Buy Rental Property Long-Distance Using The "BRRRR Method"

1. Welcome to the Class : If you want to invest in rental properties, but you live somewhere that's too expensive. You don't have a ton of money to invest. You don't have a ton of time each week to put towards this. And you do not want to manage the properties yourself. This course will be your guide. I bought close to 40 rental properties out-of-state while living in Colorado. And I achieved the proverbial financial freedom by the time I was 30 years old, it wasn't easy and I made a ton of mistakes along the way. So I wanted to create a program to help other people follow the same path that I did, but have a much easier time of achieving financial freedom. I started a real estate coaching program and I have worked with hundreds of clients at this point. A lot of my clients have 20 or 30 rentals of their own nowadays. And this course that I've put on Skillshare is the course that I took all of them through. So if you're committed to doing the work and staying the course than this program that I've put together is going to answer all your questions on how to buy rental properties. Again, even if you live somewhere that's too expensive, you don't have a ton of cash, are a ton of time to put towards this without further ado, let's get into the course and I'll see you there. 2. The Class Project: So anytime you start a business, it's good to have a business plan, even if it's just like some rough calculations on a single page that outlines your plan to get leads and create sales and retain customers. So for the class project, we're going to do the equivalent of a business plan. But for your real estate investing company, most of the time when I meet a new aspiring real estate investor and they'll tell me, yeah, I want to buy Reynolds, I want to create passive income, but their plan doesn't go much further than there. And with all those unanswered questions that are in their mind, they're probably never going to take action. A much better version of your plan would be to say something like, I'm going to buy rentals in Huntsville, Alabama. I have these three private money lenders who have already said they would give me the money for my deals. I've got these two contractors who are recommended and they're gonna do the repairs for me. And I've also got this property manager who's going to manage my properties and give me advice on the neighborhoods that I should stay out of. The ones I should look to buy more deals. And can you see how much more crisp that is? It's like a very clear plan on how it's all going to work. And I can tell you once you go through the course, you'll learn that if you know what market you're going to invest in and it's a good market because you picked it using the fundamentals I'm going to teach you. And then you have that team in place, Linder, contractor, property manager. You have all the chess pieces on the board to make the moves that ultimately lead to you acquiring a portfolio of rental properties. So I've created a document for you to fill out or you can write down the answer to those four key decisions. What market are you going to invest in? Who are you gonna get the money from? Who's going to do the repairs and who's going to manage the property. So download that and then fill it out as you go throughout this course. At the end, upload your document to the project section so other people can see what you have decided and you're going to motivate and inspire the other students in this class as well. So that is the class project putting together your real estate investing business plan. And I will see you in the first training video. 3. 2 BRRRR Criteria: Alright, so in this training we're gonna go over the two essential criteria needed for the burr strategy. Okay? A lot of you are in this program because you want to do burr. That means by renovate, rent refinance, okay? And that is a great strategy. But it comes with a couple of things that we need to go over on this training. So the best strategy is one of the most commonly used strategies that people use to grow their portfolio. And it's my favorite strategy as of right now. The reason for that is when you do these deals, not only do you end up with equity, so you're protected, like you only owe 50 K on the house and it's worth 70 or 75. But you also know with positive cashflow and you can do it with very little of your own money, right? So you can see why it's so popular. It promises a lot when you look at it that way. But I've actually seen a lot of people go about this strategy. The wrong way. People analyzed. Based on either one is what that's supposed to say. But the oh, sorry, that's actually correct. People will analyze based on either none or just one of the criteria that we're going to go over. The two essential criteria. What that leads them to is they either buy a bad deal or they put way too much cash into a deal. And that's just not sustainable. You can do it on a dealer to just to sort of get your feet wet. But ultimately you want to be buying good deals as a real estate investor. To do the strategy requires a certain kind of deal, we'll make it work. But more specifically, what we're talking about is a certain set of criteria about the deal that needs to be in place for it to work. So today we're going to talk about what those two criteria are to execute this real quick guys. Let's just revisit this. You already know what I'm going to say here. What's the ultimate goal of real estate investing? Enough monthly cash-flow to cover all your bills, right? So if it's costing you five K a month to live in unit five K a month from your Reynolds, you're financially free. That's what we want for you guys more than anything. That's what I achieved for myself years ago. And it's awesome. And I'm not dragging it was just like I was able to get to that point. Now I can pay my rent, pay my mortgage, pay my grocery bill, pay my car payment, like all that stuff just from cheques hitting the mailbox. That's ultimately what we want. So the most important criteria when buying a property is cashflow. And if there's not enough cashflow, which buy enough, I mean, two to 300 bucks a door, then just simply don't buy the deal. Okay. Guys, don't do it. Also, breakeven is okay. So when you're analyzing for cashflow, It's important to note that sometimes you may be breakeven when you're in the midst of a private money alone. But you know, this, you qualify for financing down the road and it's going to bring you back to cash-flow positive. That's acceptable as long as you're okay with footing the bill for any expenses that pop up in the meantime. So to be clear, for Burr, we're interested in the cashflow after the refinance down the road, not during the private money loan period, which is usually like three to 12 months. So I'll give you an example. House cost 40 K to buy and needs 15 k and repairs. There's 3,000 and closing costs. Okay. So that'd be 58 K all n. Let's say you bring three grand of your, of your own money to the table. The lender loans you 55 at 12% for 12 months. Typical private money terms. Your monthly payment to that private lender would be 550. So of course it's on the high end, right? Because the interest rates so high. And let's say the rents 875. So we're going to deduct out all the expenses that you'd pay in that scenario. And I always use 15% of the rent for vacancies and repairs. That's where I got that number. You'd be making a whopping 12, 50 a month and cashflow, not even enough to buy lunch at a restaurant these days right now, okay. That's what your cashflow would be during the private money loan period. When you're paying those high interest rates, then you go refinance with a bank. They give you that same 55 k at four-and-a-half percent, that would allow the payment to drop down 5-50% to 78, which would jump your cashflow up from $12 to $283. And that's then it becomes a good deal. And that is a cookie cutter example of the burst strategy when it works that way. So basically what happened is upfront, you were running the numbers based upon this based upon seeing oh, I'll make 283 a month when I refi and you knew that you'd be in a good cash-flow place, okay. But here's the kicker Guys. What else is important in that scenario? What else had to happen in order for that deal to go down that way? What crucial piece of it have we not discussed yet? Anybody note? The house had to appraise for the right amount for the bank to refi and pay that private lender back the 55, it would have had to appraise it the right amount. Okay. So going back to the same deal, I'm gonna give you the numbers again. 40 K purchase price 15, repairs three costs, 58, all in three out of pocket, and a loan for 55 from a private lender. Now, most banks are lending institutions will loan is 70% of the value of the house. So we're going to use 70% to be safe and 55,000, the amount you owe is 70% of what? So to determine that you just divide it by 0.7, which gets you 78,571. So what does that mean? That's the amount that the house would have to appraise for in order for you to do birth strategy without bringing any additional cash to the table. So to be clear, when the house is fixed up and it's ready ready. The appraiser comes out, they, they come back with a 78,000 dollar appraisal. Banks can loan you 70% of that, which is 55,000, which is exactly the amount you need to pay off their private money lender. So this is like in a perfect world where everything came back at just the right amount to pay off the first guy, et cetera. And your cruise, right? You put three grand into this deal and you'd have 23,000 inequity and 200-some in cash-flow, right? So how many times could you do that over as many times as possible, right. That's the whole point. I want to make it clear real quick that when I'm talking about the appraised value, we're talking about it after the rehab. Okay. And you're doing ready rehabs with these deals. So your determinant when you're trying to figure out like, what is this thing going to appraise that you're looking for other rent ready properties in that same neighborhood, same size, bed bath, etc. If that house were to not appraise at the 78,000 we wanted it to and it came in lower. You're going to have to bring more cash to the closing table to refi that property and get it cash flowing. So let's say it only appraised for 72. The bank is gonna give you 70% of that, which is 50,400, okay? But you remember you owe that first private lender 55. That puts you bringing 4,600 to the closing on top of the three K You already put in in order to refi. That's happened to me a lot because I didn't do the right due diligence upfront. And that lowers your cash on cash return on the deal and requires more cash to do each deal. So guys, this is why getting a great deal is the best thing you can ever do in real estate. If you get a great deal, then not only will the cash-flow be there, but you're all in price will be well below that 70%. So the bank is going to have no time, no problem giving you as much or more than you need, right? To refi out and pay off the lenders. Like literally buying a house for the right price. Literally, it takes care of everything else. We can just come up with a stupid example, like if you could get a house for ten grand or something and it's worth 90 grand. You know, like your cashflow would be insane. You'd have a lender that would give you all the money for it, right? And it would be the best thing in the world. So that's not realistic, but getting properties for cheaper should be the focus. I would rather you make, instead of, instead of making like three offers, you know, deciding to buy one of them, where it's kinda like steels. It's alright. I would rather you make 30 offers and get turned down 29 times, but then you find one really great deal. Because if you build a portfolio of really great deals, that's the only thing that's actually going to make you financially free, where you have checks, hitting your mailbox each month to pay your bills. So make sure to run cops guy. If your goal is to do this BER with as little of your own cash as possible, which it really shouldn't be. Make sure to run the comps when you're analyzing deals, I'm making offers, makes sure that house will appraise where you will need it to. Okay, so the two essential criteria, the title of this training. They are cashflow, how much cash flow you're going to have after the refi and how much equity you're going to have. Or in other words, what is your loan to value ratio going to be? Are you at no more than 70% of what that property is going to appraise for. If you're you can say yes to both those questions, then you've got a solid deal. And that deal will never do wrong. And it's super low-risk. You've got a nice chunk of equity in it. You could sell it and put some money in your pocket, or you can hold it and put cashflow in your pocket. And you want some space between what you owe and what it's worth. You want as much as possible. Because properties are going to appreciate over time what you owe on it. It's going to go down because the tenants are paying off your mortgage and the values are going up because real estate historically appreciates, especially if you buy in the right market. So the more space you have there in the beginning, the sooner you can do a more of an advanced play like a cash-out refi and throw that money into your next property or multi-family property or whatever sense. So those are the two essential criteria. Now, it's important to know that one of those two, whether it's either cash-flow or equity, is going to limit the top amount that you can pay, the top amount that you can offer on a deal. And I'm gonna go into examples to explain that. So remember the house we talked about earlier with the 55 k loan, four-and-a-half percent from the bank, monthly payment of 278 and the 283 of cashflow. If we were let's say we didn't know about the running comps and seeing what it would have praised for, let's say we were just like cashflow. Cashflow. And we were just looking at cash flow. Well, how much more could we have paid for that? Just strictly looking at cashflow, the 55 K all-in price, right? That leaves you with the 283 in cash-flow. If we bumped it up to 60, still good at 02:58, 65 to 33, shoe we can pay 70,000 all in. And at that rent, still have 207 bucks, so 75, we'd probably go below 200, but you could pay up to 70,000 if you only analyze it by just cashflow. Again, let's just go down this road with me guys. And if this lesson feels like kind of a mouthful, it's very, you know, statistics data-driven. Just bear with me. You may have to go back and watch this a second time to really grasp all the little parts of it. But you really need to understand this. So again, going back to this slide and it's like, wow, we could actually owe 70 on this total. It's going to cash-flow at 02:07. So if you thought about it that way, you might say, okay, it needs 15 and repairs and three k and closing costs. So I could actually offer up to 52 based upon the cashflow. I'd still be all in it's 70 and I'd be cashflow in it over 200 months, just like Brian says, right? Everything will be all good. So I could pay more for the deal, right? But wait, our original purchase price in that same example was 40 K when I've been showing you the slides on it earlier. Right? So why did I just jump up to 52 K? All of a sudden, you could pay that much if you were basing it only on cash-flow and you were just looking at like, okay, if the mortgage payment on a 70,000 dollar loan minus property management minus, minus, minus is 200 Zelman cashflow. However, if you did that, if you went to that max loan number based just upon cashflow, that property would have to appraise for 100,000 for you to refi it without bringing more cash to the table. Make sense? So that's the big caveat. You'd have to have 100 K and then the bank gives you 70%. So they would be able to give you the 70 to turn around and pay the lender, the private lender, the short-term hard money, whatever you used back. So that you could get into a longer-term loan at the lower interest rate, right? And that would leave you with some empty pockets. Okay? Because if you bought using those numbers and you were just based strictly on cash-flow, and you ended up with a loan of 70 k to that private lender. And then if the bank went and appraised it and it came back at like 78 because you forgot to run the comps. You would have to bring over 17 grant to the table to refinance that deal. Okay. So that deal would not work without that 17 K cash injection from you because they're only going to give you 70% of the 78,000, okay. So we talked about only looking at a deal via like the cashflow. But one thing that some other people will do is actually just look at equity and just be like, Oh man, I'm getting a good deal on this thing. I'm gonna I'm gonna make it a rental property, right? And they don't even really know how to run the numbers for cash flow, but they know how to see if they'll have equity. So this is like the other big mistake. So if you're trying to do the no money births strategy, purchase, we know that purchasing it based upon only the rent would not work, but if what if you did the opposite? So let's say you found a property that would be worth 90 grand in rent ready condition. Okay. Then you said, alright, well, 90,000 times 0.7, I could get up to 63,000 as a maximum loan from the bank on this thing, you might say, cool, that means I could pay up to 63 K for this thing all in like purchase price plus repairs and everything. But what if you didn't consider the fact that property would only rent for 700 bucks a month. If you had a loan of 63 K and it was running for $700, you'd only net 68 bucks a month and positive cashflow. Okay? So the deal would work from a no money standpoint, right? Like you could get all the money to buy it. Because if it was worth 90 and you could get it for all m 63, then you could get private money lenders, banks, whatever to give you all the money to buy it. And you would have $27,000 of equity. And you might look at that and be like, dude, I'm going to have all those equity. But, you know, 68 bucks a month, that's so slim, that's not gonna do much to move you towards financial freedom. A deal like that would be more of like a fix and flip than a buy-and-hold because there's you could make 20 grand or maybe a little more if you did a retail rehab versus aren't ready to rehab. But there's no cash flow. You don't want a portfolio of properties that are making 68 bucks a month. Because you can look at your cool spreadsheets and say I've got 27 K and equity on on ten properties. I've got 270,000 in equity. But, you know, 68 bucks a month, you're only making 680 a month on ten doors, right? And the first time anything big happens, like unexpected, like a new roof is needed, that would be, you know, most of your cashflow for the year probably just to fix the roof on one of the ten houses. Right. So it would be stupid to own that if your goal was passive income, paying your bills. Make sense, guys. So can you see why it's important to have both cash-flow and equity when doing a burr. You guys got that. Now, if this presentation has been a little math heavy for you, Let's simplify this down and you might just take a picture of this slide once I have it all out. Because when you're considering a deal and you want to do burr, basically, these are the three questions you're answering, okay. First one, you'd say, based upon my projected all-in price, will the property cashflow at least $200 a month After refinancing. Okay. So you're looking at that all in price because you're going to base the mortgage payment off of that. You're all in price is 55 grand. You're like, Well, what's the what's the payment on that with a bank minus all my other expenses. Well, I have at least 200 bucks a month leftover. That's the cashflow part. Then if the answer is yes, you say, will my loan amount account for no more than 70% of the appraised rent ready value. So when I put new paint and this sang some new floors, I cleaned it up. I do my little ten K lipstick rehab is what they call it. And I figure out what, you know, what it's gonna be worth at that point. What i 0 on this thing all in is that going to be no more than 70% of the amount that it's worth in rent ready condition? If the answer is yes to both of those, you've got yourself a great bird deal. If the answer to number two is no, then you've got to ask, Will I be able to bring the remaining cash to the table to do this deal? Do I want to bring the cash to the table or should I just find a better deal? And I've seen people say, Yeah, I want to bring the cash to the table, Brian, I've gotten. I've gotten this far on the deal. I don't want to go, but I don't want to turn back. I've got money just burning a hole in the ground and a 41k or whatever. And I just want to throw 15 granted to this deal. And if that's you, then fine. I've done that before too. And it's definitely not the worst use of your money. You're not spending that money. You're just putting it into a house so you could get it back if you sold it. Right? However, just keep in mind that the savviest investors, the ones who want to make their cash stretch and want to get as much equity and cashflow as possible, are trying to find ways to put as little of their own money in the deal as possible. So in conclusion, the two essential criteria you have to consider when entering into any bird deal. Our cashflow, $200 a month or more. And loan to value ratio, or equity basically means you're all in prices. No more than 70% of what that thing will be worth in rent ready condition. Okay. So I need you to analyze both of these separately. Okay. Whichever 11 of them is likely to be the cap on the deal. Like in the example where we showed that you could pay more on that property and still cash-flow at 200 bucks a month. Right? But you'd have to bring all this money to the table. Then the loan to value piece would be the governor on the deal, the cap. One of these two is going to cap the maximum amount that you can offer. And so you need to look at these separately. You need to say what's the most I could pay and still have 200 bucks a month. And then What's the most I could pay and be no greater than 70%, all n, okay? And really whichever one of those two is lower, That's the one that will be your max allowable offer. Make sense? When you find a deal that meets both of these criteria. The bottom line is that you should buy it guys with very little cash required a nice chunk of equity plus two to 300 bucks a month and net cash flow. These are one of the fastest ways to scale your portfolio. When I tell people about deals that I bought like this, they get really jealous. It's not that I had some secret in on the deal, right. It's just I know what to look for and I just make offers and wait for something like this to come along. And this is the simple way, the simple framework I want you to approach doing bird deals from now on. So what to do next is pick out three available deals in your market. Run the cops on them to see what they'd be worth and rent ready condition, then run an analysis to see what they would rent for. Okay. So you know what they'd be worth, you know what they would run for. Now, determine what's the most you could pay, where it's going to meet both the cashflow and the equity criteria. Okay? If you do that, you're going to have a solid fundamental understanding of the burst strategy, how to make it work for you. And of course, share your answers, answers to this with the group so we can double-check your work, make sure you did it right. And when you have an understanding of that, you'll know exactly what to offer from here on out. 4. How to Pick a Great Market: This training is about how to pick a great market in when, during an up economy. What do you do to succeed when the market is honestly nuts? When the market is the way it is right now. And every market is like, seems to just be so expensive and competitive and everyone seems to be just kinda doing a lot less deals and hanging out on the sidelines waiting for the market to crash. How do you continue to be an active investor? Is it possible? That is what we're going to talk about tonight? Real quick. I'm going to share my story with you. You probably know this. I'm not gonna go into a ton of detail, but it's definitely relevant to what we're going to talk about tonight. And, you know that I started out in Nashville nearly a decade ago, houses were 30 grand. Investing finding deals at least was not the challenging part. The challenging part was then finding the money. That lasted for two, maybe three years. And then all of a sudden, nashville was just not feasible anymore as a rental market because that's what we're talking about tonight. Rental markets, we're not talking about markets. You can wholesale end markets. You can flip in houses. Markets where you can buy houses where there is positive cashflow. Rent to price ratio wise guy. That window of time. Last handful of years in Nashville. It existed prior to me getting into real estate, but when I got in, it was kinda want a lot of other people did. Excitement, just put bubbled up and years later you couldn't invest. Put this beautiful watermarked picture of a beach on this slide. Because it almost reminded me of like being on the beach and trying to beat the time and trying to find a spot to stand on the sand. As the water rushes in higher and higher, you know, you have to go higher up on the beach as the tide rolls and to find a, try to find a dry spot to stand or sit or to walk. And so the water definitely rushed it on Nashville and there was literally no more rental properties to be had. So I branched out to surrounding areas. I first went to just 15, 20 min outside of town, there are some smaller tattling. Murphysboro, Tennessee is a town that was good for investing for awhile, but that town quickly got more expensive. And now you look at Murphysboro in the MLS, like the prices are like over 100 grand and it's really just a town for a fixed and flipper, or a developer or a wholesaler is going to wholesale to those people. Right? So then I went up north to Clarksville, Tennessee and did well, they're bought a number of rentals and I'm still seeing deals there, but it has gotten a lot harder. And you look at like even you look at what's on the MLS there, like the cheapest things, 90 grand used to be able to get houses there for 30 on the MLS. I'm talking this wasn't that long ago. Right? So I invested there and got ten rentals or so and then, you know that the water rushed in and that town has evolved to more of like what you would call a fix and flip town, not a buy and hold town. Just because you can't get enough cashflow. As far as the rent price ratio is concerned. I went south further south, 45 min north of Clarksville, 45-minute south at Columbia, Tennessee. Bought a few doors and Columbia. Now, you guys can verify this if you go on Zillow and you look at the prices, colombia is too expensive, it's too hot. You know. All the other investors were following me to these areas and bidding up the prices. And because these are all growing towns, because you know, my criteria is to find places that are growing. There's just a lot more people moving there. And that bids the price is up to, because it just increases the domain. So Colombia quickly became not feasible as far as a buy and hold town goes. Then I went further south, Huntsville, Alabama. You guys have heard me talk about that. Right? And I got a handful of deals done. I remember like first thinking about going to Huntsville. Prices there, 30, 35,000 bucks. I'm not kidding guys like wholesalers would email you deals saying 35,000 dollar house three bed needs ten grand and work rents for 800 a month. You're like What? It was almost like they were the deals are so cheap. I had my doubts about the town, but the data showed that it was booming. And if you look at the MLS now the cheapest thing you will see my B 70, 80, something like that. That town has gotten a lot harder to find rentals, then it's not impossible like Clarksville, but it's an uphill battle. And as I'm going to share tonight, It's not a battle that I am interested in fighting anymore, at least in the short term. So I went further south, the Huntsville. And basically every market that I've gone in has had this window of time where you could invest and it's lasted anywhere 12-36 months. Then the water is rushed in. Jay. And I know this is probably unique to the overall economy that we're in. This ridiculous or everything just as appearing to go up, up, up, which I know is not going to last forever. But because it has been that way for like the last ten years, basically, then the price is everywhere have just continued to go up. And investors are hopping from one town to the next. I've been hopping from one hot town to the next. I've been telling you guys to identify the hot towns and go all in there, right? The problem with that I'm seeing is that you have a small window of time to find deals. Before the water rushes in, you can no longer dig for gold and that sand. You can no longer walk there. You have to look elsewhere. And the question we face now is, is it worth it to continue to like learn a market? Build a team there, find great contractor, property manager lenders for that market learn this different zip codes, neighborhoods, market for deals. Only to be able to do as many deals as you can do in that buying window before it becomes too expensive in that competition, quickly creep sent because investors are hungry guys. You are an investor so you understand how it feels. Were hungry for deals. Everyone's starving for deals right now. Everyone's getting on bigger pockets and trying to find out what that next hop budding area is. And they're jumping to it, but jumping from one area to the next, to the next to the next. And it's causing this phenomenon where you have these small buying Windows. And the reason why I have always recommended that you look for these growth markets. Because personally, I've made a lot of money buying houses and watching them appreciate. In fact, I've made over 1 million bucks in equity gains in the lifetime of my career from buying and holding houses and growth markets, right? So it is not a bad strategy, but I don't want you to just hear that number million dollars and then think, well, I've gotta do this. Okay? But that's why I originally had that advice. It makes sense, right? Like to do it and like, just like buying an undervalued stock and making money on it. That's been my advice for you. Find the next growth market GO ALL IN. But, but like I said, because of the desire for real estate is so strong right now, those markets are getting bid up within 12, maybe three years max out of an acceptable price range for investors. And that's what I think is the problem. I have now concluded that growth markets are not worth the effort given the current climate that we face today. This may change if the market receipts and if competition drives up and prices drop, right, then we're going to have to reassess everything. But we don't know when that's going to be. And I have been like every other investor for years now, several years, 34 years, five years, been thinking that something was coming. I've been buying golden silver, a little bit of it at least for, you know, I started doing that vacuole like before. It was before 2015. I've been thinking like Something's going to happen and it hasn't happened. But I do know that the Fed has printed more money in the last seven months, then they have in the last seven years. Okay, So think about that for a minute. That can create the facade that the market is up. Same way as if I bought a bunch of stuff on a credit card. I can look like I was rich, but I was really borrowing all that money, right? So I really think something's going to happen, but I do not have a crystal ball, I don't know when. And so we have to adapt today based upon where things are today and become better investors. And that's what I'm doing, and that's what I want for all of you. Because I want everything I've learned as an investor. I want to bring it all to the table right here and now. I want my ceiling. Everything that I've learned, every mistake I've made, every thing I've learned to avoid or every system I've built. I want that to be your floor so that you are starting right where I'm leaving off. That's your starting point is exactly where I'm at today. So you don't have to go through a decade of going through what I've gone through and learning this. Okay? So here is a snapshot of some research that I've done to share with you the theory that I have, okay? And again, I stress that it is a theory. But what I've got here is a bunch of different markets in the South Midwest area. They're like Tennessee, Florida, Arkansas, Oklahoma, Texas. And what I looked at is, how big are they population-wise, new? If you look on the MLS, what's the cheapest price? Then are they a flat market, or are they growing, or are they declining in terms of population size? Okay? Now the green and the red. Ignore that for a second. Okay, I'll tell you what that means at the end. But what I noticed is that markets that are growing, okay, for the most part, markets that are growing. Have, I'm sorry, my screen freeze. Sorry. What I've learned is that markets that are growing, the price is already baked in. Okay? So if you look at the column that says cheap MLS, average price, okay? Most of those where it says growing, the price on the MLS is already over 100 grant. Right? Or at least 70 plus, which in my opinion is I'm going to share today is too much for the prices. You know, that whatever the floor is, I'll like the cheapest houses you're seeing on the MLS. I'm going to share with you where I think you need to be, which is really these prices in the green. 