How To Succeed In Real Estate Investing [40 TIPS] – Part 2

How To Succeed In Real Estate Investing [40 TIPS] – Part 2

We’re back today with ten more tips. This
is part two in our four part series and today’s ten tips are going to focus on
how you rock out real estate by making sure that you’re sinking your teeth into
the right kind of deals. Alright, we are back and we’re going to
hit you up on the next 10 tips for how to successfully invest in real estate
starting off with number 11 is.. – 11 is the median now we’re talking about the
median home value, you’ve got a sampling of homes, you’ve got high priced
homes and low priced homes. The median is the one that falls right in the
middle and so we don’t want to go above the median home price in any area that
we’re investing. Now many of you know we don’t just invest here locally, we
invest in the best markets around the nation and no matter where we go we, want
to make sure that we are investing below the median that is super important. – And
this works for anywhere you are in the world. The median is a really important
figure and that really ties in to tip number 12 which is single-family homes.
So what homes at the median price? Single-family homes which means, Steven,
do we do condos? – No. – Do we do townhouses? – No. – Do we do multifamily? – Not really. – Are we
doing commercial? – No. – Now you can do those strategies but we’re here giving you
tips for how to be the most successful brand new real estate investor so we
want to invite you to play in single-family homes that are purchased
below the median. National median is usually hovering around 200,000 to
250,000. There are homes, for example, you might be a New
York City-er like, “Well, Kris you know the median is a million bucks.” Or you
might be in San Diego where it is but you could also be in other places where
the median is like a hundred thousand. For your area, we want you to be
underneath the median. If you want to know what I do is, there’s this really
cool device people really haven’t even have as much about it. It’s
called Google and you could say “What’s the median home price in..” and then
put your city or your county and then you’re gonna know, “Oh Steven and Kris
want me to buy single-family homes underneath that price range because
that’s where you’re going to find the majority of people that can buy your
real estate and that is a huge help. – Number 13. This is market
familiarity. You want to get to know your market place. Now there’s a lot of ways
that you can get to know your market. Again, Google is an amazing place where
you can go just to find out all about your your general vicinity, drive around,
find a little bit about where you are, what’s available where, get price per
square foot so if you want to really know what your markets going for or
what’s familiar in your area then identify with the price per square foot.
So for example, you’ve got a hundred thousand
home, it’s got a thousand square feet, you divide the thousand into with $100,000
and you’ve got a hundred dollars per square foot. – Now this is important
because if you’re focusing on median homes that are single family that are
beneath the median and you get used to price per square foot, here’s what you’re
going to find, you’re going to start doing your calculations on let’s call it 2000
square-foot homes and be like well this one’s not a 100 foot, this one’s at 85 a
foot, this one’s at 90 a foot, this one’s at 60 a foot, one of these
kids is not like the other ones remember that from Sesame Street?
– One of these kids is not like the other ones. – Alright so what we’re going to do is
that’s the home that you want to zone in on because it means that there’s a
really good smoking deal there, you just got to finish flushing it out. – Absolutely.
Okay, number 14. Fourteen is a CMA. Now what is the CMA? This is fancy language, we’re
getting the jargon here. – Comparable market analysis – Absolutely. – Price per
square foot means we think we have a good deal but then you got to get with
the realtor and say, alright let’s actually take this home that I’m looking
at and compare it to the other homes have been sold in the area not just
listed but actual solds and you can take in the last six months that two, three,
five homes in the area that are as similar as possible and then put them
into a report and your realtor can pump out a seamount that may, that would
basically say, wow you know looks like you’re able to buy this home for a
$150,000 but it looks like compared to the other
homes that have sold in the last 6 months that are most like it, it’s worth
a hundred and seventy thousand. Well, there’s a $20,000 equity position that
is possibly there so see may gives you a much better indication of what kind of
equity might be in this home because if I’m going to buy a home, buy it in the
most advantageous way possible. – Yeah. Okay, the next one number 15 is home visit. Now
there’s a lot of people that think they kind of get a thrill out of this idea. I
can buy a home sight unseen alright. I can just, I could just take this
one down, that’s going to be fantastic but the reality is you really should have
feet on the ground looking at these homes. Now it’s interesting the first
time Kris and I went out of our local market and started doing out of state
properties, we put this amazing power team in place, we had literally feet on
the ground who are going and looking at all these different homes and if you
understand the way auctions work, I don’t know if anyone, if
you’ve ever had an auction of bidden on the auction steps, you put these bids on right?
It’s a list comes out, you put the bid on the home and then you’re like praying
and hoping, okay, hopefully that bid was good and hopefully this home is really
there and hopefully the wall on this home is, you know, this doubt door,
our walls are still intact. I can tell you, that’s another story for another day,
but anyway, the point is, is you want to make sure that you are seeing these
properties and making sure that when you’re putting those bids in or when
you’re when you’re putting it on a contract that it’s good enough
because if it’s not, that can mean the difference of you making a lot of money
in this home or losing a lot of money on this home. – So Thursday, Friday, Saturday,
around the country, you’re mostly having you know, the sheriff’s auctions and
homes are being auctioned off and every week our team goes in and evaluates
thousands of these homes and I’ll tell you that often, we have to bring cash to
the table on the spot so that we can pay immediately and we wouldn’t dare bid on
anything that we actually hadn’t actually first gotten to the house,
gotten in it. So visit the home, check it out, you need to have a chance to start
looking at, are there any major problems that like maybe the house is infested
with mold, maybe there’s a meth problem, you might
not be able to notice that by visiting it but after it’s under contract, you’ve
got an inspection period, you’ve got to have boots on the ground whether it’s
yours or somebody else’s. – Yeah, now let’s take this to number 16 which is, alright, so what kind of home should I be buying Steven? Should I be doing things
