Real Estate Investing: $10,000 to $100k FAST & Blunt.

hey everyone kevin here in my last real estate update we talked about what it would take for the housing market to crash how likely it would be to crash and if it were to crash how much would it crash if you haven't seen that video yet i will link it down below in the description and in the first comments so that way you can catch up but first let's go through this topic and that is is real estate investing dead in 2021 or can you still get from ten thousand dollars to a hundred thousand dollars in net worth quickly with real estate now many of you know me for covering well depending on how early you found me real estate politics or stocks and the reality is i've covered all of these because they all connect and they all help you make money fast but the issue is real estate by far tends to help you make money the fastest now generally people don't like to hear that because real estate takes a lot more effort than stocks take don't get me wrong i love stocks but there is a time and a place for stocks let me give you a 20 second primer here if i took all of my money with lauren in 2011 when we started buying real estate and we put it all into the s p 500 after the crash we would have tripled our money and turned it into a little less than 60 000 instead we took that same eighteen thousand dollars put it into a house that is now worth well over two hundred seventy thousand dollars of equity just that after selling costs and everything that is if we were to sell that house dump it get rid of it even though we refinanced it twice and took money out of it whatever what would be left over in that house 270 000 after selling fees and everything so now you're comparing 60 000 to 270 000 which is obviously way larger how is that possible well i'm going to show you exactly how you would try to do exactly the same thing again in 2021 okay first let's focus on real estate the very first thing that you have to ask yourself is do you have a pre-approval letter the odds are you probably don't because most people do not have a pre-approval letter standing by you gotta get one you gotta pick up the phone and get on the phone with a lender and go i would love to get a pre-approval letter can you send me your needs list a needs list is just literally a way of asking a mortgage broker which you could google mortgage brokers in los angeles whatever there are millions of them who want to help you out all over the place right uh ask them for their needs list and they're going to ask you send us your driver's license tax returns bank statements whatever you know w-2s 1099s send us your stuff last two years tax returns let's go send it all over to them treat it like a hot potato get this stuff back over to them now all you need to do is literally twice a day you're going to open up zillow realtor.com or redfin or maybe all of them because it doesn't take that long these days because there's just not that much that's hitting the market you're going to have notifications on on all of these and you're going to look for real estate within 30 minutes of where you live i don't care if you live in north carolina or san francisco i don't care if you live in texas or florida i don't care if you live in manhattan or you live in los angeles or san diego and oh prices have gotten too expensive i can't get started here don't care don't even want to hear it it's a stupid excuse it is what it is and i was trying to say that to say that oh i'm trying to show you to go buy real estate at all the top of the market or whatever no that's not the point the point is to build wealth the point is the title can you get ten thousand dollars and turn that into a hundred thousand dollars or scale this for your area the answer in my opinion is yes and the way you do it is you start with a pre-approval letter then you're going to look five minutes a day at each of these three apps to see what the new listings are and you're going to specifically look at properties that are within 30 minutes of where you live ideally whatever you buy is either a two bedroom two bath or a three bedroom two bath maybe even a four bedroom two bath and so that way if you needed to or wanted to you could house hack the property which just and look we've all we pretty much all know what house hiking is right now you live in the master bedroom and you rent out the other rooms if you don't want roommates then don't do it that's fine you can't qualify for a house because houses are too expensive because you live in a city then buy a condo or a townhouse it doesn't matter start with a studio start with a one bedroom but stop paying rent and stop paying somebody else's mortgage now we're going to go into detail on this all right but we're going to keep this nice and simple and streamlined so get your pre-approval letter if you can't qualify for anything and it doesn't i'm not asking you to qualify for your dream home this is not you qualifying for your dream home look if you're renting a two bedroom one bath right now for two thousand dollars a month can you get a one bedroom for eighteen hundred dollars a month and save some money probably and you could probably own it right so like you can make it happen or find what you're renting but don't try to upgrade your lifestyle by buying keep your lifestyle modest and find something that you can qualify for and buy if you can't qualify for anything the problem isn't the real estate market the problem is you the problem is you got to get a better job if you're unemployed you don't have a job you're not going to get real estate if you had a job but now you don't have a job because you're unemployed or you're laid off or you're furloughed you're not going to qualify for real estate either so you got to fix that whether that means retraining yourself getting a license getting a different kind of job or retooling your skills you've got to figure out how to provide value to society to make an income and then use that income to qualify for real estate a lot of people hate the idea of working for the man but i'll tell you the easiest way to qualify for real estate is having a w-2 job like literally you can go to college for four years