Invest In Real Estate – Q&A #4

Invest In Real Estate – Q&A #4

Kris Krohn here with Limitless TV with more answers to your questions. Alright. Today we’re kicking off with
Juan Mercado with this question, Do you have anyone that can help me out here in
Arkansas? Currently trying to find my first rental property. I’ve got eleven
thousand dollars saved up and I’m needing somebody to guide me. Juan, excellent question. and you know what you’ve got enough for
buying a primary residence this is a home that you can buy, this is a home
that you can live in, this is a home that you can buy with equity. Uhm, one of the
videos that I’ve shot is all about how you build Realtors into your team to
find homes with great equity and that’s one of the options that you have and I
would pursue that option and watch that video and I’ll show you how you can dial
up the Realtors in the area that specialize in investments and find the
one or two that are capable of helping you find a good deal. And finding a good
deal on a home that you are willing to move into, that 11,000 will absolutely
work. If you don’t want to move into the home that you’re going to buy, I’d
probably recommend saving up to maybe another till you get to $20,000 or more
so that you can get into that 20% down payment niche. HarleyLover47. I love Harleys too. HarleyLover14, do you use property managers? if so when you start
using them? Well Harley I do not like managing property so I start using them
from day one. There’s a, there’s a lot of people in the beginning I did it myself
some people do it yourself and I learned that just because you can doesn’t mean
you should. Do you like managing properties then HarleyLover14, you
should. If, and I think it’s a great experience for anyone out the gate to
learn some things. But if it’s something that you really don’t like then out the
gate bring in a property manager. They’re going to charge you somewhere between
eight and ten percent of the gross rent collected and if you’ve got a good cash
flow you can afford it because I don’t want you getting burned out doing things
that you hate when you can bring in an expert that can help you right out the
gate. We have calsoulcashuel. calsoulcashuel, informative videos Kris. Thanks but my name is spelled with a k. Just kidding. But how can I educate myself more on tax benefits as a real estate investor?
should I read a book or take a course? You know you can read a book, you can
take a course, but you know what? what you need to do is find a tax accountant that
specializes in doing people’s taxes that own real estate. Those are the best minds
but off the top my head I’m just going to share with you the best ones.
First of all, number one, you get to depreciate the value of a property over
30 years which means that you can pick up, you can decrease your income by 2 or
$3,000 per property and when you want enough properties, it will drive your
income potentially down to zero. Which means that you won’t be really good for
qualifying for properties but you won’t be paying taxes either. Another thing is
you get to write off expenses. Home expenses, property expenses, you can use
up to a percentage of your own home for a real estate office, you have to write
off your cell phone so you can track your miles you get all sorts of perks
that come with being able to do that. So you’ve got some really great options
that way and those are two of the really big tax benefits that you pick up and
then also when it comes to selling the property, capital gains things like that,
you can do a refinance which is a non-taxable event and then you can also
1031 helps to avoid paying the taxes and roll it into your next project. All of
those are some of the main real estate strategies that you’re going to get but
work with the tax accountant to get the next level. Javert your qua de, Javert, Kris how do I get my real estate license so when I’m ready to buy a
house I’m good to go? Well I’ve got news for you Javert you don’t actually need a
real estate license to become a real estate investor. it’s totally up to you
whether you do or not I decided to get my lending license when I started in the
game I still don’t have my Realtors license and it’s totally up to you how
you want to play that. Stephan zieg, Hey Kris, I know you mentioned in your
videos how you tend to stick with short term 5 to 7 year deals but could holding
on to a house longer than that be beneficial? Well it can but I’m not a fan
of the 30 year plan I’m more a fan of the 10 year plan. And when you take a
look at, at holding on to a home longer just know that every seven years you’re
going to pick up all of that dilapidation and you might have to drop
five seven ten twelve thousand dollars into rehab and that can eliminate a lot
of the cash flow that you’ve been making over the years and so I like to get rid
of it in the first wave. The other thing is that it’s about velocitizing my money Javert. if I, sorry, Stephan. if I, if I’ve got my money trapped in the
house the sooner I can relinquish it and put it into the next the more I get my
money turning faster. And what that means is sometimes I can have the same dollar
sitting in multiple homes and so at 20 percent ROI here in a twenty percent ROI
there means forty percent on my money and personally
I’m a fan of that. Madeleine Webb, easy to say Kris but if you buy so many
properties in one stop there are closing costs on each one, there are points on
each loan. How do you handle this without kind of an agenda? at least if you had to
close on each of their home inside of a conglomerate and teardown and build a
bigger residential property with units and condos please respond to my question. Madeline, I’m here to answer your question. First of all I don’t mind point,
paying points and lending fees and closing costs why? It’s the nature of the
beast. They’re not to be avoided, it’s just part of the transaction. So you
build them in and you work around them because ultimately I want to have a tax
team, a lending team, a Realtor team, because all those people I get them
working for me. And when they’re working for me it makes my life a heck of a lot
easier than trying to do a lot of those things on my own. Then you also say, what
do you do if you want to buy bigger residential properties with units and
condos? you can certainly do that and get into those kind of properties we’ve
talked about that a little bit. It’s not really my specialty when I start getting
into tear downs and rebuilding and bigger projects, that’s where I take a
little bit of a lazier approach. I would call lazy or smarter at some point
projects get too big and remember the bigger the project gets the more profit
I need. I know some people that to make a 20 percent ROI will do a Herculean
amount of work. I bought this property a subdivided the land I built another
house on it I did all these things it took me nine months worked my butt off
made 20%. Meanwhile, I just went and bought a property it didn’t even fix
them and sold made 20%. I mean there’s easy and there’s hard so for me I’m a fan of
of choosing easy over hard it’s one of the things that I look at because the
harder usually comes with more complications, hidden costs, and in my
experience they don’t often turn out as cut and dry as simple and easy does. Anthony Rogers, please make a video on how to buy a multi-family home. Anthony, I’m going to do that for you. Nate, write that one down, how to buy a home
multifamily style. But I’m just going to tell you right now just a little bit on