70, already too high. Now you're probably thinking, Well Brian, there's some here that have like real tea prices like Indianapolis to seven grand Walton. That one is actually declining. So we're going to not look at that because we don't want declining cities. Jacksonville, 35, I think there was an Ohio city on here. They've got cut off that had 30 K houses. But those cities aren't working great for investors. As far as what I've seen from clients who I've worked with. Okay. And I'm going to share with you why I think that is I'm going to share with you why I think that larger towns that have, you know, 800,000 people or more with cheap prices are not as good as smaller towns that have cheap prices. Okay? So this is just a snapshot of some data that I've looked at. And then if you look at the towns that have a flat population growth. So when you look it up, the population hasn't changed that much. Then you're seeing cheaper prices, as you can see here. Now, flat towns, those are referred to as linear markets. Linear, meaning it doesn't change. You look at the average home price, it pretty much stays the same over time. Okay? So a lot of people think those towns are really boring. But I'm starting to see that the people that are having the most success are investing in linear towns and they're not fighting everyone else and these growth towns. And this again is a product of the craziness that the market is that right now. But that's what I'm seeing. Through Abilene in here because I know Blake's doing well in there. Let me see if Blake's on the call right now. I was hoping he would be so he would get ****** off. But I was advertising is market. Just kidding Blake. But we're coming for you, man. But Abilene looks like it could be great because it's also growing on top of still being cheap and small. But what do we know about that? Is that that average price is probably going to creep up pretty fast. And even his holiness, that is, Blake might have to find a new market. Okay. So this is a little glimpse into some of the research that I have been doing on markets. And because of what I've seen, I'm now changing my recommendations based upon my experience and based upon that of clients. And one thing that is for sure guys, is we want cheap properties, okay? You can't mess with more expensive properties like 100 K plus especially. Or I'll even say 70, 8,100 K are harder to mess with and make them cashflow. Okay? Unless you do different strategies, you employ different strategies. Like we know that sub2 works for Adam Johnson. We know rent to own works for Chris Prefontaine. There are strategies to make more expensive properties work. But I have had success, is in cheaper properties that are in the right neighborhoods. Like I showed you on the slide Previous, some of the markets with chief properties are large, meaning they have 800,000 people or more. What I've seen is that large markets with cheap properties is it does not necessarily mean that they are good markets, okay? Because what we do not want for sure is for those cheap properties, the ones that are going to make sense, rent the price ratio, the sub 100 K houses. We don't want all of those being in D class neighborhoods. We want those in C class or better. It's a very, very important distinction. And this is my theory, is that larger population size in a city appears to be linked with cheap properties in being in the d.school class neighborhoods. Okay? And what I'm thinking is that larger cities are going to have more different socioeconomic classes, right? And almost more room, if you will, for the cheap properties to be in the worst areas, right? Whereas with a smaller town, like I'm going to share with you now, that is not nearly as likely. Okay? Smaller population size. Towns with cheap properties appear to have a larger percentage of homes. In C class neighborhoods. The properties I've looked at in small towns that are cheap are typically not, are typically in better areas. Then those same, similar priced properties in a larger town. I thought about this like why is that? But one thing to think about as a smaller towns typically will have a low cost of living. They'll have low average incomes. And if you have a small town and the houses are 40 grand, you know, some of those houses, I'm talking like average home prices. Some of those houses have to be in better areas, right? You're not going to have a small town where the whole town is a D class neighborhood. Right? So some of those houses, it's just like statistically more likely that a greater percentage of those houses are gonna be in better areas if the general cost of living in the general average home price of the town is lower versus a town that might have a higher average home price. But it happens to have some houses that are in a cheap, cheap, that are cheap. Those cheap houses can just be the d.school class houses and they're all d.school class. So I hope that distinction is making sense. If not, please ask, also smaller markets have way less eyes on them, right? You're not going to read some list about the best markets to invest in Boston and read about some town in Oklahoma with 80,000 people. It's just way less likely that there's going to be competition. The mantra that I've always been aware of in life is to look at what everyone else is doing and always do the opposite. That's almost always been true. Like almost everything that I do and believe in them like this is the way to do this or that most everyone else is doing it wrong. They're doing the opposite of what I'm doing. And I feel like I forgot that mantra. To some degree. I forgot how important it is to be like what they call a contrarian investor. And just take a like overall comprehensive look at what's going on and what people are doing. And go against the grain and do the opposite. So that's what I'm recommending today. And today we're going to open our eyes and look some different types of markets. First I want to talk about what the original market recommendations that I made were. Okay, let's, let's, let's let's back up a little bit and talk about how we got to where we are today. So original market recommendations. And this worked for quite awhile. It was honestly COVID that was like really through the final wrench in the machine in a big way. But it proves that we need more flexibility, adaptability, and nimbleness as investors because anything can happen. But my original market recommendations that used to be effective, we're make sure that 1% rule deals are available on the MLS. Pick a town with 100 K minimum population size. Make sure there's economic diversity. Makes sure there's economic strength. That should be a growing, powerful, booming town that's linked with population growth often. But you want to check for that too. Low vacancy rates and there's real estate investor activity. Now let's talk about where the original recommendations went wrong. First of all, 1% rule deals available on the MLS. And now realize that you need to have that, but you also need to combine it with a low average home price to more easily find deals with a good ramp to price ratio. Okay? So just because there's 1% deals on the MLS, doesn't necessarily mean that it's gonna be a great market. A lot of times those deals will not be in the right areas. And then by the time you climb the ladder up to whatever the area or the areas are that you do want to be in. You've already choked out your rent to price ratio, and it's hard to find deals. Hundred K minimum population size. Okay? This was my previous recommendation. And now I see that no cap on the size leads to investing in larger towns where cheap properties are more often in bad areas like I discussed, economic strength. This is still something to look at, as I'll show you in a second. But too much economic strength is linked to a high-growth town. And in an ideal world, we would love to have high growth in our appreciation of our investments. But that is linked to high population growth and economic strength and population growth. Quickly raise prices, quickly raised competition. And it leads to a lot of frustration and lack of results and lack of a consistent deal flow that you can add to your portfolio, then real estate investor activity. Too much activity probably means competition is already too high. So let's talk about what I want you to look at. Now. This is what I want you to consider when you're picking your markets moving forward. I want you to now be looking at smaller markets. I don't want you fighting in fishing in the big pons. Ryan wanted me to do some fishing analogies. I don't want you to fishing in the large ponds. I want you to find some smaller ponds deficient. 50 to 200 K is a nice range to think about. I also want the MLS starting price under $50,000. And when I say that, I mean a grouping of properties. Okay, So I'll just kill the slide for a second and show you little rock. A town that I'm looking at. Dawn, everybody go to Little Rock okay. Because I don t know for sure if it's going to work out. But this is a town I'm looking at. And if you look on the MLS and granted, these may not be in the right area. That is not something I've confirmed. But your C, you see a nice chunk of properties at this nice price range, 50, 60 K, right? And look, it doesn't stop. It doesn't just go up to 100 K after you look at for houses. I'm still scrolling and now we've had 70. Right? So I saw a group of properties below 50 K. Okay. So that's what I'm talking about when grouping. I'm not talking about one busted out house. I'm talking about seeing multiple properties around like 50 K or less Mark, let's say. So that's what I mean by that. And when you see that, you should already be able to confirm that those are gonna be 1% rule deals as well. But obviously, manually confirm it by checking the rent against your all-in price to make sure it is. But one thing that I've realized, guys, is that, you know how I talked about this with expensive properties, like if you buy if you go looking at, start looking at more and more expensive properties, rent doesn't follow the price up. A 500,000 dollar house does not rent for seven grand a month. 1 million dollar house does not rent for $15,000 a month. Like it would need to be the same way that a 50 K house or rent for 750 a month, right? So the, the more expensive you gather rent does not follow it up. The same thing is true as you get cheaper. It's what I've noticed. When the price of the house is going down, the rents are going to follow that down. But there's a certain point where the price continues to drop and the rent starts to flat. Write. A 40 K house is not going to rent for $400 a month, at least, not in the right area. Right. Rinse like on a three-bedroom house. In any decent market should at least be something like, I don't know, 650 at a minimum, right? Probably higher. But rinse don't necessarily follow. The price has dropped. Which is why if you have a low starting price, then you just have an easier time making that gap between what you paid for it and what it rents for. And that is what we look for to do deals. That is like when you see that, it's just like, okay, I press the buy button, bye, bye-bye. And the biggest reason that people aren't able to do deals right now is nothing. Looks like it makes sense as a rental. So we want to remove that bottleneck right here and now today. So 50 to 200 k population size, cheap stuff on the MLS group of houses at or under 50 K flat population. Notice I said not growing flat. I know that sounds crazy. That won't always be the advice. But I think you should consider towns like this for at least the next 12 months, if not longer, and supplement your existing efforts at a minimum with a town like this, as I'll talk about in a minute. So flat populations not declining but not growing either. Just a boring old flat town. We still want economic diversity. I was looking at the economic diversity of some towns, some small towns like this earlier today. And I saw that they have like, just because a place is like boring and not growing, they still have jobs in all different kinds of industries there. And you're just confirming that it's not a one-horse town where everyone works for one company or the government or the military or something like that. Economic strength. You just want to confirm that it's stable. Population growth and economic strength and growth. I feel like are really tied together. Towns that are, have a population decline. If you look up data on their economics, it doesn't look that great. It's like how things have been slip in, businesses have been going out of business, or businesses are moving to other towns. And then you'll see the population declined to really, I'm just wanting you to look and see what's the unemployment rate, what's the job growth rate and the income growth rate? It's not declining as a people. Have jobs, they're right and they can make it work there and it's a stable town. Some of these linear markets guys, you might be surprised. Probably have a better economic stability than a cyclical town that just booms and busts with every real estate cycle. Also landlord primitive, this is not something we've talked a lot about, but just verifying that your state is landlord friendly in terms of the different tenant laws and what you can and can't do about evictions in raising rents or security deposits. And what the property taxes are like. Litigation is like in that state. So that's really a state dependent thing, more so than a city. Then low vacancy rates, still just making sure that the vacancy rates aren't crazy. In fact, Little Rock, the town that I am taking a look at, it has higher vacancy rates than I would like to see 11%. So I made a post on bigger pockets today trying to connect with some investors there and find out more about why that is. Because it made me a little hesitant about investing in that market. I'd rather see somewhere with a little bit lower rates than that. Then I do want to see some real estate investor activity. I don't want it to be the most popular hub for real estate investing, the newest hottest thing. But I don't want to see zero activity either. So the point is simply to do deals, okay? That is what I want you to focus on. Purchase a property correctly. Well, you're going to make two to 300 bucks a month. Net. Don't try to get into hot markets, not during the current environment. Okay? Put away some rentals in those boring stable markets or the monthly cash-flow is there. Okay? Because monthly cash-flow at the end of the day is all we've really cared about. Anyways, equity is nice. If you sell a property, you can put a bunch of money in the bank, but then you don't have the investment anymore. Or you could do a cash-out refi, enroll the proceeds and the more investments, right? So equity is great. But in order to spend it, you're tapping into what you have or you're selling which you have. That's why people say you can't spend equity, right? Without sacrificing the investment in some way or compromising it. But the monthly cash-flow you can spend without compromising the investment. And that's really the sure-fire way to be able to live the life you want to live, which is, in my opinion, the whole reason we're here. We're just here to learn a skill, to handle money in a better way so that we have more freedom in our life. And so I'm going to be selecting a handful of markets. Test this out with over the coming months. Purchased 50,000 postcards today from postcard mania. But I'm gonna be spreading those out as I please over the coming months in a handful of different markets, I will have more data to share very soon. And that's what I'm doing that for is to help you guys and have as much real-time evidence as possible about what work. So make sure to check with me on what works to, depending on if you're watching this now, or you could be watching this three to six months from now in the course. Check-in with me about how it went. What to do next, guys is first, decide whether or not you are going to stick with your current market. Are you going to continue to stick with what you're doing? Is it working? Or are you going to look elsewhere? Of course, as always post in the Facebook group, if you need help with this, you can always continue to look in your current market. Plus add a new market based upon new criteria and let the two markets fight it out. Don't even be emotional about your market or emotional as an investor. Let the evidence determine what you should do. Is it working or not? Are you working towards your your passive income goal there or are you not? At the end of the day, that's the only criteria that shouldn't matter. And you can you don't have to abandon everything you've done. But I'm suggesting that at a minimum you add a new market based upon the new criteria we went over today and look in both of them. In fact, I was talking to a Ryan earlier today and he wants to continue to invest in Huntsville. And I told him That's awesome man, that could be a great long-term play. The economy could crash, the prices could drop. All of a sudden. It's fair game there. But until that happens, I told them to add another market, like the ones that we talked about tonight, just to guarantee that he can get as many deals as you wants to get starting right now and then see what happens next. If you do decide you want to add a new market, then use the new criteria. And I want you to select at least three potential markets to go into that fit the criteria I've gone over, and then share your choices with the group. Okay, let me know what you have decided upon. And if you need help making that final decision. And then start to do what it takes to generate leads and make offers to test your theory. And also remember this as a lesson as you go into your career, okay? Because this day is going to come again. This is not a one-off event. The market will cool off for awhile. Here at some point. Then it's going to come back again. Because that's what 100 plus years of history has taught us that it does. And you're going to need to remember this lesson. You're going to need you remember that you can invest in growth markets at certain times and you can invest in linear markets at other times. And the day has come for us to just look in linear markets, in my opinion, until things cool off. Cool. So I hope this has been helpful for you guys and go out and crush your next market. And I really think that this, even if some of you feel frustrated about the efforts that you've already put into picking markets. I hope that on the other side of that frustration, there's a bit of relief that you don't have to look in a ridiculously competitive and overpriced market. And you don't have to fight tooth and nail to find the deals to build your rental portfolio. 5. Tracking Population Growth: What's up, guys Brian here? And this is going to be a short video just to show you how to figure out what the population is doing in any city. Is it growing? Is it shrinking or staying the same? So there's two websites I use for this. The first one is this one here, census.gov, huge website with tons and tons of data. It's kinda clunky honestly, but once you learn to navigate, it becomes pretty useful. So I will search for Nashville, Tennessee up here in the bar, because that's where we do most of our business. This will pop up. You want to click on this link that holds all the data for this city. Then from here you can kind of go into a lot of different data points about the city. It says all topics here you can select from all these things like income, economy, population. So for this video, I'm just showing you the population. The estimates as of July 1, 2016 is 660,001. Thing about census is that they don't update it that often. So sometimes you'll have to look at data that's a year or two old, but it's still pretty valuable. So the main thing that I'm looking for here is the population growing, declining or staying the same? You don't want to buy houses. In cities where the population is declining. That's a really bad sign. Right here. Popula, population per cent change, April 2010 to July 2016, 9.4%. So it's gone up 9.4% in the last six years. If it had declined, there'll be a little negative sign right in front of this 9.4. So this is one place where you can check out some population data that's usually pretty accurate. Another one is this website City data.com. This is a cool website. Actually used it when I was deciding where to move and it helped me pick Denver because a lot of the data that this website had. So again, let's find Nashville here. Click Tennessee. Or maybe you click it here. Then it's going to show you every city in Tennessee with more than 6,000 residents. I guess you can choose all cities here, but if your city is not popping up on this list of 6,000 plus it's too small for sure. So let's go again, go to Nashville. Click it. 644 is what they're saying. And that's an estimate as of 2014. The important number here, and they actually have older data, is that the change since 2000s, it's gone up 18%. That's really positive, that it's grown that much in such a short time. So let's look at another city here. Let me go back. Alabama, Birmingham, I've got some properties in Birmingham two. Let's check this out. Population. In 2014, 212,000. Population changed since 2000, negative 12.6. So that's not a good sign. Since 2000, population of Birmingham, alabama has declined by 12%. So people are, for some reason, are moving away from the city. And if you look at prices in Birmingham, it's super, super cheap to get Reynolds there and a lot of investors are attracted by that, how cheap it is. But there's a reason for it. People don't like living there. They're moving away for some reason, they're finding more affordable options are better options for their money than what Birmingham is giving them on lifestyle or job availability or whatever. So there's a lot of other factors we're gonna go over, of course, and picking your market. But this is a big one. So in hindsight, I should not have bought those properties in Birmingham. I don't know if I'm going to sell them or hold onto I guess I'm going to hold onto them for now. Luckily, I've only got a few down there and not a ton. So hope this helps guys. This is a good starting place for when you're picking your market, is figure out whether or not the population is growing, declining, or staying the same. And at a minimum, it should be staying the same. I looked up Memphis on here and it didn't only growing 1% since the year 2000. So it's basically stayed the same. That's slightly concerning. A lot of people are really bullish about rentals and Memphis and people do really well there. But I like to invest in places that are swelling, they're growing up. It's like getting in any market at the beginning. Like if you were going to invest in Facebook or Google back when they were cheap or Apple, it, you just kinda ride the wave up. This is the equivalent of being able to ride the wave up of appreciation because there's a lot more people move somewhere. The demand goes up, and that pushes the price up. All right guys, thanks for watching. I'll see you on the next one piece. 6. Calculating Rent/Price Ratio: What's up, everybody? Brian? Oh, and here. So in this video, I'm gonna show you generally how to check into a market and see if the numbers are going to work. For rental properties. There's lots of markets out there that are amazing and the economy is really strong. But there's simply not any deals at the right price to make sense as a rental. So that's the thing that we are checking off in this list here. So what I did first is I googled it and just I wanted to see if anybody had compiled a good list of these markets and kinda done the work for us. And I actually found a bunch of crap. I it looks like a lot of the articles were not written by investors and they were just kinda very high level just using data and just printing out reports. This one is a perfect example right here. It says 13 of the best places to buy a rental in the US. And it's basically going off of some numbers of that, the median home price, the median mortgage payment, and the median rent. And then it's calculating a return that people are supposedly getting based upon that. Some of these do look pretty good. I'm like Baltimore, and obviously I know Nashville is good, although the prices have gotten really high there lately, I think that the median home price is definitely above 166. Now, we're even going outside of Nashville. So this isn't really accurate. Then you've got some other ones will look good. So generally, news article does look correct. But then you get to something like Seattle where the median home prices for 50 median rents only 2,200. I mean, logically, you know that a place like Seattle is not going to work great for buying a bunch of cashflow rental properties. But even these numbers confirm that. You have to be careful with these lists because markets will sneak onto these lists like Detroit probably does work from a return, but we know that the economy might be in question, but that's a separate video. Of course. The numbers on Boston don't look that great. Neither do they on New York City. I mean, who would think of New York City to be the market they're going to pick to go into to buy rental properties, right? It's kinda crazy. So these lists are not written by real estate investors. You have to be careful when you read them, but it doesn't hurt as a place to get started. So to get that passes, the main couple of things you want to check into is the first thing is, what is the this is another article I'm going to link in the notes down below that it looks like, got it much more correct. Lot of these markets are great cash-flow markets that they've listed here. So yeah, sorry about that. The first thing that you're looking for is, what's the median home price rises? Wooden houses cost on average in this market. And this is a pretty good mark. Article. Kind of lays that down and I'm going to link this down below as well. And you can find your market on here and see what the median home price is. You could also just look it up just to get updated number because this was actually written in 2015. But you definitely want to know generally what's the median home price and your market? Then secondly, what is the median rent? What there's something rent for on average. And this is another article that I'll link down below that shows the median rents for 100 of the biggest cities in the US. And so you can say, alright, medium two-bedroom rent for Phoenix is 1,000 and the home price is 200,000. Right? Already not looking super great for Phoenix, at least today. Just seems kind of expensive. Once you've got those two numbers, the median home price, the median rent, you have a little bit of information, right? It's definitely not enough to make a decision. Then I would move on to looking at what's actually for sale in the market you are considering. I've pulled up a bunch of examples here. We've got Cleveland, Ohio. So what I do is I'll put the city in the search bar here, and I only want for sale. You don't actually need to click that yet. Just for sale by age and owner. You want to make sure you only click houses. It's not that apartments and condos and town homes aren't good investments, but they kinda throw the numbers off a little bit. And condos and town homes can have really high HOA fees and stuff like that. So in single-family houses are typically what we're talking about investing in anyways, right guys. So. Just select houses for the purpose of your search. Then. So here in Cleveland, Ohio, I mean, look at the prices like 500078. It's like for the price of a new, you can get a brand new car or you could get for houses in Cleveland, Ohio. It's like suspiciously cheap, almost right? But what this does tell me is that dang, like, if I can make these houses rent than this market would work out great. Because the houses are so cheap. Again, we haven't gotten into different neighborhoods and where they're good and bad zip. I'm going to cover that in a minute. But generally, you look at the prices of things that are for sale in Cleveland, ohio and on the MLS for that matter. There, It's cheap, right? Really cheap. And Cleveland is known to be good market for cashflow. Just if you're looking at cash flow alone, it is known to be one of the best markets. Again, this video is just about rent to price ratio. It's not about economy and economic strength and all that. So we know that houses are cheap and Cleveland. Now let's see what are the rentals advertise for and Cleveland. And so all you gotta do, again, open up a new tab put in Cleveland, Ohio. Just select for rent. And then another thing I do is you need to click Rent low to high. You also on the houses, you need to click cheapest up here to sort it from cheapest to most expensive. So here in Cleveland, 300400500600. Generally, just, and again, this is a rough analysis. Like generally, the houses are really cheap and the rent the rent amounts aren't terrible. It looks like you can get 600 bucks a month, seven or whatever for houses in Cleveland, Ohio area. Alright. Look at Greenville, South Carolina. Alright, I've got just houses selected again. And I've got it sorted by cheapest. It looks like it starts around 40. Gran quickly goes up 50, 60, 70. So probably a more stable city than in Cleveland. Definitely. These are the prices and again, this is what's listed on the MLS guys. You're assuming you're gonna be able to get a little better deals and the stuff that's listed, you got to do your own marketing or network with wholesalers or whatever. You just want to see what's retail, what's top dollar numbers should pretty much almost still work from a retail perspective. Then when you come in and buy stuff at a discount wholesale price, the numbers definitely work out. Anyways, we know what the houses are kind of going for in Greenville. And then we look at the rents, 700, 800. So that looks good, honestly like just roughly if the houses are 70, 80 k and the rents are 78900 a month, you're teetering around that 