Mistakes Most People Make When Investing in Real Estate: Real Estate Investing Made Simple Live

[Music] [Music] [Music] you [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Applause] [Music] [Applause] [Music] [Music] hey welcome grant cardone here real estate investing made simple every Monday I come to you to talk about what you got to do to get in the real estate game alright today I'm going to be talking about something you need to know honey when you fix this for me the mistakes if I can keep you out of the potholes you will make money okay some of you out there right now sending deals in to me calling in you can call in today you can call in semi your deal I'm gonna ask you two questions do you have a deal or do you have a question be ready when I call in first thing I want to share with you is the mistakes that you're making in the real estate game avoid these mistakes and you will make money if you love real estate you've always wanted to get involved in real estate you want to do the real estate game but you don't know how to get started don't know where to start don't know what to buy don't know how to get the funding don't know how to manage the deal this is everybody's problems right here by the way Johnny am i a little crooked because it looks crooked over here alright okay we're talking about mistakes to avoid alright what do I got to do move over you got them for me Johnny or what now you don't where are the mistakes I thought y'all we're gonna put them up there for me mistakes to avoid the number one mistake with real estate is never buying a deal number one biggest mistake you guys never buy you never buy because you can't find the deals I got a buddy right now called me up and says look I got a bunch of money I'm gonna either invested with you imma buy my own deals if Brian ever gets in here then I'll have I'll have what I need where the mistakes well I want people to be able to see him number one biggest mistake is you're not buying deals so buddy of mine calls me from the Midwest he says to me I'm out looking at deals I'm thinking to myself yes send it to me dude I'll help you with it okay I'm thinking myself you know what I'm really thinking you just wasted time you're not gonna buy the deal okay you're not gonna buy the deal you're gonna look okay you're gonna look and you're gonna have a bunch of energy for look and then you're gonna go to loop net you're gonna find a deal and you're gonna be like oh that's it that's it that's gonna be the one now you get all excited that is gonna be the one oh yeah that's and then you go out and look at and you're like oh that's garbage I could have told you that by the zip code right I could have told you that from a google satellite search you don't want to buy garbage okay number one you never buy you never buy you never get around to it you look and you look and you look but most people most people actually give up on the looking before you get there okay number two number two biggest mistake he's doing it why wasn't it already done though guys find too small man you're buying too small if that comes out to buying too small then I'm moving to Saudi Arabia does that look like Hebrew to me you can tell I got my country's mixed up okay number one you never buy and the second thing is you buy too small let me explain to you what that means get rid of these John I'm not going to use this okay let me tell you why first of all you look and look and look that's fine that's fine you should be patient when you look but when you finally find the deal you should know what you're looking for you're looking for remember the first mistake you never buy you're looking for 16 to 32 units as your first purchase you should not look for less than 16 units do not even waste your time twos fours 812 leave them alone why because they're never gonna produce enough income for you to warrant being in that deal putting money down number two keeping the deal in down time so we will have down markets so that you know you're gonna have a down market and you know who gets killed in down markets not syndicators okay and not real estate professional investors who gets whacked are the amateurs about deals that were too small number one you're not going to buy the deal number two because you're looking to much number two to small number three number three number one not investing you never make the investment number two you went to small number three single-family homes leave them alone okay it's called the S F are in the first break all I'm gonna do is cover the mistakes leave them alone one door means no more if it's got one door okay by the way the back door does not count as a second door I know some of you think the back door counts as the second door it does not if it has one door at the address just remember this one door no more and I know a bunch of you out there buying single-family right now you're out there looking you're getting all seduced into it okay Scott Simon's just bought a house he can't wait to bring his in-laws over they're gonna be like Oh Scott you've done so well you've done so good people determine how well you've done in life by where you live or not people that you need the opinion from number four number four really it's really really hard to do this today but some of you could still do it too much debt okay I had this guy make this silly video about Grant Cardone and how brilliant it is and he's like Grant Cardone is using other people's money I've been using other people's money for years mostly the bank's money I used the bank's money okay I never used too much of it doing you guys need to know what the balance is for those of you out there in the military and for those of you out there buying single-family let me tell you biggest problem with single-family it's too much debt I can get a I can get three percent down you should know right now to run right I can get 0% inch or so my college loan run okay I can get a credit card free and they're gonna give me some baseball tickets like my mama used to tell me grant when in Vegas if they offer it to you say no do you want a drink no would you like insurance that'd be a no that if they offer it would you like to sit down sit sit please have a free seat at the table no don't sit down okay using too much debt is a mistake number five very hard to do that today though except in single family we can't do that like I just bought a deal for 50 million bucks fifty million I put 17 million down we financed 33 million dollars okay if the market goes like this crash I have 33 million dollars from something worth 50 I just got 17 sitting dead and by the way they can't happen we already planned for it okay that's gonna be dead money for three or four years and then what's gonna happen banging it'll spike again right I'll wait for this to correct itself by the way it will over time number six buying deals that no one else is competing on not a good thing number seven now using a broker dumbness amateur move not using a broker I'm gonna save 3% or 4% I'm gonna say bye-bye okay if you got to say 3% to make it make a deal make sense that deal doesn't make sense now number eight not looking at enough deals you look at one or two deals and then you close shouldn't do that number nine you can't move outside the market you live and we're gonna come back and discuss all these in number ten not knowing the market that you're buying in stay with me there's Grant Cardone real estate investing made simple where we make you money for sure