Rehabbing Real Estate : WHEN DOES IT MAKE SENSE TO REHAB THE PROPERTY

years you're going to have to fix something cabinets floors faucets take the popcorn off the ceiling paint you know you got to do things so today what we're going to be discussing in the cardone zone is when do you rehab and when don't you rehab okay for instance johnny can you show them that deal i'm doing right now for those of you that are in our club grant cardone.com forward slash club grantcardone.com forward slash club um every wednesday we meet to discuss deals it's about 140 of us uh these are very serious real estate investors some starting in their career and some that have just getting in the middle of their career and some of some of us that are really really experienced learning from one another every wednesday on little tricks of the trade how to get a deal how to improve a deal how to sell a deal but hey bottom line how do you make money in real estate okay so look i'm doing 646 units and i know these guys they got my all my screens to clean from last week right let me see oh oh man my guys let me down they let me down my screen's got to be clean same thing with a real estate deal when you buy a real estate deal you got to remember let's say ryan secco had bought this property 10 years ago okay and he let's say he bought the property for um let's say he paid 80 000 for the unit and it could be one unit or it could be ten units or it could be a hundred units right that's just going to change all the numbers in the deal and let's say he was renting this deal for eight hundred dollars a month and today let's say that same unit whether it was one unit 10 units let's say that unit today is worth a hundred and forty thousand dollars oops okay and what happened was the value of the property went up i got this backwards but the property the value of the property went up faster than his rents did the truth is he's sitting there dude he's making money right here 800 bucks a month he's earning 9 600 a year and he's got 10 units and those 10 units are full all the time and he's kind of gotten lazy right like he's he's married him and the wife are settled down they're kicking on the porch in afternoon he's drinking his corona every day at six o'clock and he's just he's getting heavy you know he's got a big gut on him right now and he's got these worn out ugg slippers that he's out on the porch with and he's just happy and he's satisfied his house is paid for he's like my boy joe uh joe joe's satisfied he's got his house paid for he's got his little vacation home paid for everything's good and life is good and what happened was in the last four or five or six years there's been this freaking like rush of money going to real estate that pays cash flow this guy's earning 800 a month he doesn't need to fix the floors the refrigerators he doesn't have to take the popcorn off the eight-foot ceiling he doesn't have to paint the place he doesn't have to do anything why because he's not raising the rents okay so he's like look you don't like it you paint it i'm already full i got 10 units or 50 units or whatever the number is and they're full and it's the same people paying rent every month and they're staying there because it's only eight hundred dollars and they about everything they complain about ah goddamn this is the problem that's a problem but they never leave because if they leave when they go down the street to the newer deal they just sold the rents are going to be 1400 bucks a month not 800 a month so ryan and his wife both overweight drinking coronas every day on their little porch watching the sunset in their satisfied complacency don't raise the rents and i come along and i'm like hey bro once you sell me this deal you could pick up you could pick up 60k a door he's paid for this by the way let's say he's been in at 20 or 30 years okay and maybe he only paid 8 000 a unit that could happen by the way there's people out there that paid 8 000 a unit and they're earning nine grand a year and they're like i i'm not moving the rents a penny but the moment you guys buy the deal and you pay 140 grand a door okay now you're going to have to change the rents and today we're going to talk about what you rehab when you rehab when do you make sense of the rehab okay so because on this hundred and forty thousand dollar deal i might spend fifteen thousand a door so that i can get the rents to eighteen hundred and that's what we're going to be discussing today when do you spend and when do you mend what do you do what returns you money and what doesn't okay you got a dishwasher you got the refrigerators you got the microwave you got a stove you got what else will we have in the kitchen what's taxes and cards i have here ryan what would a tax in a card be this is taxes and cards uh oh taxes and courts what's chords you don't know i don't know once you find out okay then you've got cabinets and hardware we got drawers and doors i got a whole list of a rehab project we just did this is what we share on our shows on wednesday by the way and we really get into a shoe moldings bath counter kitchen counter kitchen cutouts um i think dan's in there right now just ask him what this means because i don't know what it means and by the way when you don't know what something means folks you need to ask the phone number here is 305-865-8668 305. 865. six six eight three oh five eight six five eight six six eight what's taxes what what does the technical term mean nobody knows you see that happens all the time in real estate investing whatever you do you got all these freaking smart people around you that use terms and they don't even know what it means okay okay but wise taxes in cards connecting cards on the same line doesn't make any sense i don't trust it i don't believe it okay we got debris we got disposal we got uh rehab we got removing popcorn uh you're not gonna get any money for the rehab you understand you're going to spend maybe 1500 bucks on taking stuff apart removing stuff getting rid of waste ain't no return on that you can't raise the rents because you removed the you know what i'm saying now that being said you still have to do some things okay we got kitchen lights vanity lights dining room lights bedroom lights kitchen backsplash that'll always get you a little bump because they walk in they're like oh oh that's beautiful i got backsplash for the first time paint cabinets paint the unit i'll go over all this garbage disposal you're not going to get any money for a garbage disposal you're going to spend 174 dollars to put one in does that include include installation yes no it doesn't i don't believe you it includes installation on the very bottom okay okay overhead and fee that's the installation so the installation is built-in you don't know you just admit you're not sure no well look i'm pulling this quote up this morning so most yeah but