1% rule at the retail price. That looks like you could definitely make Greenville, South Carolina work from a rental perspective. But again, you are going to need to do more due diligence. And I'll go over that at the end. Let's look at a place like San Diego, super expensive. So I don't know what this house for $90,000 is, maybe a helix like a trailer Actually with the cheapest houses are like 300 K or so. And these are one, there's a one bed, okay. There's a 32. So these are small houses like this one, 700 sq ft, 766. This one's only 400 sq ft for 320, right? So really to get up a legit house and San Diego, that's three bed to bath. It looks like you're at least it 400 K or so. And we don't even know where these are yet. Right? Then we go over to the rent prices and let me sort that low to high. Alright. So generally, I'm actually surprised that you can live in San Diego for this cheap fix. Some of these are one bedroom, so I probably should have two plus on all of these because you don't really buy rentals that are one bedrooms. That's not really a usually a good investment. So it looks like San Diego. It could possibly work out surprisingly. But again, your entry price to buy single-family zeros, 300 K per house. And we haven't even gotten up to 3,000 bucks a month in rent here, just looking, you would need to make well over that on that house in order to cashflow. So I don't know. I'd probably find somewhere else, right? I just wanted to show you guys inexpensive market so you can see the difference. It's like, it's kind of harder to see how this could work, correct. Versus like a Greenville, South Carolina. Plus would you rather, by 1300000 dollar house or would you rather buy four or five houses in South Carolina? And then you've got four or five assets that are appreciating instead of just one. And if one of your four or five houses goes vacant while the other ones are occupied and help pay for the mortgage bills. But if you're 300,000 dollar house goes vacant, That's a big mortgage bill that you've got to pay and no one's helping you pay it, right. Because it's your one property and it's vacant. That's another big problem with buying expensive houses for rentals versus spreading your money out. So let's look at Memphis. Memphis is a real popular rental market. So again, real cheap houses and we know some of these are probably in areas that we wouldn't buy anyways. But you just know that if, if the starting point is five K, that there's probably an entry point somewhere in the city where you could get in and the prices are definitely cheap enough. This is why Memphis is such a popular city for buying rental properties because everything is so cheap there. Again, like most investors aren't buying in these areas where things are 17 grand because it's just a big pain in the neck to rent these out. But it's good to know that the price is start this low and then go up from there. Then we look at the rental amounts for Memphis. Starts pretty cheap. The same houses that I showed you are probably these ones that are listed forever, 350 a month or whatever. So again, it looks like you could make the numbers work in Memphis, which we know you can. There's huge turnkey companies there that sell rentals to people all over the world. And this is why, because there's just an abundance of cheap houses. And so that kinda brings me to my next point is that once you mentally check off these items, you're like, okay, this market could work. Then the next most important thing is to start digging in deeper. I would jump on the local Rhea Facebook group for this market and find a mentor and say, Hey, look, I'm looking to come into this market. I'm happy to partner with my, with someone on my first few deals, I'm going to do some marketing. In exchange for that. I'd love just to get on the phone with a local expert and just for 20 min and just ask them about the market. I want to know if people are buying rentals at the right prices. I want to, The big thing you really want to figure out is, what are the goods CIP codes and what are the bad zip codes? I've historically used property managers a lot to figure that out. They'll really tell you that I didn't even manage anything north of this road because it's all terrible. And so you can mentally just eliminate that area because if property managers won't even manage the properties there, then why do you want to buy it there? Because you need a manager, right? So that's kinda the next step is what are the good zip codes and what are the bad zip codes? So thinking, we only have focused about 17 or 18 zip codes and there's probably, I don't know, 30 or 40 total, right? So we eliminated a bunch of those and it's nice, it's like relieving to just whittle it down. Okay. This is all I need to focus on because there's tons and tons of houses in the market, right? So it's good to focus in on the ones that make sense for you. So you have to learn the zip codes beyond that, even need to learn about the neighborhoods. There's good and bad neighborhoods was up and coming neighborhoods. And you need, you really need a local contact, a local mentor. You can hire a coach or an educator like me to show you how to do this. But I personally don't know anything about most markets. The ones that I invest in. And there's so many details and things going on and news reports coming out about changes and things happening in the market. So you really have to stay privy to all of that. And that's where you find a local mentor realtors are fantastic for educating, you know, what's going on in the market. They've got market reports that they send out for free just as a lead magnet and they'll send you one. So that's the next step. If you do that and you dig in, you find out that people are buying houses at the right prices. And you look at some of the inventory that's available from wholesalers and things and the numbers are going to work for rentals. Then you're probably good. You can probably check this off your list. And again, this video is just about does the numbers work for rentals, so the price against what it will rent for you, this is something you have to check off. You almost might just do this one first because it's quick and easy to figure out before you dig into all the economy and the strength of that and everything. So that's it, guys, go get you some cash-flow and I will see you on the next video. 7. Can You BRRRR?: The reason you need that is because like I bought a house in Huntsville 30, 35 or 33 or something. I paid for it maybe 15 and repairs. Like 48. Closing costs, another two or three, something like 51. I think the private money lender might have given me 51 or 52, like right around there. But then there was like a few thousand bucks and unforeseen repairs and I had to come out of pocket for that. Even with all of my systems and dialing in. Like they ripped out a wall, they found some mold or something, they found some work would that needed to be replaced. And there's literally no way I could have detected that that repair it was going to happen. You can't like inspector wouldn't have found it like that. It's just not in their job role. So you would have to have like ripped the walls out before you bought the property to find certain repairs. That's why it's always smart to just add ten to 15% to whatever you think the repairs are gonna be, just to be ready for that and have that available, guy. So even though we're looking for deals or we can get all the money to buy and the money to fix it up. I want you to have five k at least in reserves. If your brand, brand new, maybe you might want to have closer to seven or ten K, Just because you might be more likely to make a mistake, you show all your deals to me that will cut down on the chances of doing that. But first question right out of the gate, you got five K and reserves. If the answer is no, then the first step is to figure that out. Either save the money up, free up some money from the stock market or your 41k or whatever you gotta do. You could get a personal loan from a family friend for ten grand and a low interest rate, I'd be okay with that. Put towards your first deal or just have it available. What I don't want is you to buy a house, the h back blows up and you have like 13 bucks in your bank account. I don't think anyone in this group is really in that situation, but you might not have an extra $3,500 which you can just toss towards an H back, right? Just sitting around. So that's the purpose for that question. If the answer is yes, then the next question we move on down to is, do you have a private lender? Right? This question is related to the upfront purchase of the property, okay. With the burr model, you either do private loan, hard money loans, those are kinda the same thing, or you pay all cash for it, or you get the seller to hold the note for a year or something like that. Okay. You don't go to a bank for the upfront purchase because they're going to want a down payment. And you're going to already be going into that like 30-year, 5% 30-year loan. And that's not the point. The point is to refi into that loan. If you go into that loan, read out of the gate, you're going to have to come up with 20% down that you're not gonna get back. Thus, it's not the bert model because you're using 20% down every time. Okay? So this is the, the model is you have a different take down strategy versus a refi strategy, like the upfront financing and the refi financing to separate stages. So for the upfront financing, Do you guys have a private lender you can tap or do you have all the cash for the purchase and the rehab on your next deal, some people got 50 grand that they could put towards it and then they'll get that back with the refi or do you understand how to negotiate a seller financing to do that under D? Okay. If the answer to that is no, then you need to obtain those connections or skill sets or whatever it is connected with a lender skill set on structuring the seller financing so that you can have an upfront financing strategy. You need to get that in place before you move forward. You won't be able to do the bird model. I put one to two weeks max here because you shouldn't delete Dalley on that forever. People message me on Facebook all the time and they say, Brian, I want to invest in real estate, but I need private money. And I'm like, Okay, you could probably have that by the end of the day today if you've made some phone calls, you know, they don't really understand. I think it's like this big thing. It's not. So you have to, but you do need to have that in place for your upfront finance. If the answer is yes, then we move on down here to this bubble, which asks, are you bankable for a loan from a traditional residential or commercial bank? Okay. So I'm talking like, you know, you're gonna get anywhere from a five to a 30-year loan at market interest rate. I'm talking about traditional banks. Commercial is okay too. I do five-year balloons at five-and-a-half percent interests with commercial banks, sometimes it's stuff like that. But to get those loans are requiring my last two years tax returns and they want to credit score really around like 700 or high sixes, okay? The tax returns, typically, I've seen people get loans when they only made like 40 grand a year. I don't know if it's so much how much you made, but it's consistency of income. So if you made 40 grand last year, but she only made 20 grand in 2018, they're going to look down upon that. Or if you made like AT grand in 2018 and you only made 60 last year, they're gonna look down on that as declining income. There's all these rules of banks have that might eliminate you from getting alone. You should know whether or not your bankable by now. If not, just schedule a call with a banker, get in the document so you can figure that out. But that's the next question. Okay. Are you bankable? We're figuring out, we're thinking ahead towards your exit strategy, right? So you're gonna take down the deal with private lending or something like that. We're already wondering, are you bankable? You're gonna be able to refi out of that, okay? If the answer to that is no, then the next question is, well, can you structure a seller financing deal or could you do long-term institutional funding? Okay. What does that mean? Institutional funding? That's basically like a company like lending one or martial Reddick. The companies that are not looking at your tax returns. Now, some of those are looking at your credit score, okay, So it's like, kind of like dealing with the bank, but they're a little easier to deal with. Their interest rates are higher, so you might be 6.5% to like a Marshall Reddick versus four-and-a-half percent. But your local bank, that's actually a pretty big difference in the long run. But you can pay 6% or whatever if the house still cashflows, right? So I would say, as long as you had that available to you, you can still go out and analyze deals which you need to know what interest rate to be looking at when you're running the analysis to see if it's going to cashflow after the refi are you a six-and-a-half percent interests guy? You have four-and-a-half percent interests guy, you need to use the right interest rate to see if you can cash flow based upon what your availability is. Make sense. So we said, we're flowing down the chart here. Let's say you weren't bankable for, for traditional bank. And you were also not able to do seller financing or long-term institutional funding. Which seller financing guys is really just a skill set. It's not like there's any qualification for that. It's just do you know how to do it yet? That's really what I mean by that. If the answer to this one is also no, then you're gonna be stuck. And in basically endless private money loans. Okay? Now this happened to me before. When I started, I discovered the world of private money. I started buying rental properties, right? But my income was like I wasn't bankable at traditional banks. That's happened to me before either. I didn't have, a lot of times I'll do an extension and I won't file my taxes till October. But then I need a loan done in like May or June or sometime over the summer and they're like, nope, I can't do it to your taxes are done. Or I remember like having like making good money, wholesaling and flipping. But like if the money, if I made 20% less one year that I did the previous year, then the bank called that declining income. It was BS because I was making good money. But they were actually their guidelines said you can't have a 20% decline. And so there was years where I went through these non bankable phases. And then I would get like a twelv month loan from a private lender, right? Because I did have this piece in place. But I didn't know about seller financing or like companies that were like institutional. I didn't understand that you could get longer-term loans without a W2. And so this is where I ended up stuck in endless private money lungs. What that means is you will get the deal. You'll get the private lender to lend you the money for 12 months or whatever. And then when that 12 months is up, you won't have an exit strategy to refi refi exit strategy is what I should call it. And so you're just gonna have to go back to that lender and say, hey, will you renew my loan? Will you go another six months, but you go another 12 months and they're like, Well, yeah, I will, but I want two-and-a-half more points or whatever, and it's like thousands of dollars and you're already spending way too much paying them nine to 11% interests or something like that. You're already not really cashflow and you're eating into your equity by owing them additional points because that just goes on tax onto the loan mounts. And I've had to do that before because I didn't understand what I needed to have in place ahead of time. So if you don't have any of those things, you need to figure out your refi exit strategy. And not just gets stuck in this endless cycle of going from one private money lender Next. Now, if the answer is yes to either of these to you, either bankable from at a traditional bank or your bankable from an institution, or you can do seller financing. Then we move on down to this question. Are you finding deals at an all-in price of 70% loan to value that's required for Burr. And that's a big hang-up. This flowchart is not all about the funding to do burr. Okay. I'm actually throwing this piece into because I feel like it's significant enough. I didn't throw in everything. Do you have a contractor, blah, blah, blah. Because it's not that inclusive this flow chart. But I did want to throw the center you finding deals at an all-in price of 70% LTV. A lot of you might say, I have reserves, I have private lenders. I am bankable in one of these two things, but I'm having trouble finding deals where my all-in price is going to be 70% LTV. If that's the case for you and you're trying to do burr, marketing should be your number one focus until deal flow is satisfactory. So you literally shouldn't really do anything except for marketing when you work on your real estate. Those how can I get more deals in front of my face so I can make more offers. And if the answer is yes, well, you guessed it, you can burn away to your heart's content. I hope this has been helpful. You guys will be able to download a copy of this. You can print it out, put it on your wall. If it's going to be helpful for you to think through this process. But these are the critical components that are needed for the burst strategy. 8. Think Like Henry Ford: Have you guys ever wanted to invest in real estate, but you have no idea how to get started and you're totally confused on exactly what the step-by-step processes and you have 1,000 questions and everything just confuses the **** out of you. If so, this training video is going to be for you. In this video, I'm going to break down a secret mindset hack that the ultra successful use to get those questions answered really, really fast. And the way I'm gonna do it is by telling a couple of stories. The first story is about Henry Ford, who is the founder of Ford Motor Company. And this goes back to the early 1800s. But what happened is Henry got into some kind of a debate with a local newspaper or it wasn't logo. I think it was the Chicago Tribune or some bigger newspaper back there. And because the newspaper called Henry ignorant, something to do with his political beliefs, I think anyways, henry got mad about that and sued the newspaper. Henry, and the newspaper had to go to court. And in court, the newspaper was tasked with finding Henry ignorant or proving that he was indeed ignorant. They said he was in their publication or whatever, right. So literally, like Henry had to take the stand and the courtroom and they asked him all these questions like historical facts. When did Christopher Columbus discovered America and crap like that. To try and find out if Henry was really ignorant. I know it sounds ridiculous. I don't even know if courtrooms would operate in such a way today. But Henry had to sit there and answer these like random facts from history, from there were questions from the newspaper. And Henry wasn't able to answer a lot of those questions. And he got frustrated after awhile because it seemed like the newspaper was winning and they were proving that, Hey, look, this guy is ignorant. He doesn't even know like what happened in the year 18, 12 or some crap like that, right. So Henry gets frustrated. And what he said to the court was, it became kind of like a classic, became like a legendary reply or rebuttal to what was going on. So I'm just gonna look down here. I'm going to read for you word for word what Henry said in response to the lawyers for that newspaper that were badgering him with all these questions. Henry said, Listen, let me remind you that I have a row of electric buttons in my office. All I have to do is press one of them to call the person who can answer any question on any subject I wish to know relative to the business at hand. I take care of the business. They take care of the questions. Now, would you be so good as to explain why just to answer your questions, I should have a brain stuffed with general culture. When I'm surrounded by employees who can supply any information I might want to know. Okay? Now it might be a little bit of a mouthful or an earful. Little won't let you guys are encourage you guys to let that soak in for a second. Because the mindset that Henry Ford has revealed that day around, just getting stuff done, business, getting answers to your questions, figuring stuff out in general. It contains a really, really powerful lessons. So what do you guys notice about that? What do you guys notice about Henry Ford's approach with his row of electric push buttons. That's very different from the average person's approach to solving a problem. I knew about the story of Henry Ford. I got into real estate and I was working at a grocery store at the time, had no success with real estate whatsoever. And I met a mentor who agreed to take me under his wing and teach me the process of real estate. And this mentor would drive me around in his car in the middle of the day and work, and he would take calls over the Bluetooth speakers in his car and let me listen to him, talk to his vendors and contractors and helped me start to understand the process. And this guy was actually built a new houses and rehabbing houses. And I noticed that anytime he had issue, like if he didn't know how big you could build a house because of the lot size. He would call the local planner division or whatever and talk to the guy at the front desk. Or if you didn't know like what size house you could build based upon the lot. He might call his architect. Or if he didn't know what kind of funding he could get for a certain project. He would call his banker or I remember one time he was working with a lady to buy her house. She had $50,000, I think, of credit card debt. And it was a lean placed against her property for that debt. He calls his title attorney, who then goes and works in negotiates that debt down all the way to $5,000, which I didn't even know as possible. Maybe that's a little tip for next time if you guys ever need it. But the general theme that I noticed was that anytime a problem came up or there was a question, my mentor, instead of being like a know it all and being like, Oh, I got this, I can figure this out. He would always call someone. He'd be like, I got a guy for this, I got a guy for that. He would always call and just be humble and just be open to asking for help from other people. I really absorbed his approach in his mindset towards investing before I went off on my own and did my own thing. And then I remember one of the first houses that I ever bought. It was a complete mess. It needed tons of work. And I was terrified because I was just felt so confused and had no idea like what I needed to do to fix it up or how much it was going to cost or what if I overlooked some big problems, right? I remember finding a home inspector that had a bunch of good reviews and I called the guy up and I scheduled them. And when I got his report back, it was like wave of I'm comfort kind of washed over me because this thing was like 35 pages long and it went into excruciating detail about every little thing regarding that house. Like the guy got in the attic, he got under the crawl space. He checked every electrical outlet, every faucet even wrote in their bathtub is missing a stopper. It was like, who cares about that? But maybe he realized that he was extremely thorough and he found every single thing that was going on with that house. He got up on the roof. He checked every system that a house has already checked all the appliances, the water heater, the h back for air conditioning and heat like everything that I definitely would have not thought to do right then. Yes, that is an example where I had to pay him. So I had to pay him like maybe 300 bucks for that for him to be at the house for 2 h and he spent an hour on the phone with me going over the report. But you can imagine how much better I felt after that. And then I was able to work with another expert, my contractor, to figure out what needs to be done to fix the house up. And how much is that going to cost, right. And using the inspection, I was able to decide which items to ask the contractor to give me a bid on. Then I was thinking about this because I was looking at the inspector is like profile online. And that's all that he had been doing this for 25 years. And I was thinking, man, like, how many houses is this guy inspected in 25 years of doing this, right? I can't even imagine how much experience he has, how many different things he's seen. And for me to try and understand everything that he understood would basically take me going down the same path he went down. So I literally have to become a licensed home inspector and then spend the next 25 years doing it, which would put me at 60 years old, right? And then when I was 60, I've been doing it for 25 years. I would know everything that he knew. I would be in his brain and like, I would need him anymore or my option is to just pay him his money. And I can know what he knows today and I can make smart decisions today. Does that make sense, guys? So it's literally the same thing when you think about the Henry Ford kind of mentality where you surround yourself with experts who know more than you do about your particular topic and you tap them when you have questions about anything. Another example of an expert might be like a property manager, right? A property manager who's been doing that for many years in your market, right? They're going to know all the good neighborhoods, all the bad neighborhoods are going to know exactly what a property would rent for, what kind of tenant you're going to get, what kind of vacancies you can expect exactly to what level you would need to renovate the property to to get like 850 bucks a month, right? You might learn that, hey, you know, like e.g. I. Bought a house and I was going to put h FAQ and in for $6,000, they're going to have to do the ductwork and everything. And the property manager said, Oh, don't worry about that. There's no other houses around that area that have h FAQ or it's not it's not necessary, right? And so I saved, I only spent less than 1,000 on window units. Instead. It's still got the 850 a month that I was shooting for. The HVAC would have been actually over-investing for that area at this current time. That kind of knowledge is not something like Henry Ford said. He didn't want to stuff his brain with knowledge about history and facts. I don't want to stuff my brain with knowledge about how much to renovate a house per every single neighborhood and every single market, right? And how to fix houses and what everything costs and how to inspect houses. Guys. The truth is, I've never understood any of that stuff. And it hasn't held me back from successfully getting enough rentals to cover my bills with passive income. Because I've just taken that approach of leveraging the knowledge and expertise of other people. So if you guys want to know what my secret has been, to just getting answers to questions fast, to not worrying about things that I don't understand and all that and getting quick results. It's always leveraging the knowledge of other people, even when it comes to like, growing this education business, right? I have a mentor that is helping me save many, many years by helping me skip steps and just leap frog. A lot of the stuff that other people run into. Because I've got that sort of person on my metaphorical row of push buttons on my desk. Okay, so when you guys pick your market and you go into it, the first thing for you to do is really start building your team. Building that row of push buttons on your desk where you can push a button and you can get an answer to any question that you might have. It's really, really important to build a rockstar team of people around you who know way more than you do about real estate. And that's the secret to growing really, really fast. Make sense guys. Awesome. I hope this training video has helped you kind of see the mindset that I want you to develop in order to be successful in this. And I will see you in the next video where we dive into exactly how to build your team and find all of these different team members so you can have that row of push buttons. Sounds good. Alright, see you in the next video. 