we don't make it for quick wealth dynamics believes everyone has the god-given right to own their potential most of us don't because we spend 40 hours per week serving the 40 year to life sentence turning our precious time for worthless paper called money we live on an economic planet and time and money do need to be exchanged but it doesn't need to be your time of your money we teach our clients to secure income producing assets that make the time and money change for you so you can buy your freedom back and live a life of abundance and prosperity if you get there we must know how to make money how to keep it in how to multiply it wealth on Amex provides coaching education accountability and community to help you build wealth join our coaching program get educated on the wealth dynamics University and begin networking with the wealth dynamics mastermind group today to get started go to wealth dynamics calm learn how to invest in real estate like grant cardone but you don't have the cash to invest yet reach out to Chris root and his team where he will show you how to invest in real estate to build cash without credit or much money by learning how to wholesale real estate we'll show you the right way to build cash so you can invest in multifamily apartments and other real estate investments like grant cardone reach out to act Chris Reid entrepreneur on Facebook now super grant cardone talk at WF G's latest convention some questions might be raised who 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get a deal how to make money in a deal if you love real estate but you're finding yourself not pulling the trigger because you can't find the deals you can't find the funding and you don't want to manage the deals because you don't want people calling you this is the number 3 the top 3 reasons people tell me they don't buy real estate people say now love it makes sense to me I get it like I would love to do it that's what I hear mostly from people I don't have the time to find them don't know where to find them don't know where to get the deals I go on loop knit I spent 3-4 hours on loop net half the half the deals are blocked out I can't even find them I don't know who to call I don't they don't return my phone call like how do I do this and then and by the way you're just trying to find a deal you haven't found a manager yet you haven't found funding yet you didn't found a tenant yet you hadn't run an ad yet nothing these are the 10 reasons that are the 10 mistakes that you're gonna make when you're investing in real estate by the way I deliver a show every Monday so if you like to listen in your car and want to really get your real estate graduate degree on just download the show or not from iTunes it's real estate investing made simple with the top three or four store shows on all of iTunes for real estate real estate investing made simple if you're watching on YouTube or Facebook please throw something in comments if you have a question a problem a situation I want to help you buy real estate 90% of the people that watch this show are not qualified to invest with me means are not qualified you're not a qualified investor to invest in a fund that we've created so I'm here to educate you for those of you who are qualified and would like to invest with me and you want to do big deals these are big monster deals these are not little deals these are not thirty unit deals these are not sixty unit deals the I'm not buying 60 unit deals there was a time when I did I don't do it anymore okay if I can help you look at a deal maybe you want to start with 60 units you want to put your toes in and fill it out Oh how's it feel see this cold your foot was in a sock of course it's gonna be a little cold it's gonna be wet too don't be surprised oh it's oh oh it's dirty too okay might be some mud and there might be some crustaceans down there who knows man maybe some piranhas up there Greta you scared that's why you dip your toe toe in I don't dip my toe toe in why because I know the deals are good by the way the bigger they are the better they are the reason I say that is because the less deals available in that size just supply and demand concept okay number one not investing number one mistake that you're gonna make in real estate is like literally if you could just avoid number one that means you would get in the game you're going to buy real estate this year number one biggest mistake is not investing I should have been doing this from the get-go the first three years that I shop real estate I could have bought almost anything I looked at I always knew what a good deal was and I knew what a bad deal was I could have bought everything if it produced income and didn't take on too much debt I would have made money on every single deal I bought over time number two you're gonna look at deals that are too small this is the toe in the water syndrome this is your mama saying a walk before you run test the waters not in real estate you do not want to test the waters here you'll end up with garbage number three st. very similar to number two by the way single family rentals leave them alone they get a lot of you call me hey man I got some property it's in Charlotte it's on the water it's a river it's a it's I got some Appalachian Mountains stuff man I got a deal on the lake man we could we can rent it it's gonna be vacation in one door no more stay away from it I don't want vacation rentals leave that for the rich people and in Park City I just rented a place for my guy what did we pay for that joint 120 grand to rent his joint my first house was not 120 grand I rented it for a couple weeks at 120 K okay he's got 19 million in I said man thanks for written to me bro he's like you think it's a good deal I think it's a great deal it's stupid it's ridiculous you'd rent me this place for 120 grand you got 20 million in when I bought those uh those tickets in the World Series that I was on the front row I paid 115 thousand dollars for those two seats my wife does not know the difference between a curve and a freakin slider she said next to me her seat was 60k the owner of the seat set to my right and I said thank you so much for selling me these seats so cheap he's like what I said bro how many years you been coming here 19 years he's been buying Dodger tickets okay hoping one day they'd be in a World Series and when they finally were nineteen years he sold his two tickets I got to write one check he's been writing checks for 19 years it's all about how you think okay stay away from these singer family Reynolds they're stupid these are four punks I'm telling you these are problems okay debt too much debt how can you get in too much debt today well you either bar too much money from the bank and who the who do they do that on they don't do that on 32 unit deals the bank will never lend you too much money on a 32 unit deal because their lending standards are different the most they're gonna lean you on this deal is probably on 22 of the 32 units you're gonna have to pay for the other ten now the where some of you knuckleheads will get in trouble is you'll go borrow money for the other 10 from somebody now not a bad deal if it produces enough cash flow to support the 22 and the 10 without ever paying you anything because I guarantee at some point in the cycle you're not going to produce enough cash flow there's been deals that I had that were great deals that one year in the cycle I had a deal that it was 11 years old and one year in the cycle we