that's that's that's those lines yeah okay uh kitchen okay this includes install uh vanity faucet vanity sink overhead fee total cost look you're going to get ripped off people going to take advantage of you you're going to over charge they're going to buy 12 faucets slide off two for the family take them home you end up with 10. all that's going to happen that being said the beautiful thing about real estate folks is like look you who's going to pay for this right here this tenant is going to pay for the improvement of the property if you can't get them to pay for it then don't do it and if you can't get them to pay for it and don't do it and you're not going to do it and you can't raise the rents then don't do the deal now the ideal situation is i would take a deal that's that where where they're paying 800 a month and i'd go to 1200 a month just because there was disparity or a gap between what they're receiving uh what they're collecting let's go collections here and really what the market rent was but this guy just didn't fill it up okay that's just a that's just a missed value add okay it's a value ad where this guy that bought it bought it so long ago he didn't need to raise the rents you saw the value it's 400 under market we go in and actually put a correct market on it and because we're the new sheriff in town we simply add 400 and our property now goes from collecting um 800 a month to 1200 a month to go beyond that though okay what we would do is we would take the collected market rent do a value ad on the property a value out on the property could be the floors and i'll go over what you get for each one of these and i know ryan's going to come back in you got to decide how big this rehab job's going to be it's going to be 1500 bucks or is it going to be 15 000 and depending on where you are a temper a tampa rehab a tampa rehab is going to be different than a miami oceanfront rehab okay austin texas out in the country uh near the lake there lake travis is going to be different than a rehab necessary maybe uh in the cbd okay and the same for houston dc los angeles you get the point okay dishwashers dishwasher is going to cost you about um well dishwasher you can't just touch a dishwasher right because once you touch one wall one thing one appliance you gotta touch them all a dishwasher is gonna probably be 429 fridge is 787 microwave this is what we're doing a project right now 236. stove is 682. we're going to be about 2 200 just for a kitchen okay so watch what happens let's say i have a kitchen we're doing a deal right now when we went in the rents were 1800. we're taking those rents to 2800 right now okay this is what we did the kitchen's going to cost me 2 200 to finish that 2200 will probably get us 250 of this thousand dollar increase we are actually doing a project right now and you can call up with your own rehab job if you've got a question or a deal 305-865-8668 305-865-8668 when we did the kitchen we had to do the ceiling because the ceiling had popcorn on it you can't redo the kitchen make it all shiny and be left with this 1970 look on the ceiling and the walls right so all of a sudden you're like oh now i got to change the switches oh now i got to paint the deal oh now i got to do the cabinets oh my gosh i got to do the counters the counters on this project counters kitchen counters once you do the kitchen then you're like maybe i got to do the bathroom kitchen counters bath kitchen cut out and vanity cost us another 2 300 this is for a bath and to finish the kitchen all the tile work that was another 2 300 okay we think that that was worth 250 a month put them together might be worth 500. do them separately it might not get you the full 250. you follow me okay now where's this money gonna come from you're gonna come from a rehab budget okay so when you buy the property for 80 000 or 140 000 then you're going to say okay i'm paying 140 and then i'm going to put 15 000 aside to fix this unit times the number of units that you have uh all of a sudden you run into a thermostat on your wall you got one in the living room you got one in the kitchen you got one in the bedroom and then you got to change thermostats they're going to be a couple hundred bucks kitchen lights vanity lights dining room lights bedroom lights uh this is how we made sense of this project okay we paid um we paid for this project um does ryan know what what number we paid is ryan in there he left me huh okay uh this project and let me just do the math on it 305 865 8668 we paid 69 divided by what was the number of units on that project um that's crazy man cardone capital are you talking about the heights no i'm talking about no like on this height still that johnny just brought up um 235 units divided by 235 so we paid we paid 293 000 a door for that that asset we just bought we're going to spend i think we're spending 15 000 a unit okay now the height steel that we bought 646 units we uh it's a big number we're spending on this property beautiful property i'm not going to spend any money on it and i think i think i will raise the rents 400 bucks in the next 24 months over the next 24 months to get it to where it should be it's under market now i truly believe this assets under market over the next 24 months i will get it to a stabilized 2200 a month from the 1800 okay now how do i make sense on this deal well this deal was gonna pay us about four percent four percent before we did the rehab when we spend the rehab we think we get an extra twelve thousand dollars a year if you do the math on that i'm getting four percent on the property watch this four percent to buy the property this property okay big big number 200 just consider it's one unit or in this case it's 235 units so you just multiply times the number of units and i'm like okay i'm gonna get four percent to buy the property four percent cash flow to buy the property if i spend the fifteen grand what do i get i get twelve thousand dollars in new income twelve thousand twelve thousand divided by fifteen thousand is a 80 return okay now to be completely honest and transparent some of that is just because this property was underrented i could probably get uh 400 or 4 almost 5 000 a year doing nothing just because it was under market so this entire 12 000 that i have right here is not because of the fifteen thousand dollar spin it's only because of probably maybe seven thousand so now i'm gonna take the seven thousand divide that by the fifteen thousand i spent and that's still a fifty percent return okay so seven thousand dollars that's still a fifty percent return on my investment i'm doing it okay look anything but anything above about 16 to 20 percent if you can earn 16 to 20 if you spend let's say you spend four thousand dollars guys you guys got to clean this the these up okay i really don't want to do this every week if you spend four thousand dollars