9. Your Starter Team: All right, What's up, everybody? So in this training we're going to go over assembling your team. What does that team that you really need to be able to make decisions with confidence to get all the properties that you need to buy them right, to get a renovated. Then to make this income actually passive, something that a lot of people actually really fail on. That is what we're going to go over in today's training. So if you haven't already, definitely grab a notepad, grab a pen, you're going to want to take notes. We're going to go over a lot of useful tips in this one training video here. Sound good, Cool. So first off, I want to start off with a story here of riding around with my mentor. One of the very first people that taught me how to invest in real estate. He was a young guy. He flipped houses and I was working at a grocery store or after college and after the cubicle job and all that. This guy was already successful with real estate. One thing I noticed right off the bat is that he had a lot of people that he would call when he had questions. You know, somebody ran a deal by him and he wasn't sure what the rehab estimate would be or to what level he should even rehab the house or what the sale price would be. Instead of trying to figure all that stuff out on his own, he would get his phone out and dial and he would put it on the Bluetooth in the car so I could listen to his calls and I really absorbed his mentality or mindset towards real estate investing, having spent so much time with them and having him being my first mentor ever. What I realized is that this is not a game of us being experts at everything. It's a game of leveraging the knowledge and expertise that other people literally already have right now so that you can achieve this outcome and get these properties make sense. Why is this important? Again, guys, the goal in real estate is not to become an expert at everything. The goal is of course, to have control over your time, right? You're here because you want passive income. You want the wealth building that comes from real estate investing because it will give you time, freedom, options, et cetera, right? If you can get there faster, if you can leverage other people along the way, that's always going to be a better way to go about it than trying to do every single thing yourself, right? Also the time it would take to gain the same level of knowledge as your team is just impossible. If you think about someone who's been a home inspector for 25 years, it would take you that long to know everything that that person knows, to have as much experience and have been inside as many houses as that person has, right? Why would you ever even try to compete with that level of expertise when you could just pay a small sum of money and tap into that red out of the gate. That is the philosophy I want you to take towards this entire training and next steps you're going to be taking. Another thing guys is that real estate investing is a relationship business. It's really all about who you know. Let's go into catapult your results. So it's really important that you build a great team. Also, real estate investing is a relationship business. It's really all about who you know. And if you know the right people, then everything will fall into your lap. Everything will go much more smoothly. Smoothly. You'll save money in 1,000 different areas. It's insane how much easier this whole process gets when you know the right people. And so building that team, which is really just a series of relationships, is the foundation of making all this happen. Guys, this training is going to focus on who you need on your team. And an upcoming training in the same week is going to focus on how to find them. So when you're going through this, I don't want you to stress out and say, Well, Brian, how do I find this contractor that you're talking about? How do I find these home inspectors? That is going to be a separate training. This is about the who just so you understand what the team will look like when it's done. Cool. Your hidden objections. So guys, the name of the game and real estate is simple. You buy the right property. You buy it at the right price, okay? To do so, you need two things. You need the money to buy and you need those deals. But there's a ton of objections that you also have which you may not realize that are below the surface of just I need money and IND deals. Some examples would be, well, I don't really know what to offer on that deal. Well, how much will the property rent for? I'm not sure how much it needs and repairs, et cetera. Right. When you get to the stage of trying to make offers on properties, these are the things that are going to be popping up in your head, okay? These objections and the whole point of your team is literally to answer these questions for you. Okay? So that's how I want you to think about this, is that when you have a question that pops up and it usually will start with the word but like, but I don't know. If this is a good neighborhood, right, then you would contact your property manager and say, Hey, is this a good neighborhood, right? So you're always finding a team member to answer every question that is the ultimate purpose of your team. Those expert opinions that they have. That is what gives you permission to take action. That's what gets you unstuck. So you can keep moving forward because you have the right answer on whether something's a yes or a no or what it is that you need to do. Next to move forward. Our lenders part of your team? The short answer is yes, course lenders are a critical part of this whole thing. And you need lenders to loan you the money so that you can scale. In fact, there's so much a part of this that I'm gonna be covering lenders in a future module of this training. For now, we're just going to focus on the other members of your team that are required to glue this whole thing together. So once you can identify great neighborhoods, know what a house is worth, knowing it will rent, for, know what the repairs will be. Then you can focus on finding the money to buy them. We'll cover that very shortly after we cover this stage of teambuilding. Good. So before we dive in, you guys, I want to say this, you can fulfill certain roles yourself at first, okay? Examples would be doing your own bookkeeping, managing your own rehab. You can do the office management type work. Most people start out doing that. You can even manage your own property instead of having a property management company. Later, you're going to want to outsource those things to truly give yourself financial freedom. But I don't want you guys gone through this training and saying, Well, Brian, This seems like so many people do I really need this huge, big team or whatever? And the short answer is that there may be some of these team members that you will not need in the beginning, and then she can add in later on. Also, some of you might want to do some of your own work, like you enjoy managing a rehab, but you really want to try being the property manager. Personally. I hate stuff like that, so I like to outsource as soon as possible. But if you do not want to do that because I know some people are not wired the same way. Then by all means, you can cling onto as many of these roles as you'd like for as long as you'd like, but I'll probably change your mindset about them somewhat just in this training video. We're going to review the team that you need in a logical order, like who you'd need first, second, etc. This list is not in any way in order of importance, okay? It's just an order that you're going to experience these people and make sure to stay on till the end of this training guys, I'm going to reveal the glue that can tie all this together. I'm going to reveal the one piece that will cause you to breathe a sigh of relief. Because you'll realize that this isn't as much work as it might seem, okay? The first person on your team that you will need to get this journey going is wholesalers. Wholesalers, someone whose goal is to find discounted properties, get them under contract, and assign their interests in that contract to a real estate investor. Example, let's say a wholesaler gets a house under contract with a seller for 50, they can assign that contractor over to you for 60 that closing, you pay 60,000 for the property. 50 K of it goes to that seller, ten K goes to the wholesaler, and that's how an assignment of contract works. Wholesaling is an extremely common thing among new investors. Wholesalers often want to buy rentals just like you, but they're scared to commit. In fact, some of you might be wholesalers in that position. I definitely was too, if you know my story. Wholesalers also want to make quick cash. Now that's another reason that they're out doing this. And it's important that you know that many wholesalers are not completely confident on how to run the numbers on a purchase. They're really just trying to get it below what they think an investor will pay. But guys wholesalers hustle for deals all day long. They market. They take the calls, they go on the appointments, they make offers, they follow up, they get the contract signed, they go out and do every single step of the process to find deals. And then they just want to give you their position on that contract. They want to hand that over to you on a silver platter for whatever that assignment spread is going to be for them. I've found it's easier to partner with them then to compete against them, especially when the market is super competitive, like it is now. We're going to discuss strategies later. This training, of course, to find deals without wholesalers. But when it comes to finding discounted properties, having wholesalers in your arsenal is essential. So this is one of the very first types of people that you're going to connect with to build this machine. The next one is real and a realtor. Most of you know this, but it's a real estate broker, agent, the person who represents sellers or buyers of real estate or real property. So people will use realtors to help them find a house, sell a house, and also to Comp a house, which would mean to provide cops and say, Hey, what does this thing work? And they'll provide three other similar sales in the area. And then you can see what your house might be worth. Real, realtors also have a ton of knowledge on different things that are happening within your market. Like they know what the up and coming neighborhoods are. They knew about new major developments that are going on. They know about laws that are being passed, zoning and planning. They're really privy to a lot of that stuff. And they can be a great source of information on all the stuff that for me is frankly too boring to read, but I like to know about it when I'm considering buying a property in a certain area. So when you hire a realtor to sell your house, they list your property on the MLS, the multiple listing service. That other realtors see that listing and they show it to their clients. Then there are thousands of eyes on every property like that. So competition is at a maximum, okay, and that's important to understand. You have to compete with people who are stupidly overpaying for investment properties. They don't care about their return or they don't need as good of a return, maybe. For that reason. Every property I've ever bought has been off market. Okay. I have not bought properties on market. I could have and it would have made sense in hindsight. I bought them many years ago. Obviously now everything's too competitive and overpriced on the MLS. So I do not use realtors to find deals. I use them to help me comp deals. I say, Hey, what's that thing worth? I use them to give me advice on neighborhoods, and occasionally I use them to sell houses. Those are the main reasons you would want a realtor and her team. It's not one of the most important people to have on your team, but it is a good thing to have. And that's because when a deal hit your inbox, and if you have that question, what is this property worth and what might it be worth when it's fixed up? A realtor will be able to give you the answers to those questions. Next is contractor, super, super important? General contractor is the person who's responsible for the day-to-day oversight of a construction project. Contractors will either perform the work themselves or they hire the workout. Two different subcontractors which we'll talk about. Or usually they do some combination of both. Hi guys. Contractors. Again, they're not always the person who does the work. You hired them to get the job done and they decide how it will happen. Contractors usually add about a 20% up charge to what the job actually costs. This is how they make a profit. Some contractors add an up charge to materials as well. I typically try to avoid contractors that do that. And contractors are also who give you repair estimates on the properties you are thinking about buying, okay, so you get that deal in your inbox and you're like, What is this What's the rehab estimate gonna be? You send the contractor over there, they come back, they write you up a bid. Saying it's gonna be $12,000. And that's a huge reason why you need a contractor. Because you really need accurate repair estimates to determine if you should buy a property. You can't afford to get that number wrong by a large margin because it will totally kill your deal, or you'll run out of cash and the property, you have to sit there, lots of things can happen. So you really need someone who stands by their word. They value integrity so that when unexpected issues arise, they take some ownership over it. Like you'd be surprised how often a bid comes in at ten grand and then contractor uncovers something unforeseen. And instead of saying, I should have seen this, they just say, Nope, that's your fault. It's going to be another $5,000 now to do all this new stuff. And that really sucks, right? And different contractors handle that differently. You really want someone who has a lot of integrity when those kinda things pop up. You also want someone who can do good quality work in a speedy fashion, right? You want them to do a great job. You don't want them always running into delays are pushing the project back and just really killing your whole timeline. Because a great contractor is going to save you at least tens of thousands of dollars, maybe hundreds of thousands of dollars over the course of your investing career. That's how important this person is. That's why it's literally one of the most critical members of your team. I'd say that this role is probably in the top two most important members of your team. And guys, remember there is a difference between contractors and home inspectors. Contractors will give you a ready bid, right? They are not examining a lot of key areas of the house when they give you that bit. Okay. So we're going to talk about home inspectors here in a minute. Just remember that it's not good enough. When a lead comes in for you to send a contractor over there and they say it's gonna be ten grand and you just trust that and then you go buy the house. You have to inspect further. But that initial contractor bid gives you a lot of guidance on approximately what you can expect. Cool. Next, we've got subcontractors. A subcontractor is a type of contractor that normally possesses a particular set of skills or specializes in a certain area of construction. So examples would be electricians, plumbers, carpenters, drywall, there's carpet layers, painters, landscapers, roofers, flooring specialists. For some rehabs, you won't actually need to use a contractor, e.g. if you get a house, so it only needs a new roof fan, some updated plumbing, you can simply hire a roofing company and a plumber. You would not need the extra expense of a contractor and the up charges that they bring. Because the job is not complex enough, right? It's just roof and plumbing. If the job was tons of little stuff like floors and paint and appliances and a new bathroom and new windows. And you can see how you trying to hire a bunch of subcontractors, specialized, and all those things would be kinda silly. And that's when you bring a contractor in who finds those people themselves. Makes sense. So when you're looking for subcontractors, you're really looking for not just any old roofer, but you're looking for the best roofer in your market. The best equals the right combination of price, value and dependability. There's people Who are, they do great work, but they're way overpriced. There's people that are super cheap, but their work sucks and they don't call you back and they're not dependable. They don't do what they say they'll do. Then there's subcontractors that are just in that sweet spot where you their honest you can depend on them. They do a good job. They fix something, right? And their prices are competitive. They're not outrageous. Everything's pretty expensive right now, with the market being up as much as it is. But you still want to pay competitive prices for whatever it is you're doing. And there's lots of people trying to overcharge and rip people off because there's such a demand for contractors and subcontractors tractor work right now. And you don't want to be a sucker, and you don't want to overpay. So having a good list of subs you can contact is critical to your investing success. And that's not just when you buy and do that first rehab, but also when you need ongoing repairs and improvements. As an example, I needed a new roof recently. Quotes are coming and going around like five or more, like $6,000. It seemed like a lot. So I reached out to an old friend who I met in the Nashville real estate investing group who had started a roofing company and been doing jobs for other investors. And he did that job for me for $3,500. Got it done in one week, and he did a great job. So I saved anywhere $1500-2500. That's a lot of money from just knowing the right person. Makes sense. So like, what if you had a list of contacts like that? For each type of niche repair the house could have, like plumbing, a plumber, electrician. The more of those you have, the more money you guys are going to put in your own pocket and that's just gonna be Monday you can put towards future purchases. All right. Next we have property manager now along with the contractor, I think this is the other most important piece of your team. Property managers. It's an individual or company that is hired to oversee the day-to-day operations of a unit of real estate. And to put that more simply, this is the person who is responsible for making your property perform. Okay. That's what I always tell people. Because let's say you gave your money to a financial manager. You would expect them to invest it wisely and watch over it for you, right? Of course you would. When you give your house over to a property manager, the expectation is no different. You are turning over the control over an asset to them. And they are expected to do the best possible thing to make that asset performed for you, to make your money work for you and protect your money and your investment. So things property managers do, they find in screen tenants, they lease the property, the handle tenant communications and complaints. They collect, rent the handle repairs up to a certain dollar amount, and they initiate evictions. And so what that means about the repairs up to a certain dollar amount is typically you'll say, hey, if it's $300 or less, you can decide it's over 300, call me or let me know before you give it the green light. So if an H FAQ blows up and it's going to be too grand to fix it. A property manager makes sure to get permission from you before they make that repair. Robert Qia Zaki says, a great property manager is key to success in real estate and I could not agree more. They're super important because it's literally like the steward of your investment, the person that you're handing control over two. So you wanna make sure that they treat that property as if it were their own. Next is a home inspector. And a home inspector is a licensed individual who performs a limited non-invasive examination of the condition of a home, often in connection with the sale of that home. And this is not to be confused with a home appraiser who only determines the value of a property. Okay. And also not to be confused with a contractor who gives you a bid on the items you want fixed. What a home inspector does is they give you an evaluation of every item on a property, every major system, and a house. They check it. They put knee pads on and they crawl into the crawl space. They go up in the attic. They check every electrical outlet. They checked the plumbing, they check the electrical. They check every appliance. They checked the foundation. They could climb up on the roof and look at the the shingles and the vents and the way that the fashion, the flashing and everything is, if any wood is rotting anywhere on the property. I mean, it's very thorough what they provide you. Most of the reports that home inspectors give me are usually 30 or more pages. They have pictures, they detail every system in the property. Also, they detail what the inspector recommends fixing. And usually it will be categorized like super urgent, important repairs and things that need to be addressed sometime soon and then not so pressing and important. Things. That helps me a lot because I just want to know, am I buying a house where there's some big unforeseen thing lurking inside of that property that the contractor didn't see. Foundation issues or something, right? That's really what I'm trying to avoid. When I hire a home inspector. Most home inspections cost around 300 bucks. And I use home and inspections alongside contractor bids to get the best results when determining the condition of the house and whatever it is I need to fix. That allows me to get really close to the actual dollar amount that the rehab will cost because I looked that contractor bid I look at that home inspection. If I need to add anything to the contractor bid, I do. So I really have everything covered in what I'm planning to spit on repairs. Do not make the mistake of relying only on a contractor's estimate when determining the condition of a potential property. I've said that before, but it definitely bears repeating. I gladly pay the extra $300 every time. So I really know what I'm getting into. Now. I recommend that you go with a Nazi certified home inspector. That stands for National Association of certified home inspectors. And you can learn more about that at their website. They'll sometimes I'll have a list of all the inspectors who have that certification. It's basically this ongoing education, extra certification for a home inspector, where if you know that they're Nazi certified, that basically just means that they're serious about being a home inspector and they want to be the best inspector they can be. And obviously you want someone like that who is looking at properties you're going to buy. Now, the next person that you need on your team as a project manager. And the project manager is the individual who manages the contractor during a rehab. So when I went to my first real estate mastermind meeting, all these successful investors were around. There were a bunch of them who did multiple rehabs a year. I I'm talking. Some of them did 300 rehabs a year. Just really big flipping businesses. And one thing that they talked about a lot was having an extra set of eyes to manage the contractor who's doing a rehab for you. And this was even the case. If they were doing rehabs in their own backyard because if you were doing that many rehabs a year, even the fact that the rehabs we're close to where you lived would not matter, right? There'll be way too much going on. You'd still have to pay someone to help you oversee all the different contractors and all the different projects. So when you're investing virtually, you absolutely need this because you just can't drive down the street and manage the contractor. However, the way I like to invest, the management of the contractor is not a super enjoyable part of the process. So I like to delegate that part regardless. And one thing I want to say is that the word project manager, the title project manager sounds a little heavy or a little serious, right? Like this is going to be some full-time job for a person or whatever. The truth is, is that is not the case. This is something that someone could do part-time. They could do it for you four times a year. So it's not gonna be somebody's full-time job. Managing your rehabs. You're buying rentals. You're not going to buy like five or ten rentals at a time at all times or something that would actually justify paying someone like a full-time salary. Okay. So just understand that even though project manager sounds like this full-time employee or really just finding someone who wants to make some extra money, who is reliable, trustworthy, who gets out of bed in the morning and can show up at the property. You can take pictures and videos, has common sense. They don't really have to have real estate experience. It's pretty obvious if the walls have been painted, the vinyl floors have been laid. If the window units are working, they just need to go over there and put a set of eyes on the property. But for you before the contractor gets paid, etc. So again, in my old mastermind, the rehab is always used this person and I felt like it was overkill. When I first heard about I was like really like you have a contractor and then you have another person managing the contract and you're managing them. Then as time went on, when I started doing some of my own, I realized that one. It's a lot of work to do it by herself, to manage contractors. And two, when you start to invest in virtual markets, you can't physically go visit the property. And so this method, which is the best practice anyways, becomes required when you start to rehab long distance, when you start to set your business up so that you're not involved in the day-to-day so much even if you're someone who is investing in your own backyard, or recommend implementing this strategy, spend the extra money to learn how to leverage someone else to do the thing that you might be thinking only you can do. So again, an example of what this looks like. If you live in California, you buy a property and Alabama needs a 15,000 dollar renovation. Once you select the contractor to do that work, you hire a project manager to visit the property a few times a week. They take pictures and videos. They confirm all the work is being done up to expectations. So you're getting regular updates. It's pretty much the same thing that most people think like they would do if they lived in the same city as the property. Now, typical pay for a project manager is somewhere around 500 to $1,500 per rehab, just depending on the overall dollar amount that you're gonna be putting into the property. Okay. So it's not a ton of money on top of what the rehab costs to have an extra set of eyes and to get more importantly, a bunch of your time back so that you can put it towards other things. Again, project managers, They don't get paid until the project is done. Okay? So you're not like risking a lot up front. You're really just there like an insurance policy. And once this thing is done right, they get paid, right? So they're really motivated to get it done in a timely fashion and to get it done right. I've had project managers saved me lots of money, saved me more money than they cost me. Many times. They go over there and they say Brian, you know, I know that the budget the budget, you you're going to put an H back in that property. But all I've been seeing is his window units and all the other houses on the street. And I checked with the property manager and she said that a window, you know, it will be fine. And then I checked with the contractor and he could do that for you and it would save you about $4,000. Do you want to go that route? And I'm like, Wow, thank you for being proactive and figuring that out for me. I was about to overspend on a property that didn't need that nice of, you know, heating and air conditioning setup just yet. And so that kind of stuff happens all the time. They go back and negotiate with the contractors for you on stuff and yeah, it's there's more benefits than just getting your time back. That is the essence of the project manager. I'll tip, I'll tell you in a future training the type of person to look for. But don't get overwhelmed by this higher, okay, because it's really not as big of a deal as people make it out to be. And there's lots of different types of people you can hire too, do this type of thing for you. In fact, many property managers offer the service. Like literally the same person you selected to be your property manager. They already have the keys. They're already somewhat familiar with the property. Some of them are willing to go over and do the regular checkups on the property. However, they may have a system that they already follow if they already offer this service. And sometimes it may not be quite as satisfactory as what you would really want to know. I'll break down how to how to set up this arrangement with the person and manage them in a future training. But just as an example, I've used a property manager to manage a rehab for me before. Their prices also vary widely. Some of them are like really affordable. Some of them are way overpriced. But just know that there's a lot of different options you have for selecting that person. You're just trying to find a replica of you that can be a trusting set of eyes on the property. Okay. So you'd ask your PM if they offer this upfront what their terms would be. Just see, you can have that in your back pocket. Then keep it list. As you're starting to dig into your market and your meeting people, you meet some young hungry wholesaler or some. Some new realtor and they're like super organized, but they're clearly not doing a lot of business yet. Like those types of people might end up being your project manager. So keep a list of people that you just feel like you could trust. In that market. People will do things for money. Not everything has to be formal, official, or a part of their regular job title. I've used wholesalers to manage projects for me multiple times. People that have already done deals with and I trust they want to make an extra thousand dollars, you know, so you can find people to do this all over the map. One of the biggest objections I get right towards long distance investing is well, since I won't be there and then they insert whatever fear or concern it is that they're worried about. Your job. With this project manager thing is to really just think about, well, what would I do if I was there? Like get specific. Don't just make that blanket fearful statement and then stop. What would you do if you were there? That's so special, you know? Then how can you train someone else to do that thing just as well as you could? Answer that question. You don't have to be there anymore. Like a home inspection. A project manager is another extra layer of insurance to make sure your rehab goes as planned. So you care that it goes well and you're paying someone else to also care that it goes well. And two sets of eyes is better than one, especially when I'm one of them is there in person. So again, you really want to get the rehab that you paid for, done the way you expected, and this is insurance to make sure that happens. I think it's definitely worth $1,000, give or take to make sure that Java looks right, it stays on schedule and you don't pay for something that wasn't done. Okay? So the next piece of your team that you're going to want to find is a title company. Okay? That'll company is a business that acts as the combined agent of the insurance company, the buyer, the seller, any other party's related to a real estate transaction. In short, they closed the deal when a property is being bought, slash sold. They ensure that the title is clear. That means that there's no liens or judgments against the seller or the property. You would never want to buy a property right where a lien was on the property because the liens and judgments follow the property. Right. And so that has to be cleared up before you were to ever to buy something. E.g. if a homeowner was in massive credit card debt, the credit card company can place a lien on their home. And that means if the home is ever sold, the credit card company will be reimbursed for what it is owed from the proceeds of the house. Liens can come from all different types of places. There can be a lean like a judge in a courtroom can put a lien on the property because someone owes someone else money. And the judge has determined that, yes, this person really knows this person $10,000 and we're going to put a lien against their property. You know, they can't sell that property without paying the first $10,000 they get to this person that they owe money for. You can get liens against property for code violations and things like that for unpaid taxes. Okay. Like I'm talking income taxes or property taxes. Think about when someone's not paying their dues in life, if they own a house, that's probably the only asset they have. And it's really worth anything. That's what everyone's going to look at when they're trying to get their money. And so they put liens on people's houses for things that they have on paid. And tidal companies identify those lanes. They guarantee that those leads will be identified and cleared before you purchase the property. And then it provides something called title insurance. After that, you as the buyer, would obviously not want to inherit, a lean slashed the credit card debt. So again, the title company guarantees that they're going to find and clear those liens. Once you reach an agreement to buy a house and the contracts are signed, the title company is who you send those contracts to. And all you basically do is say, Hey, I'm buying this house, I'm 123 main street and the contracts are attached here. Please start the title work we'd like to close in three weeks and let me know what else you need from me. That's all you do. The tower company says, you know, contract received, we will order a title inspection and we'll be back at you with what else? Whatever else we need. The average cost of all this title insurance plus all those document prep fees usually falls around somewhere 1-2 grand to give you a wide range of what you can expect for closing costs at a title company. Now, tidal companies have a title attorney, which is an attorney who is an expert in the field of taking title to the property and everything. That's a part of that. Okay. That's not to be confused with a real estate attorney who is more of an expert when it comes to contracts, deal structure, et cetera, which we're going to talk about here in a second. You want to title company that can close fast. That can clear up issues. Like sometimes there'll be weird stuff like properties that we'll have multiple inheritance. And you have to get all these different errors to sign off. And you have the one person doesn't want to sign in once the contract to be worded a certain way and the title company will actually call those different errors for you and work to get that thing closed to some degree. And there's there's complicated things that pop up. When there's a property that's like 10. The Easy Way To Fund Your Deals: Hey, what's up, guys, Brian Elwood here. And in this training I'm going to go