had to stop all cash flow for one year not because the economy was bad but because we needed to pour all that money the free cash flow into the rehab of the property I wanted to rehab the property the next year we spiked we doubled the cash flow the second year the twelfth year of the property actually we we picked up the year that we missed you follow I'm saying okay number five buying price you don't want the cheapest deal you want the best deal you want the best deal man I overpay to get deals sometimes why would you overpay to get a deal oh it's all in how you get to deal with the money's made when you're back not in this man the money's made every month while we sit in wait and rents go up over time okay do you have that article that I sent you run cap rhymes with this by the way say how captain Ron doing don't buy deals that are unwanted you want competition I want 17 18 19 people I've had deals where 63 people were looking at a deal the more people that were looking at the deal the more I knew uh-oh somebody wants that deal if I could just score that deal I got out of 63 people if I got 63 people bidding on a deal today and I buyed the deal for too much guarantee you two or three people out of those 63 will pay me more tomorrow than they offer today okay no broker on the deal is just dumb stupidity I bought a deal off market and hired a guy to represent me no deal flow you need a lot of deals number nine number nine I got to look back in my notes I got so much information day you can't move out of your market move out of market you need to move outside of your market for those of you out there you're in Kansas and you want to buy your own deal here's the problem you need to move out of Kansas as some canvas can Kansas at some point some point you had to get I got a buddy he's super rich he's in Los Angeles I'm like hey man what are you gonna do he's like I could I could buy my own deals I said yeah you could buy your own deals then go bomb he's like but but I gotta buy my own market to do that exactly and that's a problem for him right now cuz it's an overpriced market number 10 you don't know your market how you gonna move to Phoenix if you don't know the market how you gonna move to Miami how you gonna move to Orlando or Tampa my name is Grant Cardone this real estate investing made simple we got six callers on the phone and I want to hear do you have a deal do you have a question hey are you looking to invest in real estate my name is Grant Cardone I'm the founder of Cardone capital and for the past 30 years I've been making money with my first business taking that money and putting it into my second business real estate if you're anything like me the hardest part was making the money the second hardest part was where do I invest it now that I have some when I looked around my only options were stocks bonds and mutual funds and I hated all three of them because I'm a coward and that's why I started investing in income producing properties today we own almost 5,000 units around United States have produced positive cash flow every single month today qualified investors can now invest with us at Cardone capital where we give you access to institutional size deals these are monster size deals that can weather time look if you love real estate if you're qualified investor and you love real estate but you don't have the time you can't find the deals and you don't have the know-how go to Cardone Capital calm I would love to partner with you on my next deal doesn't landscape design this is lifestyle design Steve Griggs is the best landscaper on the planet and gives you knowledge and data that you can't even find on Google featured on Huffington Post entrepreneur.com Grant Cardone TV Steve Griggs is the entrepreneur built and designed to help you make your home become the lifestyle of your dreams for more information visit Steve Briggs design.com that Steve Briggs design doctor those computer engineering is at the front of everything digital and technology with the most advanced use of Amazon Web Services artificial intelligence to predict your next sale learn how to predict what your customers will buy next learn how to know and automate your whole business you could do one thing don't make more money Tim Clark is the guy to know a thriving entrepreneur and the masterminds behind artificial intelligence sales processes get automated make more money and grow your business with me go learn Laura ECOC EECOM that's Nkosi be calm right now what's up everybody my name is grant wise the founder of modern investing mastery only reason we run ads is to start a conversation you have something in the guys's attention you got a question you're posing and you got a solution you provide it to learn more about generating motivated seller leads generating investment deals all from Facebook Ads visit w-w-w mr investing mastery calm my team and I have set aside some time to help you master this so you can go off and master business welcome back to real estate investing made simple grant cardone here every Monday 12 p.m. Eastern Standard Time I come to you maybe you're watching on Facebook after the fact or YouTube or listening on iTunes thank you for showing up I'm talking about the mistakes made with investing in real estate don't over leverage know your market okay be able to move to other markets at some point you have to note when I was buying my first deal in Houston Texas I knew that that would not be the only market I bought in hobby I knew I knew one day I was gonna be a real estate player that meant I was gonna have more than one or two houses I knew that I would be buying real estate selling that real estate grabbing the profits and going into another market over periods of time and buying more real estate we've been in now Houston San Diego Los Angeles Tucson Arizona Austin Texas Nashville Mobile Alabama Savannah Florida that's how you make money you move money okay if the money is just gonna sit right there it's gonna get destroyed at some point you got to be able to move the money take the profits go on okay we got we got deals right now and I'm gonna take some colors but we got a deal right now what do we get offered on the Savannah deal and the Daphne deal yeah so so 80 million 80 million trellises and 30 know the whole thing Sadie right so 34 for one what's the other 46 I got yeah that was the offer what I got in the deals what do I have in the deal you have 60 okay I got one of them's called odd and one of them's called Seban all right I have six in this one how much do I have in Savannah six another six maybe seven go have six or more in that one let me show you I'm gonna show I'm gonna show you the value doing these deals this this first deal this first deal was three hundred and forty four units I've never been like might my my mother-in-law lives in Daphne Alabama I was in Daphne visiting her I think we bought her a car for a birthday or Christmas or something and I'm like hey wow that's a beautiful piece of property over there okay found out it was on the market took the deal down it's thirty two million dollars paid thirty two million dollars for this deal I knew I stole this deal when I bought it okay how much were we offered well I was just talking about autumn on okay good so purchase price was dirty for Oh 34 yep oops 34 million okay seven you have seven and half in that deal and I have seven point five million dollars in the deal okay that's a commitment right there man whack a check now what we do is I allow my