that could get you uh paint it could get you uh cabinets it could get you some uh some new look probably doesn't get you to backsplash it doesn't get you full floors plank floors you spend four thousand dollars you should be able to raise the rents at least eighty dollars a month or a thousand bucks a a total of a thousand dollars a year and that gets you basically a 25 increase 25 percent on your investment of 4 000 is the sick return and you should be willing to do it and when you do it you got to remember every time you raise the rents 80 bucks a month 80 times 10 units 50 units 100 units okay that's why the number of units starts really speeding this up watch when i change the payments when i change the rents 80 bucks if i could keep the entire 80 bucks meaning the expenses of the property don't go up okay the cost to run the property continuously does not go up when i spend money on it it shouldn't the spend cost me okay but it should not cost money to run the property because i made it better in fact you could actually reduce your expenses because you put in some more economical uh lighting and or water etc okay so eighty dollars divided by a cap rate of five increases the value of the property by sixteen hundred bucks if i did that right let me check it again 80 i'm sorry it's a thousand dollars a year thousand dollars divided by point zero six increase the property value by sixteen thousand six hundred and sixty six dollars so notice what i did i got a 25 return on my investment of four grand in this case in the case of our boca deal we put we invested uh yeah we invested uh fifteen thousand dollars we're getting twelve thousand dollars back huge huge return on our money uh in the case of this example right here a simple example i spent four grand to redo the wood floors if i could pull that off or the kitchen cabinets etc and i got 80 bucks a month but the 80 a month the eighty dollars a month the 25 return on my investment the thousand dollars a year okay actually increased the value of the property got me a little iv baby got me an iv on my appreciation hey the number's 305-865-8666 call me talk to me do you have a question or do you have a deal let's go to our first caller and if you guys can keep this on the rehab keep it on the rehab if you're if you're showing me a deal we're going to do that on wednesdays at our club dot com grantcardone.comclub slash club johnny who we got all right we got justin from metro detroit hey justin what's up buddy if you if you're showing me a deal we're going to do that on johnny go ahead what you got justin hey what's going on come on handy how you doing in detroit doing good going good i have a deal for you sir okay what you got uh i got a deal it's been ann arbor yeah i know all right so here's my situation i put in an offer last week on the deal um they connected with a broker whisper price was between 70 75 million and uh we put in an offer of 73 450. oh you came in you skipped i'm good i spoke with pat um or cat earlier today at your office there and she was saying that right now in terms of irr investors are getting anywhere i'm sorry i couldn't hear you no i'm listening to you so yeah she says investors are getting an irr of uh anywhere between 15 15 minimum of 15 and up and i'm doing my man i don't know how you guys are getting that number yeah okay so your deal is 75 million dollars you offered 73 million 450 yep yeah good 73 450. okay you do you think that that do you really think that one that the the difference between 73 450 and 75 million is going to change anything no because when we did the math no i did the math to to make sure make sure we can pay the dcr yeah and even if we overpaid on the deal the dcr still works yeah good so so why'd you why why'd you go cut the guy by by is it 73 000 or 73 million 73 million 73 million so why you want to cut the guy a million six bruh well here's my i was trying to get within that as close to that irr okay i could okay don't worry about it don't worry about th don't worry about that irr okay tell me about the n o and i the n o and the i is give me one second i have it right here for everybody watching this for everybody watching this you guys trying to cut somebody a million dollars on a 75 million dollar deal like you're chasing nothing you're chasing like you're worried about the wrong thing you're pennywise and and million dollars stupid don't know why the noi on the deal is 2 756 2 million 756 367 okay good good so let me ask you this question now um uh yeah yeah how do you like the location it's awesome it's about it's not six minutes from the university okay good and is it mostly uh students no no this one's a little different a lot of professionals in this building good i like that i like that better than the students so you're paying a 3.7 cap but okay okay good so that's fine three five whatever um and how many how old is the property it is a give me one second here it is 324 units yeah how old is it though man you you offered 75 million you don't know how old the property is what's wrong with you man 19 19 1976 1976. i was getting out of high school bro like i was wrecking cars for sure for sure yeah okay so look you know you got to spend some money there right yeah i'm going to need about um about 20 22 million as far as the the down payment no no but you're going to need to spend some money on rehab well they've already they've already done rehabs on some of the units already they have they've rehabbed about 111 units okay out of the 324 111 have been rehabbed right correct and they spent about 14 500 on each unit okay so now you're gonna you're gonna make a decision number one let's just assume that you love the property and that uh you're good to go and you want to buy it and and you're going to figure out uh because i'll answer your other question here he's like hey how do i make sense of the uh or your 15 internal rate of return i'm going to tell you that i actually believe the 15 internal rate of return that we advertise at cardone capital is low i think it's a conservative number i think i hit it year after year in fact i think i believe in my mind that i will exceed that number on every deal okay disclaimer i cannot promise you that i can do that i'm just telling you guys what i think i do when i buy these deals i truly believe that and uh i have been i have i have exceeded that over the history of my career i'm into the 28s 30s 35s 40s i'm into deals that are infinite returns because we returned our capital to the investors where where we don't have any more money in the deal now in your case you got to deal with 74 million you got to put 22 million dollars down to buy it but you need to figure another 200 for you to capitalize on this asset uh 200 times what are you saying you're going to spend there 15 grand or did you say more than that it's uh it's 50 it's 14 500 for each unit and