that need cosmetic repairs or structural repairs? – I’m going to say structural repairs.
– Really? You want to put thirty, forty, eighty thousand dollars into a home? You
want to jack up a home off of the ground and be like, yeah “There’s no risk in any
of that, there’s no way this can go wrong.” – Yeah, structural repairs.
– Steven, you know the answer is cosmetic repairs. – I want to buy
home, let’s… – Let’s duke it out. – Let’s do it. – Okay.
– Okay, no cheating. – Ready? Structural! – It’s actually cosmetic! Don’t do.. You’re right. Okay, alright. I won that
one but I will concede. It is cosmetic, you don’t want to get into strum. – I’m sorry
you didn’t go to the gym today. – I did. – No you didn’t. I worked out my chest today. I’m going to cry like a little school girl. Cosmetic. Only do cosmetic work, right, like what does
cosmetics mean? – Cosmetic is a small case. Cosmetic, you know, we’re talking about
the homes, you know, the small things, the paint. Maybe you’ve got some
scuffed up walls, maybe some carpet needs to be done right just the small
little things, these aren’t huge major projects, we’re not talking on getting
into the thousands and thousands of dollars, you know, several hundred, maybe
up to a thousand or fifteen, maybe even two thousand but once you start getting
into major repairs, well if there are structural issues, if the roof needs to
be replaced, I mean some of those things aren’t cosmetic and they just start to
eat away at your profits. – And the moment you find a property that has twenty
thirty fifty thousand dollars worth of work, you can find another deal that is
probably a better deal that doesn’t need any of that.
Alright, do cosmetic work. Ignore structural if you go in and it’s like, oh
my gosh this is a major overhaul. This house, it’s amazing how thirty thousand
dollars have a repair job can turn into forty or fifty thousand and all of a
sudden on a flip or on a long-term hold, you suck all sorts of money in on a
short-term or a long-term play and it just puts you in a bad position so focus
on cosmetic, not the structural stuff, that’s a whole new level of expertise.
– And where you’re going, this actually gets us into our next step.
Step number 17 or success tip number 17 and this is paying attention to the ARV.
Now the ARV is the after repair value. I think of the hard works,
aardvark but really it has nothing to do that. But I have to repair value. – I saw
an advert for the first time in my life at the sandy because it’s really
exciting. It was a wild looking thing, it was like had porcupine hair, it had
this really long snout and I’m like aardvark. – Have you ever seen the show biz
aardvark? – No I haven’t but let’s tangelo. – My kids have, it’s pretty amazing.
Okay, ARV, let’s get into it again. Are you going to do something again? – Aardvark. So ARV, the after
repair value. This is what Kris was just talking about actually which is what is
the home worth after you’ve put in these repairs because if you put $20,000 into
a home but it’s only going to increase the value by $15,000, your after repair
value doesn’t support those types of repairs. – And this isn’t just for the
purchase this is for selling, right. I mean how much work you put into a house
when it’s time to bring it to market? I can’t tell you whether you should fix it
up all the way or whether you should fix it up bare minimum because the market is
going to tell you that. If it depending on whether we’re in a bull or bear
market, whether the market is up or down by our seller market, that’s what’s
really going to determine what competition looks like. Right now if there’s a lot of
homes in the market, then generally, you need to fix up your house pretty nice to
put it a cut above the others but you also might be in a market where there’s
almost nothing on the market, like we’re in an economy right now where there’s
not a lot of inventory and it is amazing that you can get away with way less work
and people are willing to put sweat equity in and so again, it’s like, ok I’m
ready to sell my house, if I sell it as is I’ll get a hundred and fifty for it
but if I put 10 grand, I’ll get a hundred and seventy. Well how’d you like
to make a fifty percent, hundred percent return on a ten thousand investment?
Put ten in and get your money back plus ten more, that’s a hundred percent return.
So ARV this is, this is really important real estate acumen when
you’re evaluating a project and wondering, well when I buy it, maybe
there’s a good equity position but I need to look at what that position is
after I have brought it up to speed that I need to and similarly when it’s time
to sell it, because you might rent it for four or five six years
then it’s time to sell it, your lease option comes to an end, maybe the people
don’t move forward on buying it. Okay, number 18 real estate as a job. You know, there’s a lot of people out there and this is one of the worst
scenarios I’ve ever seen, someone has become a realtor or they’re doing
something in real estate, they’re not an investor but because they’re swimming in
real estate all day long, they actually think that they understand real estate
as an investor, when the reality is you can have an immense amount of knowledge
about the real estate market. Uh-uh! That doesn’t mean that you’re a real estate
investor, that just means that you have a job in real estate and meanwhile, well
you’ve got a job working 30, 50 hours a week, investors, I mean often I sell a
house like the home that I just sold, I got paid a $20,000 check, my partner got
a $20,000 check, I put in a total of two hours on that deal which meant that I
was making 10 grand an hour right? That’s real estate done super intelligent in
our done-for-you system that I love about it and yet, I just ran into someone
that recently said, “Oh, my brother, you know, I’ve been trying to get him into
real estate but he’s an inspector.” And oh sorry, no, she said he’s an appraiser and
I’m like, “Oh so he thinks he knows everything.” She’s like, “Right.” I said, “Does
he own any investments?” No but when she tries to talk to him about it, there’s
this, I know it I got it I have it all figured out because you’re identifying
with it on a regular basis. Don’t confuse a job from an investment. – I’ve got to add
something real quick to this. So I was out in Denver, this is a couple years ago,
we had some clients that were working with us for a while,
going through our system, doing some amazing things and then they looked at
me one day and they said, “Steven, I, you know, we wanted to, we wanted to get into
flipping.” I said, we followed your system we had great success bought several
homes but we really wanted to flip a house and they said, so we did
flip a house and I said, well great, well how did it go? They said, well it actually
went pretty good, we ended up getting this amazing deal, we put some work into
it and we made about $25,000 on this home and I looked at them, I said, that’s
great! And she kind of would look at me with her countenance kind of shifted. She said,
well it really wasn’t that great. I said, well what do you mean? She said, well we