friends and my brother and some handful of it qualified investors come in and buy a piece of that deal so somebody there's this guy wrote this thing about grants using other people's money I got the money from the dip from the bank the bank only lends me money because they know I'll pay him back I wrote a check for seven point five million dollars out of granny's account the bank wanted to see that happen when I closed okay the other deal in Savannah how much was it two hundred sixty four units twenty nine twenty nine mill it was twenty nine million dollars you had six and a half in this deal okay I put six point five in that deal same deal I bought this deal over Christmas we argued about everything they promised to sue me because I backed out of the deal at thirty we're gonna sue you let's go bring it on ding-dong are you gonna play in this league you're gonna get all kind of threats you better be ready for the freaking the hail of threats and and and big egos and people trying to crush you and I said come on man let's go man what would they do they adjust their price a million dollars we just got an offer for how much thirty the two of them together forty four and a half so I have sixty three in the deals we got offered eighty million okay that means that seven million dollars on these deals now these deals these two deals have paid me almost me and my investors almost every month that we've been in the deals not every month but almost every month we've been paid to wait patiently to make how much money so 40 46 and 34 yeah this is 80 80 mil yeah but how much money am I making cuz this is just bragging numbers up here you want you want by the way I'm probably gonna walk away from this this offer mm-hmm I'm gonna make 17 million dollars I have 11 million dollars in the deal okay 11 million dollars so its projected to make on trellis is 26% uh-huh and then on Autobahn its it's 37 percent a year no total total return on your money no no it's not right you don't you don't know how to figure out total return it okay okay okay first of all I'm making on this deal I have seven and a half million dollars down they've offered me how much money that deal is for this is the profit guys this is the profit above and beyond what I put down on the deal this is above and beyond okay eleven million dollars no that's thirteen that's fourteen million dollars in down payment is going to become 31 million dollars okay that's almost a hundred percent return in three years that's 30 percent of year you own those come on to deals if I've been in three years or four years yeah three years three years you're not a banya if if fourteen million dollars becomes thirty-one you divide just do that dude it 14 a hundred percent of 14 is what 28 million no no 100% of 14 million is 14 million dollars right so if I went from 14 million it's closing I will walk away with 31 million dollars in cash they're gonna be like here man 31 million dollars I paid off all my debt I end up with 31 million dollars and then I say okay you take yours you take yours I take mine and everybody's happy man why because we had the biggest return we could not get this return out of this market for 300 years you understand that that's what we do at Cardone capital we bought monster deals we do not buy 30 unit deals if you're buying a 30 unit deal and you want me to be your partner I'm not gonna do the deal I'm not going to do the deal why because it it has problems okay it's not as wanted they're hard to manage what watching let's take a color okay what watch what happens on a 30 in a deal and the reason I stay away from I'm not saying you shouldn't do it I've bought 30 unit 30 units at $800 a month equals $2,400 is that right how can i man is something that only makes $2,400 a month is that 30 times what oh you're right 24,000 that that's that's 280 $8,000 a year I can manage that yeah that starts getting my attention the management company's gonna want 28 of this just so you guys know I would never pay more than 3% to manage something I promise you am i right Ron they're gonna want 10% on this episode they're gonna want 10% of the total money collected if it's a hundred percent full the management company it won't be you you do not have time to do this you should not do this you should not be taking phone calls at midnight you should be running your business and making more money okay they're gonna want $28,000 if it stays full if it stays full before dead before roof before carpet before all the problems before you even do anything with management by the way we didn't even mention management in the top ten reasons people fail in real estate all right let's talk to the caller's Bryson what's going on do you have a deal do you have a question oh yeah what's up my friend okay partner in business is going to be we're going in a field together okay okay so we have your a $250,000 capital loan that were having please look out for zero interest for 12 months okay y'all looking at a deal from a friend of mine it's going to be a total of sixty minutes six units two separate properties okay two to closing sent two closings right well we're gonna wrap things up as one if possible okay and the total deal cost would be 150 hi I'm fifty thousand dollars what are you saying Ryan Ryan Ryan shaking his head already in my areas in Milwaukee oh how much of the rent tell me to the ranch there man so in the poor place the rents are $500 on average for all four on the property it's a one acre property that currently has a mobile home on it that's on their lease to own for 700 a month okay so let me ask you this is there any other way you can you can make an extra $3,000 a month that I can make an extra green if your life depended on it if your life depended on it without you taking alone without you signing alone for 30 years without you going and buying a piece of property is there any other way you could make 750 bucks a month a week an extra 750 a week 60 bucks a day do what are you doing bro you don't do this this is suicide man this is a slow suicide okay this is smoking weed every day rather than just overdose in the first weekend okay so you tell me mr. grant will impede your why you even take this alone what no man leave this alone man this is the last thing you want to go take a loan for okay too small the deals too small to bunch of single family it says nothing but but a bunch of headaches you know soon as the person that rents from you starts doing well they're gonna go they're gonna come rent from my joint right he's got a pool he got a gym so let me ask you this poor kid he's got security what do you have what's my tenant like at that joint you're at oh by the way with the mobile home out front I can't wait man I'll probably I'll get my drugs right where I live definitely okay so being that I'm not in credit investor what is your suggestion you save money you need to become a great car salesman make a shitload of money and stack your paper so instead of trying to jump in real estate you're saying just building income continued building income you should be you should be selling cars talking to people that want to buy cars showing cars demoing cars and in your time off you ought to be walking real estate you should be preparing for the next slaughter so that you can be on the marketplace with get a dry powder and know where the deals are in the next cycle you're not gonna buy in this cycle dude a lot of you out there you should not be buying in this cycle you're gonna get your head