Idiots Buy Homes. Do This Instead.

hey guys Graham here we're gonna be talking real estate today anyways I want to talk about what a mistake it is to buy a home especially if you're an entrepreneur especially if you're not renew or are you looking to start a business it's such a goofy thing to do and there are so many little trips and loopholes and ways for you to get messed up it's just goofy and if you know what ton about real estate this is probably gonna be stuff I'm gonna be preaching the choir right here but if you're a normal person like me who's thinking hey you know maybe I want to go buy a home you shouldn't do it you shouldn't do it you should always always rent where you live and own where you rent even if you have the money to do it for example I bought a multi-million dollar home but I'm generating several hundred thousand dollars per month so it wasn't necessarily a problem with me financially but when I looked at the numbers and broke down the risk and all the money that need to be lived messing with my microphone too much all the money that was locked down and all the risks that come with a home and then all the money that's burnt moving the home from place to place and doing certain things with it it's just a disaster and if you're an entrepreneur starting out it's the last thing you should ever do so I want to lay this out to you because I see so many young people make this mistake and I almost made this mistake in a big way and luckily I was able to mitigate it and because of my financial situation it wasn't much damage to me but you need to get these things also if you're not renew you want to see how I generate those several hundred thousand dollars month I'll tell you to get the link to them for free at the end of this video gives away how I built my first multi-million dollar business the ads the sales the marketing everything and if you can't make it through five minutes of a video you definitely don't have enough discipline to buy a house and you're gonna lose your but even more because you're not patient okay you're impatient like me being impatient when you're buying a house most terrible thing ever so there's three things I want to cover first the true cost of buying a home first is renting the true cross up selling a home and then really how you should be using the money overall special appear non trinova sout now I'm not even gonna get into all the hang-ups that can happen with houses I'm just getting to the basic stuff but let's say you've got a two million dollar house you're probably thinking well you know if I go and buy this home it's better than renting because I'm giving money to landlord well let's just look at the cost of living a two million dollar house it'd probably be about twelve thousand a month okay the place I live in right now I think is like worth one point five to one point eight and I pay about seven thousand dollars per month in rent okay so way none off word no you think Oh alex is losing seven thousand dollars per month but if you go and get a loan to buy a home like most people do what you're gonna need to do first off is you're gonna be paying about forty three thousand dollars per year in Texas and property tax and you're gonna be paying about sixty thousand a year on a three percent interest rate loan on a house like this you're going to at least probably be spending about twenty thousand a year in repairs if that so right off the gate right here I'm spending about a hundred twenty thousand dollars a year about ten thousand dollars per month just in hard cost just in hard cost before I'm even paying parts of the mortgage so you're losing nearly the same amount when you're renting and owning that's one thing I want to point out if you factor in HOA fees if you're living in a condo same exact thing and this excuse so many people make especially when they're young and they say hey you know what I've heard that it's better to own the property than to do that and it's gonna go up in value not always the case now is the case especially if you want to put the money elsewhere I'll talk about how we're gonna invest the money here in a second it's much better but the other thing you need to understand is that one of the biggest risk when you hit a home is that it really takes away your ability to move quickly and when you're a beginner entrepreneur or starting up as an entrepreneur or is just an entrepreneur in general and you want to take risk for example one of the main reasons why I got rid of my home is I wanted to start a high-risk business and I needed a lot of money in the war chest and I want to make really long-term decisions when you own a home you can't make long-term decisions and you have to really always keep that money that you need to spend on the home and the maintaining and property taxes always in the back of your head because it's not going anywhere you can't get rid of it if you have a job and you buy home you were locked into that job for life because you cannot go and lower your monthly payments the same amount you can't find a way to offset the home you can't find a way to get rid of the home quickly without losing a lot of money you have to understand that because when you go and sell a home what's gonna happen first off let's say we own the home for three years we're already out three hundred and sixty thousand bucks that being said when we sell the home you're gonna have realtor fees and if you're like me you know you're not gonna be selling the home on your own you're not gonna be going and doing this you're gonna have probably six percent in realtor fees okay great well there's another 100k and just losses to Realtors you're gonna have all sorts of