 5 into a 1031 exchange save on taxes something like that but I have a much longer term Horizon and it's not to say that's right but for me as an investor that's how I look at it now I'm not looking at the the quick cash in real estate I typically the people who say it's horrible real estate you're going to lose your money in 2008 everyone lost money and it's horrible to buy real estate they're usually the people with the shortest term thinking that build the house flip it you know fix it up the house flip it uh it's just it's much more of a gamble start early like you right and think long term that's when you get the big payoff it works in business it works in investing it works in real estate it's just a great Concept in life that's awesome as a real estate investor mindset where should it be right now should I still be shopping out there looking for deals or should I kind of like put things on hold until things get better quote unquote yeah I think there's always everyone's always going to find a better time you could be doing it right honestly the best time to invest in real estate was 10 15 years ago it was 20 years ago it was 50 years ago there's always a good time to invest in real estate and there's always good deals to be had there's always going to be a population of people in the news they're saying the sky is falling everything is going to crash you shouldn't buy but if you listen to that you'd never get started right so I think for most people like educate yes be smart but get started like go invest in in education course go invest in learning and maybe be an internship with a contractor and learning about rehabbing or an agent learning about open houses like start educating yourself start getting started with something in terms of actually buying a deal I really believe that there's always going to be people telling you that this guy is falling and everything's falling apart but you've got to pull that church sugar you know you know would have should have could have like there's no one in real estate that's hella property for 10 15 20 years that is is worried or concerned about that even if you bought in 2006 2007 guess what you're still up now I really believe real estate heals all wounds and so even if you buy during a Down Season hold the property right rents have continued to go up inflation is so bad it's so horrible well guess what rents go up hold the property cash flow more so between single-family multi-family commercial what would a entry-level investor should pursue what's what's your take on that I think a good starter is looking for duplexes triplexes or fourplexes because those will still really pencil in and be financed like a residential house so what's cool is you can get a duplex live in one unit rent out the other you can get a four Plex have three tenants and live in one of them as well for your expenses exactly and still qualify for the great conventional financing or an FHA loan and way less money down better interest rates that's a great place to get started is that because when you switch to invest commercial you're financing is completely different ball game whole different ball game you're looking at different type of Bank options completely as well as loan products much more flexibility when you're talking about a 30-year fixed lower interest rate loan FHA it's just it's a much better entry point for most people what do you think would be an awesome best real estate Niche right now to invest in I think in every Niche there's opportunity Unity it's you're looking for the value add when you look at that property what can you do to physically manipulate the valuation either through cash flow or through appreciation add a unit make an Airbnb can you improve the exterior of the house spend three thousand dollars on paint and make it worth ten thousand dollars more you can do that so I'm looking for the forced appreciation the value add and making that property be able to produce more income that's it that's not necessarily a niche you're just every property has that opportunity every property potentially and I think as a market gets really hot it's harder and harder to find those deals where there's what's called a wedge where you're able to buy it for something but the value is is there to add to it that's what I'm looking for that's harder in a really really tight Market when there's nothing out there to buy but there's always opportunity in every single edge whether the office industrial commercial multi-family single families always opportunity it goes to the person that's willing to look for the value add find that property and make the investment like everything we talked about today really applies to like two different categories of people one is a business owner owner who's successful has the cash flow wants to diversifying real estate the others just newbies learning wants to get in what else do you want to add to those two groups of people watching in conclusion I think the business owner I'd say number one focus on your business don't let real estate become a distraction the next shiny thing don't listen to a video like this I'm like oh I'm gonna do real estate now no don't neglect your business focus on having it more passive where you have a property manager where you have good people managing the real estate for you and then if you're someone who's guessing just getting started you don't have money I go sell what you do have and that's time go volunteer to help a contractor rip off the siding and paint the house again volunteer to do someone's open house that's so much information and education you can get for free because you have time you might not have money but you can still get invested and started with real estate that's awesome advice thanks Mike as always pleasure my pleasure brother all right well that's a wrap you guys with my candies regarding how to invest in real estate so I hope you guys learned a lot thank you so much for watching take a second to like subscribe and hit that Bell so that you don't miss any of the content we create for you thank you guys for your support

Channel: UpFlip

Views: 321,463

Keywords: real estate investing, real estate investing for beginners, how to invest in real estate, investing in real estate, real estate, real estate investing strategies, real estate investing 101, real estate investing with no money, real estate investing tips, real estate investing made simple, real estate investor, rental property investing, real estate investment, how to make money in real estate, invest in real estate, how to invest in real estate for beginners, upflip

Id: AXeqIxPVn6A

Length: 48min 56sec (2936 seconds)

Published: Mon Sep 26 2022