caved in there's a whole bunch of people gonna get whacked three or four or five years from now you can be like cordoned said to buy real estate yeah I said you could get wet too okay okay now write down okay we're gonna take our next caller so you guys can get whacked by the way there's a lot of people get whacked in this real estate game Ryan you know not a percent how many people you seen get their freaking just like like in 2009 when I was buying real estate on the small level yeah I was buying stuff for 50% off so the person bought a four-plex at 3:20 i bought it six months later for 125 to 150 you and I had that conversation two years ago you're like look you're playing small you got it you got a scale up I sold everything the appreciation went up 30 40 % and that's when you got to get out so people talk about buy low so high right now it's just the high market for the small investing yeah yeah one four units assist it's just a high market that's why that's why if you notice what I started doing here recently like we used to buy what's called value add the last the last deal I did was a new deal it was 50 million dollars why is that because the because this deal became cheaper to purchase and new then the value add the value add suggests there's some I'm gonna buy it improve it a little bit and do better off with it right because because I'm gonna have I'm because of some value some some component something I changed on it I'm gonna get bigger rent or I'm gonna sell it to somebody else I bought a brand new deal because this became too hot okay so that's why I say you got to be in the market this is a big mistake that you guys make mistake number nine you're not in the market long enough to understand the market and number ten you can't meet move to new markets you have to be willing to move I just bought a deal in Orlando never bought a deal in Orlando we're looking for more property in Orlando right now because there's some things going on there that would indicate it's a great deal we just bought deals in Houston why would I go to Houston why would I get on a plane and do five cities in one day I'm looking for property I'm hunting I'm a killer I'm looking for where do the birds move the geese are not in the south during the summer they move up to the north so if I want to kill geese in the summertime I got to move to Canada okay all right if I want to shoot them in the winter time I got to move back to Louisiana okay next caller Andrew do you have a question do you have a deal I have a question yo go ahead and hit it man yes sir so I'm 25 years old and about four years ago sort of learning how to buy houses on contract and that take oversight of that nature and I mean cumulated about about a hundred dolars a lot of single-family stuff one mobile home community yeah and I wanted your professional advice on the best way to maybe sell some of those so I could start doing bigger deals yeah what I would try to do I know it's gonna be almost impossible to do the whole hundred but I would try to go I would try to build a portfolio my game there my goal there would be to build a portfolio ideal situation all 100 units okay so I would I would put together like this is just pure brilliance right here okay I would put I would take advantage of the things that I'm saying right here I would put together all those and try to have coordinated leases on all of them I would manage the entire portfolio so all these would be properties right now you're going to sell them you're going to try to sell all of them as one deal okay okay this this doesn't something like a nine its Evansville Indiana so it's a good education you know nothing that's first the beats or anything like that obviously but yeah no matter no matter dude oh you're selling right here all you're selling is income you're gonna look for a Dennis chiropractor an amateur nine cap can cap a cap or should I ask I don't know what's the Mon you're gonna kill him you're gonna kill him no matter what it is you got nothing in okay so what you want to do is put a tenant in each one of these let's say this a $500 a month rent times a hundred this is the story you want to tell I have the lease in place I have the tenants in place I'll manage it for you doctor chiropractor foot surgeon masseuse whatever amateur real estate guy I have the whole package it's big enough okay yes sir you see what I'm saying and I do it and they're already bringing in over fifty thousand a month so so I've got so the deal is doing six hundred grand a year okay you're gonna manage him for sixty thousand a year you're gonna do that for them cuz you're that caring guy yep you're gonna manage it or are you gonna you're gonna you basically you're gonna sell this guy an idea hey you're gonna get income on real estate I have the whole portfolio ready for you we can do we can go to one close there'll be a hundred different transactions right but you just got it you got to do the work upfront this is called value add by the way the value add is what I have the tenants in place and I'm doing the management for you you're gonna do what other people don't want to do next color see what I'm doing here yeah okay again again but but you see what he's doing there - so he's buying single-family houses right yeah and he's trying to play in a bigger league yes see what a lot of guys did when I was buying for fluxes as they were saying hey here's a four-plex based on the cash flow this is the cap rate right when in reality one to four units is appraised based on the comps in your area right so you could spike up the rents so what ryan saying is this okay one two for you it's income does not determine value that's right okay the comps do and the comps in a down market are going to kill you income income the income produced by this phone probably bad example the income produced by real estate is what should determine the value of the more income it determines what's the guy's name Uglich louis Glickman said that the best investment on earth is earth the best investment on earth is earth that pays you every month because then you can keep it right I I don't want land in Antarctica it doesn't pay me I need something that pays me income income determines value okay and that's why so many of you out there should not be buying deals on your own I'm just telling you you shouldn't be buying deals on your own you you don't have enough money yet to buy the bigger deals the bigger deals are gonna have the value because they're gonna have the income in the future when the market softens again when we go from four percent unemployment back to six it'll happen robots are coming there will be disruption in industries and entire industries will get disrupted the Macy's and the JC Penney's and the targets we know they're gonna go out of business is only a matter of time before the chapatti gets replaced by a robot and Amanda Burger King people don't need to be there anymore it's just gonna it's a win mm-hmm okay those jobs are gonna go to where I don't know but I know this that person is gonna rent we have the highest rental in the history of the United States of America since the foundation of the United States of America we have the highest percent of people renting in America today ever in the history of the world at least in the United States what does that tell you you think that's gonna change you think all of a sudden tomorrow okay I can go buy a house now because Allah said it became affordable maybe I doubt it I think that this continues