they've done 111 already yeah the remaining still need to be updated yeah so 200 times 15 000. uh so you need to spend another 3 million in rehab correct okay now they spent they they uh they gave me their cap back yeah about 2.8 already i got it so now the three million you're going to spend okay well if they already spent 2.8 they only did a third of the property which is not uncommon for a guy that buys a deal rehabs it he does about a third of the property he convinces the marketplace that if you spend another two-thirds you can raise the rents on the rest of them i don't know if that's true or not what's the average rent on the property now before rehab and then after before rehab you're looking at for your one bedroom you're looking at 14 12 and for your two-bit no no no just leave it alone just stay on the one bedroom after rehab how much is it uh 1500 well no you're not you're not going to spend see see this is what the show's about today you're not going to spend 14 000 to get an 80 bump the return's not there okay so 80 times 12 is 960 divided by 14 000 uh that's a six percent return you're like i'm not doing that for six percent you you got to get rid of the tenant you can't fix the property while the tenant's in there i got to go get construction workers and rehab and insurance and blah blah and i'm gonna have a down unit for probably 30 days so um i don't believe those numbers i don't believe anybody would spend 14 grand to get 80 bucks a month like now if it changes the rents 400 bucks from 14 for me oh no well what we did when i underwrote the deal i kept it i'm reading off my sheet that i used to underwrite i keep it conservative no no but bro but bro just look at just look at the market rents what are they getting for rents right now on a rehab versus one that isn't rehabbed so when we get when we're done with this call look you you like the location cool man the cap rate doesn't bother me except for this i'm buying a brand new deal showing my deal johnny and then and then give me the address of your deal the address is and they have my deal right 3 000 signature boulevard the single picture johnny i want the single picture of the big the big property so my instagram say again 3 000 signature boulevard and it's in 1990 i apologize about before it's in 1990. yeah yeah well i'm glad i'm not one of your investors because right now you would be losing credibility you know what i'm saying yeah just keep it real man like you got to know 1990 makes me feel a lot better because 1990s i was now i wasn't 1976. i was cleaned up man i was starting to get a little hustle on in my life so i'm feeling better about you man hey where you going to get all the money down for this deal well i well i've got the uh this is a good-looking property investors yeah well here's the thing when i spoke with my invest when i spoke with a guy that does lending for fannie mae and freddie mac yeah we were able to get 70 to 75 yeah this is the problem i'm running into the problem is because they're saying well justin you're not experienced taking down a property of this size exactly exactly so this is what this is what happens when you do a deal okay okay number one they're gonna be like okay does the deal work number two you know the deal has to work so they looked at the numbers already they said hey the deal works the second question they're going to ask is can you manage this deal and and this is what i tell people all the time you could have money they could be like you have the down payment the deal's great we can get you the financing but now it's who's the sponsor like does justin have enough experience to manage a deal through a pullback through problems through a covid et cetera so justin are you in my club that's that's what me and pat were talking about today bro look you should be in my club because it immediately gives you it gives you credibility like people see oh wow you're in a professional real estate club oh you're with 150 other real estate investors serious real estate investors who's some of the people involved grant cardone oh grant cardone i know him they know my name dude fanny and freddie know who i am i'm an authorized approved uh uh a borrower from fannie and freddie so those guys all know who i am but you guys should be in there everybody here that's watching this a serious real estate investor the reason you want to be in there is for confidence like i'm telling justin right now the 3.7 cap does not bother me in ann arbor it's a great prop a great location in the country it's a great property it's a proven market it's in michigan which is a state that has been beat up hammered but ann arbor's protected he's got a good asset here he's got a great size of asset the the the million six haircut that he gave him i wouldn't have bothered with that i'd get this deal under contract figure out what my rehab is beautiful property because if he could spend 14 grand like we just did and he could possibly raise the rents 800 bucks or 400 bucks even 400 bucks times 12 is 4 800 a year 48 divided by the 14 that means i'm pay that's a a 35 return on my investment so the property pays four or five percent with with a with a good loan the property would pay five percent and the rehab on the property would pay him another 25 and you see how we get to a 15 percent internal rate of uh of uh internal rate of return so for all of you out there like justin you're going to go get a big deal and your problem is not going to be the deal or the money or the debt it's going to be you it's going to be your management experience and convincing the seller and or the lender that you can actually handle this deal and bring it home okay let's talk to our next seller justin i hope you join our club for everybody it's grant cardone.com four slash club grant cardone.com forward slash club every single week we meet for a zoom call to support one another i'm on the calls most of the calls not everyone but most of them every week and then three times a year we meet in person okay twice a year we meet for a two day and then one time a year you come as a vip for a big summit where we have a couple thousand investors and lenders there go ahead all right we got steve from pennsylvania and i like that ann arbor deal man i wish i could get in on that deal see the cabinets can you show them the cabinets johnny these are cabinets that you would redo those didn't get redone all they did was resurface those uh we're actually experimenting right now with a with a uh on our cabinets to do a uh wrap like you wrap a car dude it looks sick and it's cheap okay but it looks good uh but you can see this doesn't have full it's got what looks like a backsplash they'll probably advertise it as a backsplash but there could be a lot of improvements to this this property they got the stainless in there they didn't change the floors if they did it's terrible