over the easiest way to find money for your rental properties, okay. Because the biggest objection that I face when I'm coaching people on how to get in the game here is, I don't have the money, Brian, they say I just can't afford it. And I totally understand that because I was in your shoes at one time too. So when I first got into real estate, if you don't know my story, I started out wholesaling, finding deals for other investors. I did some fixing flips and I was way too scared to buy rentals. There was something that felt just really permanent about it. I kept pushing my dream of having passive income further and further onto that back burner. Right. And then one day I got frustrated enough and I was like, I'm going to buy a rental if it kills me because I'm so tired of trading time for dollars and I literally spent all the money I had on one rental. I even split the cost with a guy, so we bought it 5050. The purchase price was like $20,000 for this little crappy rental bad part of town. Then all our money was spent. And it's like, well, that was all the cash we had. And banks are not loaning us the money. We have this really shaky income history from wholesaling. I remember I made something like $8,000 my first year in real estate. Right. So that does not look good to a bank. I don't even know what my credit score was, right? I was kinda stuck. I was kinda stuck with no cash and no ability to get money from banks. I had that one rental property and I was pretty discouraged. And I just kinda was watching all these other people just steadily buy houses. And I figured they either have a really good relationship with banks or they have a ton of cash and buy and hold is for those guys. And I just have to stick to wholesaling and I'll get to that one day. And that was my mindset for a long time. I really wish I could go back in time, smack myself because I really should have been buying houses, but that's just what I believed. And it wasn't until I joined a real estate investing mastermind group. I got invited to this group by a guy named Joe McCall. A lot of you guys probably know who he is from coaching people on real estate and his podcast. He invites me to check out this mastermind group, them and they're at the first meeting. And there's like 100 guys in the group and there are just some rockstars in there. I mean, there was a guy in there with 225 rental properties. There was a guy in there with 150. There was a couple of guys that had 100 guys have had 50 or 75 houses. I had one. And I go to this meeting and I'm just like being really quiet and awkward and just taking notes and hoping no one asks me what I do because I just felt really inferior to the rest of the group. But I was keenly observing what all these other people were doing to get their properties. And what I noticed is that they kept bringing up these terms that I was unfamiliar with. Like private money, other people's money, raising capital, having lines of credit available from other private investors. One guy said I got 1 million bucks at 6%. I was like what, you know, like what are these things, even me, right? How are you using other people's money to buy properties? And one guy said he had 100 Reynolds and he's never once been to the bank to get money. And I just didn't know that was even possible. I realized like part of me was just kinda resistant to that advice because, you know, if something's unfamiliar to you, you're just kind of push it away. Like why don't understand that. So I'm just gonna kinda just ignore it. That's an unhealthy habit you have to look out for. But the other part of me realize like Brian, if you don't open up and start asking these people for help, you're never gonna get to their level. I go back home and I'm, my mind is just spinning our review all my notes, has started reading all these books on other people's money written by Robert key as Sakai and other people. And it turns out I discovered there's this whole world of other people's money. And this is a way that a lot of real estate deals are funded, especially deals at a high level like multifamily. And it's super, super common to use other people's money, right? Then I thought about it and I'm like, Wait, I'm, I've been sitting here saying that banks won't lend me money and that's why I can't buy rentals. But whose money to banks lend out other people's money. Literally you go put your money in a savings account and the bank could turn around and lend someone else that money with interests. And they can lend it because they're lending your money, they're spending other people's money to me if they were to lend me money. And so I realized like Why not just skip the bank and go straight to the other people? And if you can get a good pitch and a good product and the person's protected and safe and all that like we're about to talk about, then you can essentially get as much money as you want without having a good credit score, good income history, without having to sign your firstborn child over and give them your scan of your retina and your fingerprints and sine 900 different documents because banks are difficult to work with, right? And so I had this huge aha and after that meeting and after studying, and even though I hadn't done a deal with other people's money and I felt empowered. I felt like this is going to be the mindset shift or the strategy shifts. That's going to take things to the next level for me. Okay, so now I'm going to share my screen and I'm going to share with you what happened after that. As I tried to do my first deal using other people's money. So I'm gonna do that now. So I got back from the mastermind meeting, like I said, and I read all the books and I was really armed with this knowledge about OPM, other people's money, but I was still scared as **** to actually execute on this, right? Because anytime you do something for the first time, it's gonna be really uncomfortable. So it's important for you guys to remember that I was armed with that knowledge and I was really desperate to buy rental properties. Of course. That was when this deal came along. This little house is in Clarksville, Tennessee. And we got to lead on it. And the seller says, we want $33,000 for the house. And we sent the contract you're over the contractor said is going to be 8,000 bucks and repairs to fix it up. So not a lot was wrong with the house. You know, a grant is pretty typical when I'm taking something over and I've got to make it rent ready, then the typical 2000 bucks and closing costs. So I knew I'm gonna need 43,000 bucks in total to buy this house and fix it up and get it ready to rent. Now, the problem was guys, that I didn't have $43,000 in cash and the banks were not going to loan me $43,000 either. But I knew about this OPM other people's money thing, right? And so what I decided to do was take a risk and actually ask one of those other people if they would loan me the money. And I knew this guy from back in my wholesaling days that he had like 15 rental properties. He was a mentor of mine. I looked up to him. We'd had beers a couple of times and I had wholesale him some deals. And so I call him and I'm really nervous and I'm on the phone like, Hey man, would you ever consider loaning me money to buy rental properties? You know, my voice is all shaky and stuttering like that because there's something about asking someone for money, right. It just doesn't feel very good. But anyways, I got it out. And he goes, You know, I might consider that. What are you thinking? What I did is I sent him over all the information on this particular deal. I told him, You know, what needed and the repairs and of course to address and all that kind of stuff. He calls me back the next day and he goes, Brian, I take a look at your deal and yeah, I'd like to do that. Let's let's do the steel. I'll loan you the money. And literally like my jaw hit the floor, I was like, Are you serious? Are you sure, you know what? You're never supposed to ask but I was like, Are you sure? He's like, Yeah. Yeah, this looks like a pretty safe and secure a deal. And so he actually agreed to give me 45,000 bucks, which was just a little more than I projected I would need just to be safe and make sure I had enough. And he said that the terms that he wanted to do was 9% interest, 12 months guy. So he was going to charge me 9% on the 45 grand and he wanted his money back in 12 months. Okay? So my payment to him was going to be $337.50. So this like a lot of private money loans when they're shorter term, was interest-only. Okay, So that means there's no principle. Like when you go get a mortgage on a personal house, every payment you make, it knocks a little off the principal, right? That's not the case for these 12 month private money loans. They usually interest-only. Just keeps it nice, clean and simple. Where at the end of the 12 months I still owe him 45,000. And all those payments have been making were just for interest. You're not going to knock very much off the principal anyways, in the first year of alone, the way that the loan is amortized, you pay a lot of principle in the early years anyways, even like a 30-year loan, there's really no point in doing a amortize like a principal plus interest loan for the short term, you're not going to have as much success pitching private moneylenders and getting them to agree to it. If it's confusing, you just say interest-only, right? I didn't know all that. He said it to me in this particular deal and I said, Cool, So I pay you 33750 a month for the next 12 months. And then when that 12 months comes, I've got to find a way to get to your 45 grand back, right? So I said yes. And I did the deal. I bought I borrowed the money from him to buy it. And he also wired me the money on top of what it costs to buy, which has an extra 12 grand. So I use that to fix it up. I use that for the closing costs. So I didn't come out of pocket at all for the steel, which was mind-blowing to me, I got loan 100% of the money to buy it and fix it up. Then I rented it for 900 bucks a month after paying him that interest payment each month, taxes, insurance, the property management fee, then budgeting the standard 15% for the vacancies and repairs that I knew were going to happen. I was already putting $237.50 per month in my pocket for me. And that's positive cashflow after everything, which is almost three grand a year. And a guys remember I didn't come out of pocket at all to buy this deal. So I gave myself like imagine getting a $3,000 a year raise at your job, right? That would be pretty nice. Well, every single time you do what I just did here, you're giving yourself at $3,000 a year raise. And how many times do you want to do that? Over and over until that eventually pays for all your bills. You don't have to have the job anymore, right? That's the whole point. So this kinda blew my mind. This one deal, right? Because when you do anything for the first time and it works, there's nothing like that to give you the confidence to keep moving forward and to do it more, right? And so this just totally opened my eyes. It blew my mind. And I kept buying rentals just in this same strategy until I had 25 rentals or so. And I want you guys to understand that my lender on these types of deals is happy too, because that guy that loaned me the money on that house, he loaned 45 K against the house. That once I fix it up, was worth about 75 K. Okay. So he's in it for whatever percent that is. It's not even 70% of the value, which is what banks will loan you, right? If I were to not have paid him, like if I stop making those interests payments to them each month or if when the 12 months came up, if I just disappeared off the grid and didn't return your phone calls, he literally would get that house that's worth 75, that's rented and rehabbed. He would get that for his loan of 45 K, So he wouldn't make $30,000 if I didn't pay him. Honestly, the worst thing that can happen is I pay them on time. Think about that guys. He, if he didn't like me or something, he would actually want me to screw up in default and he gets the house because he would do way better in that scenario. So can you see how these lenders, when you structure a deal this way, they are protected. And it's really a win-win situation for you and them because they draw up what's called a deed of trust that's done at the title company. And it's like a written up by an attorney and it's recorded at the county courthouse. So it's like a lien on the property. Same way if you go get a loan from Wells Fargo to buy a nice personal home in the burbs or whatever. You don't pay Wells Fargo, what happens? They foreclose on you. They take the house back. Well, the same thing happens with private lenders to they have a lien on the property just like Wells Fargo does, and they can foreclose and they can take their property back. It's the same procedure for private lenders for banks, okay? So as long as you don't get your lenders in over their head, they're protected. Now let's say this was some newbie lender who didn't know his stuff, right? You let's say you went up to your grandpa or something and you were like, hey, you should really loan me money on this house. And let's say in this, it was the same house that I got the money for this example. Let's say you said, Hey, cramps, you know, I need I need $75,000 to buy this house and fix it up. And he agreed to loan it to you, just trusting you and not knowing much about real estate, he would be in that thing for 100% of the value. Makes sense because if the house is worth 75, he loans 75. So that you can, you see how that's a lot riskier, like if the market were to go down and then the house is now only worth 55 or something. And he loaned you 75 and then you can't pay him and he takes the house back. Well, he lost $20,000, right? So you would never have someone loan you more than about 70, maybe 80% of the current market value of that property. If it's like a Newbie who doesn't know what they're doing, make that percentage even lower, right? Like I have really seasoned investors that I worked with little do up to 80% and I'm not worried about them. There's a guy that I worked with at owns 400 apartment units. He's got a lot of cash and he'll loan me up to 80%. And I literally just have to call him and send him the address, tell him what day I want to close or zero paperwork involved except for the stuff that the title company needs. It's a super easy relationship. And I also don't worry about him, like sticking his neck out there too much because he runs his own comps. He knows more about real estate than I do. And so I know that if he feels comfortable loaning up to a certain amount on something and he's probably good and he's going to be safe. But I just want to advise you guys to take the high road and have strong code of morals and values or ethics or whatever you wanna call it in this. And don't get people in over their head. Alright, if something like this, this one was a safe deal for anyone. If something's worth 75 grand and it's renovated and rented, you could borrow 45 or maybe even a little more from someone against that and they're safe. They could take the house back, sell it, and recoup all of their principal investment and probably then so on. Just don't want to ask people for too much. There's a, there's a chance of someone's brand new to real estate. Like you could get over on them because they don't know what they're doing and they trust you and they could send them some comps that are not even accurate. And I go, wow, yeah, The house is worth 100. I'll loan them AT and it's really only worth 75. You just wouldn't ever want to do that little bit of a side tangent there on how to remain where you're safe and your investors are saved it because your investors or your partners in this whole thing. If you burn one lender, It's a small world like word travels fast and you're going to have a harder time getting more loans if you're not paying people back. Again, my cylinder on this deal. He was happy because as money was protected, he was receiving his payments. A lot of you guys are probably wondering, well, what happens when that deal, when the 12 months is over. That's the big kind of anxiety point rise like, well, in 12 months I gotta pay him $45,000, right? What do you do? Well, that's a good question. There's two options. Your first option is you refinance with a traditional bank. Here are some kind of bank. You could do 30-year conventional loan. You could do like a five-year or a 10-year commercial loan where there's less requirements and rules for those. You can just get a mortgage and then pay back the lender. If that house is worth 75, I'm just going to get my calculator out, right? The banks will give you usually 70% of whatever a house appraisers for 75,000 times 0.7, that's $52,500 is what the bank would probably give you approximately for this. But they're going to deduct closing costs out of that. So maybe they're giving you 49 or 50. But you remember you only owe the lender 45, okay? So you can take the bank's money, pay the lender off, and then have a few thousand bucks leftover in your pocket. And now you have a longer-term note bank and that should be more like four or five, 6% interest, not the 9% interest that this private lender is charging, okay? So if you can get bankable in that 12 months, maybe you need to catch up on some taxes or get your credit score repaired. Or if there's some reason you can't go to a bank now, it buys you some time to get those things done. But let's say that that's not an option for you. And you can't or don't want to get those things done. You don't want to deal with banks. Your second option is you can either renew with the current lender. So I could have gone back to this guy and said, Hey, do you like getting your $337 check each month? Why don't we go another 12 months, right. And if he says yes, you literally just like write-up an extension to the agreement file that you just keep mailing the checks. There's no new there's not like another closing or anything. You just extend it. Or one thing I'll do is I'll find a new private lender to come in and give me money and then he'll pay off the current private lender. So I have some other lender that might do loans for 24 months at seven or 8% better terms, right? I'll just have him come in and pay off the first guy, the 45,000. So now the first guy is gone, he's been paid. And then the new private lender now has the lien on the property for 45 grant and I'm paying him a payment each month. Does that make sense? So when I first got started, like I just described to you guys my first deal ever. I didn't really know exactly what I was doing and so I would just take money from anyone at any rate. So at any terms and as I've gone on, I've gotten pickier and I'm more wanting like three-year or five-year notes and lower, I don't really, I don't pay, you know, above 10% interests. Like I used to do some guys, I was just desperate in the beginning. But the more you raise money, the savvy or you get about the different options you have out there and you're less needy about any single person. Those are usually the typical ways that you would deal with that. Payment coming up where the term is over and you have to pay someone back. Now, I want to talk to you guys about the difference between asset-based versus you baselines, okay? Because this is something that once it really sunk in to me, I realized that this is how I should have been approaching getting money the whole time. Okay? So, uh, you based loan, uh, you baseload is what a bank is. Banks are you based? Okay, and what does that mean? That means that they want to know all about you. What's your credit score, What's your income history? What's your debt, right? All the stupid stuff. They care. So a little about the property itself. I remember banker holding up alone one time in college for me because I didn't I didn't pay the payment on a mattress that I had financed previously. I know that sounds completely ridiculous, but I'm not making this up. I literally got a mattress from Mattress Firm and I had a payment on it every month. I missed a payment for $32 or whatever. That came up on my credit score and the banker like halted the loans like we can't close until we get an explanation on this. Right. I'm just like, Dude, I want 45 grand against the house. That's worth 75. You're protected. Why do you care about the mattress from college? But they do because that's how bank loans are. Now private loans are asset-based, okay? That means that they don't the private lenders, They don't care if you have a track record. They just want to know what the property the asset is worth and then they'll own use 60% to 80% of that. Their money is protected by the asset. So that's all they care about as they should. Okay, So once I realized this, I realized that this is how lending should be done. And I also realized that a lot of lending that's already out there is like multifamily, e.g. like if you're gonna get a bunch of investors together and they're gonna go in on a 200 unit apartment building. It's all other people's money and they're all loaning based upon the asset. I guarantee they're not going to wonder about my credit score. They're going to wonder how in the **** is that 200 unit building performing that we're about to put millions of dollars into, right. Isn't that the main liability on the deal, not Brian's mattress payment in college. Yeah, they want to make sure I'm a good person with a good track record, I guess. Like, meaning I haven't just come out of jail or something. Right. But like other than that, it's literally all about the property. Because as long as the property is worth a certain amount and your money is tied to that in the form of a lean. You're protected. If you guys can transition your way of thinking about getting money for rental properties from well, I don't I'm not bankable or I don't have any cash or my credit score sucks. No, just think about what is the asset worth that you want the money against? And then who will loan you against that? Who has the same mindset that you do. So if the house is worth 80, you should be able to find people to loan you 50 grant on that house. So all you have to do is get great at finding deeply discounted deals. You have to make sure that you get the deal enough of a discount to where they're protected. If you've got the deal for 70 and you need 70,000 is worth 80. That's not enough a discount, enough of a discount to protect your lender. Okay. Hope that helps guys kinda been understanding the difference between asset-based and you based loans and other people's money. And why I think private lending is a lot better as an investment strategy versus always having to deal with banks. So guys, the final point I really want to drive home in this video is if you're sitting out there and you're kind of wondering like, okay, and I wake up every day, what exactly am I supposed to be doing, Brian, in order to be successful? Like what am I supposed to be doing? In order to actually move the needle and make a difference in my investing results. What we've talked about in this training video is that in a big way, if you don't already have someone who can loan you the money, you need to get your next rental. Then raising money is one of the highest leverage activities you can do. Okay? I mean, just put yourself in that future scenario in your mind for a second. Close your eyes and imagine that you've got $1 million just sitting there waiting to be loaned to you at a reasonable interest rate without any strings attached, you could literally buy your next 20 rental properties or something without hassle. How freeing would that be? How much confidence would that give you? How much ability would that give you to scale and just take off and get that portfolio you've always dreamed of. Guys, it comes down to lending. Like, I know people who have a rich dad that loans them tons of money and they all of a sudden have a big portfolio and it almost seems like an unfair advantage, right? But they just had no hassle lender already in place. They got lucky because it was someone really close to them. It doesn't mean that you can't find that person to, no matter if it's a family member or a friend, or a friend of a family member, or a colleague, or a network type person that you meet at a local Rhea meeting or someone you've come across on Facebook or someone you're referred to. Or it could be a big like Incorporated kinda private lending organization where it's a real business, but they still loan money to people like me and you just do it in a more professional way. There's gonna be a little bit more red tape for that, right? But still, there are so many options out there. And you've got to get in the game and start raising money. If you don't yet have all the money you need by all the rentals you want to buy, then put raising money has literally like a time block on your calendar. Guys. I did this for six months straight when I realized this, I just blocked off 2 h a week and I didn't enjoy it either. Wasn't like it was fun to call lenders and get all their terms and prices. And I was still nervous, right. But I did and I think it was like Tuesdays, 1-3 pm or something or two to 04:00 P.M. and I literally in Tuesday's came up, I got out my spreadsheet and I was either calling names that I had already found or I was finding new names. And I was literally just doing that by going into Facebook groups of local investing communities in my areas, my markets, asking for lenders and just calling them and saying, Hey, you know, I'm a real estate investor, I buy rental properties and I heard that you're lending. I'd just like to see what your terms are and see if we'd be a good fit to work together and just let him tell you and then you just find that if you're a good fit or not, right? It's not super-complicated. And I did that for six months straight 2 h per week. After about six months of doing that, I had enough names on that spreadsheet where I had highlighted them in green, which that meant they were a good fit and they said yes, and their terms worked for me. And I knew that we could work together. I add enough names on the spreadsheet where I stopped raising money. And still I don't do it very dedicatedly because I have most of those people still remain. I'm still getting new kind of references for that now. So you don't have to do this forever. But until you get enough money available to wear when that good deal comes along, you can tap into it. Then you've got to focus on that because nothing gives you the confidence having the money available. So block off time and focus on raising money. Raising money will be one of the best things you can do, like next to finding deals and making offers, raising the money to buy them. Those are the top two or three activities that will make or break your investing success. Okay, So I hope that helps guys. And in the next training videos, we're going to talk exactly about how do you find the lenders step-by-step. We're going to talk about what do you say to them on the phone? What's the pitch you give them, I'll give you a script to follow for all that. So stay tuned for those upcoming videos. And I will see you there. 