all right so what what does that mean income by the way determines value so the better the income in that market that's why you guys got to do some studies you can't just buy this stuff everywhere in farmland Evansville Indiana and there's no jobs and no income you're like hey maybe not so it's gonna be comp driven which means if your neighborhood is a town of blight black out vacancy problems toward 20 grand grant that's worth fifteen what do you mean man I got it I got a renter there doesn't matter grant the cops the cop parable sales determines the value you don't want that okay when I buy something they don't put comps on it they determine the value of the property on a fifty million dollar deal they determine the value of the property and you're like you're sick of hearing me talk about 50 million dollar deals what you should do is figure out how to get involved in that 50 million dollar deal that's what you should do because when I look at a deal unlike how much income does that deal produce right I'm looking at I'm looking at office buildings right now I got a deal that produces ten million eight hundred thousand dollars where they income a year that deal produces five million dollars a year yeah this deal right here this deal produced wine almost five million dollars a year this is open to five huh and a why is to five yeah okay so the NOI and again these sometimes these shows go long you guys need to watch it all the way through if you can't watch it all the way through trust me you have zero business buying real estate by yourself the only person is gonna benefit from this is the default company to bankruptcy company when they come pick it up they're gonna send a tow truck over to your apartment and they're gonna just take the whole thing out from underneath you and you're gonna have it on your damn thing for seven year gonna be like I thought for sure it was gonna make money here no you know no I didn't say that man I said you can get whacked right why do you think the bank wants to give you a 90 95 percent loan on a single-family home you think they feel obligated because the way they vote to get you a house are you kidding man because they need to lend money they don't have enough people to borrow money from them today alright so I'm buying I'm looking at an office building right now it's ten million dollars of income that's how I'm making a decision on it not because it's pretty ten million dollars where the gross income this deal does five million I'm like yeah this would be interesting okay Wow okay now I got to determine how good's a tenant will they be there how long Solis what happens when the world comes apart will this location be here in the future that's what you got to think about listen you're not buying a car you buy a car do I like it no with property you're saying it has income will I like it three years from now six years from now more importantly me liking it with a marketplace like this location three years five years seven years okay next caller thanks for watching today thank you for your comments by the way really appreciate you posting comments below what's going on Canada do you have a deal do you have a question Canada come on man yo what's going on brother you have a deal or do you have a question we got a deal uncle yi all right bring it on up in Canada bring it on for young it's a 360 one unit deal the addresses one huntington-hill okay I don't have my computer so can you pull it up Ryan yeah one Huntington he'll how much is it it's 85 million we have a confidential agreement on it and we have offered badges there they have it listed at 89 million but we put an offer in at 85 Oh beautiful so you're gonna put about 30 million down to buy it right but then how much you're gonna put down to buy that deal by 17 million 20 percent really okay hey you're the expert it's a lot of it and I said a lot of leverage why are you putting that down email yeah because that'll bring our word that'll make our return that that just works out with the numbers that we've that we've made that we'd come up with okay okay okay good so let's let's underwrite this deal all right let's see if this deal makes sense what's the address again one Huntington eel yeah I'm not I'm not gonna just gonna look at the deal here let's say you you pull that up sixty-eight million dollars where the debt is gonna cost four million bucks two years that is that what you have it's going to cost yep I don't that much n I think all the bank either probably took to you two days to come up with that number okay and what is the what is the noi on the property the noi is 3.7 mm yeah well you won't get along with that deal they're not gonna give you a loan they're not gonna lend you four million dollars whether debt on a deal that produces 3.7 million now mash again what is the net operating income Nash Humphrey gross less expenses before death do not include the dancer so the the gross the gross income we have down is five point five million and the expenses is about 1.7 million and that comes with them that comes to an ni of three point seven oh okay well if you want to stay with the number that's fine you're not gonna get a loan don't worry about buying the deal because they're not gonna give you a loan thirty percent expenses prize until either you don't even need to worry about buying this one we don't know I don't need an address cuz you're not gonna buy this one bad deal no it's not a bad deal it's a deal you're never gonna do you can't do this deal nobody could buy this deal okay you cannot if the 50 okay what's give me your gross again the gross in five point five nine five point five million dollars but these are apartments yeah okay so like there's no time there's no way dude D you can have there's no way that you can spend less than two point two million dollars expending expense in this deal expenses are gonna be forty percent that leaves you with three point three million dollars now now is this before your debt you're figuring these numbers before your debt right yeah okay so also it's also part of a five-year analysis that the realtor who was highly listed as well you can make you can make right now you can make the analysis for 50 years like you're not gonna have it five years from now because they're gonna they're gonna you can't you won't be able to make the payments yeah okay three point three million dollars and your debts going to be four million bucks so you're gonna have to fund seven hundred grand a year to buy this deal sounds like college I mean why do you want to lose seven hundred grand to buy a piece of real estate so it's either overpriced what years the property what year is it yeah I'm sure you know it was built in 2001 yeah okay so what is it what's what what is on the property without it I it makes no apartments and townhouses yeah average rental for about fourteen hundred a month okay so how many units 361 yeah $1,400 how much is that right 360 504 yeah so he's in the neighborhood the income comes right look this this is going to be cut in half your gross incomes gonna get cut in half cuz of expenses it's gonna leave you with this his debts four million dollars okay now look I'll tell you what you could borrow on this deal make it work because you could make any deal work by the way if you pay zero for this deal and didn't have any debt if he didn't have any debt with the deal work he'd make three million dollars a year he put eighty five million dollars down to buy it yeah okay now this is what