other people pointing together deals you're gonna have like the bank fee they're putting together the loan fees it'll just stack up you're gonna waste another 100k in that situation right there and it's always going to apply to lower in homes as well okay and so you're gonna lose money with that but they're true most deadly thing about buying home is you think that when you put the money in you can get the money out whenever you want no no no you can get the money out and you can get the money that you want out when someone agrees to give you that money to get out so for example I just want to get rid of my home really quickly I'm like okay we're just gonna flip it and whatever and it's been like two years so that's going to appreciate no no there's all sorts of things that happen with your home first off a lot of homes don't go up in value a lot of homes to keep the same value but in order for it to go up in value someone has to agree did it's gone up in value if you want to get rid of your home quickly usually what's going to happen is if it doesn't sell in the first week the value is going to go down and you have to wait for the person that really sees the value in home people are gonna look for the perfect house and so what's gonna happen is if you want to get the money out you're usually going to have to wait months to saw your home that locks you down say you want to move say you're tired of living the place you just stuck there okay with my place right now I can bounce like that I could boom I'm gone instantly and if you don't have the income I do you're not able to make a lot of decisions that I made okay so fortunately for me I save up most of my money I store most of my money and I only spent about ten percent of what I make so even if I had to take a hit selling the home I was able to do it because of the long-term focus that I wanted to move towards however if you're not super long-term focus in you're not saving up all your money you're not gonna have that option so you're gonna be locked in and it's going to be a massive distraction and so you really have to look at everything overall if we were to just go and rent some place we just we know straight up exactly how much money we're gonna spend and it's not going to be all stored somewhere all at once and we know exactly what's going to happen over the next year the next two years and we can leave it any time we're not hooked into anything we're not hooked in any disadvantages there's no risk there's no distractions there's no anything when you get a home you're still going to be paying if you take out a loan you're still going to be paying something very similar to if you rented the same exact place with every single disadvantage and I'm not saying paying something similar in your mortgage so this is going into the home itself I'm saying paying something similar and just the hard cost that you don't get back in the home and so even if you're paying a little bit less on the mortgage and when you factor in property taxes even you're paying a little bit less it's still better to do this it's still better to do this and there's a few reasons why first off everything I just broke down the distraction the risk the not being able to move money around the having to just basically give money away to people everybody that's in the deal it's it's nuts and so you also have to understand also if you want to go and make a profit on your home overall this is the last thing I want to point out say I got that two million dollar home okay every single year I'm losing like a hundred thousand dollars on this thing so in order for me to make a profit on this home really it's going to have to go up substantially it's gonna have to go up to about 2.4 million over a set amount of time but with your home aging with other things coming into it that's not always gonna happen especially in a shorter timeframe so you're just gonna lose this money right here and so it's just again owning where you live is just gooftroop worry let's scoop Trouper what you should do alright let's say you're going to get a two million dollar home or whatever home you want to get to this is a shed in California and you were gonna put $400,000 down what you should do is this so you can get the best of both worlds so you don't want to go put this money down and plus all the extra money you're gonna lose with a home is just bonkers what you should be doing is go take this money and buy a $400,000 rental property let's just say you get like an 8% return okay great you're gonna be making $32,000 a year passively then you could go and get some places probably worth the same amount as this home and lived there for I don't know seven thousand month a bomb place that's really great and what's gonna happen right there is that rent is almost cut in half because of this and you don't have any unpredictable bills coming in so you have this four hundred thousand dollars stored and in a place where if you want to get rid of it you can get rid of it without changing your living situation much easier much easier and so we're really only paying thirty eight hundred dollars a month in rent I realized these are big numbers I'm just looking at numbers that like I would look at but also being said when you do something like this and you don't have this massive amount of money coming out this allows you to be much more flexible with your business and allows you to really focus on building up warming so but for example with my business I didn't go and buy a rental property I just said I don't want to have this distraction in my life I don't want to have this blossom money for no reason I'd rather just go live somewhere where everything's