did the math. I said, okay. She said, yeah that $25,000, after I divided all the
time that I put into it, all the time that my husband put into it,
at the end of the day, we figured that each of us made about $5.75 an hour.
– Wow below minimum wage. – Now, listen to this, I looked at her and I was kind of
trying to jab a little, I wanted the lesson to sink in and so I looked at her,
I said, can I help you understand something? You could have gotten a job at
McDonald’s and you could have doubled or tripled your investment. Now let me ask
you a question, is getting a job at McDonald’s, Kris, an investment? – No.
– No, it’s not. Neither is doing real estate like a job. So if you’re going to do a real
estate, do it like an investor, don’t do it like a job. – Awesome Steven. Point
number 19, you got to know how to crunch the numbers. Now in real estate, that
doesn’t really mean that you have to be some math nerd, that you need to
understand how to do deep algorithms, crunching the numbers at the end of the
day really means I can take a look at a deal and within the scope of my strategy,
I can evaluate my profit centers. Here’s what that would mean if we’re talking,
for example, on a lease option.. It means that I know what I’m buying the property
for and what kind of potential equity is there, it means that I can crunch the
numbers on a minimum purchase price that I may sell it out in the future so that
I can know if I sell it in two years at a price no lower than this how much I
would make, means that I can factor in my cash flow and my down payments, deposits,
maybe even look at my tax benefits and my repairs and if you can evaluate all
of that and have a good realistic guess on what the numbers are, you’re prepared
to actually move forward on that deal. So if you want to be a successful investor,
you got to know the numbers. Now I know some of you were thinking, but Kris, I failed math. I’m really good at dancing, I’m really good at sports or I’m really good
at science, math, not so much. That’s okay. Have someone on your team that gets the
math, don’t blindly purchase a property without knowing what it means to
successfully have crunch the numbers and understand your best hypothesis on the
money you can make. Part of it is a crystal ball, we don’t know what the
future is going to do but the right strategy is something that can counter
that by putting measures in safe for good margins of safety and at the end of
the day, if you’re going to pull the trigger on a property, you want to make sure that
you understand enough of how you’re going to make money on it and what worst
case scenario so that at the end of the day, you can know, wow if things go really
well, I might make 15% off each year on my money for the next five years.
If things go really well and I take the market into account, it could be as much
as 20% but if things don’t go according to plan and I have really high repairs
here or if I have tenant, you know, vacancies here, then my return might drop
to 12%. Alright we got a high a 20, we got a low at 12 and JB che, French
economist 1800 said that creating wealth is moving assets from low yields to high
yields. So if you have money at 3% that you can have worst-case scenario at 12%,
then you did a good job there because you’re getting 400% more on your money.
Four times more on your money with a high of 6 or 7 times more on your money
and that’s crunching the numbers is really how you ultimately know, when
do I pull the trigger, how do I make good decisions
because ultimately, and I just want to elaborate on this for a second, when I
was reading Snowball Warren Buffett, you got to the end of the book and he said,
imagine that you only had a finite number of investments you can make in
life and he called it a punch card of 20 investments, if you’re only going to make 20
then make sure that they are winners. In crunching the numbers and having a
philosophy will help you do that which leads us to tip number 20. – Number 20
is the best strategy. Now look, I get it. There are so many different resources
that you can go to, there’s been up to 10 million books that have been written
about investing and real estate strategies and all these different
things and I’m guessing that you’re probably like us.. You want to know what
the best strategy is right? So Kris and I, we both worked for a company years ago,
this seems like almost a different lifetime, doesn’t it? Years
ago, where we were very young, on the phone talking to people who were in
their 40’s, 50’s and 60’s that were calling us saying, I’m scared to death because
I’ve done everything right, I’ve gone along this path, I’ve gotten the, they’ve
got the schooling, got the job, making the money and I’m looking towards retirement
and it’s not going to be enough. What do I do? And they were asking us for that best strategy and in the industry at the time,
the strategy that was given was, well what do you want to do? Well what’s
you what’s your best idea and they don’t know that’s why they’re
calling us. So let’s get real, what is the best
strategy that you would say in real estate? – And we put our foot down and we
wrote a book about this, it’s called A Straight Path To Real Estate Wealth and
at the end of the day, we were looking for strategy that would meet these six
criteria, least time least effort, least risk, most profit, work in up and down
markets and provide a service. You might have noticed that the last video on the
top successful tips, the first ten tips all had to do with any of those six
points, those were six of the things that we talked about.. Least time, least effort,
least risk, make the most money, working up and down markets and provide a
service and that for us really comes back to lease options, a strategy where it
doesn’t matter what your credit is, doesn’t matter your age and doesn’t
matter how much money you have because we’re going to leave banks out of it, we’re
going to give your pocketbook out of it, we’re going to show you how to do
creative real estate where you can buy homes and if you have a home, this is a
fantastic strategy of how to sell it in time in the most profitable way possible
so by the way, click the link up here and have a chance to review some of what our
best strategies and options look like with and lease option because we can
help any of you in the next 90 days get your first deal under your belt and
actually turn you into a real estate investor, you should check that out
because that’s our definition of a best strategy, now you get to decide for you
what that looks like and we’ll help you out from camp. I hope you’re enjoying
this video series and if you’re thinking to yourself, “Man I’m learning so much
about real estate and I just want to jump in head over heels quicker and
faster.” Then I want to invite you to click the link where you can get more
immediate access to some of the different ways we can get you rockin’ out
real estate because when I work with you, I want to see you doing deals within the
next 90 days. Otherwise, join us back because the next video is going to be
about the top 10 tips for my number one all-time favorite strategy in real
estate, the lease option.