you should be paying for this deal maximum you should pay for this deal is not an 88 1985 a 66 maybe at 69 okay unless there's something I don't know about the deal like oh we're going to tear them down and build something you know we're gonna build a church there and the Pope's going to give us 400 million bucks and and by the way there's a Golden Goose in the bottom that will never die and it pumps out an egg every hour whatever there must be something I don't know and the Holy Grail exists there and Jesus's only sandals are buried in the basement whatever I mean it's got to be some big story there bro okay next caller that's what so many Canadians come down to by the way if that's a good deal for you guys in Canada that's why you guys should be buying my deals see his dudes gonna make how much money a year what do you say five million dollars five five okay I got a deal that pays five million a year and I just paid 50 million for it mm-hmm so where should he be should he be in Orlando Disneyland Mickey Mouse Donald Duck the tribe they've been there 70 years bar land Oh warm 50 million gets me five million dollars with the income okay or should he go up to the north to where everything's white most of the time okay except for you know 85 million buys me that same five million dollars what deal would you rather be on would you rather be with Donald and his gang of misfits but would you rather be with the Canadians they're all proper and the Queen takes care of the land mm-hmm and there are no guns guns are founded on xcolor oh here's another crazy place Rob make this deal in Canada look good okay this is this is a little smaller not as large as I like but it's a 29 unit deal don't apologize for being a little and it's in Harrisonburg Virginia okay it's it's a college town there's a the college about a you know a mile and a half but those aren't the main tenants there there's some young professionals and they've got advanced degrees and they're working professionals it's a new unit at our new building it's built in 2014 McGarry typically about the two bedrooms there are two bedroom two bath and three three bedrooms two and a half baths the smaller units are just over a thousand square feet the bigger ones are about 1200 good good good okay I'm feeling like I'm overpaying a little bit for this place so I had heard you before but none so the numbers are this so into it a purchase price was going to be the three three five nine five so price of freedom is about 124 Dan Boneh 124 door this guy knows what he's talking about by the way best call of the day giving my shirt what's that shirt you wear man dress shirt what's that dress shirt you wear medium okay good I'm gonna send you I'm gonna saying you a beautiful shirt man hey appreciate it okay good good what's the gross income of the deal I got to pay three million you're gonna put nine hundred grand down to buy this deal right well I'm thinking I'm gonna have to put thirty percent down I think you're right I like that number better yeah 1.2 million I like that number better by the way see I love the way this guy thinks okay we've got to find something else to give them to I'm gonna give you a new copy of my newest book man real estate investing made simple all right okay okay so we're gonna finance 2.4 million dollars that's gonna cost one point that's gonna cost 144 thousand dollars a year how much does the gross income this is our debt number guys okay so write 2.4 million dollars cost no cost $14,000 here what's the gross income on this thing so soon right now with ton bacon cheese 145 is 309 309 309 is the noi no no that's so yeah so the expenses are a hundred and analyze like 207 okay so 207 207 s my noi number Noi is net operating income less than 144 that's the debt by the way that's principal and interest correct typically I get I'll get loans for the first five years interest only because they're big loans provided by a big lender three sixty three thousand dollars is his cash flows if everything goes right sixty three thousand divided by one point two million five five five and a quarter it's five and a quarter percent plus the pay down of the debt which is probably another two points he's earned in seven and a half seven and a quarter percent on his money now my question to you is who can guess the next question one word for letters starts with an E what's the exit yeah right how do you get out of the deal so the my hesitation says what happened was in the part in the offering memorandum they were saying that you know this is mere nerves University and you know you could you can convert this to student housing and cracking crank up the rents and and all that kind of stuff in and then exit with a higher you know it's a higher price but yeah what I've found out talking to property managers and investigating is especially ones that even do you know specialize in student housing they're saying this is probably it's a really competitive market for student housing yeah and that's probably not not going to be your an easy way to go it's going to be difficult to do that yeah so now it makes me so I came back Brown part of the reason they let me let me just say this if it was if it was that easy to do it they would have done it exact and they would sell be selling somebody for a higher or lower cap rate and a higher price right yeah so Maya so it turns out probably my only X is going to be you know probably keep sewing that's why I said in the beginning I came in I probably paid too much because my only accident now is to hold it the goalie by you know the minor you know three to four or five percent if I'm lucky yeah let me ask you something did you buy it already no okay good so so a couple things you could do on this tool let's find out we know what it does now let's find out do you love the location I think it's a great location good really clean property it's just you know it's kind of pride her own pride of ownership thing too yeah so but it's good I mean it's a it's a growing town they grew much you know I think the population went up 30 percent the last eight years or so yeah and there's education there's a hospital you know all that kind of stuff right I can tell you love it he does liked it right yeah only problem is I haven't been there yet and that's the next step what I'm gonna I haven't been there yet so I have to go there I'm gonna no she isn't she how I feel dude I bought a lot of property I never went there I'm like okay I know I like that I know I like the location I know I like the neighborhood I like the crime I like to walk rate I like the property I like the way it looks I like the square footage I like the purse the price per square foot you should know whether you want to buy the deal right now you guys like I kind of go visit it I got to feel it you should you should that should happen it should feel good to you because if it doesn't feel good to you it's not going to feel good to the next person but if I can't it make sense in the money I don't need to go see it it's why I don't like strip joints well I never understood that walked in a strip joint what do we do next this past Saturday I went ya know get started to look at a mobile home parks that have your credible numbers and be out there and I think there's no way I'm buying hers yeah yeah you're like hey there's no way I'm gonna do this deal so let me just go back to your 207 yeah let me tell you where I love this deal at what point I love this deal what what city did you say this in it's in