they took the popcorn off the ceiling that's what we're talking about in here there's no really nice handles the lighting doesn't look that great that could be improved so they went with a light upgrade here they have carpets on the floor it shouldn't be carpet anybody no nobody wants carpets not even the cats i mean only the cats want the carpet and you know what they want it for the bedrooms even the bedrooms on the second floors and third floors you can go with wood on those floors today and put a silence a silencer underneath the woods it's a great property it's a beautiful property though they took the popcorn off the ceiling they painted the walls they didn't pull the carpet they should people like the wood floors this is a furnace unit by the way and as you can tell um again cabinets could probably be lighter but the they spent money now what i want to see on this asset is i want to see the ones that haven't been done see here's a good shot of the floors in the kitchen that was exactly the floor i was describing it should be that's what it should look like um a very cheap very cheap solution on the cabinets no handles no you know there's no there's no pop right there's no backsplash so these if they spent 14 grand to rehab these uh you you guys should see our rehab i know call ryan tell ryan i need to see the rehab of our bocas i thought he was going to be here and then he just left me why do you abandon me in the middle of a deal right okay all right let's talk to our next caller all right we got steve from pennsylvania steve from pennsylvania yes i just have a general a general question quick general question um what do you think about um a property 12 unit with train tracks about 10 feet behind the building by about three to four times a day yeah where where is it pennsylvania yeah well where what what's the location like other than the train tracks i mean the train tracks don't bother good look good location b plus location yeah um everything's good i i just the train track scared me a little bit yeah but like are you gonna live there are you gonna own it no so you know like train tracks could be cool for some people right like i'm right we're here in miami there's a place like literally i could go four blocks and i'm gonna run into a train track and for years people said nobody will buy there okay that real estate will become some of the most desirable real estate in aventura and and so that doesn't bother me too much as long as uh it you know i'm sure they slow down during the day i'm sure they don't you know do the do the do like the horn thing like they used to and i think if it's close to jobs if it's in a good location how far from a whole foods about 15 minutes yeah and how far from a starbucks 15 minutes yeah okay so you know and what's the rent there 800. yeah you got a location you got an address see but see like like he's not buying this deal right now because he has doubt about the location if he was with a bunch of investors they could look at this deal and say dude look i'll put some money in with you all of a sudden his confidence goes up we go to a lender and the lender's like we'll lend you money at the railroad boom his confidence goes up again so that's why guys don't try to do real estate by yourself there's so many things to learn here there's so many things i still don't understand like where do we get our microwaves how small are they okay do they go in the cabinets now or do they go into a drawer okay there's so much technology out there right now it's like incredible do we do the smart entries or do we leave it alone you know do do we start charging people for water if i go in with some low water mechanisms low flow mechanisms do i start passing that water bill onto the to the tenant probably in this railroad example that he's doing the the tenants are getting free water one way to improve the property is to put everybody on a rubs program rubs meaning i'm paying for my own water now rub stands for what uh reimbursed utility bills yeah exactly reimburse utility bills the point is you don't need to know everything in this game there's going to be plenty of people to help you the lender okay the seller like there's so much help in a real estate deal it's not like buying a house and you're you're on your own in a real estate deal the bank wants to help make sure this never goes back ratio utility billing system ratio utility billing system is called rubs which means johnny nathan ryan and myself live in a property and we pay our portion of the freaking water bill sometimes that could be 25 a month 100 bucks a month and it cost me maybe maybe 2 500 bucks to put that in 2500 for them to pay for their water it's a good investment same thing with vip pickup park garage pickup so and this doesn't have to just be on these 300 unit beautiful properties like we buy like ryan what do we spend on um what do we spend on our our uh 10x living at boca the main one all tea spoke yeah we spent nothing well so so on the interiors oh zero we spend nothing okay so this is a property johnny if you could show them this property have we raised the rents here we're raising them between four and eight percent yeah so so here's a property because i know a lot of you think oh i got to spend money to raise the rents no you don't in the beginning what you're looking for is a property that you do not have to spend money on a property where there's a gap between what they're paying now and what the market should be um see this little guy right here god i run into so many problems on the internet it's unbelievable see this little guy right here sits right here when people are trying to go through their photos this needs to get moved because i can't i literally can't can't change pictures on it alright try that johnny these guys think i'm stupid come on man you know i'm not you know oh there it is there it is i found it i had to see show them this like we're not spending money on this okay this is done dude like i already spent money i'm not going to spend a penny now what we are going to do is figure out how to raise the rents there and the rents right now are being moved from what 2500 2500 to 27 to 3 grand okay so we're going to remove these rents when you move a rent from 2500 to 3 000 that is a 20 move how do we do that because the guy that we bought it from the seller was a builder the builder was trying to get it filled up he's trying to get it filled up so he can sell it to a guy like me okay and he doesn't want to sell it all half full so he what he he lowers the rents to load the place up i come in and i'm like now we're going to manage the building now we're going to take care of the tenant now we're going to give them a real experience living in a great property taking care of them we're going to put our 10x brand on it people can be like i want part of that 10x thing i don't know what it means i