predictable because then I can take this money out and put it into the war chests of my company I would much rather have for example four hundred thousand dollars in my company then locked into a rental property because I can I can I've turned six thousand dollars when I got the military into tens of millions of dollars and so it's way better for me to just store that in my company and use that to make long-term decisions see where you want to keep your money at in my opinion is in place that gives you leverage and strength if you don't have a lot of money in the war chest of your company you can't make long-term decisions so you have to make short-term decisions that aren't good for your customer that aren't good for your business and aren't good for you so for example with my home you know I was running a business that I didn't really enjoy I didn't really enjoy running and make money online business I wanted to go pure SAS and only focus on my business this involved me saying hey I'm gonna work in a business that it's not going to pay me for one to two years and the last thing I want is this multi-million dollar anchor on me in case I have to make a long-term decision or case I have to just basically live the lien for a little bit I can't change my monthly rates I can't I can't change my monthly cost of living and I can't move this money around if I need it it's just a complete disaster and so if you're an entrepreneur what you should consider doing is one of those two things don't keep your money stored in a property but if you want to if you're one of the people building passive income or something like that it's far better to go and get for example a rental property and then use that to pay your rent because this money is stored right here but again with four ental properties you're gonna get the same tax and annoyances and all the things that come with it so you should really be buying rental properties in cash first off you're looking to just make a profit from them but again it's still a colossal just it's annoying it's annoying what you should be doing as an entrepreneur is you should be keeping a or you should be renting because money comes out slowly then you're going you're still going to lose money just like if you're owning a house but it comes out predictably and slowly and you can adjust it very quickly your life is gonna be very unpredictable as an entrepreneur lasts and you want is an anchor what you want to do if you're thinking about buying a home a home is buy a home exit after you've exited your company buy the home completely in cash no matter what you never ever take a mortgage buy home completely in cash and do that when you're in a position where you're not going to be moving and your life is extremely dick table and you are in a position where you don't need to make long-term decisions anymore and frankly I don't know when that's gonna be for me I am all about long-term decisions because frankly it's not important to me that I own a big home it's important to me that I build a billion-dollar company in this one industry that I want to get into and that's what's important to me okay that's what's important to me and so it's way easier for me to keep my leverage and my fuel for my business in places I can control very quickly real estate is not that real estate is not bad so I just wanted to point this out to you when it comes to buying a home first off you're not really going and putting the money you're not investing it back into yourself you're still losing money just like if you were paying a landlord except it's unpredictable you don't have control over that that drain you can't just say okay I'm then I'm gonna pay I'm gonna move somewhere and pay only $1,500 a month right I could literally right now bounce out of here pay two months two more months rent and reduce my hard cost of living to five hundred bucks a month if I want if I wanted to go and eat ramen noodles I could do that instantly with a home you can't do that and then it takes away from your war chest it's a massive distraction don't buy a home if you're not entrepreneur especially on a mortgage that's it guys that's my best advice to you as an entrepreneur to another entrepreneur and my second best advice is if you want to see how I built these businesses that have generated tens of millions of dollars if you go and like subscribe hit the notification bell I make it post on YouTube in the community section about once a week what this post is going to do is it's gonna link you to where you can get all those courses for free it's like 30 40 hours worth of training I used to charge thousands of dollars for all these courses combined I don't sell beginner courses anymore so I'm just giving away now and using them to get you incentivize subscribe to my channel when you do that YouTube is going to make sure that you see that post an algorithm and then you're gonna be much more likely to see this post when I keep it up for three to four hours now if you want to actually be a super effective entrepreneur check out the videos after this the nightmare mode and the dopamine detox video are so essential for keeping your focus and maximizing your output as an entrepreneur if you want to see how I keep additional focus and really how I keep my life super flexible so all I can focus on is excelling at what I care about check out the minimalism video as well other than that leave a comment or something and I'll see you next time [Music]

Channel: Alex Becker's Channel

Views: 349,723

Rating: 4.7945213 out of 5

Keywords: alex becker, buy a home, entrepreneurship, financial

Id: 0BIozLE1kLg

Length: 13min 38sec (818 seconds)

Published: Fri Jul 03 2020