graduate with a comp sci degree get a job in motorola making 80 000 a year and literally on day one qualify for real estate how much do you qualify for call the lender there's no sense of me going through it right now the easiest thing to do is call a lender the lender's going to go hey well we want to run your credit let them run your credit let them run your credit oh my gosh this whole crap that i hear some people say like oh don't make sure the lender doesn't run your credit let them run your credit in this competitive environment they don't need anybody basically talking back to the lenders you're never going to get a pre-approval letter just let them run your credit make it very very simple okay so now you got a job you got your pre-approval letter you're going to look at properties twice a day zillow redfin and a realtor.com turn the notifications on you're gonna look within 30 minutes of wherever the heck you are stop going outside of 30 minutes if you do not know whether or not it is safe to do a craigslist transaction where you're thinking about buying at 9pm at night first of all you don't want to live there and b you don't even want to take the gamble if you don't know you should know oh i'd feel safe on that street absolutely i feel great on that street that's where you want to be now you have two choices of things to look for you have new construction or you have old construction stuff that already exists resale homes ideally you're going to start with resale homes resale homes require that you understand comps if you are looking at single-family real estate that or townhouses or condos that means ideally you're looking at similar properties within your same neighborhood condos look in the same building townhomes look in the same neighborhood single-family houses look in the same neighborhood make sure you look in the same neighborhood don't walk too far out of the neighborhood and look at properties that are similar square footage if yours is a three bedroom two bath and you're looking at five bedroom two baths that are all the way on the other side of the city you're doing it wrong okay you draw a circle around your neighborhood ideally within the main street borders it's like okay well here's a tract home which a lot of people when they get started with real estate i kevin i can't believe you said tractor i don't want to track home oh my gosh the safest thing you can buy in real estate is attract home because it's the easiest thing in the world to come stop trying to get the farm out in the middle of nowhere and this is not an insult on rural it's an insult on you can't find comps for these things stop don't look for anything unique get the cookie cutter stuff that everybody else has the goal of you buying your first property is not to become this oh look at my house you know fancy show off look at my upgraded lifestyle you want to get the clunker okay you want to get the 10 year old toyota camry and you're going to recondition the carpet and maybe do a little sprucing up on the paint job maybe buff it a little bit and go drive it for another 100 000 miles that's what you're looking for so the best way to find that is look for either condos townhomes or houses that are built somewhere between 1950 and 2000 now ideally the newer the better the newer the better because there's less crap that you have to deal with like in 1950 you got to deal with maybe sewer issues whereas in 2000 you probably don't have to deal with sewer issues it's very simple if you're buying a 1950s or 60s home get a sewer inspection and that'll solve it then you'll know did they already upgrade to the sewer line or not but the point is you got to start hunting and hunt for something that's easy to come again single family or townhouse same area look around the same square footage and compare if flips are selling for 500 000 and there's a fixer that comes on the market for 350 000 and it has 10 offers on it and you're like oh well it has 10 offers on it it's going for 50 000 over the asking price it's like yeah who cares this is like ebay folks i don't give a crap what the asking price is i care about what the final value of the property is if i can get into that 350 000 listing house uh get into it by paying over paying 50 000 for it but the comps are flying off the shelf at 500k now i know at four hundred thousand dollars i could put forty to fifty thousand dollars of work into this and still bump my net worth by another fifty thousand dollars i'm not going to sell the property if you sell the property you'd be much closer to break even because you've got big fat selling costs maybe you'd walk away with 20 grand but the point is not to flip real estate the point is for you to get in build some equity because when you build that equity guess what you're going to do you're going to build your credit you're going to be able to refinance in the future to get rid of mortgage insurance because if you're a big weenie baby and you're worried about paying mortgage insurance you're doing it wrong stop being worried about a half percent or a three quarters of a percent extra on your interest rate it's not a big deal stop looking at your loan from the point of view of oh well over the next 30 years bro you ain't gonna have this loan for 30 years the average person keeps the loan for seven years so stop worrying about mortgage insurance let's just cut to the chase here and be real you're willing to pay two to five percent margin but you're not willing to pay three quarters of a percent on on mortgage insurance it's nuts put three percent down put zero percent down if you're va three percent conventional try to get homeowner assistance google in your area like ventura county community development corporation call them up yo you got any home buyer assistance options for moderate income individuals you might be surprised you might be able to get a ton of money literally for free granted to you by the government as long as you agree to live in the property for at least a year check with your state every state is different but the point is get in to real estate and the point is if you're going to get something that needs work it doesn't matter how much over the asking price