Super Real Estate Investing | Greg Vanderford | Skillshare

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Super Real Estate Investing

teacher avatar Greg Vanderford, Knowledge is Power!

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

15 Lessons (3h 5m)
    • 1. Intro 1

    • 2. Lesson 3 How to Buy Houses Super cheap

    • 3. Lesson 4 Direct Marketing Tips and Tricks

    • 4. Lesson 5 Financing Deals

    • 5. Lesson 6 Hard money lending 1

    • 6. Lesson 7 Understanding Hard Money

    • 7. Lesson 8 Exit Strategies

    • 8. Lesson 9 Secrets to Wholesaling

    • 9. Lesson 10 Secrets of Rehabbing

    • 10. Lesson 11 The Confusing Subject of Tax Lien Certificates and Deeds

    • 11. Lesson 12 The Ultimate Endgame

    • 12. Lesson 13 REI Tips and Tricks

    • 13. Lesson 14 Even More Ways to Make Money in REI

    • 14. Lesson 15 How to Leverage REI experience to sell products

    • 15. Lesson 16 Conclusion

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About This Class

This course is for anyone interested in real estate investing, from the beginner to seasoned pros looking for more money making strategies. In this course you will learn how to:

1. Buy houses for super cheap and flip them for a huge profit

2. Buy houses for super cheap and wholesale them for a quick profit

3. Buy houses for super cheap and rent them for passive income

4. Buy tax lien certificates and tax deeds for super cheap and earn a huge return

5. Build wealth through the oldest and best strategy in the world: Real Estate

Throughout the course you will not only learn how to do all of the above but many more tips, tricks, and ideas that it took myself and my business partner many years of trial and error to discover, tweak, and perfect. There are so many ways to make money in real estate, reduce your taxes, defend your wealth, and even just have fun, that you can never do it all.

In addition to everything else that you will learn in this course, you will have access to myself and my partner through the discussion board and private messages on Udemy to get the extra help that you need. We understand that it's hard starting out, so we're here to give you a boost.

This course is the answer to students of my current Udemy course, Learn the Secrets of Probate Real Estate Investing, who kept asking me: When will you produce another course?! Well now I've done it, and I hope you enjoy it and accomplish all of your learning and investing goals.

Meet Your Teacher

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Greg Vanderford

Knowledge is Power!


My courses are designed based on my many years as a teacher and student of education and business. I hold a master's degree in curriculum and instruction and have been designing curricula for over a decade.

The business, language, and chess courses that I have built are a reflection of this experience and dedication to education. My goal is to reach as many people as possible with my courses, which is why I have chosen the internet as my ideal mode of delivery.

The following is a little more about my expertise and background. I was born and raised in Sandpoint, Idaho. I attended the University of Idaho where I earned a bachelor's degree in Business Administration in 2004. After a few years in the work force as an account manager I moved to Vietnam where I lived for over 5 ... See full profile