Harrisonburg Virginia it's about an hour and a half two hours from south east of or west of DC yeah and and there's another town called Charlotte so it's like the 10th largest or the like this deal I like this deal anywhere south at three point two million dollars three million won $84,000 and this deal pencils out like this three million 184 okay I put nine hundred thousand dollars down I tried to get a loan with a little more leverage okay maybe I need to personally sat on that loan to do that it doesn't bother me to do that even though most people would tell me I'm an idiot for signing okay - I borrowed two million two hundred eighty four thousand that's not going to change anything a bunch but let's just see 284 times 0.06 I got a 136 million 136,000 dot what'd you say the NR is 207 okay sixty-four thousand divided by 900 I got a seven point one percent return before the pay down of the debt so I'm getting almost nine percent before any rent increases what is the rent at the place well what the Redcoats work now I gotta do that do I need to spend any money is there gonna be a roof is there gonna be paint is there gonna be some landscaping can i improve the rents by 50 bucks if I can improve the rent how many units 29 units 29 i from what I know of the market I don't think I don't think he was gonna I mean I so the market rents for those market rents you know that what the they're telling me is market rents are about a thousand dollars for the two bedrooms in 1200 yeah do you think there's $50 a month in rent I think eventually but night for now for probably three years oh wow that's a shame that tells me something to do you don't want to go in strong on price if you don't think there's a rent I mean everything I've ever bought I'm like can I get 50 bucks for these people for something yeah late well well no we're maxed out right here if you're at the top of the top then you got to wonder how you tell you how are you there but just remember this 50 unit $50 on 29 units is 16 grand a year if he could achieve that by the way if he could achieve that his 64 watch this goes to 80,000 and free cash flow and based on what he paid now he said it's a great question most exciting deal of the day by the way rest of your deals are losers 8.8% before the pay down of the debt remember we're paying down this debt this this 2.2 million dollars we're paying that thing down every month I could show you another way to do it but look man if you if if you're buying something that has no chance of a rent increase you got to ask yourself what the hell am i doing right right here right now okay so keep looking man keep looking or you know what you do you go take a run at this guy you go take a run at this guy and you say hey bro look 2.5 million now watch the deal I'm gonna give you 2.5 million in cash call me up I cut him a check today okay yeah I'll try to steal something from Club him over the head while you didn't look at man okay yeah that's 29 units now now I'm paying less than a hundred grand a door you go in we pay we write a check for the 2.5 put $800,000 down notice your down payment went down again 1.7 okay now we make it some money what I do is I go take a run at the guys see if I could clip him maybe he's in trouble maybe he's hurting maybe he's tired okay when's the last time this deal traded see I can't get off the phone with these guys well you know what I would do I'd go to him and say look I'll give you 2.5 million dollars zero percent Interest for five years I'm going to take this thing off your hand and nobody's calling you anymore I'll manage the deal for you and pay you what you're getting now mm-hmm okay so you could either give him whatever number he wants no interest loan payment the future or take it from him right now he's got no money in the deal yeah okay my name is Grant Cardone this real estate investing made simple this is what I do for you 90% of the people that call me cannot invest at Cardone capital but want to our minimum investment is a hundred grand our average investor puts ran into our fund most of you cannot yet because you're not equipped as an accredited qualified investor do so so what I do because you're not ready to invest with me is I try to prepare you with the right information so you can buy your deal find your deal manage your deal and make money on your damn deal so that you can invest with me in the future because I'd love I'd love to do the work for you we find the deal by the deal manage the deal fund the deal we look at 100 deals to buy one or two my twin brother he'll invest with me on one deal he's like how many'd you look at 100 okay to him he's like how much money you got in 12 Megan okay let's roll that's all the look and he does what did you do grant okay I'm following you he's on my bus so if you're interested you love real estate you're qualified you don't have the time to find deals manage deals fund deals look at 50 deals to buy one if you don't have time to do that call Ryan Ryan Seco for a dough two to five eight two to seven if you want us to look at your deal every Monday I do this send your deal in early to Ryan at card own capital calm and I'll inspect your deal I'll give you a colossal what does it call kalasa PP I'll give you a look we take a look put the camera on the deal take a look so you don't get effed okay alright if you're watching on on YouTube or Facebook please put a comment down okay if if if if you're listening on if you're listening on the tunes man comment man with the top three or four stores on real estate investing right now on iTunes mistakes top three mistakes you never buy a deal number one biggest mistake you're gonna make is never buying a deal it's not losing money on a deal is not picking a deal wrong it's not paying too much it's not buying a deal it's never getting involved in real estate it's a single biggest mistake you're gonna make in real estate number two biggest mistake is you went to small stand up tall number three mistake remember this one door no more stay away from the single family you don't need a living one own it cuz you never do anyway and you don't need to rent them out to other people that are just crackheads thanks for watching you're not satisfied with the status quo if you want to kill the competition if you're ready to grow your business at massive levels I want to take three days to spend time with an exclusive group of people entrepreneurs business owners business managers coaches and experts and show you how to get a competitive edge in your business using social media using e-commerce using sales salespeople cold calls follow-up and a sales cycle and a business cycle that I guarantee will 10x your business in 2018 I'm doing this at The Diplomat Hotel I'll take care of your hotel room I'm gonna spend three days with you and we're gonna focus on a plan that 10x is your business in 2018 [Music] [Applause] [Music] [Music]

Channel: Grant Cardone

Views: 26,457

Keywords: Mistakes Most People Make, real estate mistakes, mistakes in real estate, mistakes made in real estate, mistakes made when investing, mistakes investors make, Real Estate Show, grantcardone, grant cardone, investing, realestate, multifamily, multi-family, apartment investing, great investment ideas, cardone capital, investing made simple, getting rich for sure, top investing mistakes, bad real estate moves, don't do this, investment mistakes, real estate investing made simple

Id: K-fRmjjSfP0

Length: 72min 4sec (4324 seconds)

Published: Mon Mar 26 2018