things are going for i don't care what things were listed for in san francisco it's a strategy almost you list properties low and purposefully try to overbid two three hundred thousand dollars people are like oh my gosh this house was sold for 300 000 over list that says nothing to me it says literally nothing to me what i care about is what you can buy it for and what it's worth now if you're going to pay 450 000 for a house that needs 50 dollars worth of work and it's gonna be worth five hundred thousand dollars when you're done well then there's no point to buying that because you literally just put in a ton of effort to spend fifty thousand dollars and take the risk that maybe you had to spend more which hopefully you don't and guess what you break even with the neighborhood that makes no sense in such a scenario you're better off two scenarios here this goes into a fork one you buy new construction new construction you pay a little bit over market value but you get 10-year builder warranties there's nothing for you to worry about you just make sure you're not buying like on the outskirts in the middle of nowhere make sure you're buying in an area that's more tried and tested and that is a downside of buying new construction is the neighborhood is not tested you probably know which neighborhoods in your 30-minute radius are like the high quality really desirable neighborhoods with the really entrenched like like safety statistics and everything about it is great everybody wants to live in that neighborhood ideally that's the kind of neighborhood that you want to be buying in you want to be buying in the neighborhoods that have proven themselves so so so important anyway uh if you do go the new construction route that's fine you can do that that's acceptable you're paying a little bit over market value but you're getting the benefit of brand new big danger with new construction don't be a newbie woobie and go in there and start doing all the builder upgrades i literally want you go into this new construction and i don't care if this feels like pouring acid into your eyes do the right thing for your money and your wealth leave the carpet and linoleum and just live with it stop trying to go oh now we own the house we got to do hardwood floor now we got to do wainscoting and we gotta do crown molding it's all a money grab to rip you off and rob you of your wealth the reason people go broke in houses is because they overspend improving them they do not act like pros they act like newbies it's a big mistake do not overspend on real estate so uh fork number one is just go new construction fork number two you gotta make sure you're doing your numbers correctly because if you're looking at a property that has some nasty paint and carpet on the walls and you call up a licensed contractor and i'm not bagging on licensed contractors here okay i've been ran a licensed contracting company okay folks if you look at a property that needs paying carpet here's what you do you call a painter directly call three banners directly go to home depot and find referrals to painters there are people handing out their business cards all day long or better yet you paint it on the weekend you got to scrape the ceiling get a p100 respirator watch some youtube videos and go do it who cares if it's not 100 perfect or find somebody else to finish it for you after after you scrape it all down uh follow precautions yeah there can be asbestos there could be lead there can be mold learn what a p100 respirator is learn how to protect yourself from things that aren't really that big of a deal lead asbestos mold please it's a joke if you just follow the correct precautions as a homeowner there's a reason the epa gives you guidance for example on how you can deal with mold yourself so it's not that big of a deal you got to deal with the issue that's causing the problem if there's a leak it's causing mold call a plumber fix the leak get rid of the mold problem solved you can even do air samples from old afterwards if you want after you clean the place up but the point is things in real estate seem much more like a big deal than they really are so if you go into a property and you call up a general contractor and you take the noob approach and you're in this 1960s property and all of a sudden the contractor comes in and says oh you know the electrical system's old oh you know that's not up to code anymore oh you know the plumbing's not up to code anymore oh you know we should just tear out all the kitchen cabinets oh wow those are some old fiberglass bathtubs oh my gosh we should just tear all that crap out too well yeah guess what you're going to get you're going to get 150 000 whole house remodel bid you get what you ask for you call a licensed contractor you get what you ask for now flip the script and i'm not saying go unlicensed i'm saying i get on the phone with an electrician i go yo i got a property here it's going to be a rental in the future i just need the existing electrical system made safe i'm on a shoestring budget i do not have money to do everything i just want this safe i don't want this property to burn down and i don't want anybody to get zapped can you do that for me great come on out do a bid great perfect what are they gonna do gfcis make sure there are no faults make sure the breakers aren't rusted and arcing and they solve the electrical issues you do the same thing with plumbing you reglaze the bathtubs and the and you repaint the cabinets instead of replacing the stuff you put in 50 faucets instead of 500 faucets because why are you even thinking about putting in 500 faucets when 50 faucets guess what a 50 faucet does it makes water flow and guess what a 500 faucet does too it does the same freaking thing so when people start putting their heads on correctly about how real estate functions and how to make money in real estate it's not that hard okay so what about the title how do you take ten thousand five hundred dollars on a property and end up getting to one hundred thousand dollars well let's go with the example that i gave you which is you find a 350 000 listed fixer-upper i don't care if it's a two-bedroom one-bath from the 1920s or a three-bedroom