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1. Intro 1: Welcome to the class, everybody. As you heard in the promo video, we're gonna learn a lot about real estate. We're gonna learn all different ways. There are to make money in real estate. That includes flipping houses, renting them financing, buying leans on the houses. There are so many ways to make money in real estate there so many strategies. You could be really creative. And I've tried pretty much all of them. And so this course is going to be, ah, me telling you guys what works and what doesn't work. In my experience, if you've taken my other course, learn the secret of probate, real estate investing, you know that a lot of experience flipping houses. But I've also dabbled in some of these other strategies and used others very extensively. So I'm gonna tell you guys what I know what I don't know and what works. And a lot of it is really the philosophy behind real estate in the philosophy behind financing of real estate that helps us to understand why it's so powerful, how to do it, and many different things that make it understandable for all of us. Everybody can make money in real estate. You don't have to be a genius. All of us are familiar with with housing. Most of us are familiar or have mortgages and stuff like that. So real estate is a really logical place to begin building wealth for most people, especially if you don't have a business degree and you haven't spent a lot of time in business or in finance. Well, real estate is understandable and can be done, and pretty much, um, understood by anybody could be implemented by anybody. So we're gonna go ahead and look at a few few of the things you need to look at, um, in the basics of understanding real estate. So first me to do is look at why real estate continues to be the best wealth building strategy there is and always will be. Real estate has been making people wealthy for hundreds, if not thousands of years, literally. And there are some fundamental reasons for why real estate is such a good investment compared to things like stocks or gold or other business deals that you can dio and other types of financial instruments. Real estate has some has a big advantages over a lot of those things. One of them is that it can be leveraged. Banks will lend you money for real estate because they know that if you don't pay back the loan, they can take the property and homes and land will always have value. And it's a really easy thing for banks to measure. It's really easy for us to borrow because of that. I mean, the banks are not going to lend you money on most other types of assets, or they may on some of them. But much more strict with collateral with the paperwork and the deal you will get won't be as good. This is a huge advantage because it means as long as you have a down payment and ah, decent credit score, which you know from, in most cases, your credit score doesn't need to be that high toe mortgage property. Ah, you can invest and you can invest in multiple properties and you can leverage your wealth and, uh, basically turbocharge your portfolio. You can borrow on stocks, you know on the margin and do some fancy stuff there and and use debt to buy stocks. But its way risk year to a trickier, and it's harder to do. Real estate is much more straightforward, at least in most cases, the 30 year mortgage. This is an innovation that's only been around for a few decades. Actually, we're all pretty used to it now. But the 30 year mortgage allows the consumer to purchase way more real estate. Then you ever would have been able to before the 30 year mortgage, right, because it lowers your payment. And even though over time you're paying a lot of interest over 30 years, you are controlling a property that is appreciating and your money is going a long way because you can get a mortgage and multiple properties as long as you have the income to show it and rental income counts, you can leverage that to make a lot of monies. That's, Ah, that's a big deal. That's one of the big reasons why real estate has become an even better investment than it used to be, or at least easier to get into it with these 30 year mortgages. And there are many ways to finance, refinance and be creative in real estate, right, if your equity goes up because your property has appreciated over a short period of time. You can refinance that house and pull cash out of that equity and buy another property. This is an amazing thing that you can do with a lot of other assets, and you can. You can refinance. When interest rates change, you get a better interest rate. You can pull money out of this, said. You could do all kinds of creative things. With that, you could get into mortar because of properties. You can subdivide properties up, and there's tons of ways to be creative and to make money. And once you've done a few deals, you realize it's not that complicated. I mean, at first it could be daunting because there's paperwork and it might be confusing. Or it might just be scary because you haven't done it. It seems like maybe it's risky or, you know, having debt and carrying debt is something you're not used, Teoh. But once you've done a dealer to and most people you know own a house to live in, Um, you start to realize that it's not that big of a deal. You start doing it and it works, and then you just keep doing it. You get more confident, you learn mawr, and, um, you just start building it. You know, you just really got to start. And I know that my first deal the first time I flipped a house, it was scary. You are risking your own money. It's something new. You're worried you're gonna make a mistake. You're worried that maybe you're going to get ah, taken advantage of by somebody. There's all these moving parts, and then you go through the process and you go, Huh? Well, that was challenging. And I mean, usually it is a first. You start to realize that you've gotten better at it. You've learned the next time it will be easier. And you made some money, and you really just got to get started. So those are some of the reasons that real estate is a great investment. More reasons is that there will always be demand for real estate under no market condition to people not need a place to live. Right. So even if you know, the value of homes goes down, such as we saw with the crash, you know, the bubble in 2000 and eight popping everyone still has to rent someplace so rents might go down and the values might go down. But real estate will always be necessary. There will always be demand for it. Okay, this is makes it unique, you know? I mean, people don't need stocks toe live, but people need a place to live. There will never be a time. And there will never be a scenario where people don't need housing. And so that makes it very, very safe in the long term. Now, of course, if you're over leveraged and you have 10 properties that are, you know are all hanging by a thread that you have to have tenants and all of them, you know, in order to just barely keep it all together And then the market crashes your upside down. All of them. You know, that's how people lose all their money. They lose their shirts. So you have to be careful with leverage. We're gonna talk about that in this course, but in general it's a unique investment because people always need housing. And the reason I've written here that demand will increase over time. Over the decades, the population of the planet is exploding. It's going to double every, you know, decade or so. So you're talking about having billions and billions more people on Earth. But the land is fixed. You cannot create mawr land. Is this something that most people probably haven't thought of? But as the population gets gets huge and it starts exploding, the value of real estate is going to go up exponentially. This is already happening in many countries where land is much more scarce than the U. S. In United States, you know, we have lots of land. We've got a really big country, and we have really good land. And values are also going up here, of course. But as available properties get more and more scarce, then the values will continue to go up. So that means it's an even better investment. Earlier you can start investing in real estate firm or it will be worth, and I think this just my belief. But based on the economics I just explained, I believe that in a couple of decades from now, land is gonna be worth many, many multiples than it is now and way way more than it ever has been. It's gonna be increasing at a faster rate that it ever has been, because we're going to essentially run out of it. And this cousin quite happened yet. So Investigators state is going to be even Mawr valuable, and they're going even mawr demand for it than there ever has been in history. As we move toward the future, real estate also has the attributes to be able to protect your wealth during even the worst financial disasters. I mean, even if if the Valley of real estate goes to almost nothing, you know it loses half its value. As you saw in 2008 you still own something that can be lived in. It can be used. It can be rented right. If you need to hold on to your property, you can live inside of it. You know it's actually has utility, whereas Gold doesn't have any real utility. And even money doesn't have a lot of utility. If you're in a super hyper inflation environment and you're losing all of your purchasing power, as we've seen happen in history, in places like Mexico and the Old South, with Confederate dollars in the civil war in Asia during the banking crisis, in the nineties. That is also possible. And even though the value of real estate could go down, it can always be lived in. It can be used. Land can be, um, farmed, and you can actually create food with it. So this makes real estate inherently valuable in a way that pretty much no other asset is. And that makes it a really good investment, especially over the long run. And then finally, for this introductory lesson, the low end of the market has the highest level demand. This is great for investors because, you know, most of the people in the marketplace can't afford $1,000,000 houses or whatever that means . The lots and lots of transactions are happening in sort of the lower to middle and for properties that are, you know, $203,000 or whatever. And this is good for for us as investors, because everyone's always looking to rent these kind of properties toe by this kind of properties. As we're flipping houses, whether you're selling it to another investor as a wholesale deal or you're selling it on the market, the demand is really high at this sort of low end to mid and of the market. So there's always lots of activity. There's always lots of buyers. And of course, you know nothing about real estate is cyclical, sometimes the buyer's market. Sometimes it's a seller's market, but there's always demand for housing at this low end of the market. And if you don't have any capital, you can get started, you know, with mobile homes, or you get started with just the land and learn how to make money that way until you build it up and you start doing bigger deals. But this is another attribute of real estate that is good for us as investors. And so with that, I will leave it there and will go on to another introductory lesson will continue about the fundamental merits of real estate before we get into more of the meat of the course. 2. Lesson 3 How to Buy Houses Super cheap: in this lesson, we're going to go over the basics of how you confined and buy houses for very, very cheap. This is the cause for much confusion, and it's also the root of a $1,000,000,000 industry. The seminar industry, you know, make money with no money and no state, no money down how to flip houses in all this. What it comes down to is finding motivated sellers. That is the game. Okay, So motivated sellers can mean anybody who is, uh, distress or needs to sell or wants to sell their property quickly. And for our purposes, they need to sell it under the market value. Now you might think, well, are we taking advantage of people they're selling it to us for under the market value? The answer is no, because in many circumstances they need the money. There's no other buyer. And if the property is distressed because it needs lots of repairs, they can't find a normal buyer because banks will not lend money for people to buy properties that are just stressed and need a lot of repairs. And so there are essentially no buyers in the market for such properties, except for investors willing to pay cash to give them money to get out from under that property. They're going to take a discount, and we're going to get a really good deal and be able to put our money into the property. And then once we sell it, make a very large profit now in real estate. But just understand one thing that there's lots of ways to make money in it and is also a huge range of the amount of money will make it any given deal. You can make $100,000 arm or on one flip, especially dealing with $1,000,000 properties. Of course, you make a lot more than that, but we're talking mostly about their lower to middle end of the market. This is where most of activity is. It's where it's easier to do the deals, so we'll find more of the deals and then once you have more money and you learn the business later on, you'll have opportunities to do larger flips and larger deals. But most of time, you know we're going to make in between, uh anywhere from 15 $20,000 to 70 or $80,000 per flip, but think about if you do 10 of them a year, you're making a lot of money. Um, and this business is not only really lucrative, but it's also really fun and interesting, and every single deal is totally different. But that being said go back to our motivated sellers, so that might be someone who's going through a divorce and they don't want to live, not property more than just want to get cash. They want to move on. They don't care so much about getting top dollar for the property, want some money, and they want out. Okay, it might be someone who has inherited a property. I've got ah, entire course on this called Learn the Secrets of Probate Real estate investing. This is a niche that I specialize in for various reasons you can learn about in that course , but there it's very lucrative. These properties is usually easier to get a deal. Usually the houses have lots of equity in them. You find him, you start flipping houses that a lot of deals that seem like they might be good deals. The owners don't have enough equity to make it worth it for you So you need to find properties that are either paid off or have enough equity in them, meaning the loan they having is the bank is small enough in relation to the mortgage that you can still make money out of it. And in a probate nichd, Um, nine times out of 10 there's enough equity to do a deal because people who are are passing away, leaving valuable properties that have been paid off. That's that's one other example of a really good motivated cellar area. You have people that are in financial distress for whatever reason, there might be people who owe money on their taxes. And we're gonna go over a whole lesson in this course about how you can take advantage of that by buying tax ling certificates and tax D's, depending on the state that you're in and make a lot money off. A lot of money off of that which is guaranteed by the government of really good niche, another niche where there's a lot of confusion around it and people have heard or read a lot of things about it. So we're gonna clear the air about that. I'm gonna give you guys the truth and some clarity about how that works and some of the, um, misconceptions in that business. So you've got people that are under financial distress, people that are going bankrupt, people that are going to divorce is any any reason that someone to be distressed and want to get out from under their property or want to get money out of the property? They can be a motivated seller, so we need to find those motivated sellers. Usually. What you'll dio is you will go to the courthouse or you'll buy lists, mailing lists or telephone lists from organizations on the Internet. You get these lists and then you send out mailings. This is the way to get the best deals. Now there is another way what we're gonna talk about a little bit later, where you basically use realtors and you just make a huge volume of offers. This is one of the methods that is taught in some of the seminars, and there are some problems with that method, especially when the market is doing well like it is now. You have lots of competition and it drives the purchasing price up so it makes it really hard for us to make a profit when the margins get narrowed like that, and it becomes really tricky, nearly difficult. That system works well when the market is depressed right after the crash. That would've been a really good time to do that. But when you do the direct marketing, when you're sending letters out to these people introducing yourself and say, I want to buy your house, you will get way, way larger spreads and margins on the properties. What? This is why we do it this way. You negotiate directly with the seller, you negotiate a good deal. Use a special contract purchase and sale agreement that gives us protection. Gives us a way to get out of the deal. If we do our due diligence and we find out there's some problem with the property and, um, this is the best way to do it. So what you do is you. You send out the mailings, you'll send out several, um, several rounds of mailings, so that means like four or five rounds every two or three weeks, you'll send out a mailing could just be a letter that you that you type up. I've been using the special letters that, um, that are designed for this for years. But sometimes I'll just send out a hand written note. Use the third or fourth mailing. I'll just ride it out by hand because it seems toe have more of an impact. Sometimes after they received a couple professional looking letters from you, they're more open now. They're familiar with your name and there more open to talking to you and to calling you. A lot of times you sound these letters. People are intimidated or scared. At first, they think that maybe it's a scam or something. But once you are persistent and you finally get a hold of them talking on the phone, they realize that you just want to buy their house. You're an investor, you're gonna you're gonna put money into it, and you're gonna try to try to sell it, make money off it when they realize it's just your business. A lot of them become very amenable to selling the realize you just a normal person and so they will call you will call you. You'll said, deployment to see the property and you'll come out there and run the numbers, the numbers that we're gonna learn about later in the course, and it's a pretty basic formula. You just look at the numbers and you figure out whether or not it will work or not. It doesn't take very long to tell. Once you get used to doing it, you can look at a property, you look of the equity, look at the numbers, and it's really, really easy to make a quick decision. Does this have potential? Not. And then what you do is you just start making you make really low offers and you see what you can get, and any property is worth it to flip if you get it for low enough. I mean, if you get a property for cheap enough, there's almost no risk because even if a whole bunch of stuff goes wrong with it, you're still gonna get out with money because you paid so little, then that's the The critical thing to understand about this business model is getting houses and properties for super cheap. That's it. And, um, we're gonna learn how to do it, and this is the best way to start that process. You get list of one of its sellers. You send out the mailings saying I want to buy your house. Please call me. You set appointments to see the properties like the prophecy offer you this much for this property. You try to get a quick closing two or three weeks enough time to give you, give you a chance to do some some checks on it to check the title to get an inspection done to make sure the things that the seller has told you are true. And, um, you do all that, you check it all out. And then during that period, we call that the continuously period. You have a stipulation within the contract that you have them sign on that day when you make the offer that you can get out of the contract based on finding anything with wrong with the property or based on your not getting financing. And so you make those offers and you do it again. You just do it over and over again. It's ah, it's a pretty basic process, and this is ah the way that is by far the best method under most circumstances. So we're gonna look, though a little bit at using a realtor because a lot of people are intimidated by trying to call and talk with lots of these sellers directly and they don't have any. Maybe, you know, you haven't had any sales experience or any experience doing this talking to sellers or doing marketing your anything. That shouldn't be a reason to stop you from trying to flip houses if you're interested in real estate and you want to build wealth and you want to get into this business. So the other way that I mentioned, which I'm not as big of a fan of at least during good markets, expanding markets cause there's so much competition is through a realtor. So basically what you dio is, you find a realtor, the understands and his on board of what you're doing. A lot of Realtors are not on board of this. They don't like making lots and lots of offers. And then a lot of those offers end up not going through, because even if our offers do get accepted, once we start checking out the property, we may have to pull out of the deal. So this is a model where you're basically doing high volume of offers, like making maybe dozens of offers a month. And then, out of those dozens of offers, you might get one or two accepted and then go all the way through to a closing. So in sales, it's a numbers game, and this is, sort of, paradoxically, a sales activity. Even though we're acquiring properties, we are selling our offer. We're selling our deal. We're trying to get a deal that is below the market value, so there's enough meat on the bone, as we say, to be able to get cash out of it. So you need to find a realtor that understands this business model. And a lot of Realtors are also real estate investors or have been active real estate investors in the past. So they're totally on board with this to understand what you need and, um, and it's important to have a realtor that is like that. I've seen lots of people have conflicts with the Realtors, you know, oftentimes, realtors actually are not that well trained. They have taken their realtor exam, and they basically are a salesman. They know how to get listings and do the paperwork to sell the house and get a commission, and that's pretty much all they know. Some Some realtors, of course, have lots of experience, and they're very, very knowledgeable. It really just varies is the point. And so you need to find the one that is knowledgeable, understands what you're doing and is on board with what you are doing. So once you do that, you go out there, you tell him what you're looking for exactly. You make a high volume of very low offers, and then your realtor is most of the work, and they're going to get a commission when you buy the property. And when you sell the property to use them to sell it after you've flipped it, if you're not gonna wholesale it and you're gonna full rehab and resell it so your realtor is incentivized to help you. And if you're doing lots of deals, especially it's worth it for them to do a lot of late work. But, um, the idea with this is that they're doing most of the work instead of you having to go around and call these people. Send all these letters, go visit all the properties a 1,000,000 times, which is a lot of work, even though that ends up making you a lot of money. This is a way that you can basically outsource this part of the process. And even though there are some downsides like I already mentioned, such as more competition may be having it be harder to get as good of deals this way. You can get deals this way, and some people use this model exclusively, and they're really good at it. But the key is volume. You make tons offers. You get someone accepted and then attend of the day. If you get a property that you can rehab and flip and make 20 or $30,000 out of it, then you're happy, and you can certainly do it this way. So it's important. Understand that there are different methods, and these are two of the main methods. You will directly contact motivated sellers from lists and say, I'll buy your house, is how much and you go through a large volume of them. You get a property, flip the house, rehire realtor, you say this is what I'm doing. I want you to find me deals that air 70% of the after retail value minus the repairs. Look for houses that need repairs and they go out there and they find them for you gonna get in more detail about this process, you know, later in the course. But for now, that's the process. That's what we're trying to do, OK, and then another way you can acquire them is through referrals from places that would have information about motivated sellers. So I visit law offices and I say, Hey, my name's Craig Venter Ford and I'm a real estate investor and I look for people that I could help out, get out from under their properties and pay cash for houses. And, you know, can you please send me some of your clients that may be in need of my services? And some law offices don't like this. They say, Oh, we don't We want you coming, soliciting, you know, at our office or, you know, euro, your real estate investor. Okay, and they don't really care at all. But some law offices, especially if they have a lot of clients that might be in a situation that they would sell their property like clients that are the low end of the market or clients like, for example, divorce lawyers or probate lawyers, certain types of lawyers, they might see real value in what you're doing, because they do have the best interests of their clients in mind. And they will be able to say, Oh, you, you're in the situation? Well, actually, I know somebody who might want to buy your house, because again, these air houses that usually cannot be sold on the regular market for full value because they need repairs or have other issues. And so we are the only buyer in many cases for these properties, which is one of the reasons why we can get them so cheaply. And you just have to have the financing or the capital to be able to put into them. Fix them absolutely can be sold and purchased with a regular mortgage from a bank. We're gonna learn in the lesson about the financing that you really don't need your own money to do these deals. I mean, you almost always need some. If anyone tells you in real estate that you don't need any money, I mean that's true, You could do deals with There's absolutely zero money goes out of your pocket. Usually the result of that will be a couple things. One will be that you'll make far less money because you had to pay a lot of people to do a lot of the other activities that you could have done. Um, and the other is that you have to have a lot of skill to do that, you have to have a lot of skill and experience, usually to be able to do deals that way. But the thing is, even if you you don't have that level of experience, oftentimes you could do deals where you're only paying for the interest on the hard money loan. Maybe you're paying a few $1000 to do the deal, so you do need some money, but you don't need a great deal of money to do this by any means. Okay, so busy law offices. One way that I've gotten referrals and I flip some houses that way. Another way is just to visit. Brokers and real estate firms say, Hey, I'm a real estate investor. If you guys got any deals or you got any heads up on any potential motivated sellers that you guys aren't gonna work with, um said in my way and I'll give you a commission. You could work out various types of deals with brokerage firms you can dio basically just a fee for if they send something your way that ends up getting, um, purchased and closed, then you can say 500 bucks for every time you do that. You could say 100 bucks. Whatever it is, you can negotiate