11. Vital Lender Questions: Alright, again, so what's up, everybody? This is Brian Elwood. And in today's training we are going to review the vital questions you must ask your lender before ever doing a deal with them. In this train, you guys are going to learn pretty much every question that you would ever need to ask, either a private money lender or a bank so that you can get every single bit of information about what type of loan products they offer. So you know what you're going into and you'll know whether or not you are bankable through the conversation that you'll have with these bankers. Using these questions, you'll know exactly what you need to do to be qualified to get alone, okay, So this is really, really important because there's a lot of different terms and conditions involved in doing alone. We're gonna go over a lot of what those are today. But there's way more than just the interest rate and the term, you know, and some of those things that people generally think about when they think about alone. There's all these little details that really can matter. Either right away or five, or ten or 15 years from now that are important to ask about and think about. Now, if you don't know of all those things, there's a lot of different pitfalls that you could run into. I guys I want you guys to understand the full scope of what you're getting into from beginning to end of the loan. So you will be fully prepared. Sound good. The questions I'm about to reveal to you are really going to fill in the blanks. They're gonna make you a much more savvy investor. They're going to make you really just come across as sharp. I'm like, you know what you're talking about when you're on the phone with these lenders, which I know is a lot of people's biggest concern. Real quick, these questions apply to bankers, hard money lenders, private money lenders. Anyone who's loaning you money for property, okay? There are some exceptions where hey, This question is only really applicable to bankers versus private lenders. In those instances. I've noted it next to the question. And just remember that there is a downloadable version of these questions available. Down below. There'll be a link to an attachment and you guys should go ahead and download that and print it out. So the first question that I advise you to ask private moneylenders is, what different markets do you loan in? Okay? Now this is important because e.g. I. Buy in Tennessee and Alabama. And some lenders lend in both of those markets, while others are strictly one or the other. And it's important to make sure that they do loan in your market. They have to get a different license to loan in the different states. In the US. And I find that lenders that specialize in one market tend to have better rates or they might be a little easier to work with than someone who might say, Oh, I'm approved alone in all 50 states, right? So I do like the local lenders. And I just asked this question up front just to see, hey, well, that'd be able to use this person everywhere. It just Tennessee, is it just Alabama? So sometimes I'll ask this right up front just to get it out of the way. The next question I'll ask is, what different type of loan products do you offer? Okay. So you're really just getting a feel for the different products they offer, right? Everything from five-year balloon loans to loans for renovations to 30-year Conventional Mortgages. There's so many different products out there. And you want to sort of get a lay of the land, right when you get on the call to see the products that they offer on a spreadsheet or on their website while you're talking to them. It's going to help you a lot to see everything visually. I'll usually hop on the website that the lender has while I'm on the phone with them, just so they can they also can tell, Hey, this guy's serious, he's on my website, he's looking at the different products we have. But I just like to see it on a grid. So I can see that, hey, as the, as I go 5-10%, 30-year loans, the interest rate goes down depending on the longer the loan or something like that. Just to kinda see how it works for them. If you don't feel like you understand their products, first of all, this is normal. I have been on the phone with lenders that were just confusing the **** out of me with all the different products because they talk about it's so fast and some of the terms that they use, I just don't even understand or the abbreviations, right? So the following questions in this training are going to help you understand what all those different details mean of each loan product. What's the maximum LTV or loan to value that you will go to? This question is really important because you want to know how much they will give you in relation to what the property is worth. So e.g. if a house is worth $70,000, and the lender says R max LTV is 70% than a 70% of 70,000 is 49,000. That's the maximum that they would loan you on that property. Most lenders are going to be in the 60% to 80% range because remember, lenders want to protect themselves. They don't want to loan you 100% of what something is worth. The next question you might ask is the value that loan to value is the value based on the current appraised value of the property just as it sits or is are you basing it on the ARV to after repair value. Okay. So some lenders do this differently. So it's worth asking like a property might be worth 50,000 as it sits there today. But if you put some work into it, it could be worth 80, right? So when the lender is going to loan you, are they going to use the as is value or they willing to look at some comps and see, hey, this property could be worth 80 if it had some work done to it. So I'll loan you based upon an ARV of 80,000. It's important to get that distinction cleared up. Okay? So like I said, some will actually run comps, see what it could be worth loan you based upon that number. And that's a very important distinction that if you didn't make it ahead of time, just could run into a snag down the road because you didn't have clear communication about exactly what they would do, make sense? Alone on the purchase price as well as the repairs. Okay. This is a important question to ask. Of course, because you want to know if they'll give you money for the repairs. Traditional bankers usually won't do this, or private lenders usually will. And you're making sure that the money they learn you can be applied to both purchase and repairs in the likely event that it is needed. Because if you think about it, if you were going to buy a house for 35 and it needed 15 and work, you would need 50,000 bucks to buy an renovate that house right? Now, if the house is worth, the ARV is 75. And let's say the lender said they would loan you based against the ARV. So we know they loan you a little over 50,000, I believe, if they would do 70% of the 75,000 ARV. And so they could loan you all 50,000, the purchase and the repairs for that house since you are going to buy. But will they will they let some of the money go towards repairs or does it all have to go towards purchase? Right? So when it goes towards repairs, they'll do something like they'll wire you the money for closing. Then the 35 would be for the closing. And then they would keep the other 15 in an escrow account at the title company, and that would be dispersed over a series of payments. Once you provided proof that you had done the rehab, done the different phases of the rehab. So that's a really valuable tool when a lender would loan you the money for the repairs, along with everything else. But you have to verify that. Very, very important. What interest rate do you charge? This is pretty straightforward, but it's obviously something you need to ask, right? You're checking your interest rates right now. In 2020, bankers are around the four to 5% mark. In private money lenders are around nine to 11% interest, okay? Like the interest rate that you choose can make or break the investment. It doesn't seem like much, but if you think about it, 4% versus 8%, let's say, is double, like you literally pay twice the interest per year. So a lot of properties that I see, they will cashflow around the 45, 45% interest mark, but they will not cashflow around the nine to 11% mark. And also remember it's okay to borrow money at nine to 11%, but only in the short term because it's too expensive to cashflow long term. So you need a plan to refinance out of that. With banker. What is the term of the loan? Term normally refers to how long the loan is going to be. When people say terms plural with an S on the end. That usually means all the different things like interest rate, the term, meaning the length of the loan, etc. But when they just say term singular, they're usually referring to how long the loan is gonna go for. It could go for anything. It could be three months, six months, 12 months, 51015, or 30 years. And they're definitely going to have different loan products that go different amounts of time. So it's important that you ask about this. Do you charge points? I guys points are typically only charged by private money lenders. Banks will do closing costs. So really, you could almost look at private money lenders like they're closing costs are zero points. But points, closing costs are two separate things, even if they are intended to achieve the same purpose. So it's important that you ask about both points are just a percentage of the loan that is paid up front. So e.g. if the terms are $50,000, that's gonna be how much you get loaned. They're gonna give it to you at 6% plus two points. You'd pay the 2%, which is the two points of 50,000 at closing. And now two points, or 2% of 50,000 is $100. Okay? So really the way you could read that if that was confusing, is the terms are 6% interest plus 2% in points. The only difference is that 2% of the points is due right at closing. This is like a way for lenders to make sure they get some return. If they don't have, if it's a short-term loan or if you have the option to pay them back really quickly before a lot of interests to accrues. Then sometimes they'll throw points and to make sure they at least get, in this case, $1,000 so that it was worth their trouble to do alone. Makes sense. You require a downpayment. If so, how much? Now this is pretty obvious why you would ask this, right? But you still need to ask it. You're checking to see if they want you to have skin in the game or not. Most private moneylenders won't require a down payment, but banks almost always will. And that's an important distinction because, you know, the downpayment dramatically affects how much cash you're going to need to put into the deal, right? One of the biggest reasons that I see people believe that they can't get into real estate is the down payment part. Like man Brian, how do you get 20% down? Over and over and over, right? That's not realistic for a lot of people. So it's important to know what is required of you with both types. And as you call lenders, both private and banks, you're going to start to understand the difference between the two. You're going to understand the difference between when you would use one versus the other. You'll see, you'll see where private moneylenders, though. They'll give you all the money for the deal as long as it's within 70% of the value. No down payment required. But their interest rate is crazy, right? Whereas banks require, let's say, 15 or 20% down, but they'll give you the best interest rate and the longest term and all that. And so using both of them at different times is typically the best strategy in the way that I do it. How fast are you able to close? On average? This is important because you're getting a feel for how quickly they are able to move. Remember, you don't always have to wait four weeks. You don't always have four weeks to wait around for a loan to close. In a very competitive market, okay? Working with the slow traditional bank can be problematic. On an initial purchase. There's been times where I tried to use a traditional bank instead of a private lender right out of the gate. And we had to have the contract for six weeks or seven in the seller's getting mad, they're wanting to close. But the bank was moving way too slow and we could not close and we've lost deals because of that. Okay? So some traditional banks say that they can close in two or three weeks, which is awesome if it's true. But you definitely want to ask this and kinda get this on the table right out of the gate. What are your closing costs? Okay, no closing costs, again, typically are associated with traditional banks, not with private money lenders who normally charged points. But you're just checking to see how much they charge for their work. It shouldn't be more than, let's say a couple of thousand dollars. I feel like the most I've ever seen in closing cost B was maybe 3,000 and change and the least was maybe $500. A big part of it is actually related to the, the title companies closing costs, right? So what banks will actually call theirs is loan origination fees. That might be a better title for this question. What did you have any closing costs or loan origination fees, right? Banks will charge those and it's just them charging extra money for the time they put into getting the loan up and running. Is there a pre-payment penalty? Okay. This is one that I didn't even know about for a long time. And I wanted to tell you guys about it because it actually does matter a lot. So sometimes you're going to want to refinance out of the loan quicker than the term of the loan is, okay. Example, you might get a twelv month loan from a private money lender. And then you want to refinance out using a bank at only month three. Okay? Is there a penalty to do that? Like some loans have like a six month minimum interests guarantee, okay? So in this scenario, if you wanted to refi out at month three, you would have to pay interests on month 45.6 at closing because the interests minimum was six months. So yes, there is a prepayment penalty. Okay. So that minimum interests guarantee, the prepayment penalty. People ask about those a lot a lot of the time they're actually the same thing. Okay. But you're just making sure that you can do this or you know, what the penalty would be if you did. I paid this penalty many different times just because I wanted to refinance earlier, but I wish I would've known it going into it. So a bit of a repetitive question, but again, is there a minimum interest guarantee? Okay? Which again is the same thing sometimes as a pre-payment penalty. So that's tied to the previous question. Usually they are the same thing. Again. 12 month loan with six month minimum interests guarantee. You have to pay six months of interests no matter how soon you refinance out of the deal. Now, if you get to six months, then your minimum interest is met and then you can refinance anytime six months or later. And you don't pay any extra interests. Okay? So once you hit the minimum, you're in the clear to refi. So sometimes it's good to just wait right in and try to time it right when that minimum is hit. Is there an option to extend the loan? Now this one's really important too, guys. This is something I've had to do multiple times. And what I mean is you're basically checking to see do I have the option of extending this loan out at its exploration, okay. So if you had a five-year loan and at the five-year mark, You definitely forced to pay the lender back, or would they extend it for another period of time for you? This can be nice to buy you some time if the loan expiration date kinda creeps up on you and you didn't plan for it. It was only last year when I had a five-year balloon note come due on a property, the bank just kinda send me a letter in the mail saying, Hey, you owe us. So I think it was $14,000 was remaining on the loan that I owed. It wasn't very much. The bank says, Hey, you owe us $14,000. Do immediately. I'm just like What the ****. And it turns out that I just had not remembered that that five-year loan was expiring. I didn't remember that. The loan due day it was coming up. I was just busy doing other things. And I had never even reached out to that bank to say, Hey, would you be willing to re-find, go another five years with me? We did. We reached out to them. We asked for the other five years and luckily, they agreed to it. They asked for some information. I think they did like an appraisal on the property, but they agreed. And luckily, I got to extend that loan out. Right. So definitely would have been nicer to know this upfront and to have been way more proactive on it. Really, a lot of the times banks are going to do this because it's just in their best interest to make more money. So again, a bit of a repetitive question, but important to ask, is there an option to refinance the loan with you At its exploration? You're testing the waters here to see if this is something they would entertain. A lot of lenders will say Yes because it's in their best interests to keep the loan going and collect more interests. They don't want cash in the bank. Banks want their money to be out and working for them. What type of requirements do you have of me in order to get approved for a loan? Now this question is really powerful and will reveal everything that you basically are going to need. The answers to this could be all over the place. This is a bit of a loaded question. When I coach people and they want to call lenders, but they're a little worried about whether or not they could get approved or they don't really know what they're supposed to say. I simply just tell them to say this. I simply just say, get the lender on the phone and say, Hey, what would you require from me in order for me to get approved for a loan and then just shut up, take notes and listen. Okay. So you're finding out whether or not you're going to meet their standards. When it comes to getting a loan. For traditional lenders. They're going to want to talk about income credit, where private money lenders will mainly talk about the property itself. They might have a few small requirements, but that's typically what you can expect. Do you require and appraisal of the property? You're asking to see if an appraisal will be required. Now, for those of you who don't know what an appraisal is, it's basically just a certified person who goes out there and does their opinion of value of the property and cost a bunch of money. Sometimes it can cost like 600 bucks, right? And so it's important that you know whether or not this is going to be required because it's a bunch of money. And another big reason is that appraisals can really take awhile. Some of these can take literally several weeks so they can delay your closing at times. You definitely would not want to promise that you could close in one week and then still have to order an appraisal because I know that in the markets I'm in right now where it's really competitive. The appraisers are backed up sometimes three entire weeks. Okay. Then it might take them another week to get the report to you. I know that sounds crazy. It is crazy. But if a bank requires an appraisal or sometimes a private money lender even will. You've got to know that going in so that you can communicate with the wholesaler or the seller. And given honest projection of what they can expect from you in terms of like your closing timeline. Tied to that question, Who pays for the appraisal, right? Of course, this is also very important. I've seen this done a couple of ways. Sometimes the bank will actually pay for it, which is extremely nice. But usually you have to pay for it. And explain easels. Appraisals, again are expensive. So this is worth asking. Do you require me to have a certain credit score? Okay. Now, again, you've already asked the earlier question of what would you require from me in order to get alone? This is a follow-up question. If maybe this doesn't get touched upon. Again, you don't have to ask every single question in this list every single time. This is a general guide to get you started. But do you want to ask this if it doesn't come up? Because credits really a big barrier to a lot of people for getting alone. I think the credit is kind of silly because it can be affected by the tiniest thing. Like one time I didn't get alone because I missed a payment on a mattress in college for $35.01 time and it was still on my credit report. But stupid stuff like that comes up. And this will typically be asked by bankers, not private lenders. They will typically want to see your credit score. So you're asking to see if they will pull your credit score or not. And if so, where are they want it to be? Do they want it to be a 750 is 706, 50? Usually they at least want high 600s. Do you require my income history? This is a really important one as well. And typically this is only going to happen with traditional lenders. They're going to want to see your tax returns for the last two years. Private and hard money lenders don't ask for this. I don't think I've ever had one asked me for my tax returns, so they don't know how much money I make or anything like that. Okay. And this is important because if they do require your income history, you need to have a conversation about that and say, well, what where do you want my income to have been? Right? I've been dinged before for having declining income or my income was like it was 20% less one year than it had been the previous year, right? Which I mean, my income went all over the place when I was flipping lots of houses wholesaling. Even if I had still had a healthy income, it didn't matter if it had gone down by more than 20%. And so banks have all these weird rules. And I didn't know about them and I'd put all this work into trying to get a loan and then they would say, all your income declined. We can't do it. Right. And it was really stupid and wasted me or my office managers time, a lot of time collecting all this paperwork before they noticed this. It's like why didn't you ask me about this? Like the first day we were on the phone. And so it's important that you figure out, not only do they require your income history, but also asked them, what do you need the income history to look like? You know, like what type of income do you want to see from me over those couple of tax returns? What DTI ratio do you require? Dti stands for debt-to-income and this is for traditional bankers only Lynn private lenders not going to look at this. And they're basically looking at how much debt do you have against how much income you make. So if you had a car, let's say you had a car note for 25 grand and you had a student loan for ten grand, and you had a credit card for 10 g. So that's $45,000 in total debt. And let's say you made $100,000 a year. Your debt was 45,000, your income was 100,000. Your debt-to-income ratio would be 45%. My banker has a max DTI of 45%. I'd imagine other bankers are in that ballpark. So that gives you an idea of where you want your debt to be in relation to your income to be bankable with a traditional lender. But don't take my word for that because there are so many different banks out there. There's so many different loan products, they're all over the place. You've really got to do your due diligence. Some bankers may go up to 60%. Some bankers may not even look at this. Some bankers may require 25 per cent. That's why it's important that you ask. Again, private lenders don't look at this. You require that I have a certain amount of cash in the bank. So some lenders actually require to see a snapshot of your bank balance to see if you have some reserves. In the event that something happens, like your rehab goes over budget or something like that, those lenders actually want to see what you've got. I remember getting loaned the money from a private lender to buy the house and fix it up. And he wanted to see that I had at least like five or 10,000. Maybe it was just 5,000 in the bank. In case the rehab went over because the rehab was 15,000. And you can kind of understand their logic because if I hadn't no money and I'm borrowing 15 grand from him plus the cost of the property to buy it, then anything at all, unexpected pops up. The rehab is not even gonna be gonna be completed. So the House would sit there like partially finished because I didn't have any extra money. It would not, you know, hit the after repair value that the lender loans against because it was unfinished, it wouldn't be rented out. Which is like when a property kinda gets stabilized and a safer investment when it's performing for you. So it's important to have a little cash, right? So don't freak out. If you don't have any cash and you need to start saving. I mean, just get two or three grand in your bank account that you could show a lender. And that's going to make them feel way more comfortable than you having $0. But again, ask them because every lender is different. Some lenders wouldn't want to see this at all. I'd say most of the time I have not had to send over my bank account balance. But this is just generally a good question to ask. Usually want to see a small amount, let's call it two to ten grand depending on the property and the loan amount. And most don't ask for this at all, like I said, enclosing guys. First of all, I have a helpful tip for you. So all the documentation referenced here, like keep it inside of one Google Drive folder. So all those tax returns, you know, like if it's your credit score, if they want to see copies of your bank statements. Like some lenders want to see my rent roll. They actually want to see the copies of my insurance binders which just shows I have insurance on the property. It's crazy how much documentation you need to provide, right? Especially if you're doing like a refinance on some of you already own, they're going to want to see a bunch of stuff about that property. And so instead of just replying to all their emails with all these crazy attachments everywhere. Just look at the list of stuff that they send you or I'm going to need all these things to get started. And then just drag all those documents into a Google Drive folder, make the folder shareable and share it with them. Share the link to the folder with your banker. Just keep everything in there from now until the end of time. Then you only have to gather all this documentation one time when you don't have an assistant yet to do this for you? Like I do. It's a nightmare. It takes it's like a full-time job to get all these papers to blenders, It's crazy. So this will save you from a lot of your hair falling out. So here's what to do next, guys. Print out the attached list of questions down below. I want you to call three private moneylenders and three bankers, Okay, So three of each go through the questions that we've gone over here on the call with those lenders, write down their answers. So you know what their loan products are, what they require from you. Minimum interests guarantee, yada, yada, yada. You've got all the information from them. And then you will have a much better feel for how bankable you are and exactly what would be required from you to do alone. Okay? And that is going to give you a ton of confidence because you will know that either you are bankable now or you know exactly what to do to become bankable? I mean, you think about it. Getting the money for rental properties is always been the biggest bear for everyone, right? It's like how man, I want to buy rounds, but I can't find them money. And that's the truth. It is the probably the biggest hurdle. And so what better use of your time than talking with the person who literally has the money. They are the gatekeepers, All the money lender folks, right? Instead of ******** and complaining about them like I have done and still do a little bit. Why not? Just ask them What would things look need to look like for me to become a great customer, for me to become super bankable, for it to be a no brainer, for you to loan me money. What are your best customers? What do they look like and how can I become like them? There's no better way to spend your time and figuring that out. So that you can work towards making yourself into that so that you can get loans super easily. I know a guy who has 600 rental properties and he gets them all from a commercial banker on five-year notes. And it's literally like push button get loan, push button get loan, push button get loan because he's so bankable. Okay? So we want to become like that guy and have a great relationship with our banker. And calling them and asking them to lists, lists of questions, and then starting to morph into someone who has all their ducks in a row who is bankable. Those literally are your next steps. So hope you guys enjoyed this training. Thank you so much for tuning in, and I will see you guys next time. 12. How To Find Deals: Alright, so in this training we're going to go over how to find all of the deals. You will ever need to grow a rental portfolio that is going to pay for all of your bills. And we're going to go into the how to the tactics, the best marketing channels, and all of that stuff. But we're going to start out with a little philosophy because I believe if I can teach you guys how to think about things, then you can go out and execute, okay? And when you, if you ever go out and you want to teach someone something, I want you to remember. You can tell someone how to do something. But if you tell them how to think about something, then they can use that to make their own decisions on all the different unique scenarios that they run into in life and that is way more valuable. Okay, so let's talk about how to think about the deal finding part of this whole shebang, marketing and sales. You've heard this before. They're the two most important parts of any business. Without marketing, without sales, nothing happens, okay? You have to bring leads in to a business and you have to convert those leads to a deal or a customer or whatever it is that you would call it for your business? Correct. So those are definitely the two pillars that really make or break any business. Okay. You're like, But Brian, what about buying rental properties? Well, finding deals is marketing. Okay. Finding deals literally is marketing and negotiating on those deals and getting them under contract. Taking that to closing, that literally is sales. Okay? And the better you get at those two things, the better any business becomes, okay? So developing the skill to find deals in a tight market is going to be completely invaluable for your entire investing career. Like this. If you can learn to find deals now, then you will have no trouble ever finding deals at any other point in your investing career, right? So take on the challenge to find deals. Now, when the market is a little tighter. If you want to be an entrepreneur. This is marketing, like the process of reaching out to people or reaching direct sellers or whatever, that's marketing. And you can't be successful in any business, have your marketing sucks. That's true. If you ever, you guys have heard of the term like the starving artist, right? It's like the person who's really good at art or they're really good at music or whatever. But they're just struggling, struggling, struggling. There an author or whatever and they write great books, but they just struggling maybe like ten grand a year, you know, and they have to eat ramen noodles and stuff. But they're so good at their craft. Why is that? It's literally because they suck at marketing and they suck at sales and they don't think those are like dirty words. Write their message or their art are there. The beauty of their creativity never reaches the masses, never reaches the world. And it's a shame if you believe in what you do, you need to get great at marketing and sales. And a lot of people that are trying to be like rental property investors are basically the equivalent of the starving artist, meaning that they, they suck at marketing Their or they're just not doing it at all. And they're wondering, well, why isn't this working? Okay? Also, finding a great deal, guys, it solves all your problems. You find a great deal. It's gonna be really easy to find funding for it. If you found, if you brought me something that was worth 100 grand and you're like Brian, I just need 50 K. I'd be tempted to loan you the money. If you could give me a good percentage interests. Because if you don't pay me back, I get 100,000 dollar house for 50 K, right? My money is safe because you found such a solid deal really easy to find funding. You'll have more equity and more cashflow, okay? So you could, you know, pretty much mess up and still be good to go. You could like underestimate the rehab. You could put the wrong tenant in there and lose some money to vacancies when you have to evict them. You know what I mean? Like you could screw up the rest and be good to go. And I've seen this before, like people who are great at marketing, greatest sales, they can actually mess up other business fundamentals and still make a lot of money. There's a lot of internet marketers out there that I know don't even look at their profit and loss statements or anything like that. They just crushed. They just have like tons of sales, super high profit margins. They just see all this money in their bank account. They're like, Yeah. We're doing good. And they don't have any systems or processes or team members or financial understanding, right? But they make a ton of money because they're just really good at marketing and selling. And so I know what you guys want in this group. A lot of you want passive income, of lot of you want to start other businesses. Like getting good at marketing and sales should be part of your morning routine, basically. Like it's that fundamental growth. I read books on four different categories. Marketing, sales, mindset, and business. Business would be like more the just different business principles and business fundamental stuff like that. But those are the four categories that will really help you out, okay? And marketing and sales is literally half of that. So you find the deal. Again, there's a saying, find the deal and everything will take care of ourselves. I think I was Googling this yesterday and it was actually Donald Trump who had a saying, the bus. This was from his book, The Art of the Deal, back before he was the president. And it was saying like protect the downside and the upside will take care of itself, right? He's basically saying like if you protect your downside by getting a good deal than your upside is going to be in place by default. So example, if you found a deal for like 25 grand, let's say I needed 15 and works, you're gonna be all in at 40 things worth 70 k ARV, rinse for 800 bucks, you'd have $30,000 in equity. And it would be a 2% are in cashflow. You would make lots of monthly cash-flow on how to deal with. Can you see how you'd be in a much safer position on a deal like that. You could sell it and put 30 grand in your pocket. So can you see how mastering that skill of finding a discounted deal really just eliminates the need for a lot of other things. There's another common business philosophy. I read this in a great book called ready fire, aim. I think it's by Michael Masterson. And great business book. He talks about how, Hey, if your business is under 1 million bucks a year in revenue, you should be spending 80% of your time on marketing and sales. 