don't know what it is we got single women coming over there i want to live at the 10x property okay okay so they don't know what it means they're just like i i it sounds good okay and then our job is to provide them with an experience to where they can pay three thousand dollars a month and feel good about it look at these look at these look at these beautiful properties so rather than putting fixtures up on the wall notice those fixtures would cost me five thousand dollars to put on the wall we painted them on the wall isn't that beautiful the paint cost is what twelve hundred these light fixtures would have cost us five 000 each chandeliers it's a brilliant way to make a move to make people feel like i'm you know look at this amenities these are common amenities right here this is money that the builder spent to make it sexy for the guy when he walks in oh my god i'm i'm i'm gonna come i'm gonna become tom cruise i'm gonna be shooting with my eyes closed people walk in there like this is sick okay let me bring you to the swimming pool okay guy looks at this place pulls up oh my gosh i feel like a star so so this is on the high end this is some of the stuff that we're buying today and but when you go by the way i bought this for the same cap rate that the guy's paying for that 1990 stuff that's got to go he's got to go spend fifteen thousand dollars a a unit on i don't have to spend that same same exact return going in except i get to move the rents remember i started the show today the ideal thing is to move the rents without a spend just because there's a difference between where they are and where the market should be and that's what we did go ahead ron no i'm just going to say these communities like altis book is a prime example when they walk into the building they're like okay what am i canceling i'm canceling my gym membership yeah i'm cancelling my spa membership cancelling because you know that thing has a cold plunge it has a cold plunge it has a a a 24-hour gym yeah i mean the thing has a hot and cold sauna i mean when you everywhere that has a cold punch i know yeah yeah so look at this i show up there on the weekends look at the swimming pool like they have a swimming pool equal to what i have at regalia okay that's swimming pool at regalia where i live uh the minimum to get in that place is 10 million bucks and 50 grand a month uh my house my house this has got palm trees equal to the palm trees i put in my joint i mean the view is not as good here but you got a community you got social networking you got like ryan said a spa that's open 24 hours a day so ryan's saying and we're next to a green what a fresh market fresh market you can literally walk to it i'm not talking about a long walk i'm talking about 30 feet walk that's covered so anyway these are the two ends of the spectrum one is the rehab deal that you're buying we're about we're looking at some rehab stuff right now and the other is a high end you guys should be looking at both join me every wednesday grant cardone.com forward slash club for exclusive club it's about 150 people that join every week to talk about real estate to discuss deals to underwrite deals to give people guidance yay nay maybe somewhere in between and to connect people up for investing for debt and for deals okay let's talk to our next caller johnny all right we got luke in minnesota tell you what we're seeing a lot of good deals on that wednesday call too yeah luke what's up buddy you see talk to me how you doing pal i'm doing well my friend doing well i just want to say thanks for what you do man first off been watching you for years hey thank you so much man you got a deal or you got a question i got a deal under contract okay so uh type in this address 1721 ferry street f-e-r-r-y f e or y yo ferry street south and it's in anoka minnesota i got it i got it what does the noka mean over 20 anoka it actually i don't know what it means i know it's the halloween capital of the world it's the what halloween capital of the world yeah halloween capital yes sir that's good trick or treat so i got wait go ahead sorry i said trick or treat okay this this property was built in 1972 78 okay i'm sorry i just guessed you sh you guys all should be able to look at a property can you see it right you can't see it on and and know the year i was off by six years um and how many units are here 29 29 like the size of it what are the current rents current rents do you want on average for all or do you want one bed too bad or the efficiency just give me just give me the one bedroom okay on average uh one beds are 8.31 okay is that low or high for that market that's low those things need to be up about 300 so now this is in line with what we're talking about today can i get the 300 can i get the 300 bucks without spending any money um i think you could get to i think you could get to 200 without spending any money okay so then everybody's gonna be like okay dude if i can get 200 bucks if i can go from 831 to 1031 why the hell would i spend the money well there's an answer to that question sometimes you just got to spend the money you don't want to just keep slum lording your client and being a greedy like we we don't greet out we're long-term investors in the property um no notice what what luke's got here he's got 29 units that he thinks he can raise the rents 200 bucks on this is a screamer this is one of the examples that'll make him a half a million dollars if he can pull it off 29 times 200 is 5 800 bucks a month times 12. he'll keep 72 000 i'm i'm i'm rounding up right now but it's close to 72 thousand dollars is that right yeah 72 thousand dollars which will increase the value of this property divided by 0.06 uh by 1.2 million dollars bro you should buy this deal okay yeah i'm all in on a grant at even the current price at three five let me let me tell you by the way i told him to buy the deal without even knowing how much it was so like now now let's go back and do the three five okay if he can raise these rents though if he can raise these rents i know he makes a million dollars despite what he paid for the property if he if he's paying too much just so everybody understands nobody's going to give him a loan on the deal so don't worry about it you're like oh am i overpaying the bank the debt will determine whether you're overpaying or not and i and i don't think luke's got 2.9 million dollars so what's the price of it 3.5 million 3.5 million so the first thing i'm going to do is i'm going to look at 3.5 million i'm going to divide it by 29 units and i'll be like okay dude i'm at 120 grand a door like does that seem expensive to you no okay what what city are we in what are the rents oh it's in minnesota yeah the rents are 831 a month i'm like i'm good on this we got 300 000 cars that drive right in front of the property every single day show it to him johnny bro if you don't