with them. And if they see that, they send you somebody and then they make money off of it. And you were honest with them about it, you know, and followed through with everything, Then they'll send you a lot of potential deals. I've gotten house slips this way. I basically had what happens in businesses that you'll end up getting late shift with, Like a few people that worked really well, they become part of your team. So that might be the same title companies every time, the same broker or a real estate agent that you use every time there might be a few of them , but I basically have one broker that sends me referrals all the time. I use those It took me a while to get the point where I have one, that we work together a lot and everything works really well. But this can be a really fantastic way to get house you never would have heard about otherwise. And it's just another avenue. When we're fishing for deals, it's like, you know, you want to put out lots of lines and so you might be sending out, um, direct mail. You might be having realtors look for you. You might be using referrals. I kind of use all of these methods I prefer, as I mentioned, sending out direct mail and just dealing directly with the seller. I get the best deals that way, especially in the probate niche. But this is another way to seek referrals, and it does pay off. Um, and then another great way is to attend RIA meetings, right. Real estate investing meetings. Okay, this is the real estate investing association. They have these meetings and pretty much every major city. Usually their weekly meeting and investors come and talk about investing the network. And this is one of the places where you can build a buyer's list. For once you have deals on a contract that you want to wholesale and just flip to another investors, often times you could find buyers at these RIA meetings. Or if you want to be buying deals from a wholesaler and then flipping that property, you can oftentimes find those type of investors at the Rio meanings to. So that's that's another way to basically get a deal for property that year. You're going to you flip is Teoh by them directly from wholesalers, so the whole center will be the person actually gets a proper under contract will bump it up to you. Maybe they'll make a few $1000 maybe even as much as you know, 10 or $20,000. In some cases, like when the boom was happening in 8007 wholesalers were making like 2030 grand on property because the values of the properties were going up so fast. Like while they're doing these deals, the profits are appreciating, so there's an enormous spread in that. But even in the regular market, you can get a house in her contract, bump it up five grand, sell it to another investor, you make 5000 bucks and the investor gets a private. It's still way below the retail value, and they can go ahead and rehab it and re flip it and still make money is this is one of the ways I've done some deals when it's been hard to get one the normal way, and then I go to re meeting and there's a guy has got a wholesale deal and I was buying from him. Now you have to be careful, these kind of deals. Not that wholesalers aren't honest, but you really have to check him out because they're trying to make money and you got to make sure that there is enough meat on the bones. Still, when you're looking to buy a house from a wholesaler, that you can still make money in it, just like when we're trying to sell our houses, you know, in a wholesale deal, we want to make sure we make enough money. You've got to make sure that everyone involved is gonna make money so the wholesaler gets their cut. You have enough money to make your money and everybody wins. That's how it has to work. Once you start getting greedy or wants. Start looking for too much. Not only will it kind of, it will make it harder for you to do business, and you'll end up making less money. But you get a bad reputation and people will want to work with you. And in this business, what you need is you need team members that you can use over and over again. So you need to have a good reputation. They need to engage in fair dealings at all levels of the process. Otherwise, it's just bad business. It doesn't work. You will end up being less successful. But attending Rio means a great way to network to find deals, to find buyers for your deals. And, um, you know, it's just a no brainer. These meetings exist. You may as well go to them and meet people and just yet another avenue to find different deals and different ways to take part in real estate investing. Sometimes you know you'll meet an investor that is in a certain it's like the only buy properties at auctions, for example, which I don't specialize and I haven't talked about much. I find them to be to be a difficult to find the good enough deals at auctions. But some people do that exclusively and make a lot of money. They know a lot about the auction process. They go to different auctions in different counties, in different states, you know, the best ones to go to. And so I have piggybacked, um, with a, um, a person who does that. I went in on a deal just for fun. You know, We went, He say, Why don't you come with me? I'm going to an auction next week and we'll look at some properties and I said, Sure, that sounds interesting. I've never done before and we got a good deal and I went in halves with him and we made money on it. So there's a lot of cool things that can happen. A lot of synergies when you meet people in the business that are doing different things in you, and you just never know what's gonna happen. So is one of things that makes it flipping houses. It makes investing in real estate really fun is you don't know what's gonna happen. Okay, so with that, I think it's videos going on quite quite long and we'll and we'll leave it there. Um, feel free to leave any discussion, question or any comment in the course, and I'll be available to answer your guys questions, too. I'm going through this stuff a relatively quickly because there's a lot to cover in a broad course like this. So use me as a resource and use each other as a resource to understand. A lot of you guys in this course will have some investing experience. So post questions or comments up in the discussion board and let's help each other out. Make sure that the course is another forum that can be a resource for you. 3. Lesson 4 Direct Marketing Tips and Tricks: okay, It's on the last lecture. We talked a bit about how to get houses super cheap. I'm gonna go Ah little deeper into some of the things that we discussed already. And it's kind of continue with this topic because it's pretty much the whole crux of flipping houses. You have to be able to get cheap properties, otherwise you won't make any money. And you really don't need to have that many skills and other aspects of the process, especially if you're gonna hold sell the properties. If you can't get the properties for a low enough price, you just can't make money in. The business is simple. Is that, However, on the other hand, if you can get these properties for a really good price than you know, there's a lot of room for error later on in the process, and you can still get out with money. So this is really the critical aspect to the whole entire thing, if anything, that anything is a secret. You know, in the real estate business, this would be it. You have to acquire properties for less money. That's the name of the game. So we look Atmore direct marketing strategies. I mentioned places that you can get lists, but I know that could be confusing. You're just getting started, so we're gonna go into a little bit more. You can get mailing lists at the courthouse, especially for the probate niche. And sometimes you can get even get bankruptcy lists at the courthouse. It depends on the county your in, so you'll have to check. But you go to the county clerk. You say I would like a list of all of the, um, properties that are currently and probate in the county, and this is by law, something that they have to give you. It's ah, legal right, you know, for citizens to get this information, freedom of information so they will give you a list will ask you Well, how far back do you want? And I usually do one or two months so that you are getting recent listings or recent, you know, potential sales. We could say sometimes I go further back because someone may have a proper they're just sitting on and, um, and stuff like that, but it's better to get the most recent ones you can, but I'm really active looking for a deal. I will go in there every week because then you're getting all the fresh stuff and you're getting You're getting information soon before other people get their hands on it. You want to get in there and be the first person to talk to these people so that you're the only one that talking. Teoh, they go. Oh, my gosh, I got somebody wants to pay money for my house. You don't want them to be talking to Realtors. You don't want them to be talking to other investors because then they're competing with you. And so you want to be the 1st 1 to get in there 1st 1 to talk with them and try to get a deal as quickly as possible. Okay, so the courthouse is one of the ways that we get these lists and other places. The bank. You can talk to banks, just call them and say I'm a real estate investor. I would like to know if it's possible for you guys to send me information regarding people that are being foreclosed on their properties. I am in a position to buy those properties and I can help them and some banks are not interested in doing this. Some banks are very interested in doing this because they understand that if you help them get out from under that property, the bank will get their money back, or at least get some of their money back. Instead of foreclosing you having to go through that, you know they're going to get some money. You can work with the bank and do a deal when you buy the property from the the owner. Um, you can do a deal this way, and often times the bank will send you this information. You can contact people that air that air in bankruptcy. Often times there will be equity in these properties and people. There's various reasons why they haven't paid their mortgages more than why they're going bankrupt, and it could be is really bad financial management on their part. It could be something happened really quickly and haven't had time to sell her house to get their money out. There's all kinds of reasons, you know, these things that happen in situations that people get themselves into so the banks can give you this information already mentioned law offices, you know, just go around, talk to them. This is something that could be kind of intimidating at first. You're not used to doing this. It's like you're soliciting something. But if you just casual about it, you know, going there and just chat with them Oftentimes the paralegals and clerks that law offices could be quite bored or have lots of time on their hands, you just chat with them. It's like a sales job. You go in there, you meet people, you talk with them and you introduce yourself. Let me know what you're doing. Some people are not very amenable to that, and they don't like it. But a lot of people are really happy to talk to you. They find what you do to be interesting, and you make friends this way and you meet a lot of cool people. So I've definitely gotten deals all these different ways. By far the most successful for me, though, has been going to the courthouse and getting those probate lists and sending out direct mailing to them and ah, you get a lot of deals. That way you can purchase list on the Internet. Just do a Google search for a motivated seller lists, and there's all kinds of brokers and websites that will sell you that information, and it can be a little bit expensive, but it cuts out all the work of having to go through the other process. You get the list, you have a mailing list and you send it out. You can even buy these at RIA meetings, people that have list that are selling them. I have sold my lis at Rio meetings to other investors, and they've used them to get deals as well. You have to be creative in this business. There's not just one way to do everything, and some people will tell you that this is the way this is. The best way is the only way. But at the end of the day, what we're trying to do is get a property and make money off of that property. So how can there be only one way anything that helps us to do that to achieve that objective is worth exploring, so you try to dabble in all of it, and usually what will happen is you'll find one or two strategies that are either the most successful for you or you the most comfortable with. And then you'll end up using those strategies the most or even exclusively. But especially at first, you got to kind of explore all these different avenues and go out there and try it, okay? And then, finally, you can purchase these list from other businesses, too. You can say, Hey, do you have any mailing lists? You go to a Realtor where you can go to a brokered firm or a law office and say, Would you be willing to sell your list of customers? A lot of places are not willing to sell his information. Um, and a lot of places are very, very eager to sell this information because you're gonna pay for it. And some places just want to make money. And if you can get 1000 person customer list from a business that's targeted because of its AH real estate business or law office, you're getting a lot of potential deals there. So these lists are very valuable. It's a targeted list that you can use to contact people, so there's lots of other ways to get these lists. But when you're in the direct marketing strategy, you need to have people to market to. And so this is one of the critical aspects of the business, and these are some of the ways to get those lists. OK? Ah, you need to send at least four rounds of letters that I mentioned before. Most of the time people will not contact you after the first round of letters will send out a letter saying, Hey, my name is such and such I'm a real estate investor. I'd like to buy your house. Um, can you give me a call and we could talk about it? I'll buy your house, you know, in any condition. Um, I could do a quick closing. Give me a call, let's get some money in your pocket. And a lot of people look at that and they go to span. They won't call you, but once they get a second letter from you, or then 1/3 and fourth letter, their hand written and they see it's personal, it's not coming from some ivory tower, you know, some big corporation with no face and no name, they say You know what? I'm gonna give this guy call and see if he is all about. He sent me a few letters here. Let's see what he had to say. And that's what I do. So usually I'll get most of my calls on that third or fourth letter. So this is critical. You have to send out multiple rounds of letters and you can't get discouraged. If you didn't know anything about this business, you might think Well, I sent all these letters. Nobody called me. But you have to send them out every couple weeks and be persistent. And then the 3rd 3rd 4th or even fifth try. You will get calls and you talk to them. So yeah, this is my name. This is what I do. Can I come and see your property? Are you interested in selling it to me? Get some. Get some money in your pocket. I pay cash. And even if we're using a financing like a hard money lender or other time another type of financing I mean, you're still basically paying them cash at the closing. They're getting cash from you. So you always say you pay cash and that's attractive to them because you're not getting a mortgage or anything on the property not doing with banks. Whatever lending institution you are dealing with, whether it's private money, your own money or hard money, you're essentially paying cash at that closing. And, um, is that something you always want to emphasize? And, um, you know, this can be difficult talking to these sellers because some people are the skeptical of the suspicious or they're nervous or they're afraid, Um, and they're they're reticent or reluctant sometimes to do a deal with you or to accept your offers. But you can get better deals this way than any other way you will find. After much effort, there will be a deal that will come along. Someone is truly motivated to sell. They've got a property that you know is worth 200 grand after you fix it. You know how much you got to put into it? Maybe 30 or 40,000. And, um, they're willing to take, like, 50,000 bucks for that property or 60 or $70,000. The property want the money, they want to get out of it. They need to move on for whatever reason, you know, people have complex lives. There's lots of reasons that can't even be foreseen as to why someone wants to get out from under a property or needs money. Okay, so you've got to remember that when you're getting a few calls or you're getting angry callers, you have to remember that people are out there that do actually need our help and that we actually can, you know, get a really great deal from, and they will always exist. Unfortunately, in the world we live in, there are lots of challenges. People are in financial trouble a lot. And some look at this industry as us taking advantage of those people. And, of course, I've seen it from all angles. Um, there are those who do that, and you can do that if your unscrupulous, but you also can and do help a lot of people that need to get out from some situation that they're in. So once you get used to this once you start getting used to talking to these sellers, Um, this is how you make most of your money flipping houses. Okay, So you sent out the letters you sent out four rounds of letters and you'll get calls on the 3rd 4th 5th rounds of letters. This is one of the up front expenses, because when you're sending out mail, you have to pay for the stamps, and the stamps are the most expensive aspect of this. This is one of the things that cause a little bit of money up front. You're sending all of his letters, but it's not like thousands of dollars it might cost you. You know, it might cost you hundreds if you're sending out large volumes of male. But the more mail you send the MAWR responses you'll get. And of course, even if you spent thousands of dollars on the male, one deal will pay for it 10 times over. So you got to keep that in mind. You just need to get a deal. We need to get a property under contract and the money will come. And this again, I want to emphasize, is the critical part of the strategy. In acquiring properties for cheap and flipping houses. You need to be able to get them at a big discount, and this is the best way to do it. Okay, so this is like a little bit mawr at the different types of motivated sellers that they are . I already mentioned most of these probate. Somebody has passed away, and a family someone has inherited a property. These people are usually motivated to make money off the property. Oftentimes, they won't want to sell right the inherited, probably for their parents. They want to keep it. They want to live in. It makes sense. Often times will inherit. Property might even be in the same state or even the same country. And they'll get something from you. And they will. Um, yes, I want to get the money out of that property. Let's meet. Let's look at it and we'll take We'll take 50 grand for $100,000 property, especially if the property needs work. And they know that Realtor will have trouble selling it. Or they don't want to deal with getting Realtor and waiting for months and months for the listing to get sold. And they get something from you, say you'll buy the house in a week and they go. That sounds good to me. I'll take the cash. And so that's why the probate. This is a good one. Divorce. Um, this is a reason that comes up a lot. Unfortunately, a lot of people get divorced and they don't want to keep that property. They want to sell it. So this could be really lucrative group for motivated sellers, bankruptcies, a big one, tax debts, a big one, Consumer debt. I mean, people get into credit card debt and stuff, and I need money. So they need to sell their the house to cover that type of thing. And so any kind of financial problem at all. And so you can even contact credit card companies and say, Can I can I purchase a customer list from you? And usually credit card companies will sell them to you. In my experience, they're amenable to. That can be expensive, especially if it's like a huge list. You know, creditor couples often times have like millions of customers. But you can say I want 1000 customers in my city in my region. How much would you sell that to me? Four. And, um, you can get a list that way, usually for like, a few $100 but that's money well spent. I mean, it's a very targeted list. People that have credit card debt that need money that my own property. It could be a really good way to do it. Okay, so pretty much any financial emergency that someone may be in is a potentially motivated seller. Okay, so you find that person you offer to buy their house. It's really easy. One thing that I don't have on these slides. I haven't focused on a lot in my career, but some people do have success with is they put up so called bandits Signs abandon sign you may have seen driving around your city is a little sign that you just post up on a street corner. Try to do in a high traffic area, like at an intersection, and you say we buy houses and you put your phone number on there and someone driving by might see that go call you and say I saw your sign says You buy houses. I want to sell my house and then you get calls that way, too. I don't like doing that because, first of all, it's usually illegal to put those signs up. And what happens is the city officials will take them down and then released, invested will just put them back up in different locations. You can get in trouble for doing it. You could get fined if they see that. You keep doing it when they have called you and said, Please, some of the signs up you don't have the legal right to do so. So I don't like doing it. For that reason, I also don't like having to go out there on the street corners. You don't put the signs up goodbye. The signs. I just don't like that. But a lot of investors have success with that. That sounds like something that you know you're willing to do. You can get calls that way. I know people who get most of the calls that way. Actually, it's another way to reach people that you know you're not gonna reach with your other methods. People that would never receive your mail. Um, that, you know your realtor wouldn't contact. But just by driving around, they see one of your sign. That's the way to advertise. And, of course, if you're you have a lot of money. You could buy sign Ege and pay for billboards. But of course, that's the exact opposite of what we're trying to do. We're trying to get properties for a low amount of money, so bandit signs are a way to do it. I'm just the name themselves bandit. I mean, it indicates that they're a little bit, you know, unscrupulous. Almost every investor I know uses them. So I think I would be remiss if I didn't tell you about that strategy so you could take advantage of it. If you want Teoh. I mean, it's perfectly legal to use it on your own property. So if you have a house, it's in a on a busy intersection. Or if you have a friend or a relative that has property on a street that a lot of cars go by, well, then that's a good way to put up a sign so you can put up a sign that says we buy houses in your phone number on someone's property. Who you who you know, or at a business who is a friend of yours. You have your own business. That is a place where you can put up signs that say we buy houses really simple, but it can be effective, so you should at least know about that strategy and of course, since this course is an overview, any of this stuff that I'm not going deeply enough for you to be able to go out there, understand every step in the process to go dio just look it up. You know, I'm giving you guys direction. I'm telling you how we do it and some stuff that you may not fully understand. Look it up on the Internet, look up bandit signs and is all kinds of information out there. So hopefully I can put you in the right direction. I can provide education that you started. Maybe you're already a real estate investor and you don't know very much about particular aspects or particular niches. When I hope this class helps you with those things. And with that, we're going to move on and look at different ways to finance the properties of really important subjects. 