two-bath from the 1980s it don't matter to me okay newer the better but you don't have to have a strict new bias so you just have to be more aware of other issues that could come up with older okay so now you find a 350 000 property you look at it and everybody's like oh my gosh it's going to take 150 grand to fix this thing up then you look at it from the rental hat perspective and you get these quotes like i'm talking about people like oh kevin we we can get this done for for 45k because your electrician's going to do this your plumber's going to do this you're going to send in the specific trades you're going to be dealing with you're you're gonna be there every day anyway so you coordinate it put in a little bit of work but then guess what you're also gonna do you're gonna go there on weekends and do the cabinets yourself do the painting of the walls yourself scrape the ceiling yourself do a little bit of work yourself it's not that hard if you be careful by the way with demo okay everybody wants to go in with a hammer and start swinging and opening walls big mistake you get the city on your butt you do not want the sitting on your butt okay anything that requires planning you run away from because here's how planning works hey yo architect i want to do plans for my house okay kevin sounds good i'll get your plans in six weeks oh could you do any faster sure i'll get them done in four weeks i'll just rush them and you'll have way more corrections then you submit your plans you're like yay we submitted our plans the city takes eight weeks to get back to you and the city's like here are your plans with corrections and then you get your corrections like cool hey architect can you do the corrections sure in six weeks can you do them in four okay i'll do them at four you submit them again you'll wait another six weeks with the city to get your plans back and city goes oh we have more corrections for you and you literally keep looping down the cycle until you never want to touch real estate again so do not touch anything that has to do with planning don't move walls don't do things that require special plans to be submitted with the city it's stupid just put the house back the way it was meant to be i don't care if the master bath feels small from because it's from the 50s i don't care if you don't like where the wall placement is your goal is to go in there paint carpet clean it up put some inexpensive fixtures in light fixtures and i'm not saying cut corners i'm not saying lipstick on a pig you can do high quality work using lesser expensive materials it's just not that hard hey by the way quick note yeah the market is pretty competitive and one way that i've found to put myself in front of sellers before their properties hit the market is with deal machine if you go to medkevin.com deals you could sign up for a deal machine and get some free credits to send some free mailers and postcards directly to your favorite potential listings that are maybe going to come up for sale or properties that may come up for sale in the future the way i like to identify those is i look for properties that purposefully look like they have an old dilapidated paint color or maybe even a driveway or it kind of looks like the yard's overgrown and beat up but the windows are new the roof is new and it looks like the owners spent a lot of money on the systems of the house like the expense of things but they did not spend a lot of money on the things that are easy to do like paint and carpet and weeding i can do that with my own labor that's the kind of target i'm looking for and so i love sending mailers and i send hundreds of mailers monthly to properties that i've specifically targeted that look like what i've just described so that i can hopefully find many many many many of these deals off market check it out by going to medkevin.com deals all right so now you are fighting to qualify for a property and you see one okay it's that 350 000 house it looks like a great deal and you're like kevin i'm gonna do like you say i'm gonna put three percent down i'm gonna put the little down but i don't have the thirty thousand dollars to fix it up i've got maybe a little bit of extra money to get started on it perfect then that's what we're gonna do we're gonna get started little by little on the thing and every time you get paid you're gonna take your money and you're going to do a little bit more on that property you're going to paint it you're going to clean it up and you're going to slowly clean that place up to where you can live in it maybe live in one room and slowly fix the place up over time you don't have to have 40 50 000 sitting around right away get the place to where it's in a livable state which usually you can do by cleaning it up and cleaning it out scrape the ceilings you can do a lot of the stuff the prep that you need to do the cleaning the paint a lot of the stuff you could do for very very inexpensive costs don't worry about the landscaping yet don't worry about the exterior paint focus on scraping the ceilings clean it up get the gunk out of the bathtubs and the trash out from around the property paint the thing clean it up and move in get the thing into a livable condition and so your goal 350 000 place hits the market you buy it for 400 000 because you write a nice letter to the owners and you wave some contingencies so now you put let's say three thousand dollars down i'm sorry three percent down on four hundred thousand dollars you got a loan of three hundred eighty eight thousand dollars you put twelve thousand dollars down great now you control the property now over the next six months you're gonna spend thirty thousand dollars or whatever capacity you have to spend to fix the property up you're going to do a lot of work yourself if you don't have the extra money if you've got the extra money great then you don't have to do as much money yourself you can hire the rest out if you want to hire everything out get it done for 30 40 50 000 or less it depends how much you want to do and it depends on the area in which you are look if you're in an area in idaho where houses rent for a thousand bucks maybe you only spend ten thousand dollars fixing the