9 thoughts on “How To Succeed In Real Estate Investing [40 TIPS] – Part 2

  1. Thanks for the tips!

  2. Im loving this series so far 🙂

  3. Hey kris! I had a question. I’m starting out in this industry as a 24 year old. I have really good credit, and at the end of this upcoming summer I’ll have a 2 year work history along with enough for a down payment on a house. Should I go for a single family home below the median and move into it try to sell it OR a duplex/a Home with a mother-in-law apartment I can hold onto for a few years and try to sell later after getting some rent out of it? Along with this I wanted to ask how I should evaluate a duplex? They seem to be more expensive than the surrounding homes more often than not. Are these just bad deals or am I missing something in my base evaluation of these properties? Thank you.

  4. I wish my wife would look at me the way Steven looks at Kris.

  5. Hi Kris, do you also look for investments in India? I am from southern part of india and would love to work with you if you have any future plans here.

  6. How are you suppose to invest in other cities or states while the current market in your location have houses that are above $200k on average and you have no money? And if you do decide to invest in property and choose to live in that house while having some tenants there for some cash flow, would it be worth it if there was only like 12% equity? And this was for all property in that region where all property is expensive atm.

  7. Haha cool device, GOOGLE, LOL.

  8. I love these guys 😂 made my day

  9. Dude sounds like Ross from friends

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