4. Lesson 5 Financing Deals: so we need to understand how to finance these deals. You've heard a lot of stuff in real estate marketing and propaganda about doing deals with no money down about making money, real estate with using other people's money, and all that stuff can be done. But there are various different ways to finance deals. So, of course, we all are familiar with the traditional bank. This only works for properties that are not distressed that don't need work to be on them. Because the bank has various reasons for this. They want a property that they know has value that could be sold in the marketplace. If they have to foreclose, they can get their money out, so lowers their risk. They don't want to have to put money in the properties to flip that banks are not in the real estate business. Banks are in the financing business. They don't actually like to foreclose on properties. It's a pain in the butt. For them, it costs money for them to have to foreclose, go take a property and then deal with Realtors and sell that property and recoup their investment. They want to allocate their capital to two people that borrow money and they want to make money off of the interest that they're paying you. That's what banks want to do. They do not want to be in the real estate business. But of course they have to be sometimes. So one of the ways they avoid that is do not loan on properties that are distressed. Okay, but sometimes we do use traditional bank loans to find out some types of deals. When you do use them, you get lower interest rates than hard money in other other ways. Because you know the 30 year mortgage allows payments to be to be low, allows the interest rate to be low, and the banks will recoup their money over a very long term. This is a way Thio, of course, by rental properties. If you have a strategy of buying multiple renter rental properties, you can just get traditional bank loans. You want to get long term mortgages so that your tenants can pay your mortgage off and produce a profit for you over time, will be paying those mortgages completely off, and then you seven cash flow. I'm gonna talk about this more later on in the course when we go through exit strategies, because all the money we're making flipping houses and doing these deals basically the end game for most smart investors is to eventually have a portfolio of Reynolds. That air paid off free and clear, so you flip house to make money. But then, later on, once you have capital from all these activities, then you invested back into rental properties that have no mortgages on terms. Union mortgages to scale Teoh control multiple properties to get cash flow and Teoh get the tax benefits to allow the properties to appreciate. So you're building wealth. But eventually, once you have their wealth, what you are is you become a landlord and you just make money off of the cash flow. This is what Robert Kiyosaki is always advocating in his books, and now he's got MAWR into the sort of seminar business and stuff like that. But his original information and his, uh, his first few books in a row. This is what it's all about. It's about cash flowing properties, and this is usually where we end up or we end up in other things, like hard money lending. We're gonna talk about that more later. But the traditional bank loan everyone is familiar with it usually works only for buying properties. We're gonna live in buying rentals. They're gonna have a tenant in, and you can't use it for distress properties. So this is not the type of loan that we're gonna use for flipping houses generally. Okay, so the main way that we will have financing to flip houses if we don't have our own money is to use so called hard money the first time people hear this word hard money Sometimes I think. Is that a loan shark? Why? What's hard money? It sounds scary, but all hard money is is it is a financial institution, often times just one person who has capital has a business that lends money for various things. But usually hard money is specifically for for real estate and for flips, usually hard money Lenders have a lot of experience in real estate. That's how they get into the business. And this is one of the things that you could end up doing after you flipped a lot of houses and you have capital loaning it out at at 10 to 20% interest in a very risk free manner where you have collateral for your loans. You're essentially behaving just like a bank. Only the only deals you do are short term in nature and of high interest. So hard money lending can be very, very lucrative. But for us borrowers, when we're flipping houses, even though we're paying a high interest, it short term and we're only paying it while we're rehabbing the house. And then once we sell the house, we pay the loan back. And so the hard money lender makes their their interest off of you and you get to use their money. So it's really a match made in heaven. And, um, there are some risks with it, the main one being that if you're flip takes a long time, it can become very expensive to evolve money at 12% interest or 15% interest. So the key is that you want to flip your house is quickly. You want to get the money, you want to get the rehab done and you want to get it sold quickly because the faster you do that, the more money you save and therefore the more money that you make. So when it comes to flipping houses, time really is money. Speed is an important factor, and the more you do it, the faster you can do it. But also, when you're looking at the properties and you're evaluating deals, you want to be looking at properties that are not gonna take you a year to flip right? You want to be looking at properties where you think the rehab will go relatively quickly, or if you're just a wholesaler and you don't intend to actually the rehab yourself, you just want to get the probably under contract, go to a re meeting or go to your buyers list and and bump it up, make five grand or 10 grand. Then you also need to be able to evaluate a deal that will be good for the other investor, and it'll be attractive deal for them to want to buy free from you. So, um, flips that could be done quickly that have, um, maybe not a small rehab, because usually is more money to be made in houses that need more repairs. You don't want to get, for example, houses that were built in 1900 that have knob and tube wiring that have a specious and led , for example. Okay, so those are the kind of house that you that you don't want to deal the end of being money pits and you want to get houses that are newer Ideally, you know, after 1970 there, mostly up to code. So the construction process during the rehab is simpler and less expensive. This is all related to your financing because you want the process to go as quickly as possible because you're borrowing this money that relatively high interest rates. Okay, so if you borrow $50,000 for a flip that could that could include the cost of the house and the cost of the rehab. So if you get a super cheap housing loan in the market for 25 grand and after you after you put money into it, you're going to sell it for $75,000. That means you're gonna put, let's say, $25,000 more into the property to fix it for the repairs, and then you'll get out of it. You know, after some fees from your heart money and your realtor maybe will make 15 or $20,000. That would be a good flip at the low end of the market like that. You could finance that whole entire deal with hard money. So you go to a hard money lender, you say I want a ball 50 grand. I've got this property. He looks at the deal. He makes sure that your numbers are good. Usually hard money Lenders have a lot of experience in this business, so they're, you know, more knowledgeable about it than you are, or at least as much as you are. And if they give you the funds, you're good to go. Let's say, for example, a typical deal. A low end, a good deal for you from hard money lender. Let me 10%. That would be pretty much as low as they want to go. Usually if somebody is much higher, if you have less experience, the interest rates will be higher because it's relatively riskier for them. Let's just say you know you borrow $50,000 at 10% and you so you have to pay them $5000 within a year, so that would be like a little more than $400 a month that you'll be paying wire flipping the house, so the maximum that you're gonna pay that loan over the course of a year is five grand. That's just added to the cost of doing the rehab, the cost of the flip. And then, of course, we sell the property. You pay them back their original money and the 5000 and you come out with your profits. So you can easily see, though, if you flip that house in two or three months, which can totally be done for a lot of properties, especially when you got your processes down about your team of contractors and title cos everybody working with us so they can get everything rolling really quickly. Um, then your savings. Thousands of dollars on the flip. Of course, when you're doing a larger flip on your borrowing more money, then you're saving even more money when you do it quickly. So we're gonna look at some numbers a little bit later. We'll look at some detailed scenarios of how much money you have to pay or how much you can save in different time frames and such. But this is how hard money works, so it's really good for flipping houses. It's basically there, specifically, four real estate investors to do this type of activity. Everybody wins, but eventually, once you have capital or if you have private investors, like maybe a friend who's a doctor or a family member who wants to invest their money at a higher rate than they can get in the stock market. If you confined those types of lenders to do deals than is usually better. But often times people don't have that that resource and so hard money is available. And it's a way that most people get started when you don't have your own capital, and it works OK, so, um, you could look up hard money lenders in your area. They exist everywhere, and, um, it's a way to do this kind of a deal. Okay, seller financing. This is the original. No money down strategy, right? Still works great. If you get the seller to agree, it improves your cash flow, and it allows you to do more deals, and it's low risk. So there's a lot of really great things about seller financing. So the great thing about seller financing is that you don't put any of your own money in the property. Originally, you basically just take over whatever mortgage payments the seller has, or if they don't have any mortgage payments, you create a mortgage and you start making monthly payments to the cellar. So instead of putting down a big down payment instead of having to line up the financing, if the seller is willing to take payments, then you don't have to really put down anything. So you start making a monthly payment on a mortgage that might be anywhere from $500 to $1000. But while you're flipping the house, since you're intending to resell this property in a short time frame, you're not gonna be out very much money over the course of a few months. This is one of the cheapest ways to do deals. It's one of the best ways to acquire real estate. You can work any kind of a deal you want to with Seller. If they are amenable to that deal, so you just ask them, would you be willing to dio seller financing? Would you be willing to have me take over the payments that they have a mortgage on Lee. When you take over the parents, what you do is you leave their name on the mortgage, but you just take over the payments. You're not taking over the mortgage legally, you're just making the payments for them. And oftentimes sellers will agree to this because they're in financial distress. They don't have the cash to make their payments. So basically, they sign over the deed to you. You get the property and you agree to make their payments. Okay, these deals, I think, are the best if you can get them to do seller financing. I like these deals, but sometimes it's hard to convey. Get convinced them to go along with it. It just depends on the situation. Some sellers are very agreeable to it again. You have to remember that people are in all different kinds of situations. People will agree to all different kinds of things, and sometimes you know, you'll think that, well, there's no way someone's gonna agree to this. And then they dio someone's. You get properties for really, really cheap, even less than you expected because people are fed up, they need money. Whatever the case, may be. There are a 1,000,000 reasons why people are distressed. I need money. So unfortunately, that's to our benefit. That's part of the world. But hopefully we can help them, and we're getting in cash that they couldn't get any other way. So if you could do seller financing on and take over the payments and do it this way, it's less money out of your pocket. It provides you with the time to do what you need to do to flip that property, and it lowers your wrist. So it's a really great way to finance a property if you can do it. Okay, so private money already mentioned if you can get funds from friends or relatives or business partners or even local professionals go in and say, Hey, I'm an investor looking to finance a deal, and one thing you could do is you can create a presentation that shows the information of a deal. If you've got a house under property and you haven't lined up financing yet, you I don't want to use the hard money lender if you can help it because of the higher interest, and so you want to see if you can get ah, different person to invest with you that you can make a presentation and it makes you look more professional. It makes it look all, you know, legitimate, because people, of course, will be skeptical if there someone comes in asking to borrow money for a real estate deal. But you go in there with it with a tie on, ask if you know they're interested. Ask if you can show them a brief presentation and then this is one way to get private money . This could be difficult to do, especially if you don't have experience in sales giving sales presentations stuff because again essentially were engaged in a sales activity. Even though we're buying properties, it's a sales activity to get these types of deals to get this type of financing, your convincing people to come along with you on the journey. Here's the great thing about private money, though, Even if it takes you a great deal of time and effort to find one or two investors to go along with, you wanna deal if they make money with you on one deal, they loan you $20,000 some small mountains, saying a small deal, even if it doesn't flip the whole property for you. But it pays for a bunch of the rehabs there, but a bunch of the rehab cost or something. They will be really, really eager to give you money again as long as it works once, Then they could be someone that could finance like all of your deals. The people I know that our most successful in this business, they use private money. I use private money when I when I can, Um and it works the best. It's easier because you're not dealing with a professional hard money lender is a professional. You know what they're doing? They're gonna be watching your flip. They're going to be coming to the property. They're going to check and make sure everything's on schedule. That's all totally fine. But they could be breathing down your neck. Sometimes they're watching their investment, whereas, ah, private lender. Usually they're putting more trust in. You may be a professional, the business. So you know, that kind of let you do your thing and they're more like a sort of angel investor. They just want to see a return on their funds so this could be the most comfortable way on the cheapest way to do it. Also, if let's say something goes wrong with the flip and it takes, let's say, longer than the year time frame that hard money lenders usually give you hard money. Lenders will extend your loan after a year if the term is a year, but it gets really expensive after that. And so the payment might like double. For example, um, which means, you know, you just need to get your flips done within a few months and sold, but with a private lender. If if it goes on longer, there's usually you know, they're not gonna come down double the payments. You just going to keep paying them the same amount that you agreed to. So, let's say, for example, it's 10% with no points, no down payment, which hard money lender usually requires up front. So that might be, you know, a few $1000 with private money. You say I'll give you 10% on your money. You borrow, you loan me, we'll see $20,000 again, for example, to smaller amount. So your payment might be, you know, like $200 worth $300 whatever it is per month. And then, um, you pay it all off. Once you saw the house, it's easier. It's less expensive and is a bit less stressful. So if you can get private, money is the best way to go in terms of using other people's money. I actually think the best way to go ultimately is using your own money. Once you have your own capital, you don't have to answer to anybody. You save money on the interest you pay out in your financing charges. But most of us don't have a bunch of capital lying around to go pump into properties and flip lots of houses, especially if you mean to do you know, two or three at once. Then usually you have to use other people's money. Once you get further along in the business, you can use your own capital and Mrs help people end up being hard money lenders. Eventually, they have been using their own capital for deals for so long. Eventually, they have capital, they just become a lender, and sometimes it's going halves on a property, and instead of getting percentage bills take half the profits like of your brand new investor, and you get a hard money lender that doesn't, you know, have any faith in you because he's your first property. But oftentimes will do is gonna say, OK, I'll put up the money, but I get half and that's a way to get started in the business. So from hard money perspective that so it's a way Teoh a lot of money and do very little work once you have the capital. So that's usually where we end up going, Teoh. But in the meantime, if you can get access to private lenders than this can be the best way to get you to that next step. And so the next lesson. We're going to look mawr at hard money so you can understand in detail exactly how it works . How the numbers add up and stuff like that is a really important topic toe, understand 5. Lesson 6 Hard money lending 1: so we already covered the basis of hard money. It's a specific tool for real estate generally for flipping houses because it's short term in nature. So it makes it perfect for this activity both sides when the lender gets the property as security. So if anything goes wrong with the deal, they will just get that property. So essentially the hard money lender owns the property. They have the deed while you're rehabbing it. Once you sell it and they get paid off at the closing of the sale, all the money gets split up, they get their money back, and you've already paid them their interest. While you were flipping the property, you get your cash out and you make hopefully a big profit. And then, of course, the bar where it gets the capital to make the flip work gets the money they needed to make the deal. So it really is a match made in heaven, especially if you can get a decent deal with the lender, so it could be anywhere from 10% up to 25% or more. When I describe sometimes it will be a 50 50 split when you're first getting started out in the business, which is a way for everyone to make money and for you to get your foot in the door and start doing deals. You can have to pay your dues sometimes in the business when you're first getting started. So there's a big range, but is generally gonna be within this range 10 to 25%. Most hard money lenders I know well usually end up doing deals between 12% and 20%. That's what usually ends up happening. And so you also have to pay points often times, so appoint can either be 1% 10.1% of the origination of alone. So, for example, the loan is $40,000 you pay one point. That would be $400. But oftentimes, in they say point, they just mean $1000. So you have to make sure that you specify with them is a point of percent, or is the point one grand? Okay, so, um, hard money lenders that I use When I first got started, they used $1000 of the point. So if I borrowed $40,000 for example, maybe I get 10% interest on the hard money, and then I have to pay three points, so I give them a $3000 to originate alone. And then I'd have, like, before $500 monthly payment while I was fixing the property had my contractors fixing the property. I never did any of the work myself at all. I just have contacted do all of it. And, um and that's just one of the fees in doing the hard money. Okay, So as I already mentioned, the faster you finished that we have, the more money you will make. So, for example, if you borrow $40,000 at 10% for one year and that three points, your monthly payment will be $333. Your origination fee, if three points is 1000 for each point is going to be $3000. And so that means for the whole year you're gonna be paying $7000. If it takes you a whole year to flip the property, you're gonna be paying $7000. Excuse me. So the Harmony letter makes seven grand off of their 40% which is which is a really nice return. And if you know, if you flip the property faster, though, let's say it only takes you six months, which is a pretty typical amount of time to do a good flip. If it goes well and you know you get it sold relatively quickly. Six months is a good time for some people Do a lot quicker. You can't get it done in two or three months if you get good at it, depending on the market at the time. But I have found six months to be a pretty good marker for how long it will take if you do a good job and everything kind of goes normally. Okay, so in that case, you're still gonna be out of $3000 but you'll be saving $333 a month. So in that case, you would be saving, um, a couple 1000 bucks by by doing it faster, and so that's a big deal. You know, you're saving your saving quite a lot of money, but this is how the scenario work. So if it goes for the whole year, that's how much you'll end up paying. It goes longer than a year, the price will go up considerably. So we always want to stay within one year for our flip. Okay, so the duration of the loan will usually be from six months to a year. Okay, That's usually what? Sometimes they want it. Six months. And so the hardman under. So you got to do it in six months. Some hard money lenders were really strict and may be difficult to work with. They're all different, just like in any other scenario. They're human, you know, You want to find a good one that has experienced that is trustworthy and isn't going to be breathing down your neck the whole time. Um, there's lots of different lenders out there. Okay? As I said, they can extend it for longer than a year if you go if you go over. So it's like they're gonna demand the money and you're gonna be an emergency. But it gets really expensive once it goes over and needs to be extended. Okay. And also, a good thing of the hard money lenders is that they can act as mentors. They have a lot of experience. Usually they have capital. They've been where you are. Most of them were investors for a long period of time before they got into the lending business, and they also have connections that could be helpful. So the very first time I flip the house with my partner, the hard money lender helped us do it, and he introduced us to ah, real estate attorney. He introduced us to the title company that he uses for everything, and this made it a lot easier and being able to ask him questions. And he was generally happy to help us. You know, he knows what it's like getting started the business. I mean, he's making money off of our deal, so he's happy and he wants to make sure that the deal go smoothly. I mean, if everything goes well, then he's gonna get paid more quickly and with more certainty. And so, um, using a good hard money lender, Bacon act as a mentor and a teacher for you without having to pay a coaching feet of somebody else. You know, I have acted as a coach for people, and coaching fees can be expensive, especially if you have someone who really experience is gonna help you a lot with a deal that could be several $1000 to pay for coaching. Whereas if you find a really cool, hard money lender, they're gonna coach, you know, essentially for free because they're making money off the deal. They want you to be successful. So there's a lot of benefits to using a hard money lender if you find a good one and they could go way beyond just them, having the capital to to lend to you. There are some other synergies. They can introduce you to a lot of people. And it is another way where you just start networking just like going to the Rio meetings, meeting hard money lenders and meeting other investors. There's a lot of synergies that happen in this business when you meet people, deals were cut will come your way. Referrals will come your way. All kinds of things will happen. The more people in the business that you meet, and with that, we're going to talk mawr about the specific numbers in the hard money deal. In the next lesson, 6. Lesson 7 Understanding Hard Money: Okay, so we need to understand hard money a little more deeply still, you guys feel confident to go out there and try to do a deal, right? So most people taking this course probably already understand this formula. We're gonna go through it anyway. For those of you who don't know. So the formula and flipping houses, if you want to get a deal, the maximum price you're willing to pay is gonna be 70% of the A R V, which is the after repair value. That's the amount that you're gonna be able to sell the house for after it's all fixed up. OK, so we want to make a 30% margin on our money on our deal minus the repairs. That's how much we're gonna offer. So really simple example, um, is gonna be if we have a deal for $150,000 70% will be or be 66%. This would be an example of a realistic deals. Often times the price won't be exactly 70%. So you got it for 66% and you subtract $40,000 in repairs. He's attract, um, $15,000 for let's say like your hard money costs or other costs that there will have that you would make $35,000 profit. So it's the purchase price. Plus the rehab cost okay, would be $6000 plus $40,000 equals $100,000 k r a r V $150,000 and our profit will be $35,000. So the general rule is 70% of the after repair value, minus the repair costs. And so this is how you look at a property you can tell right away how much you're gonna offer for it. If a property is going to be worth $100,000 after you look at compass, right? That's how we determine the value of real estate. We look at comparable houses in the neighborhood and that Have you know, if it's a two bedroom, one bath, then we look at other house in the neighborhood roughly the same size of a two bedroom, one bath. If they're selling for about $100,000 because, okay, I needed this property for $70,000 minus the repairs. If you calculate that it's gonna cost you about $20,000 to fix the house. That means that you be offering your maximal offer would be $50,000 for that $100,000 property. You you pay 50 grand, you put 20,000 into it, and then now you're 70,000 into it, and then you sell it for 100,000. Now, there are oftentimes other fees involved, such as the hard money and and different things like that. Which is why we want to make sure maximum offer is never more than 70% of the air B minus repairs. You want to make sure your margin is somewhere between 20 and 30%. So you're making a decent amount of money on that property. If you're selling a house for $100,000 you want to make 20 or $30,000 on that flip, you will, of course, try to get the property for as little as you can. That's why, in this example, I use 66% of the RV because, you know, if you got a better deal, maybe university 6% of the air B. You get a really sweet deal, maybe get it for 50 or 60% of air B. That would be awesome. So you want to get as low as possible. And the less you pay for the house, the less risk there is in the deal. And of course, the more money you're gonna make, but also this less risk you're gonna have because you're going to be allowing yourself tohave unforeseen circumstances and unforeseen costs come in the picture and still allow you enough margin to make money. So you want to get it for as cheaply as possible. But you never want to go above 70% of Air B minus repairs. This is the iron rule in the business, and sometimes you get it. Get a deal. I'm going. You get seller on the hook and you're so excited that you're about to get a deal, you know it's gonna be a pretty good deal. You'll fudge the numbers and you'll go a little higher than 7% of Air B. You'll have to use your judgment in those cases. I try to just have a hard and fast rule If the numbers come in higher than 7% of the Air B minus my conservative estimates for the repairs I will not do the deal. Someone is really close. But you have to say no because this is how people get into tricky situations and either lose money or end up doing a ton of work and making a very small amount of money. If the rehab becomes more expensive, it takes longer than you expected. You know, I've done deals where when I was first starting out, you get out of the whole thing. You only made five grand or 10 grand, which is better than losing money. But if it takes you a whole year with the work, it's not what we're going for here. We're looking for 2030 $40,000 for a flip. Okay, so stick to the rules 70% or less of the Air B minus repairs. That is gonna be your maximum offer. So now we want to look at another example. So let's say we bought $100,000 at 50% interest with no points, OK, so we'll just take the points out of it. Some hard money lenders will be cool with just the percentages with no origination fee. Not many, but some um, let's say your monthly payment would be $1250. So for the year, the annual cost would be 15 $1000 if you went the whole year doing the flip and had to pay them that much so you increase your profit by 12,000 by $1250 for every month sooner than a year that you complete the rehab. So I don't understand the importance of doing a fast flip. Because if you're doing a larger property and you're boring a larger amount of money from hard money lender like 100 K where you're gonna be paying them $15,000 over the course of the year. If it only takes you six months to do that flip, they're going to saving over $7000.750 or $7500. Excuse me, that's a lot of money. When you're talking about doing a deal where you might make 20 or $30,000 saving extra $7000 is a lot. Okay, there's something we want to understand that that mawr quickly you do the rehab, the more money you will make and this monthly payment $1250 you'll be paying this out of your own pocket while you are doing the rehab. Okay, so you have the funds to do this whole big deal, maybe $100,000 you know, covers both the purchase price of the property and the whole entire flip. So you don't need any of your own money for the deal except the financing while the deals going on. So you have to have a little bit of cash in a deal like this, And this would be this would be an expensive one. This would be one where you're borrowing a lot to do a larger property. Hopefully, in a deal like this, where the air is gonna be 1 50 you know, arm, or you're gonna make more like 40 or 50 grand on this property. So it's worth it to put more in, to get more out and to make a larger amount. So let's get to do with these examples. So, on a six month rehab profit of this deal, if you are selling the house with the air view $150,000 you would make $42,000.42,500 dollars if you did it in six months. Now, if you didn't even faster in this scenario and you flipped it around in three months, which is totally doable in many situations, that takes you one or two months to get the rehab done. You get listed to get it sold and only takes you three months from start