place up a little bit of touch-up paint you don't even change the colors and you put in some new appliances and some new carpet and linoleum you call it a day it's 10 grand you're done you're good to go if you're in let's say a southern california house and you want to spend a little bit more hey maybe you spend a little bit more and that gets you to spending 30 000 and maybe now you look very similar because you put your own blood sweat and tears into the thing you have a house that's very similar to property selling for say 500 000 now your basic renovation is not going to be worth as much of as a flip but it's going to be worth a pretty similar to or pretty dang close to what the flips are relative to what you were able to buy it from so let's say you buy a place for four hundred thousand dollars three percent down that's twelve thousand dollars down now you got a loan of three hundred eighty eight thousand dollars you put let's say thirty thousand dollars into it over six months so you're into the deal for 430 000 and now all of a sudden your property is worth not 500 like the flips but 480 let's say well that just created 50 000 of net worth for you see the beautiful thing about that is because you now saved money and worked towards spending the money to fix it up that is now extra equity as well so 480 000 minus the 388 000 you just convinced yourself to save the money to fix up the property to save the twelve thousand dollar down payment all of a sudden you have a net worth of 480 minus 388 but wait with inventory how low it is the odds are after the six months or three months it took you to fix the place up the place is probably worth at least the eight thousand dollars more in which case if your house is worth 488 there you go you've got a hundred thousand dollars of equity in this property and what'd you do yeah you put that twelve thousand dollars down yeah you saved up to put in that thirty thousand dollars worth of work or material maybe it was less again depends on the area you're in depends on your capacity to save but now you've created a hundred thousand dollar net worth and you're not going to sell the property your goal isn't to flip this what's your goal instead well after a couple years especially if the market keeps going the way it is maybe you refinance in the future you'll get rid of mortgage insurance maybe you even lower your interest rate in the future depends on where we where we where we stand or you refinance don't get any cash out do a cash out or do a home equity line of credit and now you have a big credit card built into your home where if you ever needed to swipe the credit card of your house you'll be paying four or five percent interest maybe six percent interest on a secondary loan against your house which you can now use to buy the dip in stocks if you wanted to but the point is you're now in the real estate market and here's the beautiful thing if you have a 480 000 house and the house just appreciates or 488 thousand dollars let's say and then over the next year after you fix it up it goes up in value just five percent just five percent of an increase in value on 488 000 is 24 400 well you put in that 30k plus the 12k right that's 42k you've almost in two years you got basically your money back in net worth and all of a sudden your net worth is six figures rather than oh i put all my twelve thousand dollars into options in the stock market and oh yay i tripled it and it turned into thirty six thousand dollars but then because you were taking on so much risk to triple there's a chance of you potentially losing all of it and you go back to zero or pretty close to zero or or even half like real estate just got you to six figures plus like there's no reason for people not to start with real estate people bag on real estate because it's hard to find a deal well let me ask you if you think it's hard to find a deal are you pre-approved and are you looking twice a day because if those two things aren't true yeah probably is hard to find a deal also if you are pre-approved and you are looking twice a day for a deal and you're like well everything that just comes up in my market is overpriced really is everything just selling over the asking price because maybe you're not keeping up with the comps are the comps you're looking at july comps from last year or are they february and march 2021 comps where you're actually up to date on what the current market pricing is and the trajectory of the market when you throw yourself into this real estate market you're gonna learn so much more and you're gonna see the power of being able to leverage your real estate with just three to five percent down and really maximize and do what other people can't when you put the right mindset on now if you want more perspectives on how i handle real estate check out the programs i have linked down below i have a real estate investing course and a do-it-yourself property management and rental renovations course and these programs help save you tens of thousands of dollars if you follow the simple steps they provide in these programs you all the insight on how to make sure you're negotiating a deal correctly and how to get deals in competitive environments folks you gotta gotta get into real estate if your net worth is under fifty thousand dollars seriously get into real estate look for a deal follow the steps in this guide here don't overspend on real estate and realize if things ever go bad with real estate you can always rent out rooms you can rent out the building or guess what happens the government comes in to swoop out homeowners first i'm not saying go over pay and i'm not saying live beyond your means take this safely it is a real obligation but your capacity for building wealth is substantially higher the lower your net worth is if your net worth is under 50 000 you should be looking into real estate and increasing your income thanks so much for watching and we'll see in the [Music] next

Channel: Meet Kevin

Views: 417,139

Rating: 4.9386001 out of 5

Keywords: investing, stocks, stock market, real estate, money, making money, real estate investing

Id: zshlrp-6n1o

Length: 27min 17sec (1637 seconds)

Published: Thu Apr 01 2021