80% guys. Like if you're working in eight-hour day, that would be like 6 h and change would go towards marketing and sales. So like six-and-a-half out of 8 h would be marketing and sales. So you can see how a board minutes, like you don't need to be worrying about administrative stuff and I need to set up my LLC and get all that perfect. Like you should be looking at, looking for deals, making offers, negotiating, finding great deals, like for 80% of your time right now, okay? Creating some mindset shifts. And you guys, because this is true for investing businesses, not just like a typical business guy. And other real estate investing businesses. Mike, wholesaling, flipping, those are pretty much all marketing. Like wholesaling is literally just a marketing and sales machine. You just mark it for properties. You sell the seller on doing business with you, and then you turn around and sell the contract to a buyer's. It's only marketing and sales basically, that's the whole business flipping the same way except you have to do you have to close on and do a rehab, but you're still selling the seller on selling it to you. You're selling your end buyer on it. Once you've rehab, you're right. It's mainly market and in all those businesses, like if you're great at marketing and sales, you can suck IT operations and you'll still make a ton of money with just rentals. Like you don't need to spend as much time working on your business overall to scale like it's not a full-time job by any means. But the time you do spend, 80% of that should be on marketing and sales, okay, so I hope this rearranges your priorities and your mind is like, wow, like I should be spending way more of my time finding deals, making offers. I'm going to show you guys how to do that in this training. But think about this. Let's say you made that shift after you watch this, you say, alright, starting tomorrow, I'm going to spend 80% of my time finding deals, negotiating deals. What would change for you? How much better do you think your business and your investing efforts would be if you made that simple shift in the way that you spend your time, You got it. You got to honor the fact that finding negotiating deals is kinda the scarier part, right? Because you're talking, you're actually talking to people. You're getting your hands dirty, you're in the game. So the reason people don't spend 80% of their time on marketing and sales is not just because. They didn't know they were supposed to be doing that. Like some people will watch this video and be like, well, I still need to figure out my LLC or whatever. And what's typically happening there is they're just avoiding the sticky part of the business. I say sticky because it's like uncomfortable. Right? And I want you guys to remember this, that whatever is uncomfortable, whatever's like, that feels uncomfortable to me right now. That is literally the world telling you what you're supposed to do. Okay? There's a reason why you have inner resistance to something. I don't have any resistance to things that don't apply to me. Like, I don't walk around thinking like man, I should really not sure, really like skateboard more often. Like I can't believe I'm not doing that. I really need to get better, but I'm too scared to drop it on the half-pipe. You don't what name? Stupid example. But like I don't walk around with resistance towards the fact that I'm not like putting more time into that because it has nothing to do with my goals or anything. But I'll resist stuff like Brian, you should be more vulnerable in your content. You should open up. Did you tell this or that story? You should post more on your personal Facebook profile and just be more open with people because it'll help share, spread your message. And I'm like, I know, but it was gonna be awkward and weird, right? The only reason that is even entering my mind is like the universe is telling me that I shouldn't be doing it. And then my little brain is resisting it because it's the right thing to do, right? So go towards the things you resist if you want to achieve your goals a lot faster in life, because you have this internal barometer that's pointing you towards what you're supposed to be doing. Unfortunately, it's always a scary stuff which sucks, but how bad do you want it? Let's talk about seller's markets versus buyer's market. Scott. When the market is down. Like it was in 2009, onward for years. Deals or Everywhere. Funding, on the other hand, is hard to come by R to get loans, but houses are cheap. Nobody wants them. Sentiment, which is the way investors feel about the market, and excitement are also down. So you have to work against that in a downmarket. When everyone's saying those houses are overpriced or I used to, I watched people scoff at 30 or 40,000 dollar houses in Nashville when the market was down, because sentiment and excitement were down. And the way that they felt about the market rubbed off on me and I was like, yeah, I'm not buying that. I'm not going to overpay looking back, that was real stupid. So the way people felt was wrong, didn't matter what they felt they were wrong. They should have bought it. Obviously, house is worth 200 grand now, right? So you have to work against the feeling that everyone else has. And when the market's up, deals are harder to find, which you guys are experiencing. Now, funding is a lot easier to come by. Banks are lending interest rates are low. Sentiment and excitement are up, which makes being motivated easier because you're seeing everyone else go after properties. Everyone's excited about real estate when the market is going up and everyone's like trying to get into game. So another thing to really understand is that when it comes to marketing, when it comes to marketing, you have to invest either time or money, okay? When you're finding leads for a business, you won't get any leads unless you're putting in either time or money. Okay? So as an example, just like this coaching business, right? I could choose to drum up leads manually. Meaning I could put some time in. I could go on Facebook, I could record some podcasts. I can send some emails, send some messages to people, right? Go and bigger pockets. I could put in some time and I'll get some leads to bring into this group. Or I could run a Facebook ad and that costs me money. But without one of those two, there's no leaks and there's no and eventually there's no business makes sense. So finding rentals, you could choose to pick up the phone, call. A lot of people spend a lot of e-mails that takes time. Or you could spend money on a marketing campaign and get people calling you. And then you could even pay an assistant to take the calls for you. That's money. Right? And one of those two, either of them will get you leaves. You'll need to decide which of these you want to dig it to dedicate to this. Maybe you have a little less money and you want to, you like, you don't mind putting in the time. Or maybe you don't have a lot of time or you really just hate the process of like drumming up leads. In that case. You got some money in the bank in that case. Put the money towards it. Okay. When you think about money, just remember that the money that you put towards drumming up some leads, paying someone to work the phone for you a little bit or whatever. It's really going to pale in comparison to how much money investing in real estate is going to make you in the long run. So if you decide to go the money around, that's fine. That's an investment. It's not really an expense. People look at marketing costs as expenses. They actually categorize them as an expense on a profit and loss statement. It's not an expense, it's an investment into your business. When you go out for sushi dinner and you spend 110 bucks because you got five roles plus Apps, plus two big things, the Sakai or whatever. That's fine. But you could have spent 110 bucks into your business in marketing and you would have gotten a better return on that money. Okay? So remember that investing in like properties is not the only type of investing. We're investing in personal growth or coaching. You can also invest in marketing for your business, and that's also a great use of money. It can be a waste of money to if you don't track it or stay are like watch what you're doing. But typically you're going to produce an ROI. Okay. Like, how much would you spend to get a property with 30 grand of equity and 350 bucks a month of cash-flow or something, you know, something like a really good deal. You can hold that property for the rest of your life and watch it go up in value by 100 grand or whatever, right? Like, what would you spend to get that outcome? It wouldn't be super hard to get that outcome for way less in a marketing spend, Then you'd actually make from it in the lung. So just a different perspective on marketing costs to think about. But if you want results, you have to be spending either time or money on this guy. Potential pitfalls to watch out for would be trying something for a week than thinking it does not work, right? You gotta, you gotta stay with it. Not following up enough times. This is a big thing. There's been all these studies, Keller Williams, the big brokerage, did a study, found out that most of their sales where they get a listing or they sell a listing, it comes after the sixth or seventh time. I think that they followed up. You guys should like Google to study and find it somewhere. It's probably on line six to seven times, so they had to follow up okay. To get a deal. What if I had talked to you guys just one time and then never talk to you again and you didn't join this program like that would be ashamed. I couldn't help you. Follow up is key. You've got to follow up relentlessly basically until someone tells you to stop. Also not spending a large enough percentage of your time on this. We talked about 80% not outsourcing this whole part of the business if you hate it or you don't have time not being consistent with your marketing efforts. Again, giving up after a week or spreading yourself between multiple marketing channels at the beginning, we'll talk about that later. Or not marketing at all. Just kinda chilling. Not making any offers, not doing anything to drum up any new leads. If you're doing it. Cool, I mean, doesn't mean you're a loser or a bad person. It just means you're not doing things, correct right now and you just need to make those shifts so don't beat yourself up, but also don't make that mistake. So a little bit about my marketing journey. I started out doing direct mail when I was a wholesaler. And I found a lot of good deals. It was a ton of work, right? I'll talk about what it takes to do direct a seller marketing today. I've done over 500 deals from direct mail, mostly. Wholesale deal is flipped deals, rentals that I have bought. Yeah. It's it's literally 500 plus easy. It works, right? Once I shut down the wholesaling business, I switched to finding deals just via wholesalers and property managers. I have never bought a listed property to this day. Doesn't mean it won't work. But in my markets, typically, those properties are too expensive and so you don't have to look at listed stuff. That's a big mistake I see people doing when they're new. They'll just send me stuff that's on the MLS. And that can work in markets where like in Ohio or something where everything is so cheap that like even stuff on the MLS works. But again, not every property on the MLS is a good deal just because it's cheap. It has to be in the right neighborhood and all that other stuff. Some markets you can go the realtor route, but my markets that I've been in, Tennessee, Alabama stuff, typically not great deals. If we get a big recession correction, that could totally change. Okay? So let's talk about the top for marketing channels. So the top for marketing channels for rentals are wholesalers, property managers, Realtors. And direct to sell or marketing. Let's talk about each one of these individually. So what it would take to get deals from wholesalers, How do you do that? Well, typically, I'm just going to keep this super simple for you guys. I'm not going to over-complicate it because that will help you, okay? What it takes to get deals from wholesalers. You basically find them on Facebook inside of different local Facebook groups. And you get their emails. You get on their list. Then you email me, email them every week or two, just looking for deals, reminding of them your criteria. When they send you stuff, you have to analyze their deals and you need to make offers. You should have lots of communication with them. Ghost them. You need to make yourself known, so to speak by them. Then you've got to navigate around there. No inspection period, BS, that's something's going on right now where they're saying like earnest money or is required and there's no inspection periods and all that stuff that only popped up over the last couple of years. It may not last, but it is a potential obstacle that you have to get around that wholesalers are posing right now. But that's just a high-level overview of what it takes to get deals from wholesalers, property managers. What it takes to get a deal from them is basically finding them on the Internet or through referrals and Facebook groups. So you get a list of the top, like ten or 15 PMs and your market. Then you email or call them, just say, introduce yourself, hey, I'm a cash buyer. Then e-mail them or call them once a month after that, looking for deals. I'll tell you what to say to them here in a second. Again, you've got to analyze everything they send you, make offers, lots of communication. And that's the nuts and bolts of getting deals from property managers, Realtors. What it takes in that scenario is literally just find them in a Facebook group, get their email. I like to just see who is the most rockstar realtor in a market, even though I don't use them to find deals, I'll use them too. Give me comps and to sell stuff. If I'm selling anything, I want the best realtor that works with investors. Email and just say, Hey, this is my criteria. I want you to send me deals. They can set up a little automatic filter that just shoots every new listing to your inbox that that fits your criteria. Then you're going to need to look through a lot of different properties they send you, kinda give them feedback on some of the stuff. And again, make offers on the deals they sent. Okay? So you can see that all of this is pretty simple. It's literally just getting some deals being sent to you and then taking action. Now direct seller, what that takes. So we're gonna go into that in some more detail. But you essentially obtain a list to market to a certain list of people you want to reach out to. Might be like absentee owners. Then you select a male house to send your letters. In the case of direct mail, you have to design a template or a mail piece to send out to them. Edit your list to remove unwanted properties. Send your list and your mail piece to the male house along with your instructions on frequency and et cetera. And then you got to take the phone calls, work with those sellers to get the property under contract, work with them through the whole due diligence period, all the way to closing. So you can see how that marketing channel is a bit more involved. And this is an important slide. I want you guys to know what to expect when you are tackling these different marketing channels. We have a graph here. And the further to the right, something is the more price competition further up, more effort. So we're realtors, you're going to have the least amount of effort. You see it's low on this effort scale because you're just like getting deals sent to you. You can use the realtor is like your like your concierge. Basically, they do all the paperwork. They talk to the seller. It's nice and like lazy to use the realtor. But you're gonna have the most competition in the deals are gonna be the most expensive. Harder to find deals, but easier to see a lot of deals. Wholesalers is further back on this scale, meaning that it takes more effort, but you get better deals with a little less competition. You might have 3,000 people looking at a realtor deal and 300 people looking at a wholesale deal. So 10% the competition. Then you go back another step. Property managers guy, that's going to require more effort because you, they're not, property managers are not marketers, not for selling deals like a wholesaler is, right? Property managers are just chilling managing properties. So you're kinda like coming into their world if you're asking for deals. So you have to proactively reach out to them and stir the pot. They're not gonna be blessed and an e-mail list, same deal for sale or anything like that. Or if they do, it's gonna be pretty rare. But those deals are going to have less competition, right? And they're gonna be cheaper because less people are seeing them, right? The price is not. The more competition, the more price. So really those two are linked because. More eyes on something, it just drives up the price. Then lastly, will be direct to seller and you can see how that one requires the most effort by far, but it's also the cheapest and the least competition by far that seller might not be talking to anyone else, but you are maybe two or three other people. So would you rather compete with 3,000 people with a realtor or three people direct seller, right? You can see I didn't get a lot better deal that way. It just depends on if you want to put the effort in or not. These are some potential templates for talking to sellers. So I mean talking to the different marketing channels, not sellers. So wholesalers, typically what you would say is like, hey, I'm a cash buyer in Nashville. Well, you put me on your email list and then, hey, you got anything in the pipeline right now I'm looking to buy something this week. My criteria is three-bedroom rentals. And then you say your target zip codes and you're just sending them that every week basically just to stay top of mind. For property managers, it might say, Hey, I'm a cash buyer and Nashville, I'm looking to buy a few new properties this month to any of your clients have properties they are looking to sell, then that gets the property managers wheels turning. They started to think, yeah, I've got a few properties of managing that had been vacant that the guy that owns them and is always busy, I think you might want to sell, uh, let me check that kind of thing. Then for realtors, it's just a real term and investor looking for three-bedroom rentals and the zip codes, I prefer fixer uppers don't be sending me retail properties. Would you send me listings that meet my criteria when they hit the MLS? That's literally how that conversation goes. And again, this might seem oversimplified. I hope it does, because don't we want things to be simple? This is literally all it takes to get deals from these three marketing channels. Let's talk a little bit more about direct to sell or marketing. With direct seller. There's literally no limit to how cheap you can get a deal. You're working directly with the seller. That can be really desperate. There's no middleman like a wholesaler. And the way that wants their cut, and you can get the best deals. And if you are someone who likes talking to people on the phone, if you like, having total control over the situation. So you're not like competing with a bunch of other people. And, you know, you're controlling the process end to end. Like I'm gonna reach out to the person, I'm gonna get them to call me. Some people are like that. Um, if that's you, then direct to salary marketing may be the one for you. That might be your best option, okay? You will spend money on marketing with this option, which I talked about already. People are very averse to. However, you will make back what you spent and then some because of the discounts you'll find literally, have you spent a couple of thousand bucks Jerome up a deal. You'll probably get it for more than a couple thousand bucks cheaper because you found it yourself. Okay? So you might find it for ten grand less than what you would have paid, it, paid for it from the wholesaler. And it might cost you $2,000 to find plus a bunch of your time. Makes sense. So really, this isn't an expense, it's just a down payment to get a cheaper deal is a way, That's a way that you can look at marketing spend. In my wholesaling and flipping business, I literally spent anywhere $100-250 thousand per year on marketing guy. And we were making over 1 million. We were making a good return on that. Okay. So people would I used to tell people like I'd be like, yeah, this year has been at $225,000 on marketing. Maybe like, Oh my God, you're crazy. Like really what we made 1.1 million in gross revenue. So are we Crazy? Where do you think that revenue came from? From the marketing from without that 200 something thousand spent, we would've made zilch like that was where the money came from. So the types of direct seller marketing, we talked a little bit about direct mail and we're going to talk about it more. But there's some other ones with direct mail. Again, you're basically getting a list and you're sending them male with your phone number on it. Facebook ads is another really popular one and you just run ads to your market directly to a squeeze page to enter the info in it. You texts blasting is another really popular one. Now you get a list, you skip, trace it to get the phone numbers and you use software to send out texts blast to everyone at once. And RVM stands for ringlets voicemail, you get a list, you skip, trace it to get the phone numbers, then you use a different software to leave them a voice mail. It skips past calling them. These are the marketing channels that are working the best right now for direct seller marketing. Okay? I've done all of them except for Facebook ads personally, that's a little bit of a newer one. And I recommend that if you're gonna do this, you start with direct mail. You start with something that is. Least complicated, and you can do it on just a very small level. In a very targeted list are very good list to start with is properties that are absentee owned, meaning the person that owns it does not live there. So it's a rental or it's like a landlord that owns it and that person lives out-of-state. You can pull this for out-of-state absentee owners. So properties and Alabama owner lives in California and they've owned it for at least seven years. So they're going to have some equity in it. And that means they would be more able to sell it to you at a discount because they'll owe less on the property. Typically, you would obviously only mail to your target zip codes. And when you buy a list for marketing, you make sure to exclude duplicates. Okay. So if Bob owns 37 properties in Huntsville, Alabama, you don't want to send you don't want him on that list 37 times. If you don't click exclude duplicates, That's how it'll show up and you'll actually mail him 37 letters all on the same day, one for each property, which is stupid. You only have to send them one letter for one of his properties. And then when you get them on the phone, you can say, Hey, do you have any other properties you're interested in selling? So don't send someone more than one letter. Also, you'd scan the list, remove any properties you don't want. I've gotten lists that have had like commercial stuff on there, or churches or gas stations, even though you've clicked residential like weird stuff will show up. I typically scan lish just to make sure nothing. Sometimes several be owned by banks on there and they don't ever call you back. So you don't want to take off all the bank owned stuff. You'd set up a Google Voice number so that you're not using your own personal number for the calls to go to. And remember that consistency is key. If you're gonna do this, you need to plan on mailing that list at least six times before you can even judge the results. I see you would set it up to mail them like once a month for the next six months or once every three weeks. No more frequent than every three weeks. Don't don't mail someone every week or every two weeks. It's too often. Every three or four weeks is a pretty good That's what we always found was a pretty good frequency. Then the copy that you put on your direct mail is really important to k. Like I say, all this really crappy stuff where it's just like, Hey, I'm interested in buying your house, please call me, right? Like you gotta do a little bit better than that. And I'm gonna help you guys do that. So this is the best-performing copy that we used back in the day. And you can see how it's a little different. This is a marketing lesson for you guys. What I'm doing is I'm throwing rocks at the competition with this copy. I'm saying like, hey, you know, every homebuyer out there in history, they're all making you the same old promises like you've heard them before. We pay cash, we pay competitive prices, closing costs, no realtors as is. And I'm like you've heard these promises of time after time. It's like a broken record. Then I'm saying, you know, hey, that stuff is easy for home buyers to do. They should be going above and beyond, especially in this market. At our company, we do that and much, much more. And then I list out a master list of all the benefits like will buy the house with tenants in place. You won't even need to tell the tenants are selling will evict the tenants and pay for it. We might buy multiple properties, we'll pay your closing costs, will settle code violations for you. We can pay off credit card debt. You won't have to remove any trash, will cover your attorney and legal fees will delay foreclosure for you. Assist you with inherited properties, especially if you have multiple inheritance, were actual home buyers, other people are trying to get your property under contract and sell it, will introduce you to our title agent. To sum it up, There's no problem that we won't help you saw, right? Can you guys see why this would do than hey, I want to buy your house, call me then to book and no strings attached strategy session with us on the easiest way to sell your house for max profits give us a call, text, or email using their code below. Super chill, you can text me, e-mail me. And you guys are gonna be able to download a copy of this. So don't worry, I've got you covered when it comes to this as well. And you can use it, just put your company name on there. You can use this as much as you want, word for word. So typically like once you will, if you're going to use that copy, then you'd find a male house. There's lots of different ones that will work. I don't know necessarily which one is the best. It really doesn't matter trying to save $0.37 a letter versus 41 sends a letter when you're not sending out a ton of letters anyways for just buying ribs, Sky back in wholesaling, we would try to really get that price tag. Just spending so much money on marketing, doesn't really matter. I know this company, yellow letters.com, is supposed to be pretty good. And you can see at the top, ask about are free homeowner data absentee owners. So they will provide you with lists for free, for like an out-of-state absentee owner list if you use them to mail letters too. You can also find lists from services like prop stream or wherever else you might pay to get your deal analysis software from. Tidal companies sometimes provide lists, but once you have the list and you have your beautiful copy here, you need someone to mail it out. These yellow letters that look like they're handwritten are very tried and true. They've worked for a long time, so I recommend starting with those. So here's what to do next, guys. Pick one marketing channel and go deep with it. Focuses the key. Don't worry about trying to do three or four different things. That is a huge pitfall. Just pick one and make it work. Your day will be simpler, you will be happier, you'll be more fulfill, you'll get more results. You won't feel scatterbrained. Just pick one. Choose the marketing channel you would enjoy the most where you're like, I definitely am the most likely to do this one consistently. That's the one you need to pick. Okay. It's not a valid which one's the best It's about which one will you do? The most often? Then block off time each day to work on growing that lead source for you. Remember, 80% of your time marketing and sales. Like just put your head down, focus on this and you're going to crush. You become the best marketer. Everything else will be really, really easy for you guys. Your marketing skills are also going to spill over into 13. Your Deal Generation Machine: The name of this training is how to build a hands-off deal generation machine. Now that's a pretty big promise to think that you could build something that you would not have to touch and could just produce deals for you and just deliver deals like to your doorstep. And that's what this really will do for you. It's going to require some setup and it's going to require some money. But for someone like me who doesn't want to do the hustle and grind technique, Find deals. I much prefer this approach. That's what we're going to talk about in this training. And I didn't think I'd have to teach this to the group because for the past few years, all the deals I've bought and the deals that students have bought have come from wholesalers, property managers, or realtors. And you can still get deals from those sources. But she used to be able to get them a lot easier than you can now. And so I thought, Why have to set up direct seller marketing? Seems like a lot of hassle. If you only want to buy maybe five or $10 a year, which is really good if you're buying five or ten a year as far as the speed at which you're building your portfolio. If you can do that without setting this up. I used to think like, well, why go through all that? Why spend money? Why talk directly to sellers? And that used to be my philosophy on that. And I still do want to say that director seller marketing is not required to be successful by any means. There's people in this group that are buying deals on the MLS bind deals, wholesalers, property managers, you name it. But due to the competitive nature of the market right now, if you don't market director sellers, really, your alternative is to grind it out on the phones, right? It's to do the networking approach. It's kinda like, you know, my coaching business. I've gotten coaching around that and they basically say, you know, you have a couple of options. You either learn how to run paid advertising and then you get leads coming to you, or you hustle and grind on Facebook all day and you message 30 new people a day and you go in the Facebook groups of similar minded people and start a bunch of columns, frustrations. Finding deals is so similar. It's like you've either learned paid advertising and you can kick your feet up or you hustle and grind and you do the networking approach. Both of them work. It's which one do you want to do? For my introverts out there who would rather set up a system to have the sellers contacting them. This may be a better fit for you. And I've spent hundreds of thousands on direct mail. So you guys are in good hands because I've done something like 500 deals in my wholesale and flip business in a short period of time and that was in like maybe a seven year period. And we were spending 100 or one year, we spent 220,000 or something on like direct seller marketing, primarily direct mail. So I've done a lot of this and a lot of testing on lists and pieces and copy and drop dates and all this stuff. It's, I'm sharing with you what I think is kinda the cream of the crop for doing direct mail today. Another reason for this training is that wholesalers have changed. And wholesalers they had been good to me for years, like I said. But I kinda realized some of the reasons I was getting deals from them was because I had a good relationship with a handful of wholesalers who are bringing me deals direct. And if someone's brand new and they've never done business with them, like some of you might be getting into a new market, then they're not necessarily going to treat you the same if you've never done a deal with them. Also, in the past year or two, they really are in the power seed because it's such a seller's market and they basically represent the seller. They're not offering due diligence periods. They're sending deals out to a big list and there's all these Mom and Pop buyers on the list who are just massively overpaying for deals. And that's messing everything up. So I've decided not to go that route anymore. And I realized honestly, in hindsight, that there's lots and lots of benefits to direct a seller that I hadn't really considered because I had been looking at it as more work when it was worth it. One of them is you get to talk with the decision-maker. You get to talk directly to the seller instead of having. Someone in the middle, which means you're a lot more likely to get a seller finance deal because the wholesaler, we usually lock it up as a cash deal. And then you say, I want to do seller financing. They're not going to want to go back and renegotiate with the seller and tried to do seller financing. Most of them don't understand that anyways, also a due diligence period is assumed it's normal to have a time period where you're going to inspect the property, but the wholesalers will not let you have