to finish. Then you're gonna make $46,000. So you're making $4000 mawr by doing it three months faster. Okay, so that's a big deal, right? Every month you're saving $1250 it takes you the whole year you're gonna make you know 10 to $15,000 less money. So this is one reason why you want to try to choose your deals that, um, are going to be easier to rehab. Faster to rehab and less expensive. Okay, So in flipping houses with hard money or private money, time is literally worth money. So if you have good planning and increases the speed if you have experience doing this, of course it'll get faster if you have a good team. So that means you're your realtor to sell it in the end of the process. That means your title company knows how to do these deals with you. It means that you're more important than anything. Probably in this process is your contractor or subcontractors doing a good job and doing it quickly. Okay, this is a big deal. So you want to have a really good general contractor to do your whole flip or if you're gonna, um, subcontract out each piece of work, for example, hiring electrician's to that part? Hiring of someone to the floors, hiring someone separate to do the roof, for example. You need to be managing them very well to make sure the work is getting done on time and nothing is being held up and you're not paying too much. So that's a big aspect of flipping, that we're not going to get into a lot In this particular course. Managing the contractors in the process of the rehab is very, very important, and you're gonna want to find basically, the key is finding a good, reliable, trustworthy contractor or contractors. If you can do that, the process will be good. If you are just basically getting bids and hiring people that you don't know it's risky, but you may have to start out doing it that way to find the contractors that are are good, OK, and then, finally, a quick closing also increases the speed, because if you do a two week closing, you can check everything out on the house and do your due diligence within two weeks. Get a closing, get the get the hard money lined up, and then get the rehab underway, and you can get that thing cranked out in one or two months and on the market. Then you're saving a lot of money and getting your money back faster. You know you can get your money into and out of a property within two or three months in an ideal scenario. So imagine just doing one property a time, but getting three or four them done a year. If you made 50 grand on each one because they were all really good flips, you can easily make a couple $100,000 in a year in this business. What a lot of investors do is when the market's going well, and it's hot as they tried to as many properties as they can handle, which means sometimes will be flipping two or three or more at the exact same time. I haven't done a lot of multiple foot properties at the same time, I have done more than one. At the same time, it gets a lot more stressful. But the thing is, if you get both those houses that turned around really quickly, this is how people get really, really rich in this business. They do lots of volume that you lots of properties and take some time to get that good at it. But that's how people make a great deal of money. So some people make hundreds of thousands of dollars or even millions of dollars. If they're doing ah, high end, um properties and they're doing multiple properties within a year time frame, you could make a great deal of money. So, you know, just as there's many ways to do deals in this business, there's many different strategies and ways to go about doing it in terms of how many houses you want to flip in terms of, you know, some people just do one a year and they keep their day job and they flip a house and it supplements their income may be making 20 or $40,000 a year by flipping a house. It's a lot less stressful, but it's a big pad to their income. It's a big extra income. This is what I'm doing now. I now have a full time job and I flip houses on the side. I know what I'm doing and have the team in place, and I make extra income this way and it works very, very well. That's what a lot of people end up doing after they have capital and they can afford to do this usually when we get started. Um, we're getting in this business to make money cause we don't have a lot. And so you want to hustle for the first few years and you want to do as many deals as you can, so just something to think about. But the time value of money is very, very relevant. When you're flipping houses, you want to be able to do this stuff quickly and save a lot in the process. 7. Lesson 8 Exit Strategies: Now it's time to look at exit strategies. We've done all this work to get a property. We're putting money into it. We've been putting work into it, putting effort into it, and now we need to get our money out. And so there's various different strategies to do. This is various different ways to do this. I'm gonna go through some of the main ways we can use, and then I'll talk to you a little bit about my experience and what I have done that has been successful. So the first strategy is to sell a property you have under contract to another investor to finish the flip. Or, as you probably heard, the word wholesale wholesale the property. You are wholesaler and then the next investor would be the retailer, right in the value chain. It goes the manufacturer, the wholesaler, the retailer, and so that's kind of the same order in real estate. And the good thing about whole selling it to another investor is it can be done really quickly. It's much more low risk because instead of having to extend out this deal for several months or even longer, put all your money into it. Get a hard money loan and do all this stuff and try to make more money. You'll just get done with the deal. You get the property, you get cash in hand, right? So they're saying one of the hand is worth two in the Bush. Very much applies to this. Try to make maybe five or $10,000 depending on the market conditions. At the time. Somebody you could make mawr Sometimes you might even take a little bit less. But once you have a good buyer list, it's pretty easy. And so, as I already mentioned, you could build a buyer's list by going to the Rio meetings by networking by visiting the banks and the law offices. And just the longer you're in the business, the more people you will meet that are also like, Oh, you flip houses. Hey, I've done that, or I'm interest in this part of real estate or I'm an investor and you build up this network and, um, you have a lot of informal buyer literalist do. You might just call it a hey, got a property are you interested in right now and you're gonna get rid of a lot of them that way. Um, I try toe on Lee Wholesale of property. If I'm going Teoh, make at least 4 $5000 on. Otherwise I'll do the rehab myself. Um, but it's always a good option if you have someone that wants to buy it. And it's a good deal to just take that money and then try to find another another property . The way I look at it is I will try to hold still, most of properties I get. And if I can't find a good buyer in the time that I need, then I'll go ahead and do the flip myself. And then I will try to make a lot more money, and I will sell the property at the end of the deal once you have the whole entire rehab finish to make a lot more money that way. But it is riskier. It does take longer, and so if you're gonna be able Teoh wholesale it, then it's also a really good way to go. Okay, So, like I said, you getting their wholesaler or if you can't find a wholesaler or if you just want to make more money on it. Then you can rehab the property yourself. So you make a lot more money by doing this. Um, and once you get a team in place, you can outsource most or all of the process Eventually. This is how people are scaling the house flipping business. They will flip five or 10 houses at once, especially in the market is booming. And you just get a whole bunch offers out there. You get a whole bunch of deals going. You've got your contractors, you've got your team of people in places. Call Mr Hague another deal. Start the process and people know what to do. Your contractors know what to do to come look at the property and you could do multiple properties all at once. And you could even use hard money or private money for all of them. Now, this is a risk, your strategy and you could juggle a lot of moving parts. But once you have experienced and once you have a team in place and you've done a lot of these, some people are flipping 10 or 20 house at the same time, which sounds pretty radical. I've never handled that many myself. I could do maximum of two or three at once. But, you know, this is how people are making millions. This is we're getting very rich, but you're very leverage when you do this, and a lot more can go wrong, so it takes experience. But, um, you will make a lot more money doing the whole rehab, and you can outsource most or all of the property. So it's kind of like you want to try to exit at each stage if you can. That's the way I look at it. So, um, I get a property under contract, and before the inspection periods over, I shop it on and see if anyone wants to buy it off of me. 2000 3000 5000, 10,000. Whatever I will, I will shop it. And then if a buyer's interested, do a deal done. I get another one, and I take that cash that I just made for my efforts, my efforts in finding the property. Another word for this selling at a really early stages called bird dogging, where sometimes you know you're actually holds on the property, but you may not even have it under contract yet But you'll, um you'll have a really, hotly you'll be talking to the cellar and you think that you're not really interested in doing the whole rehab yourself. But you tell investor friend of yours you've got a hot prospect. You've got a house with sellers really interested in it and you pass it off to him, maybe he'll give you $500,000 for that. Sometimes much is like two grand for a really hot lead that, you know, you're pretty much gonna go to close it and follow up with that. That's called bird dogging. So if I get somebody, if I get a deal that I'm not really sure about, I don't want to do it for various reasons or my hands are already tied with the deals and the Capitals are tied up with other deals. Then I'll call a bunch of my investor friends up and see if they just want to give me, like, 500,000 bucks and I just give him lead. Basically, that's called bird Dogs. That's one way to get a little bit of money out. Go on the next one. If you already have it under contract, then you're in the wholesaling phase, and now you already have control the property legally, but having under contract and try to make. I try to aim for 5000 on most of these because I operate in a relatively low end of the market. If the if the spreads bigger if you get it for cheap enough, it's a more valuable property in the two or $300,000 range for the after re after retail value. After we have value right then you might able to make 15 or $20,000 on a really good wholesale. It really just depends what's happening. The market. When the market was booming in 6 4007 people were making 2030 and even like 40 or $50,000 on a wholesale because of values were going up so high. There was so much demand, so many investors were in the game. You could make those huge spreads its not like that anymore, but those kind of the range is you're dealing with. But, hey, if you need a property and contract and sell it, make 5000 bucks for just, you know, sometimes a couple weeks work, maybe a months worth of work, then it's a really good deal. And if you can do a lot of those, you can even specialize. Just doing wholesales. That's what a lot of people do. They don't want to mess with the rehab in the construction and all that stuff, even though they might build to make you know five or 10 times as much money off of one property by doing the full rehab. They just want to get under contract to sell him, getting a contract to sell him and just imagine issue average $5000 on each whole sale of your property. Then you will say you you move 20 of them. Well, then you would have made $100,000 that year if you move 20 properties in a year and something will do a lot more than that, so it just gives you a good idea of the numbers. But if you want to make the most amount of money in this business, you pretty much have to go ahead and rehab those properties because sometimes you could make $150,000 or more, depending on how big the property is on one flip. And so if you can dio 10 flips in a year and you make 100 grand, each one will boom. You just made a $1,000,000. There are people who do it to that level. I'm not at that level myself, but I mean a lot of money in this business. And most of the money I made in this business has been from rehabbing the property and going to the whole entire process and selling it on the market through a realtor at full price. After you've put the money and the effort into it, another thing you can do and this is kind of an end game strategy. If if you're thinking that long term and you don't absolutely need that cash back out that big chunk of cash back out from a flip, what you can dio is you can keep the property as a rental. Get that long term passive income. You'll have a lot of cash flow from a flip because you'll have money into it, and so you will owe a lot less. You have an appreciable asset. You'll be able to shelter taxes you can finance of the property or refinance it after it's been rehabbed at lower interest rate through traditional bank. So what I mean by that is we already learned that you have to use hard money because a traditional bank will not give you a loan on a distress property. But once you put that money into it and fix it up, it's no longer a distress property. Now you can get a traditional loan on the property. So what you can do once you've fixed the house of Let's say you're the hard money lender. $50,000? Well, now you go to a bank and you mortgaged the property. You pay back your hard money lender with the bank's funds, and now you just have a $50,000 mortgage. But since you've already put some of your own money into it, now you have a $50,000 mortgage on a proper that's worth 100 or $150,000 presumably. So what you have is a small mortgage on a very valuable asset, and so your mortgage payment every month might be only two or $300 but your cash flow will probably be, you know, 600 to $1000. So you're getting a very positive cash flow on a very small mortgage, and you have a lot of equity. So this is another strategy if you don't absolutely need the capital. If you can do this a few times, you can build up very quickly. Ah, lot of passive income and appreciating assets that have all the tax and other benefits that we've learned about off of a very small mortgage. And having lots and lots of equity in the property is another way to build wealth. As I mentioned before, most people in the long run in this business will end up being a landlord and having a bunch of rentals or being a hard money lender and just loaning out your capital. And so if you're in a position where you can get a property and have the rehab be done and just get a loan on it, mortgage it, rent it. If you're in that position, it might be the best thing to do because, let's say, for example, got a positive cash flow on the property after you have a mortgage and you're done with the hard money lending aspect of it of $500 per property. Well, if you did this five times, you'd have permanent passive income of $2500 per month in income, like as much as a salary from a job, and you would be owning several $100,000 worth of real estate. You have $700,000 with equity in real estate. And so if the real estate, if the values went up really high, you know you could double your money and become a millionaire. Values go down. You got Rendon renters in there. You got tenants that are paying those mortgages and paying your passive income. It's a pretty safe thing to do. It's not the same thing as someone who leverages themselves out to the max and has 10 or 20 properties, and you only put small down payments on all of them and you have big mortgages. You also have to worry about. We have the bigger mortgages about having tenants leave and not having tenants in there. Well, with this strategy, said your mortgages small, your equity is big and the property will have been recently fixed up, so it's so nice and new. It's very, very easy. Relatively speaking, to get tenants in there and keep them read it. So it is another really good way toe exit. Ah, flip, If you're in a position to do this, this would be what I would advise to dio. But of course, when you're first starting out, we usually want to build up our cash. And so we'll be doing Wholesales will be doing rehab. We're doing whatever we can and, you know, it really just depends on each particular property. They're all a little bit different. Some of them may not be as good for this, depending on the location, depending on the attributes of the house, some of them might be perfect. This and you say, You know what? Actually, I was planning on flipping this and get my 20 or $30,000 profit out of here. But I think it is a perfect one is to keep it to hold. And I'm gonna do a couple more deals and flip those. You know, it just depends on your situation and your preferences, but this could be a very, very good way. If you're thinking long term thinking about building wealth as opposed Teoh. Just making money and making cash. Then this would be the way to go. Probably if you just do this a few times. I mean, imagine if it just it, even if it took you 10 years to flip, are not even flip. But, you know, do this process where you're you get a flip property for cheap and you actually rehab it and you'll see did 10 times, Let's say, in 10 years you did this 10 times, and now with our scenario, you've got $5000 positive cash little per month, and you probably would have in this case you have over a $1,000,000 probably a couple $1,000,000 at least in real estate. And a lot of that equity you built just by buying the house is cheap. And then going through the process that we learned about you, build all the equity in the property as you put the money in as you flip it because you get it for cheap and then you increase the value a ton by fixing it. And so all of a sudden the value goes up like double what it was when you first bought it. And so you're creating all this wealth. And if you hold onto it, you have this big appreciable asset that he just flipping it the money out. It's actually pretty short sighted. When you really think about it. You got all these tax benefits. You get the passive income forever. I mean, if you have attended in there for 30 years or 50 years, I mean, we're talking about a massive amount of money off each property way more than you ever would have made off that foot. Even a really good flip. So it's definitely ideal if you can think long term about it. And if you can hold the property and rent it out, Okay, Most people, their endgame, anyway, is to build up enough capital to pay cash for some properties and live off of the rental income, and you just retire and then you know you on the fast track. You're living your life, how you want to. And so if you could just go through the process of flipping. But just keep some of the properties, you know you could flip some of them and you can keep some of them. That's another way to go. You can combo it all however you want to. I prefer to get the money out. Um, as soon as I can, because I've learned his business things can go wrong. So if Aiken bird dog a property taken wholesale property will usually do it. If I've been a situation where I don't have any properties under contract and I'm ready for a big one will probably focus a lot on doing one big flip. And I'll do the whole rehab and everything. Just spending situation. But in general, I'll try to get my money out as soon as I can but can't find buyers. It is not lined up. Then I'll rehab it. And then sometimes, you know, you might have trouble if the markets not very good trying to sell your rehab property. And then, um, you know, you can't find a retail buyer at the price you want, either, so you'll make a lot less money off the flip than you plan. That might be a scenario where you want to go ahead and just rent it out instead of selling it. Go ahead and get the passive income and just keep it so it just depends on so many variables, and the idea is to understand that all these different strategies exist. Understand that you can choose, you know how to go about getting your money out or keeping the property, and then allows you to be very creative and just go with what's best for you. 8. Lesson 9 Secrets to Wholesaling: okay, I want to go over whole selling more because it could be confusing subject for a lot of people. They've heard about what is wholesaling. There are other people doing it. We had a little little more about the process, how to go about doing it and especially deal with some of the issues, such as doing single closings versus double closing. I've heard a lot of people are confused about that. I'm not really sure about how to go about it. But then once you figure out all the steps in the process, you realize it's not that complicated. As with most things, once you've learned about it, you realize it's relatively simple. You have to take action and go through the process a couple times. Get some experience and it becomes pretty easy. So I already mentioned join the real estate investment association in your local area. I believe in joining multiple different meetings so often times you live in a larger metropolitan area. It will be a whole bunch of different groups for all the different suburbs in different areas of the city, so join as many as you can. Some of them won't actually be Ah, Ria will have a different name Some other investors club Join those network with people. A lot of people think Well, I'm just sending out my letters, you know, as direct mail. I'll talk to the sellers. I don't see what I'm gonna gain from networking that much. Or maybe you're uncomfortable going out there and doing this. I tell you, in all the years in this business, people that are most successful are the ones that are plugged into the network. They know people they put on their buyer's list. They know people that will send them referrals. There's all kinds of synergies to that. You don't even think about just knowing people in the business. All kinds of things will work out for you. They can suggest the best title companies, the the best real estate friendly attorneys, All kinds of stuff like this. Okay, deals would has come your way because you know, other people in the business and you know you're an investor. Sometimes they won't be able to handle a deal that getting also Hey, maybe maybe he wants toe handle this. Or maybe we'll throw it, throw it his way and stuff just happens. Okay, so you have tow network. If you want to be successful, build a huge buyers list. That just means you have a huge list of people that you can shop your properties to write when you get him under contract. So what? I do want to get that signature on the dotted line of the purchase and sale agreement with a seller. I immediately call a so many people as I can on buyers. Let's send it out via email. Blast, everyone. My buyer's list. It took me a few years, but I've got several 100 people in my buyers. Listen, so you know you need a lot of people because some people aren't ready for a deal at that moment. Some people don't have the capital or they're already working on other deals. Some people will be interested in that particular property for whatever reason, where it is. If it's not the right type of house, they like to dio whatever. But usually there will be people out there that will be really eager to buy a property from you because as we've been talking about, it's hard to go out there and get a property under contract, you're providing a valuable service service as a wholesaler by going out there and spending the money on the mailings. Or if you're doing through a Realtor making all those offers and going through the whole process, there are expenses involved. So if you can skip that process and pay a little bit more and just buy a good property from a wholesaler than people really happy to buy from you if you are honest and you leave enough meat on the bone, as we say, you don't want to bump it up too much and be greedy and think, OK, well, I want to make $10,000 off this property. That's my goal, and then you shop it around and you're asking for too much. And then people, first of all, won't trust you. Next time you'll think that you'll get a bad reputation. Will think that you're trying to take too much if you aren't greedy. If you're humble and especially when you first start out, do some deals, make only three or $4000 on a wholesale deal, do some really good deals and be generous with people they're gonna come to you will be asking You got any deals? You got any deals? And then you'll be able to sell your future properties much more quickly. So it's a little bit of advice for you when you first get started. Don't be greedy when it comes to how much you're bumping up with contract. If you get a property under contract for for 30 grand and that's like 65% of the RV, you can really only bump it up 5%. You don't ever want it to be over 70% of the RV. Um, when you sell it to another investor, Okay, so you got to get it for cheap enough. If you're a wholesaler, you've gotta get the properties for really cheap. It has to be 60 65% of air B. Some people will buy a property for you because from you, because they're a little bit desperate. And they've been looking, they can't find one, and so maybe they'll pay a little bit more than 7% of the RV. But you don't want to rely on that. And you can't assume that people are are just gonna buy whatever property you get. It has to be a good deal, and other investors in the game they know what they're doing. Okay, they can tell they could go look the property. They can tell if it's good or not. So you have to keep that stuff in mind. You're doing wholesaling. You have to be honest and you can't be DRI okay. Another really good thing to do is develop a presentation. I mentioned this earlier. That's really important. You won't need this for hard money lenders for private investors on individual properties for other investors, it increases your professionalism. It gives a visualization of what you're doing and it improves your results a great deal. We're in a business where people don't necessarily trust you. They don't know who you are, what you're doing when you come in there dressed professionally and wearing a tie, and you have a really nice polished power point or other type of presentation, especially if you're good with computer graphics and you make make a really nice presentation with graphics and things explaining each individual property. So right when I get the proper in a contract, I'll go through, I'll get some video. I'll take a bunch of photos and I'll make a power point. Presentation of the property of the details of the deal with the RV is how much I got it for what the estimated rehab costs are. How I got those numbers and I go through it in great detail and say I'm looking for an investor to go on this property with me. I'm looking for a 12% return for that investor, so if you give me $50,000 you're going to earn a 12% return on that money. I'm gonna give you the deed to the property. Here is the property. They are going to feel very comfortable knowing that you will be giving them the deed. And they have total security that if anything goes wrong with that property, they're gonna get that property, show them that they're gonna get a property that's worth a lot more than their loan, right? This is what banks always do. They will loan up to 70 to 80% of the value of a property. We're going to the same thing. They're gonna be loaning us money that will be worth less than the property. So the security is very, very strong and just say, You know, here's what I've got Here is the paperwork and they're skeptical. How have your real estate lawyer look over it? It's really It's a really simple process, just like I said it. In the very beginning of the course, lenders want toe loan for real estate