that. Multi-family, the principles are going to carry over and work the same. My
experience is that the only way to really get
deal on multifamily is not because someone is trying to, it’s a very elastic
market so you’re not going to get a deal on it. Where you get the deal is, if it’s
ready for a massive upgrade and rents haven’t been increased and you need to
put money into the property. So for example, I, I can buy a house maybe an
apartment unit at a 30% discount but I need to bring a few hundred grand at the
table to elevate the level of everything and then raise the rents because the
previous managers didn’t. And the higher rents and the higher the cap rate the
more money that I’m going to make on the back end. So I’m looking for a way to
improve the premise and that’s typically what you do with multi units. We’ll get a
video coming your way. Harry Y, Kris, when partnering with
someone who wants to go in fifty-fifty on a down payment do I also give them
50% of all net profits? or in general do you ask for a bigger share if you found
the place and did the initial work? great channel by the way. Thanks Harry.
I think so too. I’m glad you’re enjoying it. Okay, if I’m putting in money and
they’re putting in money but I’m also than doing all the work you better bet
your britches that I’m going to be getting a better cut. Usually I’m 50/50
if they bring all the money and I do all the work. So if I’m doing all the work
and I bring half the money then I’m probably going to end up being closer to
a 75% owner and for bringing in some of the money they’re going to be a 25%
owner maybe even a 20% owner and so hopefully that helps you on on how you
do those splits. Regina Abara, can you make a video about
how to buy a four-plex? you too? alright. multifamily, similar advice. Remember fourplexes are also very elastic hard to get a good deal on them.
we’ll make that video for you. Jason Savage Thanks Kris. Great info. Is there
a 1031 tax exchange equivalent in Canada? Jason that is a great question. I
actually do not know the answer to that I would probably hop online and google
it and see if they got something like that. I don’t got that answer for you. Caleb Pendergast. Caleb Pendergast, so you don’t recommend
going to college at all? No, no I never said that
I mean after all you can get started real estate with only three thousand
dollars u.s. like I could live in my parents home literally not paying for
anything and after ten weeks of, of working minimum job I could save over my
property did I get it right? Okay Caleb. We need college for many different types
of jobs out there and the statistical averages that those with a degree
typically earn twice as much as non-college earners. But
what I’m a really advocate for is saying that real estate investing this, is about
achieving freedom. College is about getting a job and being able to do a
great job paying the bills or maybe getting ahead a little bit. I use real
estate to get ahead not a little bit I use real estate to get ahead a lot. So
something that I would do in addition to. I can’t really tell you whether you
should or shouldn’t go to college. I do believe in education. This real estate
this, is also education. I’m going to be educating my entire life and for those
of you that require degrees to do you know to become an engineer, a doctor, a
lawyer, some of these other professions do that. Get that degree, get that
education. Ultimately I’m a massive proponent of education just don’t
believe that a college degree is an end-all be-all because college isn’t going
to teach you how to become financially free. They’re really just going to teach
you how to work for somebody else and do okay. Hip city life, here’s my question. if you if you purchase a home and then after a year
purchase another, then you sell the first home, if you live in it for two years and
avoid capital gains, true. But if you turn around and sell the second house you’ll
have to pay capital gains on that other house or every other house that you buy.
How do you avoid capital gains? Well hip city life, we’re not always trying to
avoid capital gains. Taxes, you know, that’s how we pay the golden goose that
lays the golden egg of opportunity that America provides us with. I love paying
my taxes but only what I get to. So I will take advantage of every loophole
that I possibly can. So you can avoid capital gains if you live in the house
for two years but frankly if your investment strategy lets you build four
times more larger portfolio without living in it for heaven sakes do not
ever hold your portfolio back just to save on taxes. Never allow paying taxes
to keep you from growing. I guess that’s the real big principle that I see some
people doing because it’s like, why should I do more? why should I put in the
effort? why should I build more? I’ll just out pay more taxes. Awesome. Now I
challenge you to get to the point where you’re paying a million a year in taxes
because it, trust me, it means that everything is going super really well in
your life right? So um, use as many loopholes as you legally and possibly
can on otherwise bite the bullet with gratitude and keep building that
portfolio man. Okay last question today comes from Joe Silva he says, the one thing I’m confused about here is, what? I made a video that confused you?
just kidding sometimes the video breeds a lot more questions right? Joe says. I’m
confused about how it works and how equity works in real estate and you pull
the money out from the bank. Can you please help me understand? Joe, this is a
fundamental question. So I’m really happy to answer this for you. If I buy a house
that is worth two hundred thousand and I pay 150 thousand for it then I walked
into 50 thousand dollars of private, a pirate booty
I got fifty thousand dollars in equity it’s a 25 percent equity position and at
some point I want to harvest that equity out. Either through selling the home or
through doing a refinance. So a bank loves to lend on a property that I’m
buying for 150 that’s worth two hundred and maybe I bring in a 20% down payment
so now I owe 120 thousand on a house worth two hundred. Once that house is
seasoned for six or twelve months the banks have programs where they’ll
let me go back in and say, hey we’re ok if you owe up to 20 thousand, twenty
percent on the home. So 20% of 200 is 260. Ah I owe 120! They’ll let me go up to 160.
There’s a $40,000 margin there so I’m going to do a refinance or a home equity
line and boom I got my money back. I still have the house I’m making money on
it I’m going to go put it in the second house and now I’ve got my money working
in two places at the exact same time that’s called velocity. And that’s one
thing that I really like to do. So hopefully that helps clear things up for
you Joe and everyone thanks for watching today’s video. Thanks for watching
today’s Limitless TV real estate video on the Q&A. Are there videos that you
would like to see us create? are there topics that we haven’t done yet? you know
what, I know there’s a lot of them but when we create these videos we would
love to create them according to your demand. What do you want? how can we serve
you? and just remember it hit that subscribe button and share these videos
with some friends if you know others involved in real estate investing that
want to get cutting-edge knowledge on how to invest successfully in this
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11 thoughts on “Invest In Real Estate – Q&A #4