buy this i'm gonna buy it okay yeah i got it under contract um you better keep it under contract you better keep it under contract now look at these interiors now if they're getting 831 a month for that now depending on the market you can tr you can push rent too much but oh that's a chiller bro you got to be a little careful of that chiller right there i don't know why they showed that picture let's do it river stabilized sea property is a class c stabilized asset a growing north suburban they're admitting it's a sea c standards actually one of my partners put the roof on at last year okay a new owner would have a true value-add opportunity to increase the rents 20 or more see so you're a little higher than they're saying the rents can be increased uh studios are 7.52 one bedrooms are 8 30 ones two bedrooms are 9 28. uh again you're the only one that knows the location yeah but but uh you know you got a new roof it was built in 1978 uh i don't i don't think you get hurt on this no i don't think so either can i tell you where my partners have concerned right now where your partner what my partner has a little bit of concern on the price yeah well that's the problem with partners you see they're punks that's your partner look you want to make profit or you want to be a punk yeah we got great financing on it right now too we got 20 percent down yeah that's great dude that's great what you should do are you in my real estate are you in our real estate club i'm not in the real estate club you should join tell your partner he probably won't do it because he's cheap and and um or you both should join i got i got plenty of funds to buy it myself you know yeah dude i but the question is do you if you have the money do you have the confidence because the people yeah i'm i'm all in on it okay well then you know tell your partner to go away buy the deal yourself but you should still join our club because you're going to have even more confidence and figure out new and better ways to do this to get these rents to 1200 and make the kind of money i'm talking about by the way that million two is a 200 rent increase if he gets 400 a month rent increase because he does some really tricky stuff to the property which means new kitchens new floors take care take get rid of the popcorn give it a fresh look on the outside use some paint some good classy sexy paints uh uh use some landscaping some artificial turf you guys come by my house sometimes look at the artificial turf i did at my house i took a house that was cold dude and just made it cool as could be like you literally your temperature drops is so cool at my place okay i spent money on palm trees not that you do that in minnesota because they'll freeze but you know landscaping goes a long ways to changing a rinse let's talk to our next caller and by the way luke you should do you should join our real estate club bro you're the perfect person to join our real estate club 25 grand is a small price to pay to get access to me every week and three times a year in person where you get to meet my friends other investors and other lenders that like his his setup right here man if he could take these washing machines and dryers and put them in the units that's going to get you another 100 bucks a month so i don't have to walk down there people will pay twelve hundred dollars a year not to have to walk to a laundromat and pay a quarter all right you got lalo i'm good i'm good ryan if you if you're retired did we get that deal we get it are they around they are yeah i know you know they jacking hundred yeah i'm working deals while i'm doing the show by the way massive deal i'm doing right now go ahead lalo don't be a loser what's going on mr grand cardone uncle g what's up baby what's up my nephew i could see i just have a i'm gonna get off your hair right quick but uh you know i've been a follower for years as everybody is um i'm just your normal typical mexican i don't really have a question just one question and uh and then and then i'll get off your hair um we're from houston texas uh uh ray not born i was born in mexico so i'm just a regular latino kind of a guy um i have we we've had this property my wife and i until we got divorced and uh she didn't want the property she took everything else besides the property i came over here me being a city boy um met a lot of people here gucci which which they're cowboys you know what's your question what's your question player my question is should i sell my 10 acre land to move to a 50 acre land i'm i'm towards college station i don't you know a m yeah i know it yeah if you can sell your land you should sell your land and you should buy an asset that has income on it and and that's what you know because i met these cowboys and everything i mean i'm fresh through all of this i'm a spit boy again like i repeat myself yeah um but but but benson how much how much land you got 10 acres 10 and how what's it worth it is worth 150 yeah and then it's not much like with y'all kind of a boys y'all been talking about you know yeah but what you should do i know dude but but how does it feel to be around a bunch of people talking big numbers it feels great yeah exactly i want you guys to feel great i want you guys to be around big think big people big money like nobody's ever offered this ever ever like in my entire lifetime nobody's ever said come on in man be part of my club be part of the club be part of where the money's joining coming whether you're on the come up or you already made it man i'm trying to put people together i want to be inclusive to all people that want to want the dream so the only way to get the dream is to touch it you can't just think about it in your head you got to get close to it so what i would tell you to do brother is i'd sell that 150 000 piece of land i take the 150 and i'd get involved in a multi-family apartment deal that will provide you and your family with cash flow okay hey avery let me call you right back i got a call at one o'clock in three minutes so you guys in or out oh we're in we're in for sure bro we're in okay all right sounds good i mean 100 we're in my goal my goal is to buy the deal okay good okay good thanks all right sounds good i'll talk to you later bye so that's a big deal i'm working right there man i mean it's a monster and i forgot i'm supposed to get them all today at one o'clock so um so look this game is played because we all come here to this country and or we're born in this country nobody knows us like you could be a rich kid nobody knows you nobody knows you they're not nobody's going to give a favor to a rich kid they don't know so to all of you out there you're on the come up man you want to go to the next level you got to get known okay so i'd sell that property i invest i'd put i'd invest with some of the people that we club up with every week that i put together in this club