because it's so much security in it. You have a deed. There's nothing that the worry about you get the property. It's really simple. OK, so having a presentation that shows that to potential investors and hard money lenders and everybody eyes something you kind of have to have if you want to be professional and you want to really succeed. And it's not that complicated of a thing to dio all kinds of resources and stuff online, including on you, Demi about, um, how to make sales presentations because again were involved in the sales process. Even though we're not selling something or selling our deal, we're selling our property. We're selling ourselves. We want people to cooperate with us to sell to us at a cheap price, to invest their money with us and to go into business with us. So what we're doing is definitely a sales job or going to the sales process. We're just not selling a product. We're selling a service. We're selling a deal. Essentially. Okay, so that's the way that we want to be thinking about it. So, like I said, what I do And I said a minimum spread. If I'm gonna hold sell property, I'm not gonna hold. So if I'm gonna make less than $2000 unless they haven't got a signature from the seller on the contract yet. So, like I said, if I've got a really hot lead and I think I'm gonna go to close on it But I don't want it for whatever reason, there's lots of reasons why. I mean, I want to take a property that another investor will want to go ahead with it. It depends on our situations or circumstances. And what kind of deals we like to dio. So that's how I look at that. Now if if I think that I can wholesale it from more than $10,000 in, say, 15 or $20,000 I may consider keeping that Does that mean there's so much meat on the bone that if I rehab to myself and sold it at full value. It's gonna be a really big market. I mean, if I can hold, sell it for 20 grand and that that person that I sold it to is still gonna be able to make 30% profit, um, minus repairs, the air view miners repairs. And that means you're gonna make a ton of money on that flip. So the higher the spread gets on the wholesale, the more logical it is to keep it and do it yourself. Just one way to think about that. So if it's gonna land in the $12,000 range and fit the the, um, formula, then I will try to go ahead and hold. So I already said that, you know, I will try to hold cell in your way and get my money out because it's little risk. But it's a really good one. I'm a keep it. So that's just kind of how I think about that. Nobody think about it is, um I might wait, make a spread on the wholesale anywhere from 2 to 10% So I'm kind of giving you guys an example here. If the property is gonna be worth about $100,000. So anything below two or above 10% that I probably will be less likely to wholesale, such as something Teoh to think about if it's too small to spread, it's not really worth all the effort of going out there and sending out the letters and trying to get the property and trying to convince the seller to sign on the dotted line. For all the work that's involved, you need to be making some money. So if there's that much work involved, I can't find a buyer. We'll all be happy. Teoh do the property myself. So I'm not gonna hold sell it for $1000. For example, if I spent a whole month working on somebody and I finally get the deal, um, from the contract, I'm going to make a little bit of money. It's hard to get these properties. I'm gonna want to make more money off. It will probably keep that one. Okay, um, as I said to larger spread commune, you may want to do the rehab yourself because a lot of money in it, and there's no reason to give that away if the deal is really, really good, just depends on what you want to dio at that moment in time. Okay, now the confusing subject of a regular clothes versus a double close. There's a few things to keep in mind here. One. Some states do not allow a double close any longer after the real estate crash in 2007. There was some new rules, and you have to check to see what the laws are in your state. If you've been in this business and you know you're allowed to do a double close and the next concern is making sure that your title company knows how to do a double close because it seems like they're professional people in this business, it should be a simple matter for them. That's not always the case. There are a lot of people that work in title companies that really only do one type of deal . They're used to the regular traditional deals where a realtor sells a property that come in to do a closing. It's very simple process, and they haven't done any other kinds of deals. Maybe it's, ah, new person. That hasn't been the business very long. For whatever reason, often times they won't know how to do a double close. They won't know how to do any kind of complex deals. When it comes to this stuff, we can do any kind of a deal that we want to as long as it's legal, everything that's going to be any kind of complicated or tricky all ideo is I. I give it to my attorney and I say This is the kind of deal we're gonna dio make up the paperwork for us. And so you don't have to worry about understanding everything super deeply. You got something complicated going on. Have your lawyers do it. You never get in trouble that way. It's simple, but this is a reason why your team is important. Once you've done a few deals with the title company, you want to use that same type of company that you're used. Teoh, they know you and then every time you just tell me what's the situation and they'll set it up for you and it's easy final title company that you like. They've worked at the real estate investor before that, familiar with these kinds of deals and these kinds of closings. Okay, so one reason why you might want to do a double close is if you are going to wholesale the property to another investor and you happen to be making ah lot of money on the deal. You don't always want them to know how much money you're making because they might get upset. I think it's ridiculous. I mean, if they are happy with the price that they are buying it from you four, it shouldn't matter. But my experience has taught me that sometimes people get angry when they see they bought a property from you and you're gonna make $20,000 on it on a wholesale deal, it might be better to have two closings. Okay, so you close on it with the investor or excuse me, you close on it first with the seller, and then you will turn around and resell in a separate closing. It might be half a hour later. Might be later in the day or would ever try to get the same day with that person, your whole thing, it to with the other investor. Okay, So you closing the deal, you own it for you know? Ah, little bit of time and he's resell it immediately. And that was no hard feelings. And there's nothing to worry about. You usually don't need to do, is you can just do one close and have all the parties present Somebody, you don't even have to be there. You just sign all the paperwork and send it to your attorneys and they'll send it to the title company. It just depends. But if you're gonna do it double closing the two main reasons to do that are is if your state allows it and you want to do it because your spreads gonna be big and you are worried that you're, um you're other investor. The party is buying the property from you. It's not gonna like seeing how much money you're making out. This does happen. Okay, so, um, it's important thing to consider. And, um, once you understand it, though, that's really all there is to it. It's really not that complicated. Most the paperwork stuff that keeps people out of the business. They're worried about doing something wrong or the complex legal side of things. It's so simple. You just use lawyers and you don't really have to think about it that much. Um, you let the title companies do the paperwork. You let your lawyers check all the paperwork, and it's not that expensive. I mean, you know, for a few $100 your lawyers will draft up contracts for you. The look over contracts for you. If it's a lawyer that you have, you're not not necessarily on retainer, but they're using a lot that you're familiar with. They're not going to charging an arm or leg. Every time you know you have them. Look over your paperwork. It's pretty easy for them to look over a contract. Okay, so when you're doing a deal where you're making 10 2030 $40,000 or whatever, you know what's $500 to a lawyer to make sure that everything is done properly? It's not. It's not worth anything. The peace of mind knowing everything is going to be safe and go through you know properly is totally worth it. Okay, so that's a little bit more on wholesaling. And if you have any more questions, feel free to ask it in the discussion board 9. Lesson 10 Secrets of Rehabbing: okay. We just looked at a little bit more on whole ceiling. Now, when you look a little bit more at rehabbing, there are some certain things about rehabbing that can cause you much heartburn. Okay, on one of the biggest things you need to understand is that managing contractors can be a huge pain. So I'm gonna teach you guys a few tricks that will help you to not be put in some situations that myself and many other investors have been in when it comes to using contractors, getting bids and managing those contracts as they do the work. First of all, one trick is if you provide your own skews for the materials on the property, this can make things run much more smoothly. So what that means is you can go to Home Depot and actually pick out the exact materials they're going to use for the property. One thing that the best rehab is dio is they use the same materials, if they can, for as many properties as they cancel. Specialize in a three bedroom two bath that has been built newer than 19 seventies, and you'll do the same types of renovations in it as much as you can on every single property. You have the prices of the skews and the quantities. So when you give them to your contractors, there's no fudging the numbers. There's no oh well, we went over budget because of this. That another thing you can say these the process you're going to use, you know exactly what the prices are, and it allows you to control the process much more than if you just have a general contractor and say, Here's the rehabs. Here's the estimate. Here's what we're gonna dio and you just trust them to do it. When you have a lot more control over the process, you'll save more money. The process will be more smooth and the contractor will not have any excuses. If things are not going to according to plan, you gave them more detailed information and requirements and therefore they have no excuse to not follow them. So you provide a detailed costing and rehab plan. The numbers you use when you analyze the property you want Teoh, give those numbers to a contractor. Whether using a general contractor, this is gonna handle the whole team of contractors for the whole job and hands off. Or if you're going Teoh higher different contractors for different aspects of the job. You want to give them a detailed plan for the renovations and cost. Now, if you don't know anything about, construction has no problem for the first couple properties. What you can do is you can have a contractor do a walk through the property with you, and you can't ask for much of questions, and you can start writing down notes, start running down information. You could buy a book on rehabbing, and I'm start learning about it. Okay, once you've done a couple of them, you learn a ton. First couple flips, Ugo. You learn so much you want to believe how much you learn. Okay, but once you can get a detailed plan that you give to the contractors, you're much safer, and there will be fewer problems during the process. Another thing you have to dio to protect yourself is used what's called a mechanics lien. They're called this because mechanics were the first workers that this type of paperwork was used for, and the reason is the state's laws tend to protect workers from not getting paid by people who have hired them to do jobs. And so oftentimes what happens is you will hire a contractor and they will do some work for you and let's say you pay them and then later on they come back and they say, You didn't pay me for all the work I did and they sue you and you're forced to pay them or that sounds ridiculous and unfair. But the law tends to favor the worker in order to protect the worker. And so the way to solve this problem is every time you pay a contractor for some piece of work in the property, you make them sign a mechanics Lien saying that they wave a lean waiver, saying they waive their right Teoh using a mechanics lien on you. They can't put a lien on the property and say you owe them money for the work they've done OK, so this is something a lot of people don't know about. It's very valuable, so it's really easy to do. You you just go get a mechanic's lien waiver from an office supply company or even from the Web printed out, and when they finished the work. Have them sign that and don't pay them until they sign it. OK? Do not pay a contractor for any work if they have not signed the mechanics Lien waver. Okay, this will save you a lot of money that will save you a lot of heartache and will make the process go very smoothly. And finally, we're using subcontractors. You can save more money, but it can require more time. But you have more control. So I think using a general contractor is ideal if it's not gonna be too expensive if you trust that gentle contractor, if you've used them before. Ideally, as I said before, you'll have somebody who does all of your properties and they know what you want. You guys work together, and then it's smooth. It's awesome. But of course, contractors trying to make money And, um, you know, they're gonna get as much money out of it, is it? Can. And so one way that a lot of people do is they just asked for, you know, two or three different bids and they go well, all these bids came in really high there. In my experience, there's been a huge range of bids of quotes that you'll get from contractors. So if I get five bids from contractors on a property, I don't like any of them. I will ask for more. Sometimes I will get the work finally to be done at 30 or 40% of the cost of what another contractor offered. So there's a big range in the different quality and trustworthiness of a general contractor . So the solution to that could be Teoh, just subcontinent trying contact the workout. Have somebody different to the roof, has something different to the floors of somebody different to the drywall. Have something different to like the electrical, you know, and you just pay them as you go with your money for using hard money. You make them every time they finish a part of the job that's on your rehab plan. You check it off. You say it's finished. You have him sign a mechanics lien waiver, and you pay them for that piece of the work. It requires more time on your part, but it will usually save you sometimes a lot of money, and it gives you a lot of control over the process. Which of course is a good thing. So this is what I have done for most of my house flipping career. It was only been relatively recently where I have worked with a general contractor who I know who works well with me, and I totally trust it took a long time to Final like that. They didn't just say that general contractors are not trustworthy, but through these kinds of deals, they need to understand that we're going to reselling the property. We need to be doing a low expense and quickly. Okay. Contractors oftentimes don't want to be, you know, working as fast as they can, trying to rush to get the property done. But of course, we want to get it done as quickly as possible, so it usually just takes the right fit between the contractor and yourself for this. So in the meantime, I recommended your starting out in order to save money and to learn and have more control over the process to use subcontractors for each piece of the job and have them sign Lien waivers and go from there. Um, it's a good way to go 10. Lesson 11 The Confusing Subject of Tax Lien Certificates and Deeds: So in this lesson we learn about taxing certificates and tax deeds. So it seems to be a lot of confusion around these two financial instruments because there's a lot of misinformation out there. There's just a lot of different kinds of information out there. And because the the laws are different in each state, you know, some states are tax lien certificate states Well, other states are tax deeds, states. People are often times intimidated by this, and they are afraid to go and buy these certificates and make these investments, which is really unfortunate because they pay huge returns, often times much better returns. You get in either real estate just by directly buying a property or in the stock market so you can get anywhere from 10% annual return or, in some cases, like in Illinois, upto over 50% return on a tax lien certificate. These are backed by the US government is what a tax lien certificate is is that a homeowner is late on their taxes, they haven't paid them, and now the government is allowing you to invest in that by paying the debt for the homeowner and then the homeowner will pay you back an interest in order to keep their property. Otherwise, the government will take the property and give it to you. Okay, so this is a really safe investment. There are a few considerations that you have to do to protect yourself, but is backed by the government. If they don't pay you, If a default on their certificate that you bought, you will get the property. The main reason this can be risky is if you get a worthless property. So there is some due diligence you have to do to check before you go to the tax lien certificate attacks, deed auction and by the certificate that you check out as much as you can, the properties that you're planning to bid on and make sure they're not like, you know, on some sewage plan or something like that, or some useless little tiny strip of land in the mountains that can't be used for anything and therefore can't be sold for anything. So if you did end up with it, you'd basically be losing the money. But that's pretty much the only risk. Another concern a lot of people have, As you've heard about how now, big companies will be going around to these auctions and bidding the price of the certificate up. So you're actually paying ah, larger amount for the, uh, the actual taxied certificate or or deed. So, for example, let's say, was a $10,000 taxi certificate that person owed $10,000 in taxes. You want to try to buy a certificate for around that price? That's so you're in a state where they pay 15% on that certificate. So you would make $1500 off of that, uh, $10,000 purchase. Well, cos will come in there and they might bid more than you and did that up to $20,000. Now they're paying $20,000 for that 15% on that $10,000 which is still only $1500. So you paid mawr and your your return has gone down. Your yield has gone down by half. And so there's often times now competition with those big companies. But it varies so much because each county has a different auction in the whole entire country. Every single county has a different auction. And so if you're in a big, um county that has a huge population, lots of valuable land. You'll have more competition. It's been my experience that when Ugo to these auctions in the smaller states, you have much less competition must much less interest from the big companies. So I have bought these in Washington and Idaho, and, um, I haven't found this to be a huge problem here. And I've bought several of these certificates and they work. I got my money back and everything was fine. I had no problems at all. But other people tell me they're concerned about that, and it does happen. So it's something that you just have to be aware of. But essentially, if you if you get one of these certificates and the owner the property defaults, you're going to get a whole property. Oftentimes it'll be a nice property will be a house, you know, be worth you know, 123 $4000 for just a few Grant. This does happen. The statistics on this are that only about 10% of all tax and certificates end up defaulting. Where the purchaser we'll get the property. That's a 10% chance of one in 10 chance they're gonna get a property for, like, nothing. Basically a lot of these certificates, only one or $2000 sometimes even even less. Um, so that's something to be aware of. So that's how taxing certificates work. You go to the auction, they have a list of the properties, They have the cost of the certificates and then you bid on them. You buy this difficult, you pay cash, and then they will give you this difficult or mail you the certificate. And then, um and then after, um, sort of my time goes by, usually at the end of the year, they will pay you that your money plus the interest. So it's a It's a high yield. When interest rates are near zero and bonds pay almost nothing, you can buy these certificates and make a much higher return. Okay, so you need to check to see what type of state you're in. Some states are tax deeds, states. Others are lean states. You attended auction. You purchase the leans or the deeds. They will usually be put on by either the county treasurer or the assessor. So you go to the county courthouse or you call them ask about when the next auction is going to be, and then you can attend those auctions. You can attend them in every county all around your area, so you know you can go to a different auction every month. If they have that many where you are, you can travel around simple, just travel around the country and go to these auctions. And they've ideas about certificates. They acquire a big portfolio of land, and it's really fun. You know, if you're in tow, traveling around and kind of being a little bit swash, buckling and have an adventure. This is a really fun thing to do, especially if you've got a friend who is interested in doing it with you as well. And you have enough capital, of course, to be able to go around and do this, don't work full time job or whatever, but, um, it's really fun, and, uh, it could be really rewarding and very lucrative. Okay, um, so a deed is different than a certificate, though. So when you buy a tax deed, like in a state of Idaho where I currently live, they sell the deed. So you actually are buying the property, not actually getting a certificate and getting a yield. You're just getting the property straight up. And so because of that, usually the prices We bid up quite a lot higher, then they would be for a lean. So there's a ah tax D. That's $10,000 you go there. Um, it's quite typical for that to be bit up to 20 or $30,000 but you have to remember that you're gonna get the actual deed to the property when you're getting the actual property. So if you go, you're looking, there's a proper has a house on it, and you know that's worth like 100 grand and you pay $30,000 for that deed, you're instantly creating $70,000 worth equity for yourself. So it's It's a no brainer if you can do it now. The caveat for this type of deal is that oftentimes title companies do not give clean title on a tax D that was purchased at an auction, cause it can't guarantee that the title is is clean. So what happens in this case is that they will be like a holding period of up to five years where the deed is not clean, which means you can't sell the property. So if your goal is to get that deed and then immediately sell it, make money, often times that we very difficult to do or you'll be unable to do that. So just as with everything you know, nothing is perfect and there are certain risks and costs associated with this stuff. But just imagine if all you have to do is hold that thing for five years and you have a $100,000 or, you know, orm, or if the property appreciates 5% a year, which is a long term average for most real estate. You know, over the course of five years, that thing is gonna go up in value 10 or $20,000 or more. So while you're waiting, you have an appreciating asset that you're just holding your sitting on. And if you only paid 20 or $30,000 for it, you know, you just wait. And if you're doing that, you know, multiple times, um, and you and you acquire a whole bunch of properties, you know, and those deeds air getting clean, Those titles air coming clean, you know, staggered every every year to you got another one coming clean. Some people get very, very wealthy. By doing this, you just kind of have to know what you're doing. And, um, I recommend is dabbling and going and buying one taxing certificate by one for 500 bucks for 1000 bucks and see how it works. Go to the auction. Go through the process. Goto Ah, tax deed. States even get a cheap one and have fun with it. Learn about it and, um, and see how it goes. But this is one of those investing methods that could be very, very lucrative. That's very interesting. And, um, you know, a lot of people still don't know about it. They don't know how to do it, and it's not that complicated. You just got to go and try it out. So it's pretty exciting. I love this kind of stuff. And so hopefully that will be useful to you. And you can go and check one of these out 11. Lesson 12 The Ultimate Endgame: So we're focused a lot on this course on flipping houses, on wholesaling, in ways that we can make big chunks of money in real estate. And usually that's the way we have to get started. In order to start building up wealth, we have to flip some houses. We have to get our cash going so that we can invest in properties to rent. This is the most logical end game for most of us, because what's the reason that we got into the real estate investing biz in the first place is to build wealth and to be free from our jobs and to live the life that we want to live, whatever that life may be. So usually that ends up, meaning that we're going to buy some rental properties and become a landlord at some point . Okay, and this is the true way to be wealthy, because once you have enough cash to just by several rental properties, now you've done a few things for yourself. You've acquired some assets that are appreciating over the long term that you can just set set them there and basically forget about it, especially if you have like a property management company or somebody actually managing them for you. Um, if you're doing the management yourself, Okay, well, then you're a landlord, and you have some work to dio, but it won't be nearly as much work as a full time job. Right now, you have a huge portfolio, which would mean that you're rich. Um, so that would be a good problem to have. But you are. You're having these assets. Usually don't mean that you have, you know, one or $2 million at least of of capital if you're gonna have a portfolio of rental properties. But even on Lee, if you only have, let's say half a $1,000,000 you have two or three really good rental properties, that's enough. Over time, If you're living off of those rents, Teoh just continue to build and make you wealthier and wealthier. You've got the passive income from your tenants. That, of course, if you have no mortgage because we've paid cash for these properties now we have no debt at all. That should be more than enough to support your lifestyle. And so you've gotten yourself. You basically retired. You have appreciating assets that are tax efficient, right? You have all kinds of ways to shelter taxes with these properties. You can get tax credits for putting, um, energy efficient things into them, such as lightbulbs and windows and other ways that you can make them energy efficient. Okay, The end result of this is you have freedom from working a full time job. I have no boss. You can live anywhere, and you can spend your time doing whatever you want forever. Okay? And I know people who have achieved this in, like, less than 10 years by flipping houses, going to the process that we talked about the course You start up flipping, you build up your capital. You might invest in a few rental properties that have mortgages on them as they appreciate . And as you are building equity by paying on on them, your your wealth is building. And then what they do is they sell off all those when the markets high, and they take all that cash and then they pay cash for a few properties. In that way, you have no debt at all. And you