  1. Lovely content! Keep it up!

  2. What taxes are you responsible for when renting out your property

  3. Hey Kris, If i take out a HELOC and purchase a rental property with it, how do you recommend going about paying that HELOC back? Do I use the rental cash flow income to pay back the HELOC? What is your recommendation? Thank you!

  4. what's going on buddy, i know in one of your video you said can put 3%down on a house but if you put only 3% do you have to pay a mortgage insurance?

  5. Thanks for the content keep up the great work Chris love your videos 😁

  6. Do you think that investing in comercial property is more profitable than investing in homes?
    Thanks in advance 😁

  7. Could you do a video explaining how to use an LLC to mitigate your risk as an investor? Love your channel!

  8. Hey Kris, not sure if you've answered this question already but i'm trying to invest in property, problem is that my parents had me use my credit to buy their home which they are still paying and don't want to refinance. Other than a good downpayment, what are my other options or what can I do to put another property under my name?

  9. Hi, I'm 23yrs with 25K, I haven't been doing my taxes in 3yrs. I went to the bank to try & get a mortgage loan but they told me I need at least 2yrs of stubs. is there any other way to speed up the 2yrs by going to the notary & get at least 1yr of work proof? could you make a video Q&A, btw great videos!

  10. Freedom vs jobs! Good point

  11. What kind of contract do you use when you do partnerships?

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