i'd be like hey invest with one of those guys get your money involved in a deal where you can start growing and rolling your money okay my name's grant cardone we do this every wednesday folks i'm sorry every every wednesday i do it with a private group of people where we actually meet people face to face on a zoom call three times a year we get in the same room together work deals discuss deals chop it up have dinner drink have a good time whatever y'all want to do we do it but we meet three times a year so you can get faces together so you guys can start realizing hey who do i trust who don't i trust who do i need to be with what do i need to learn okay you got to connect up real estate is a people game you cannot do real estate without people you have to have partners you got to have investors you got to have debt you got to have confidence you're going to get a partner that doesn't have confidence more partners have talked me out of more money than i have today listen to what i just said i brought people into my life that didn't know what i knew about real estate that talked me out of real estate that i should have bought i've had more friends and family cost me more damn money than the money i've made because they got in my head so you got to get around the right group of people that are that are seeing the future for the kind of real estate that you're buying like the guy that asked about the trains today the the young the young immigrant that asked about how do what do i do with my land to the guy that called from ann arbor that said hey should i buy this deal folks confidence i'm not talking about a good attitude by the way i'm talking about the confidence to get a deal done find it see it tie it up close it get a loan from the bank manage it and then as we discussed today how and when to rehab it so you can raise the rent my name is grant cardone if you want to be part of this just keep showing up every monday man it's free it's on youtube it's on facebook it's on the itunes it's on the high tunes where else it's on the sticker the serious accident we put it on the wicker we might drop it in the clubhouse the trap house and a jump house okay but you guys that are listening to it on itunes man make sure make sure you subscribe to the itunes channel make sure you subscribe by the way uh to uh on the youtube with the little notification the bell or whatever it is the dinger don't be a don't be a ding-ding or be a dinger hit that dinger and i'll i'll send you a little notification every week and say hey we going live you want to learn something from the grant cardone 10x boy and i'm gonna show you i'll tell you what like me or don't like me it don't matter i'll show you how to make money in real estate i got people that hate my guts that follow my show they don't really hate me they just envious of what i put together okay and we got a lot of stuff about to happen if you want to buy real estate yourself i'll show you how to do it if you want to do it with me we have a deal right now johnny can you show them the picture of just the one property johnny the shot i did on instagram that's the only one i want ah irreplaceable institutional quality number one sub-market in the top market in the country number one market for urban renters 34 percent rift growth since 2010 in this market average home price check this out 850 000 thank you johnny you can invest in that deal right now 305 865 no no 305 407 0276 305 407 show them the the asset again 305 407 0276. look at this show me a market you show me a market johnny back to me where the house across the street is the median house is 850 000 okay because my competition on that asset is the house across the street the payment on that house right there with a hundred and fifty thousand dollars down i think the down payment to rent at my place is 500 bucks this guy right here if he wants to live across the street has to put 150 grand down he has to finance 700 000 and the payment on that's going to be 3 500 bucks a month my rents are 1800 bucks a month and i got a swimming pool you could take the entire neighborhood across the street and on the next street put all their swimming pools together and now all the swimming pools of all the million-dollar houses in the neighborhood combined are not as big as my damn swimming pool and none of them have the view i have of downtown houston none have the security none have the underground parking none have the amenities none have the full-size 1500 square foot gym that i have and my payment to live at my place is 1700 less than it is to mow the grass at their place you tell me what the better deal is okay if you guys want to invest with me i know i got a rent increase here i know i'm going to go from 1800 truly believe i get to 2200 in the next 24 months i truly believe this asset i bought it under replacement costs in the best damn location in the strongest apartment market in the entire country if you want to invest with me you got to be accredited you need 250 000 of bonarola ready to go cold cash here in the next 14 days or you will not be able to invest in this deal the numbers 305 text me don't be surprised if i don't text you back 305-407-0276-305-4070 can't guarantee you're going to make money but i can guarantee you i'm buying this deal whether you come in or not okay and and i'm just texting some of my best friends this morning gerald my friend gerald ramoy some of you know gerald i said gerald i'm buying a deal in houston number one market urban market 300 646 units this is an f and beast okay i grew up with gerald so he's a good friend so my good friends people that have invested with us since the people that we hit first on our deals i think we're 95 95 already funded on this asset so if you want to come in you need to get your money in asap right away immediately if you're not ready to invest with me no problem i'll help you get your deals let's go get you something more than just a house let's go get you a duplex let's get to four plex let's get you eight units let's get you 80 units okay i want to be the guy that helps you and your family have that residual passive income that has been produced by real estate for people wealthy families for the last hundreds of years if i can help you i want to be of assistance to you i truly want to help you i do this every monday for free if you want a more exclusive more intimate setting every wednesday we do a zoom call uh that website's grant cardone.com forward slash club grantcardone.comclub love for you to join us there see you next see you wednesday [Music]

Channel: Grant Cardone

Views: 25,490

Keywords: grantcardone, grant cardone, 10x, money, finance, business, sales, motivation, yt:cc=on, WeAre10X, 10XNation, 10XStrong, 10XLife, 10XEverything, real estate, rehab, property, fixer up

Id: ktKfQARPc3E

Length: 61min 35sec (3695 seconds)

Published: Mon Aug 23 2021