have this passive income. You can continue. You can start again and continue to flip houses after you've already done this. If you want to write, the point is that it gives you freedom from being forced into a job to be forced to having to live in one place. You can do whatever you want. You may choose the work full time. Still, even after you have enough passive income, Teoh, pay all of your bills. The great thing is that you have the choice now and, um, you know, living abroad in a developing country. I keep talking about this because it's such a powerful strategy. If you're open to moving because you could live in a place of the tropical climate, you could go to the beach. You can have a really high standard of living off of such a lower amount of income if you congest. If you congest get one or $2000 in passive income meaning like maybe two good rental properties, but then move abroad to a country like Vietnam rice to live where that class of living is a tiny fraction of what it is here, you know it's 1/3 or 1/4 or less for a higher standard of living. You can basically retire within just a few short years if you really wanted to. That's not gonna be the pathway for everybody. They may not be appealing for a lot of people, but it's another way, among the many different strategies and ways that we can be creative in the real estate investing business. There are unlimited number of ways to combine strategies and tactics and situations. So in this business we need to be open minded. We need to be open to all the different strategies and then all the different ways of not only building wealth but adjusting our lifestyle so that we can have the freedom we want. We can have the life we want and we can really escape. We have a really amazing opportunity by being raised, being born and raised and rich, wealthy nations, especially as an American. Because you have a passport, you can travel anywhere. You have the language, which is the so called lingua franca franca of the world, right? English is the most viable wings of the world. People are paying lots of money to learn it. Everywhere in the world. You can travel anywhere. We have more capital, so you flipped a few houses and you have a few rental properties here By going to 1/3 world country, you can quadruple your purchasing power because the low cost of living that the reverse is not true for people living in Third World countries or developing countries or less wealthy countries. So we have all of these options that lots of other places most of the world 90% of the population of the world do not have. It amazes me how many other Americans I meet that I have never used a passport, never traveled abroad, never lived abroad when we are among the few privileged enough to be able to do so, um, at will. And I think realising these things, realizing that we have so many opportunities, so much freedom, especially in this post recession environment or things have gotten really tough for a lot of us where the middle class is shrinking, there's lots of pressure on us. You know, a dollar doesn't go as far as it used to. Got to use some of these creative strategies to free yourself, build passive income flip houses, do some wholesaling deals, build up your wealth, live abroad or if you don't wanna live abroad, maybe you move to a less expensive place, right? If you're living in a big city in California, New York or whatever and your cost of living super high, that's a great place to get in the real estate investing and then build up some some level of capital and then move to a less expensive place. In all of a sudden, you double or triple your standard of living. Okay, Got to be creative. But the end game for most people end game that makes sense is to eventually just be acquiring a portfolio of rental properties that you have no mortgage on and you just have permanent passive income. Real estate. Passive income is still the best kind of passive income when you compare it to money from online courses like this one and websites and products and stuff, because once you have a property, it is permanent. So as long as you have attendant in there, that money is going to be flowing to you for the rest of your life, whereas a lot of the other stuff you're gonna do in business and with the rental or not, with your rental properties, but with your products and with your passive income, there's nothing guaranteeing that that will be permanent. You know, it might last for a few years, and then maybe the platform dies off. Maybe that some new technology comes out. We know with a rate of technology right now is changing very, very rapidly. So that's another reason why real estate eso and is so ah, durable it's going to last for a long time. While everything else in the world is changing, real estate still isn't. And so it's another good reason to be in this business. And it's another, um, a factor that makes it stable. And that's what we want. We're trying to build permanent wealth. We're not trying toe make a quick buck. But in order to get started, usually we have to start flipping properties a little more capital before we can get to the buying and reading. For passive income states, the processes flip by rent, retire, and when I say retire, you know it just means retire from having the working 9 to 5 doesn't mean you have to retire, right. A lot of people aren't necessarily attracted it is doing nothing, but you don't have to. You can do anything. You could start your own business that you've always wanted to. But you couldn't before. You can live wherever you want, Teoh. You can travel however you want. Teoh, Um, you're escaping the rat race, right? And essentially you are at the top of the investing world, cause even though you may not be a multi millionaire or a billionaire once you have enough passive income to cover your basic expenses, whether that's $2000.10,000 dollars, you have escaped. This is what Robert Kiyosaki is always talking about. And he has that game cash flow. You know, this is the end game that were that were shooting for. And, um, if you have, um, lo requirements for life, if you have low expenses, then you can escape the rat race and be free and a tiny fraction the time for most people. A lot of people want to get in the real estate investing cause they want to be rich, right? They want to have a big, nice house, really nice cars, and they want to have that type of a lifestyle. But if you have a lifestyle where you can meet your basic needs with only a couple $1000 a month or less. In some cases, if you're single and you're really frugal, then you don't really need to build up that much capital to achieve that. And there are ironic thing is that once, once you're free from having to work a job because you've covered your basic needs with your investment income, then you have all of this time to go and build mawr income. So you know, if you can get free quickly, then you can continue. If you want Thio of building a portfolio of doing new kinds of investing or starting a new business, it doesn't take that much if your expenses are low and if you have a low level of desire. So it's it's sort of a psychological strategy, I guess that you can think about it that way instead of needing five or $6000 to meet your maybe your current needs if you can. If you can just get enough passive income to free you with the bare minimum that Alison all your time could be spent continuing to build it, okay, but that's that's the process. This is the road that many people have followed. It's the one that I'm following, and I'm pretty much there. I mean, I pretty much have have enough passive income right now to meet more than my basic needs and continue to invest. And I'm now I'm experimenting with things like this online course on you, Demi and other avenues that are out there to build more passive income living abroad and doing all kinds of creative things that are just fun and experimental. Okay, it doesn't take that long. If you follow the process, flip houses, you gotta buy properties once you can, and you got to rent them. And that is the simplest way. As we learn in the course, there are tons of ways. And after this lesson you learned that there are even more strategies in ways that you can use, and you can combine them in a 1,000,000 different ways. But this is a simplest pathway toe follow that pretty much anybody can follow if you, you know, have the courage to get started. And if you can follow through with it, I mean, it takes hard work. It's hard. It's not easy, but it's simple, right? You don't have to be a genius to do it. You just have to have some courage and you have to work hard for a period of time to do it . Okay? And then, um, another endgame that can be even better than buying rental properties is to become hard money lender yourself. Because what you're doing is you're leveraging your capital for huge passive returns. So if hard money lender loans out $50,000 at 20% they're going to get $10,000 back on their money. And oftentimes they'll do. Those loans will still require that it has to be back within six months, forcing the flipper to get the project done sold within six months during a active market. That's on the rise. Um, that could be really not only doable, really easy to do during like 62,007 period. House were being flipped around like in one in two months time periods. So just imagine having $50,000 reinvesting it twice in a year because you're getting your money back within six months. So you made $10,000 on each loan that would be 20 grand, passive off of only $50,000 in capital. These are the kind of return is that hard money lenders are getting. Okay, you have less government oversight than, um, you know, if you're a big bank that's heavily regulated, but you're behaving just like a bank only. Not only are you making more money than that bank in terms of how much you are allocating, how much capital you're allocating, but you're getting it back faster and with less risk. Because you are getting a higher return, you're going about getting it back faster, and it secured by real estate that is worth more than the loan. If you're loaning out $50,000 a hard money lender, it's gonna be on a property. It's worth a lot more than $50,000 so there's not really any risk, because if the person barring the money defaults, you have the deed to the property. It's really simple paperwork. You just you have to have them sign something that gives you the deed. You just have have a lawyer write you up. Ah, contract that use over and over again for the house flippers that are borrowing money from you and you guys negotiate the rates if they have to pay any points. And, um, it's really relatively simple business. The thing is, you have toe have a lot of experience already in the business to know that the deals that the investors are bringing you, the people flipping the house is that they're good deals, that the house is worth more than they paid for it. I mean, you can't become a hard money lender until you have lots of experience. But once you have lots of experience in the business, that's a really simple business bottle, you know, and everyone that's flipping houses at some point their career. We usually need a hard money lenders. There's lots of demand for the services of a hard money lender. They're one of the most important cog in the wheel that allows the house flipping business to continue. So, um, not only that, but when you're a hard man, later you get to be a mentor. You can also make money with coaching fees and you can you know, um, in some cases that the investor is brand new. You can say, OK, I'll loan you the money and I'll walk you through it. But instead of charging 20% you just split the, um, the profits with them. And so they're doing all the work, and they're taking all the risk. But you're letting them your expertise and you're helping them. You're increasing the likelihood that it will be successful and you're protecting your investment. So when you dio deals with brand new investors, you can charge a lot more. And, um, again, it's pretty passive. So once you've got a lot of capital, let's say you have several $100,000. You could choose to invest in rental properties and get the passive income you could choose to just loaned out in harmony loans and keep doubling your money up and growing even Mawr, or you can get a little of both. Maybe you buy a few rental properties, and you have that passive income. But you also want to keep some dry powder, as we say in the business. Some money for investing that you can try. Teoh, you know, double and triple over the course of a few years and then later on, eventually totally retire and buy some rental properties. But being a harmony letter is one of the most lucrative ways to be on investor in the world . Your way higher returns in the stock market. Typically, there's a lot of demand for your capital, especially when the real estate market is booming. Of course, the real estate market is weak. You're gonna have a lot less activity. That would be lesson investors in the business for you to loan to, and so it will be a little bit slower. But the thing is, there's a lot of people out there, especially post recession that are in the real estate business because their jobs are paying the amount of money. The reason that you know, a lot of you are here listening to this course you want to make money in, um, real estate investing. And so being in the hard money lending business, if you can get to that level, can be one of the best places to be. So I don't you guys have ever thought about that. But when you're thinking about the future after you have your capital, what you gonna do? Two of the most typical and logical ways of being free and of being wealthy essentially are to buy rental properties and become hard money lender yourself. And then the next several lessons we're gonna look at, Ah, a whole bunch of different ways to be creative and make money in this business once you have some experience. 12. Lesson 13 REI Tips and Tricks: In addition to all the normal ways that we think of when we think of real estate investing , flipping houses, investing for cash flow and all the stuff we've been talking about, there are all kinds of other synergies and ways in which you could make money in this business, especially once you have some experience. So the typical pathway, in addition to flipping and then eventually buying for the long term and renting are to become a coach or teach courses or experiment with new, different kinds of markets and either different countries or different areas of your country. Different kinds of deals. Write a book or a training manual and sell it or build a website. And, of course, you could do all of these at the same time. Maybe you make your website your core, um, promoting tool. And then you sell your your coaching services on their and your your courses like you Demi , for example, Um, or you read a book or whatever. You can do a course on you, Demi. Right now the space is really crowded on some of these platforms like you dummy, so I'm probably not going to do more than these two courses that I've made because they're just so many options now for everyone. But these are some of the ways that you could make additional money after you have experience, especially with becoming a coach. Locally can be a good niche, because no matter how many people have made online courses or books or whatever, there it will be a need in your home town or city for coaching services. And so you can charge for your time and you could even do that. You get a full time or part time if you no longer have the need, because you become a successful investor to go out there and work a full time job, which, of course, is our goal. You can do it part time, you know, for fun and for extra cash. And if you're really good, then you can charge a lot for coaching. You can charge 5 $10,000 per person for a coaching session, which is really a bargain if you are really good and you can get people deals and someone's gonna flip a house and make 50 grand because you were there, Coach, you know it's totally worth it if they weren't going to be able to do it by themselves, and so it could be a very lucrative business and a lot of people making a lot more money in the coaching business in the seminar business, then they ever were flipping houses. Which is kind of ironic because, you know, they were successful flipping houses and they had to do that in order to get into the other game where they had the experience and credibility to be able. Teoh charge lots of fees for coaching, but you see those seminars that come to town, Um, there's a whole bunch of I'm not gonna name the names of them in this course, but it's a whole bunch of you'll see on the billboards. You go to a free seminar and they talk up house, flip being and start selling products to you, and they first will sell you like a $200 product, and then they'll invite you to the next level of coaching. Then they'll sell you a $5000.5000 dollar product and then they'll invite you to the next level. What they're what they're really doing is they're using this business model of getting you into their marketing funnel and just selling things to you. Um, it is generally not a good deal. It all to go to those things. I hate to break it to you. If some of you already forked out money for that stuff, I have people in my family that have gone to that and paid a lot of money for those services. So, um, the business model in general is a really lucrative business model. So there are good coaching, you know, avenues, and there are not so good, I would say, Avoid those big seminars. That's pretty much away for the people put on the seminars to make millions of millions of dollars. We don't have to be in that particular business to be a good coach and to make money. I'm off the same target market. We can actually, you know, provide more value on Give one on one coaching, which they say they give you at those companies. But you know, really, they give you like, a phone call once a week or once a month, and they kind of advise you, which is really easy for them, really expensive for you and they don't actually go with you to do stuff. Whereas if you are hired a somebody's coach, you can go with them to meet that seller's go to the title companies, go talk to the attorneys and walk them through it. And for a lot of people, that's all they need. They need to see it done by somebody, and it will allay those fears that we've talked about in the course, and you're providing a lot of value by do that. Even if you just do it for one flip, you know you go with them and maybe they pay you $5000 you walk him through one of the deals. You make money. It's relatively easy for you because you're so used to it. It's going through the process with them, but you're providing a ton of value for a new person getting into the business. So there's all these different ways that you can earn money after you have experience in the business and becoming a coach. You know, what you're doing is you're monetizing your experience and your knowledge, so you're you know you have these skills. You've used them toe, become wealthy as an investor, hopefully. And now you're, you know you're giving back. Um it's a really fun thing to dio if you don't need the money because you're not, you know, under all this pressure to make it. And so you're meeting people, you're making new connections, you're helping them and a lot of the stuff you could do from anywhere in the world. I mean, you can, coach, you could live in 1/3 world country, um, or developing country on the beach somewhere. And you could do coaching sessions from Skype on the Internet. Now that wouldn't be ableto provide as much value as, say, walking with someone, as I just mentioned Teoh all the meetings and everything. Still, you could charge money. You could charge less money because you're living in a a cheaper place. Give a better deal to the person that you're coaching. You could still advise them, walk them through everything. If they paid you a few $100 for advising, you be saving them thousands of dollars that they would have to pay a coach from one of those seminars that already mentioned. So you can provide a lot of value when you compare what you can give somebody to their alternatives in the business that are basically, you know, there's sharks out there and they're trying to make money off of your lack of knowledge. And I know a lot of people who have been burned by those guys, but, um, so that puts us in a position to do a lot of good by providing more value for less money while, of course, earning money for ourselves. So it's a good niche to be in right now because while its competitive, most people are charging way too much. And so the margins here for us are pretty high there pretty good. And, um, so it's a great business to be in again. What you're doing is you're finding a way to monetize all your experience and knowledge, and so it's kind of like at first it takes money to make money and the business is really hard in investing. But the farther up you get with your experience with knowledge in your capital, it's kind of ironic because once you actually don't need money because you already have it , Um, you know, all of a sudden you could even make Mawr because you have all this knowledge and all this experience all this capital. It gets easier and easier and easier as time goes on. So understanding that I hope that motivates you to get started to get to the next levels where you can do a lot more of this stuff. We're not only making a lot more money, but it's more interesting and it's more fun and there's less pressure on you. So, um, e I mentioned you know, a couple prices, but there's lots of different ways that you can charge for coaching. I mean, just like we're being creative in real estate in general, you can be creative with how you charge for coaching, depending on customer and their ability to pay. I mean, you can split deals with them. You can charge by the hour. You can charge by the year, but actively will do with someone who doesn't have a lot of money. But once coaching services is, I will charge them for, like, a six month period or one year period. And I'll say, you know, maybe a couple $1000 for six months of coaching or if they give me $5000 I'll help them for a year if they want really intense coaching, and they want me to go, like, really go to the deal with them and do pretty much everything with them. What I will do is all just split the money in the deal, and so they'll be putting up their money to cover the hard money and everything. But I'll let them use my contacts, all that them use, um, my hard money lender and stuff there in my same city. And then I'll just split 50 50. The money we make on the deal together for first. That's what I would do. But you can charge a fixed rate for years. So $5000 a year in terms of fixed rate for our And if you know, if you want to reduce your risk, Teoh almost nothing. You can just charge by the hour. This usually ends up being a pretty expensive way for your customer to pay. You know, they're charging you $50 an hour for all the time you guys spend together all the time of the phone. I mean, you're charging not quite as much as a lawyer would charge, but I'm getting up in these high hourly rates ends up being very lucrative for you, but it ends up being a little bit less of a good deal for the customer. Which is why I like to just do a fixed rate and make sure that I get paid. But also make sure that if we do end up doing a lot of time, I don't want it to rack up a bill like 10 or $15,000. I mean, they're not gonna be able to afford that anyway, so they're not gonna be able to get as much value from us at a $50 an hour raid or whatever . But you can do that. You can charge $23 an hour if you prefer. That way, maybe you don't know how much time you gonna end up spending with them and you just build them every week or something. Um, that's another way to do it. And you can also do a variable rate for property flip so you can say you're gonna coach them and all the properties they flip while you're coaching them, they pay you 10% or 20% other profit. You can agree to whatever you think is fair. It depends on the circumstances of what kind of house is they're doing. You know how how likely you think they are to succeed and stuff. So you know, it's really up to you. I usually charge for chunk of time, like six months or a year, because they'll usually need my services for that period of time as they go through the process. And it just depends on what they need. If someone wants, like, really intense coaching and they want you to be with them for, like, a whole year and really, really help them, well, you can charge more, and that's how you can make a lot more money. Um, so in that case, I would just split the flip with them and I'll do it with them and I'll take half, but they put up all the money. This is the way that we are reducing our risk and making money in the business were working , and we're doing the job with them. But you're gonna have them do most of the heavy lifting because they're trying to learn and their new and so you're basically just going along with, um, you're helping number. You're still getting half. And so that's a good deal for everybody. They're paying you out a lot of money from their point of view, because they're putting up the funds. They're taking all the risk. But you're guiding them. They need you. So that's usually how I handled those situations. Okay, so, um, it's like I sort of messed up all these members somehow. Maybe I was too excited. I was making these slides. Okay, um, or you could do a fixed rate for property acquired, like, for example, if they're doing low end properties, Um, you can just say OK for every property that we flip together, you're gonna give me 5000 once it closes. And that's a way that you can just make it fixed. And you don't have to calculate or worry about how its profit there isn't a deal or how much how big that the property is, no matter what, whether or not they lose or make money. They're going to be $5000 for working on that flip as long as it closes and it sells and everything works out. So you choose which way you would want to charge for the coaching fees, depending on your situation on the person that you're coaching situation and what you guys can agree to, Some people you know that your coaching they won't want you to do a certain one of these and they'll they'll like, you know, Okay, I'll pay $1000 fixed for six months or whatever, and it'll just be a negotiation. But, um, I've had a lot of fun doing coaching, and it feels really good when you help somebody and you make money while you do it. But it feels good to build a relationship and to help them. And, um, it's really good business to be in. So, you know, after after flipping houses for a few years, I mean, even if you only flip like a few houses, you can already start helping. Someone who's totally green has no experience at all. If you've gone through the process two or three times, I don't think you should be charging a lot of money for your services in that case, cause you're still basically, you know, a beginner and neo fight, but you have more experience than somebody else. You can still help them. All of us are at a different level in this game, you know, all of us are at a different stage and anyone who's further along in the process and we are has knowledge that we don't have and they can help us, and that's what it's all about. So it's a good strategy. If you just didn't doing this, it could be a really good end game for a lot of people. They just end up being a full time coaches, basically on doing on the side for fun. 13. Lesson 14 Even More Ways to Make Money in REI: we are continuing to discuss MAWR real estate investing strategies and tactics. So teaching courses is what I am doing right now. It's a way that has been made very, um, accessible because of the Internet and because of platforms like you, Demi and like many other platforms that are now out there and websites websites that are out there, of course you can make your own website and do it as well if you want to keep all the money that you make, but you have to do all the marketing. I mean, you can earn passive income this way, and you may not become a millionaire doing this, although there are some who are out there making millions of dollars. You know, even just making a few $100 or a few $1000 a month passively is wonderful, cause I'm just imagine off these courses. If you could make I don't know, say, $1000 a month, which is not really that difficult to do what you start. You start teaching a bunch of them. Um, I think the market's getting a little saturated now, but it will keep changing. There'll be new avenues and new products new ways you can do it. But when you have a passive income coming online from your courses of $500,000 a month, you know you go live abroad as I mentioned before, or move to a cheap city or state that covers a lot of your bills. I mean, if you're living abroad, that can cover maybe all of your bills and it's passive. So that's another way. This kind of shortcut, your sort retirement plans to free yourself up from a 9 to 5 job. Once you get that passive income built up, everything accelerates because you know you have some passive income, and so you're a little bit freed up and you can you know, maybe you work part time to cover the rest of your bills and then continue to build your passive income up until eventually you're free. So, just like with the strategy of buying and renting for passive income like we discussed in detail previously, Um, having courses online is a great way to build up that passive income, and you get a little bit of diversification. Your online courses. The passive income can be built up much more quickly than a rental. If you think about like buying a a $200,000 rental property, how long did it take you to build up your capital? $200,000 to pay cash for a property that maybe you get $1000 a month and rental income from whereas maybe within, like, one year, you can build up enough online courses to get $1000 in passive income coming in per month. So the online course strategy is actually much faster in my experience to build up the passive income. But it's not necessarily as permanent, right, because once you have a property that you have tenants in, you're gonna be making that passive income forever as long as you still have it rented out . I mean that real estate is permanent, or as there's no guarantee that your courses are going to be pumping out that same level of passive income for 20 or 30 years, but you can build them up much more quickly. Okay, he doesn't take all that capital, so it's another way to get passive income to build up more quickly, and to do it in a way that is, um you know, different and just gives you another avenue. Okay, um, you can also be someone that goes on lectures at seven. Ours. You can start your own seminars. I have not done this myself. But I have friends that do do it, and they're pretty successful. I mean, they follow the same business model as I already mentioned you before, getting everybody to come and putting it in their marketing funnel, but they don't overcharge. You know, they don't charge ridiculous amounts for their services. So you can kind of mimic what those guys dio if you have a few years of experience, Hopefully, when you're going to a seminar, gonna have a lot, you know, five or 10 years experience, I would say, at least So you're credible and you actually providing the value that you need to be providing to people that come. But, I mean, you do what data you can advertise. Um, maybe not on the billboards. That's pretty expensive. You can advertise in the local paper, so you're gonna have a free seminar. Usually negotiate, um, a space for the seminar at a restaurant, or even at a big venue. Like a conference. You know conference center events center. You can usually negotiate that for free. If you get enough people to come, you can say, you know, if I get 200 people to come, um, can you make it free for me? Usually say yes because they want to get a bunch of publicity. And then if you don't hit the figures and you'll have some rate that you're gonna pay, that I usually still be easily worth it. So it's pretty simple thing. I mean, you advertise. Okay, On this day, we're gonna have a free real estate seminar. Come. A lot of people will come to that because a lot of people interested in real estate as I mentioned anybody can do it. We know that. And so if it's free, a lot of people will usually come. And so they come there And you, you just talk about real estate. And if you have products, you know at the end of your your talk, you could you could sell your coaching. Seven. He wants coaching. Come talk to me. Afterwards, I have this book that I wrote have these courses online. Come talk to me afterwards and this is the way that you can get a large marketing funnel going. If you have a couple 100 people that come Teoh your talk and you convert 2% of them, right, that's only four people. But if you sell them some coaching products that are several $1000 each, you know you are. You're going to make money off of that, and you're going to be building a marketing funnel by getting the emails and addresses and stuff of everyone that comes to the summer us One of the sort of the tricks you're getting all this contact information, you're building a list, and those people could be, um, on your buyer's list. You could send stuff to them, potentially those people that interested in real estate investing so their target market for you. You have no idea who those people are That cave. They might already be investors. They might already people that have experience in real estate investing, but they wanna learn mawr. You have no idea who the people are, so you're building a list. So let's say you did 10 seminars over the course of one or two years and you got you averaged a couple 100 people, you got 2000 person list. Not only that could be a buyer's list, but could also be a, uh, a list of market all of your products to at regular intervals. Maybe every two or three months, you send out an email blast 2000 people, and you just basically printing money when you get to that stage. So this is just another way that can be really fun and work really well if it's a good fit for you. The good thing about having so many different strategies and tactics and real estate is that some of them will be a really good fit for you if some of them won't. And so you might find one. And we call this the hedgehog strategy. You just pick one strategy. Just do it over and over and over and over again, and you can become a millionaire that way. Or maybe you like to dabble. You don't like to focus on one. That's kind of how I am like a lot of different things. Like to flip house. I like to make these courses. I do some coaching and, um, I also want to allocate capital into long term Reynolds and even hard money loans. So I like to just do it all because I find it to be really fun, to dabble and try and experiment all the different ways you can make money. So this is just another another option. It's another way that we can go about doing it. And then, um, finally, we can see what we can experiment with new markets. Um, I already talked about investing overseas, but this could be a really good way to go for the more adventurous of you out there, because real estate will usually be much cheaper if you're going to a developed country or a developing country. Excuse me. There's much more growth potential because everything is developing. The markets are growing, the GDP zehr growing, and usually that means that real estate will be on the rise. It's being built. Son will develop yet, and so the values will usually be going up for a long time. So if you go into a relatively inexpensive market like Vietnam rights to live and you can pay cash for $100,000 property, that probably is gonna be worth many multitudes mawr than that in a few years so that growth rates are much, much higher over there. So it's cheaper to get in. You get higher rents. Actually, the ratios rent there are actually higher for various reasons. They don't have a 30 year mortgage, and there are there other financial reasons within their banking industry that make it so they can actually charge Mawr for rent. So, um, since it's harder to buy, since people are more poor, paradoxically, that drives the rents up because they don't have the option of buying. And so we have a really high demand for rental properties. So if your landlord it's even better for you. So for, like, $100,000 property here in the US, maybe you can only charge. I don't know six or $700 a month to rent that place out where $100,000 over there, you can probably charge $900,000 for rent so you get higher rents. You get cheaper properties. When I say $100,000 maybe the same prices of property over here. You'll be a much nicer property for that much money. You could buy a house over there for 40 or $50,000. They pay cash and get a nice five or $600 a month rental off of it. So there's more growth potential. It's cheaper. You get higher rents and is a lot less regulation. Um, they don't mean they don't have all the rules that we have here for banking and for investing and everything in terms of like the down payments and stuff, there's less regulation. It makes it really fun and exciting and you get to travel. So I've got a friend that goes back and forth. He's, um, half Vietnamese, half American, and he owns property in both countries, and so he flies back and forth a couple times a year. He manages properties in each place, and he's increasingly investing more and more capital over in Vietnam because he could get more properties. It's a better time to be doing it, and he gets to travel. I get to spend a lot of his time on the beach. He spends a lot of his time on the phone on the beach, literally. I mean, he's basically living the dream. And while that might seem out of reach to some of you listening to this. It is a lot. It's more possible than you realized once you get going, once you have a little bit of capital, Once you have just a few properties, it's not that hard. You just got to get your passive income. You just got to get your money up a little ways for the first couple of years. It's very challenging, which is why most people don't do this. But you know, a few years into it, if you keep going, it gets easier and easier and eventually get the point where you know, we see the Robert Kiyosaki of the World where they've got this huge portfolios of millions of dollars of properties, I, of course, and nowhere near that level. But you don't need to get to that level. You don't need to be a billionaire or, you know, be worth $100 million. Teoh, be free of your 9 to 5 job. If you can get one or $2000 passive income that gets you most of the way there, depending on what your lifestyle is like right for a lot of you. Maybe you want to make $10,000 a month and passive income. You can keep going till you get there. But for those of you who are just seeking freedom from a 9 to 5 job and I'm just freedom to live your life, how the way you want to you it doesn't really take that long. You think about getting one or $2000 in passive income. You can flip some houses and then buy a couple of rental properties after a couple of years . And in the meantime, you can build up some passive income with online courses like this one, and to combine all that together and you're there. So if you just think a little bit long term, think 45 years out, you should be able to achieve most of what you need Thio to free yourself. So I mean, I've done it and I got a lot of friends who are doing it or have done it, and it's hard, but it is totally achievable if you stay focused and you put your mind to it. And so I hope this course helps you guys 14. Lesson 15 How to Leverage REI experience to sell products: in addition to all the strategies that we've just covered, you can also just write a book or some sort of a training manual that you can easily sell online. You can sell it to your student you're coaching. You settle the talks to giving the seminar. So this is something that could make you a great deal of money once you have an audience. I mean, if you've got a $10 book, um, or training manual or you can make it 20 or $30 I mean, it's very, very valuable if it's if it's good and it helps people get started in the business. Um, you know, you can sell this to a list of thousands of people that you know you can use all your list . You can use your your students on your online courses. You can use the people that come to your seminars. You can sell it to all the people of your coach. You could even sell it at RIA meetings. You know, you re a meeting and I want everybody there knows, you know, that your experience and that you know what you're doing. Just tell people that if they're interested you have this, um, this training manual for people that are new and you sell it to them to This is a way that you can sell lots and lots of product, relatively easy, because if you have a lot of experience, you can write up a really good training manual or book and not all that much time. Actually, it's the experience is valuable. That's the hard thing. So all these things, once you have the experience, become relatively easy. The hard part is being in the business and getting that experience and making money for, you know, some years before you can do this. But this is just another way you can monetize your knowledge and experience. In addition to all the other ways and again because of the Internet, it's become so much easier. You can just sell it online yourself on a website. If you're someone who doesn't like to sell face to face with people, I mean, you're probably in the wrong business because we have to do that a lot. But who knows? Maybe you'll really get it flipping houses you're really good at at getting realtors to do a lot of the selling for you and making the office for you. You know a lot more about the actual rehabs or, you know, just the finances of it. And then So you've got a lot of experience, a lot of knowledge, but you're not really good at sales. But you can write a really good training manual and sell it online, right? I mean, we all have different personalities. And so that's once again just a really good reason why we need to know all these different money making strategies in the business. And you could, you know, you can choose any of it building a website. Now it's easier than ever. And if you're not good at this, you can outsource it. I mean, you can outsource literally anything right now, but I mean, there's websites where people in India can build you a quick website within, like, one or two days. A simple website. They could even do the S E o Wright, the search engine optimization for you, and they can start getting it ranked in the Google, and especially if you pick a niche that people are searching for. That, um, is not super crowded right now. The general real estate investing niche is super crowded. So you're gonna be really hard to get ranked on the first or second page of Google for some real estate coaching or training or courses. But those those guys s CEO guys, they know their business and they'll be able to figure out where is their niche, where you can target. And we could weaken market to them so they can build your website for you. They can target the niche, they can get you ranked, and basically your stuff will start selling automatically. You just have to pay them a fee to build up for you. That he's not gonna be that much to all to do all that. It might only cost you a few $100. Um, there's so many options out there now, this is another way to earn passive income. Just have you have your website up earning for you Have it up there. Um, selling your product for you Have it be a downloadable product. People come, they put the credit card information in they, um they click. Purchase your book. You know, you gotta sales page, which you can outsource as well. And then this is another way to get passive income. Your books just selling all the time. So this is, you know, an avenue that sounds like it would be good for you, then, you know, try this out. But luckily, you know, if you are get attack and you do know how to build websites. Well, this is a no brainer. Because if you got real estate experience and knowledge, build your own Web star sites, start getting it ranked, do the S E o yourself, and you're pretty much guaranteed to build up at least some sort of passive income. We never know how much is gonna be. I mean, you might only be able to build up 50 or $100 a month and passive income if if it doesn't go all that well, but it's still passive income. The way I look at it, passive income is worth a lot more than regular income because we do the work once and we said it and we forget it. And then that stream comes in your bank account. I mean, to get 50 or $100 passive income from a dividend from a stock, you need to have you know at least several $1000 of capital in a stock that pays a 45% dividend. And maybe you'll get I mean, you probably have 10 or $20,000 actually, to get $1500 a month right, cause they pay dividends quarterly. So if you have $20,000 in the stock and it pays 4% that's like $800 or something. And so that would be, like $200 per quarter, right? Because normally they pay the difference out. You calculate it for a whole year, and so you get to $1 per quarter. That's three months, so you're only talking about 60 or $70 per month and dividends off of a really high paying dividends stock if you have $20,000 in capital. So if you take zero capital or just a little tiny bit of money to build up a website and start selling your products in there and you could even get like 100 bucks a month in cash flow, it shows you how valuable it is. Passive income ISMM or valuable than it seems, because it comes in without you doing additional work overtime. It adds up to a lot. Let's say, for example, you can build up $500 in passive income from a website, and that's only, you know, uh, what is that? $6000 a year? And so, um, over 10 years, though, it's 60,000. And if you could make $60,000 off of amount of work, that is much less, you know, than like a year of full time work, which, you know would normally be what it takes, maybe to make $60,000 right? So that's a pretty good salary for a full year's work with passive income. As time was on, the income itself increases in value because it's based on fewer hours of work that you did , if that makes sense, so any kind of passive income you get was 20 bucks or whether it's 100 bucks or whether it's 1000 bucks. If it's if it's long term, if it's gonna be permanent income, especially like with a rental property, but with your online courses with your online products. If you can build that up, it's really the best kind of money you can have. You don't have a boss. You don't even have to manage your own business and be your own bus. You're just producing income for yourself. It's huge. It's a game changer. OK, so, um, try to understand deeply how valuable it is and even if it takes you a lot of hard work to get some passive income, if you can build on it and you can keep building it up, you're looking at a permanent solution to financial problems. You're looking at freedom, and that's what we're trying to achieve. 1,000,000,000. Website now is one of the most realistic ways to do it. Most people that are getting free for the 95 they're doing with blog's and they're doing it with a website. So you Demi's one avenue. That could help, Um, and there's lots of other websites like you. Tell me where you could just sell your platforms, you know, sell your products and they take a big cut to take half. If someone comes to you, Damian and buys that, they get half and you get half. But if you have your own website, of course, you keep it all. And so, which is another good way and again outsourcing can now be a saving grace. You can outsource anything these days, and you don't have to be an expert. So if you're really good at one thing, you focus on that one thing. Outsourced all the rest and especially when it comes to the Internet, because a lot of times you're outsourcing it to people in India, India and Asia that charge much less for their services because there's a huge surplus of labor over there and high skilled labor to, um, it's not unskilled labor. I mean, there's this is like high skilled tech labor. You can find all kinds of services online with simple Google searches, all kinds of them and have them basically do everything that said you can have them to the S e o build a website. Um, do the marketing build you a landing page, which is a sales page for where people will actually click to buy your product and have it down. They can set the whole thing up for you. And this is something that I originally learned several years ago reading the four hour workweek. Probably a lot of you are familiar with that by Tim Ferriss and he talks about. Originally, he started setting up what he called these muses, which are essentially products that he was selling online. He was selling like not diet pills, but like supplements, and he set it up. It's called private Labeling, where you sourcing manufacturing company Teoh have a product manufactured and sold for you , and everything is automated and outsourced. And so all you do is you have a website when someone clicks on it. The purchasing process takes place automatic on the website and in the fulfillment from the manufacturing plant and the shipment to the to the customer. Everything's automated, so once you set it up, it just runs. And that's basically what I'm talking about with the Web site. But, um, since you can outsource it all now, there's no reason to have to be an expert on everything like you used to have to be. And so this is a big deal. If you think about the possibilities of this, um, it's really a game changer. And so, um, I encourage you to explore the options for that and, um, and take it from there 15. Lesson 16 Conclusion: so we talked about a lot of strategies. Now we're gonna bring it all together. I'm gonna reemphasize for you as much as I can. Why real estate continues to be the best way to make money and build wealth. As I've said throughout the course of the sudden introduction, it is something that is permanent. There will always be demand for it, especially at the lower to mid range, because that's where 99% of people are with their level of wealth, There will always be people that need to rent properties, no matter what happens. The technology. Everything is changing so rapidly in the world technology. Humans will always need a place to live. Think about that is one thing that will not change. It's one of the only business models that will not change, so it's the best way to make money and build wealth. While technology is changing all the other platform, the business models, real estate isn't changing. It's easy, understand. It's easy to get started in. It's relatively easy to Dio, and you just have to take the leap. Okay, so understanding that there's no really good reason while you shouldn't be investing in real estate. If you have a goal of building a long term wealth, or if you have a goal of simply making money on the side while you keep your day job, you can flip a house while you're working a full time job. You can partner up with people to flip a house for you while you're working a full time job , you can do wholesaling deals on the side and suddenly your income while working a full time job. So there are almost an unlimited number of strategies to use, as we've learned from coaching the hard money lending to selling the books to selling the courses or just picking one thing just being a hedgehog, as we say, just do you wholesaling right? You get really good at sending the letters out, doing direct marketing, talking to sellers, buying the properties. You build up a buyer's list by going to the read um, RIA meetings and networking. And all you do is that one thing. You just sell properties, the whole sellers 5000 here, 10,000 here, 15,000 here. Just do as many of those that you can. Maybe you do 10 in a year, you make 5100 grand. People are doing that, and you just get really good at one thing. There's an unlimited number of strategies to use. No matter how much technology changes, people will still need housing, and banks will still provide mortgages. Hard money lenders will still provide capital. This is one of the Onley types of investing and wealth building that you can do that you can his borrow money easily for You can't do it for stocks. You can't do it for almost any other type of investment, right? If you invest in our or collectibles, banks are going to like it. Here go his 50 grand. You'll flip that piece of artwork at an auction, right? Real estate is the only way that you can do a lot of this stuff. It has the infrastructure. It has the brokers and the realtors. And the infrastructure again is not just something that makes it easy to do in terms of the fact that you have the capital and there's lots of demand and everything like that. But also you can use all the people in this in this network in this infrastructure to learn from. That's what I have done. I ask questions of my brokers and the title companies and the lawyers. I asked them questions. I mean, we paid tens of thousands of dollars to go to universities and get degrees so we can go make money. Why don't we pick the brains of people in industry that are actually doing this stuff every single day? It's a no brainer. It's free education. I mean, when you're asking a professor information in the classroom, you're paying thousands of dollars to be able to ask those questions of a professor and a professor is a theorist. Usually they're not even someone who has experienced in the real world. And yet we're paying crazy amounts of money for them. Why don't we have the same approach in the real world for free and get that information? To me, it's a no brainer. That's another reason why there's so much information out there all around us about real estate, where that's not the case with many other subjects. Most people are not experts in stocks or in many other ways of making money or businesses, But there are a lot of real estate experts at least relative experts that know a lot more than us about it when we first get started just floating around out there in all these offices in the world. And so that's one thing that also helps a lot. And finally, you know, it is fun. It's fun and it's exciting. And if you're someone who can handle a lot of ambiguity in a lot of chaos, sometimes while there's lots of moving parts and stuff flying around, it could be such an adventure. You know, investing in real estate in Vietnam and making these courses like I'm doing right now and having houses being flipped on the side. It is so much more fun than any job I've ever had. And you know, if I can do it, anybody can do it. I started out flipping one small property. I was terrified that I was gonna make a huge mistake and I was gonna lose my money. And I had no idea what I was doing. And everyone along the way and my 1st 1st property flip, everyone helped me. Everyone understood that, you know, um, hard money lenders took a chance on me. I kind of trusted everyone in the process. They all trust that I could do it works really hard, got it done, made some money and the rest was history. Once you do one, you can do 1000. You realize that you can go through the process. And so really, you just have to get started. Anybody can do it. I know people that are making money flipping houses that are not brilliant people. Okay? Like they didn't go to college. They never were gonna school, which is necessarily mean anything in business, right? But, um, they aren't even really that good at their day jobs and in some some cases, something they're actually pretty lazy. But once they're doing something, that they can actually build wealth from and be their own boss and do their own thing from they get really motivated. And, um, they get a taste of it by flipping that one property or by doing a wholesale deal. They get this taste and they get really excited. And I know some people that you wouldn't even imagine, like, five or 10 years ago would be making $100,000 flipping houses in real estate that are kicking serious tail right now because it's it's invigorating once you get going. So I hope that, in addition to give you guys some some ideas and some knowledge in the course, it also motivates you to go out there and get started. If you've been afraid, because, uh, if I can do it and some of the people that I know who do it can be successful than you certainly can, too. So good luck.