that. They have one with the seller so they can back out. But when you wanna do and it's an actual inspection, they won't let you do. Also, your earnest money is refundable and you'll pay at least $10,000 less fear deals, the average wholesale fee. And a lot of markets right now is ten to 15 K on a deal. That was always our average to over a hundreds of deals. And so you're going to pay that much less for the deal. So if you spend 1,500 on a direct mail campaign, that's going to feel like you're spending a lot of money and you might not get a deal, then you might have to spend another 1,500 and by then you're sweating a little bit, right? But then you get a deal. You got the deal for $12,000 less than you would have paid for it from a wholesaler. So really that's a net positive of $9,000 in your pocket. I want you to think about it that way. Also, if you decide to talk to the sellers yourself, which I'll share with you in a minute or later on. You don't have to, but if you do, it's going to grow you as a person is just going to push you, push your edges, and you're going to get better at sales. And it's just kind of an edgy conversation when you're negotiating and it, anything that's hard is always going to grow you as a person. So you do want to gravitate towards things that are hard. Also, this is getting you into a skill that's going to allow you to get deals for the rest of your career. So it's really important to not just become a real estate investor and then just sort of find a realtor and then sit back and be like, man, they're not sending me any deals. That's not the way that the good, successful, savvy investors do it. They all market director sellers and already went over that. It costs you less money in the end, you get one deal, it makes it all worth it. Also, another thing that's not really on here is that It's super automated, right? Like you don't have to do as much work to find the deals when you set this up, it's more work in the beginning. It's more cash intensive in the beginning. But once you're done with that, like you have deals coming to you and there's lot less competition on the deals, right? Because the sellers, maybe only talking to a few other people versus a wholesaler is blasted it out to 300 people. And so I really like direct seller marketing for pretty much every reason. Here's some results I did from a recent campaign. I have done more campaigns since this with similar results. But I sent out 1,200 letters Clarksville, Huntsville, I got to warn percent response rate 12 calls. I had copy that really filtered out people who were mad by just being very blunt with about who I was. Got 20 leads from that I got a six unit building under contract and a bunch of other good leads from that one mailing. I there was a couple of sellers who had multiple properties and it was more than I even needed at the moment. I just dropped another mailing in Little Rock last week and I got probably a half percent response rate. So not quite as good as the letters did, but it was postcards and I probably spent only a third of what I spent on the letters on those postcards. So per dollar, I actually got a higher ROI on the postcards to Little Rock. Pitfalls when getting into this, one of them is only sending out one campaign or just judging your results by one campaign. That's really dumb. There's so much I could say about that. Like marketing has shown you're supposed to touch people six times before they really reply or four, they notice you. How many times have you seen a Facebook ad or a TV commercial? Like a bazillion times, you think it's stupid for the first seven times and then on the eighth time you're clicking on it. That's happened to me multiple times. Right. So your postcards are basically that it's also not calling the sellers back. We're following up due to fear. That was something I struggled with. When I first got started. My phone would ring and I would just kinda clam up because I didn't I thought that people would be ****** at me. I didn't want to talk to them. And that was not good. Also, you can delegate this to an assistant in due time if you want to have a training on that in this same module on how to outsource your seller calls. Also not acting on this because it seems like a lot of work is a big pitfall people run into. Like I said, it's a decent amount to set up. And then it's very easy from there, it's very push button from there you to rinse and repeat or not acting on this because it costs money. And like I said, it ends up being cheaper in the long run. I mean, if you're getting the deal for ten or 15,000 less, you would only need to get one deal from $10,000 worth of postcards to breakeven versus buying it off the MLS or from a wholesaler. So components required to make this work. You need a list. You obviously need a list of names and addresses to mail. You need to set up your phone number. You need to write the copy that you're going to use. You need to select your mail house and you need to design your mail piece. The male house, they'll help you do that, but you need to design that. When you have all that, then you can roll and you're good. So let's start with building your list. First of all, it's important to note that competitive markets are going to do worse. It should be kind of obvious. But I do want you guys to pick your linear market first. Before you do any of this. You can go out and try to do direct mail in a competitive market for rental properties, but I don't really recommend it. I don't think it's going to work that well for you. And I would much rather see you in a market that was stable, cheap, and flying under the radar somewhat from a lot of other investors that is going to really, really serve you. Not just because you'll get necessarily a much higher response rate. But like, think about it. If the average sale price on a property is 50,000 bucks, if that's literally what they're worth on the MLS. You have sellers calling you, you know, like the copyist. So they can be is like I want full value 50,000. You're already scratchy or chen Like I might be able to make this work. If you're in a competitive market, you're gonna be in that same conversation, but they're going to want 100,000 and then you can't do it. So just that linear mark is going to give you that lower average house price. And that makes, that actually raises the effect of your mail. I got my list from upstream. Prop stream is cool. You get 10,000 records a month for 100 bucks. If you don't use prop stream, you can check with your mail house that you select. Houses usually provide a list pulling service. You will need something like props to him though, to analyze the deals properly. I don't really want you to use just Zillow to run comms. It's not as good. So prop stream, at least trying it for a month or two is what I would recommend doing. So let's talk about List criteria. So if you go to pull your list, you're going to use props. Dream. What do you need to select? Well, we do absentee owners. That means someone who owns a house doesn't live there. It's typically landlords. That is kind of the cream of the crop list to mail. It's always been for as far as like single-family houses. That's what you want to attack. I mean, it's just so much easier than buying a house that's owner-occupied. And like a lot of those people, if they're in a tight position and they need to sell, they're also not going to have anywhere to go. And so it's a lot easier to buy properties that are occupied by tenants versus owners owned by investors who sometimes just want to cash out. Sometimes they'll sell at a discount. And then understand things like seller financing. So we do absentee owned and then you select how long have they owned it? I do seven years. I don't want someone to have owned the property for just a few years necessarily for my strategy. You can also add in these two criteria. If you want to. You can add in vacant properties on Prop stream. That's going to bring your list size of way, way down. Like I've seen it take a list from 3,000 records down to 300. So it's definitely important to have a bigger list in 300. But if you wanted the absolute best records, it would be the ones that have been flagged as vacant on top of the other criteria that we're going to use. For some reason you wanted to start small and just do a few hundred letters and you are going to keep it old school and write them yourself or something crazy like that. You can do that. Start with vacant. Also free and clear, something you could add that doesn't bring the list out nearly as small as vacant. You'd be surprised to learn that something like, I think it's like 30 something percent, 30, 40% of the homes owned in the US are free and clear. It's pretty high. I don't remember the exact number, but I want to say it's 30 something in the 30s. So that's like a third of every third house you look at is free and clear. It's pretty crazy. So free and clear houses are great. The sellers have more room to sell at a discount because they don't have a mortgage. That's like choking out any negotiation room. And it's a lot easier to do a seller financing deal when you don't have a mortgage that's also involved. It's called wants you to choose single-family, multi-family. You can go up to however many units you want. And if you're paying by the record, make sure to eliminate duplicates before buying. Prof stream does not charge you by the record. They also don't eliminate duplicates unless you use them for the postcards. But I don't recommend that for reasons that I will explain later. But there are websites like lists source.com. I used to get all my lists from and I paid by the record. So I always eliminated duplicates before buying go with prompts streams, you'd get 10,000 records a month. Like you aren't going to use all those so you don't have to worry about trying to eliminate duplicates, especially when you can't do it at the click of a button like you can another websites. So you're probably going to end up, I'm either going with prop stream and then not having the duplicates removed, which is fine. I'm going to show you how to remove them. Or you might get a list from a male house, in which case they can remove them for you and sometimes they'll charge you like 25 bucks for that. Then you want to download your spreadsheets. So you have your list and I upload it to Google Sheets. So I'll just show you what it looks like to pull a list in Prop stream. Here's a town I've searched for, apparently at some point, Lee's Summit, Missouri. Don't know anything about it, but we're going to pretend we wanted to pull this here. Okay. So filters, owner-occupied, you click no, vacant. I leave that as any because I'm not going to do just only vacant properties. So you see this, there's 40,000 properties in the city. Soon as you click, owner-occupied know, takes it down to 10,000. Okay, So that's a pretty big drop. And then if we went and we added free and clear, it takes it down to 7,000. Okay. So in this market, 7,000 of the 10,000 apps and TOO and properties are free and clear, pretty nice, pretty mind-blowing. Then we would go to ownership info, years of ownership, who would say seven as the minimum owner type. We're going to leave that. Then. What else do we want on here? Nothing on mortgage info. You can do something like you can put a cap on the assessed value. If you just don't want to get properties on your list that are worth $900,000. You know, you can put a cap on that, but you can also do that after you pulled the list, I can show you how I do click property characteristics and I exclude any properties with HOA fees. So that brought it down a good bit. Probably a ton of like, condos and things on there that I didn't want. So we have owner-occupied, no free and clear. No HOA is seven years or more of ownership. And that's good for me. So then you select off by clicking that box, you click add to list and then you would create a new list. You put Lee's Summit, that's the city. And then once this saves, you go to my Properties and you click marketing lists. And then we pull up the one we just did. And then we would do another step where you remove some zip codes. So Lee's Summit, Missouri, Let me just look how many zip code it has. 3456789 is nine. So I would already need to know that I'm only going to invest in these three or something or these four before I did this. Because then I could come in here. You can click this to sort the list by zip code. And then if you wanted to remove like all of O15, which is only five records, which is good, just e.g. sake, you click them, click Actions, Delete records, remove guy. So you do want to come in here and remove the zips. You actually can do this after you export it to. So really whether you do it right here or on the spreadsheet doesn't matter. Then I would click this to select all. Then I would hit Export. And that's taken a minute to load. But you see it downloaded and XLS down here. And so then I could go into my Google Drive. I can upload this New Upload. Come on. And so that's going to upload it. I'll just I know this is taking a minute, guys, but I want to show you step-by-step how to do this so that when you come in there's no questions. Then you want to upload, you click it. And then this whole pop-up open with Google Sheets. And then now you're going to have it in Google Sheets, Scott. And that's where I like to have the list for editing purposes. Then I will go ahead and format threes, whereas that view, view freeze one row with the top row selected. And then that makes it so that this header column won't move. And then you want to eliminate duplicates. Okay? So I'm gonna go back to the slides for a second and we'll come back to that through this. So you want to use the owner address to eliminate duplicates. This is because if you use like the owner name, it could be Main Street LLC or something. They can have multiple LLCs. That same owner could have multiple LLCs. I have a few LLCs. I used to have more than that back when we were doing more flips and wholesales and stuff. But we all all those LLCs were using the same address or the same PO Box address? You could buy address. You could have if someone were to look, they could have spotted. Okay. All these LLCs have the same address. They're owned by the same person. So you want to use owner address, not owner name when you are removing your duplicates, okay? So you're going to move the owner address column to the front temporarily. I'm going to show you this in 1 s. You're going to use this formula, which I'll show you as well, to remove duplicates. And then you're going to move that owner address column back to where it was. God. So basically you go in here and let me just move some of these out. One or two. You see over here on the beginning of the list, this is the address of the properties of themselves that you're trying to buy. Then these are the owner names, and then these are the owner addresses. Okay? So what I'll do is I will move just this mailing address over because I want to see it right here up front. Then I'll move over the owner lastName. Because I kinda wanna see that side-by-side to just kinda do that for the purpose of editing the list. You'll see, we'll see why in a minute. I'm going to make this a little bigger. Okay? So now we want to know what the duplicates are on this list, okay? Like if one guy owns seven houses, we want to delete six of them off here. It only male one of them. Okay. So we're going to go off of mailing address. So what I'm gonna do is I'm going to select this column. I'm going to hit Format, Conditional Formatting. And then I'm going to hit custom formula. And then we're gonna come back to this. And that's what we're going to put there. This formula has getting excited yet. The good news is you don't have to do this that many times. So you click Done. That's now there. Okay? So another thing we have to do is we have to sort the sheep by this column. So you highlight it. Hit data sort sheet by column B. Never click Sort range because that's only going to sort the things in this column B. And so it would no longer be in alignment with everything else. It would screw up your whole spreadsheet. So when you hit data, you're always going to sort the whole sheet. Don't even go down here to range it's risky. Sorted sheet by column Z. And now we have instances of duplicates. And Siri thinks I'm talking to her again. Alright. Let's see. Yeah, this is showing up slightly different than it normally does. Try moving this here. I'm going to try to run that formula one more time. So you click Custom formula. That's right. I had a in the formula, but I was trying to sort the B column. So let me go back. My apologies guys. Are going to get this back to where it was. All right. Now I'm going to move the mailing address two column. That's what I screwed up their conditional formatting custom. Now I paste my formula in there. And then I sort the sheet. There you go. That's what I was looking for. So what this does is it highlights all the duplicates. As you can see, all these properties are owned by these different corporations, but they all have the exact same mailing address. So I don't want them. It's interesting that this one's JCPenney. It makes me wonder if they own these other companies. All but one of these, then that will be done. You can see that one goes away because it's no longer a duplicate. Then I would go through this list and just clean it up. This takes a while. It's not fun, but this is what you have to do to get it ready. So this this is a duplicate, but Court company and East plaza Association don't sound like people who are going to sell me a property, a discount. I'm going to delete both of those restoration services. I'm going to leave that because that's probably just like a contractor who has a few properties. So I left the one you see, development, that's fine. And then you go through and like this one, whoever owns ER W has a bunch of properties. We're going to delete all those except for one. And this is why it's really important to ask if they own any, have any other properties they want to sell. That's something I want to make sure to put on the property information sheets. As you guys asked that a lot of these people own more than one. Make sure that makes it on there. And so you just go through your list. And so basically, I see that this is all owned by a church, so I'm gonna delete tax churches don't really sell. But if it's like just someone's name, I'm going to delete all but one. Or if it's an LLC, I'm going to delete all but one. I'm kinda telling you two things at once, okay. One is if it's like someone like mental health service or this Homeowner's Association. I'm deleting all these teachers credit union union. I'm deleting that. Homeowners. Okay. So that's one thing I'm trying to tell you guys. The other thing is like for all the other records where there's a duplicate, you just delete all but one. So construction company, One, Bank of America, you're gonna delete that as well as all these church ones. Bank, bank, bank, telephone company are going to lead all that. So this list will go down a good bit and you want it to, because you don't want to just nail the good records, not anything. That's gonna be a waste of your money. So you go through and you clean this list, I'm going to delete this bank. So really what you could do to save your sanity is don't worry about trying to identify. West co Lu incorporated. You could just do all the duplicates first. So just like just delete all. But one of every batch of the greens like this. This is kinda what I do. Control Z to undo a, screw anything up. I know you probably know that, but I just used a lot. So I'll go through and I'll delete all but one of every duplicate like this. And then once I get to the bottom of the list and make sure to have some coffee and take some breaks because this will like where your brain out. Then once I get to the bottom of the list, then I come back to the top. And I start to just look in this column to see who else I wanna. Like. City of. I'm gonna delete that CVS pharmacy there. Delete that City of re town. I'm gonna delete that. It's like a corporation or a government owned thing or if it's incorporated. A lot of the times, it's not probably someone that's going to sell you this oil and minerals. I might even delete that because it's probably like a business That's different than like someone who would want to trade their properties into someone like you. Another thing that I mentioned earlier that you guys can do is you can come over here to estimated value, total assessed value, your bill. And you can delete some more records. So you can go, let's assume you did all that. I want another thing that we did not select when it came to Lee's Summit. One thing we did not do was we didn't really go into detail on property characteristics. So single-family. You want to check those three boxes. Okay. Because I did get some other types of properties on this list. I got some land and things like that. So it's easier to clear that stuff out, right? I can just come here and I would just delete all of these that are not classified. Most of these are still going to be houses. Then I would come over here and delete these agricultural, rural, and land records. But you won't get those things if you select the right thing. I forgot to select that. So I actually got every type of property in lease. You want you don't want drive-through. You don't want condos or land. So I didn't do a very good job of teaching you because I forgot a very important step, but I'm glad we caught it. So you're going to come here, you're going to select what you want. You might want land. You know, some people want a male land. I'm actually kinda thinking about dabbling in it. Just because everyone raves about how awesome it is. And we had a lot of success wholesaling it back in the day. But you want to select what you want. Then assessed value is another thing you could sort by. The problem with assessed value is that it's not the same thing as appraised value. So it's like a portion of appraised value. I would rather you use the column that is estimated value, which is right here. So datastore sheet. Then you could come down here if you wanted to. And it doesn't put it in exact order. It's just like all the 9's at the end. So it'd be at 9,001.900001. So you kinda have to manually come through, but you could come through and delete some of these like 900 something thousand records because every market will have houses like that. You can do that instead of putting it in here on the front end. It's up to you. Okay. So you'd go through, you'd remove duplicates, and you'd move churches, state government organizations. You're going to leave LLCs, trusts, construction companies, people like that who are investors would sell to you? I always scan the list at least one more time. Look at all those owner names and make sure that duplicates are all gone. It seems like every time I scan it I'll find another bank or a church. So definitely like run a fine tooth comb over your list before you send it off. Also spot check it. Just make sure you didn't screw something up. So like, you know, you come here to the mailing address or not the mailing address, the property address, and you would just 1302 Southwest heartwood. And then we click that to go to that property. We click Details. And then you see it's owned by Aberdeen partners. So Aberdeen partners is here. So I didn't screw that up at least. But if Aberdeen partners was not the owner name and it was something else, it would mean that you sorted one of these independently of the rest of the sheet and it got scrambled. And you'd probably either have to hit undo a bunch of times or possibly even start all the way over. But I always check this even when I'm like, especially when I'm about to drop the male and the male house tunes be proofs. I come back to the list so I'm like, okay, is 603 southwest southeast Howard, is that really going to this address? And I check it with the proofs just to be sure. Also, you want to seed the list with your name. Okay. I love to get a copy of my letter, a postcard at my house just to I know these things are being mailed out. I got mine and I like to note note when I got mine and I live in Colorado, and I'm mailing like Alabama or Arkansas, Tennessee. In the Milhouse I'm using is in Florida. So I'm gonna get my letter a couple of days after everyone else does, but I still like to gauge it because there has been a time where I could tell that the male how screwed up because I got my letter on Monday. They said they mailed it Friday and there's no possible way it gets from Florida to Colorado in two days, right. That just doesn't ever happen. So I was able to call them out on that and get some payback, so to speak from them. Next, you set up your phone number and I use Google Voice, it's free and it's great. So you create a separate Google account like I went and created a new email like Tennessee investments, one or something like that. I can't remember what it was, but you have to create a Google account and new a new one. And then you can create a phone number on that account and then it won't be mixed with your current Google account. Then you go select a phone number, pick a phone number that's in the market that you operate in. So if you're bombing postcards and Ohio, pick an Ohio phone number, they're more likely to be comfortable with that and to call you back, then you need to login to Google Voice and record your voice mail. Okay? Pretty easy to do. You record it, you upload it, but you don't want them to call and get nothing you want, um, whatever you're saying in the postcard or letter to match what the voicemail says and then same name. Then you can set it up like to not ring after 05:00 P.M. or did not ring on weekends. There's all this customizations with Google Voice, That's cool. Or you could add it never ring. Or you could do what I do and just give someone else to login and say your handle on these calls. It's really up to you. Then you're going to want to take a makeup test call from another phone. Obviously make sure this is set up and it works before you sent thousands of pieces of mail with that number on it. Now let's talk about copy. Okay. So you have your list that's ready to go. You got your phone number set up. Now we need to decide what you're going to mail them. And the biggest part of that is what is written on it, not what the peace actually is. It's the message. Okay? And so you need to have a return address first, I use virtual post-meal dot com. It's 15 bucks a month or something like that. It gives me California's address where someone accompany receives mail there and they scan it in and send us an email every time. And that's pretty cool. It's like a concierge kind of thing. And so you need to have a return address to give them. And you could set up like a local PO box in the market where you operate or whatever. Some of those companies will have a service now, or they'll open your mail and scan it or whatever. But I like virtual post-meal. Then when you're writing your copy, the biggest thing guys is to make it stand out from the pack. Don't do the we buy houses stuff. Okay. Like I don't want you to use prop stream for other reasons than this. But if you come in here, you can see that you can create a campaign and you can choose from all of these templates that they have. And a lot of these are just so overplayed, right? How many times have you seen all this? Like if you think about it, Do any of these really stand out from of the others? Tired, fixing a beat up. I do kinda like, you know, are you upside down? If you're subject to like kind of investor taking over mortgages, which is not something that I do. But, you know, all of these other ones are just they've just been used so many times. And so I think you need to write something that kinda throws rocks at this stuff. Or is more relevant at least to what's going on in people's minds. A quick lesson on copywriting is you want to enter the conversation that's already going on in the customer's head. Okay? So when you write copy, you need to think about that like what what's going on right now? Coronavirus is going on. Or the election. You know, like you guys can steal this idea from if you want. You know, if you're watching this live, you'll houses, you'll still have time to do this. But like the election is pretty soon, it's like two weeks away and change or something. You could drop some postcards. Right now that just says, what if Biden wins the market tanks and your house goes down dramatically in value. Because that's what happens a lot of times when a Democrat wins. And I promise you they've been thinking about this and they're worried about, man, if the market tanks, because Biden wins, then I'm going to lose all his money. That's going to stand out from all those other we buy houses, stuff. Or if Biden does when you could wait until, you know, for sure and then write some copy that speaks to, that speaks to the fact that the markets are panicking because they probably will be, right if we have a really bad, the Dow Jones goes down 10,000 points. Like you should be ordering a postcard campaign so you can mail people about that. You know, the Dow's down 10,000 points. What does that mean for the value of your house, right? Make, make your copy relevant. You really have to fight for people's attention. Okay? You can't just be bland. Why would you be blamed if you're doing all this work to set this up and you're going to spend money. Like Dan Kennedy as a saying about marketing, he says, If you haven't **** somebody off by noon, then you're not marketing hard enough. So it's okay if your copy is edgy, it should be edgy. Not unethical, not disrespectful, not dishonest, but it should be edgy. Otherwise, you're wasting money. But if you do it right, you're really going to stand out and get better results from everyone. So I'll show you some examples of copy in a minute, but include your phone number. You don't have to put the seller's name on there, but you're going to have a spy in your copy for the property address. So you might just are you tired of people mailing you about your property at property address? Because there's Milhouse is going to take that spot and they're going to mail merge in all those addresses automatically for you. So this is a postcard I recently dropped. You guys may have seen this one before. This is the one that I'll get a half percent to 1% response rate on. 14. Outsource Your Seller Calls: You're having to do right now to succeed is market direct to sellers. Like you have to get around wholesalers, around realtors, around property managers to get decently priced deals, to get an inspection period, a due diligence period. The reasonable things that are needed to do deals. Because otherwise, it's kind of a **** show the way that the market is right now. And so I tell everyone to do direct seller marketing, but not everyone listens. And I think that's for a number of reasons we're gonna go over tonight. But i2 have resisted this directed cellular marketing advice. And I know why I did it. So I'm going to share my story with you tonight, but best of all, I'm going to share with you how you don't have to really do a lot when it comes to generating leads this way when you implement what we're going to talk about tonight. So I hope you guys are strapped in, grab a piece of paper, grab a pen. This is really going to free up either a bottleneck that you currently have or something that you're going to get in your business guy. So this is about outsourcing your seller calls. Like I said, a lot of people avoid direct seller marketing. And here are some of the top reasons why they do that. Number one, they doubted that it will work, right? They doubt that if they drop $1,000 on marketing, that they're gonna get any leads from it. And that's a real concern. I get it. I've addressed that one in some of the other trainings we've done. But some people will not do that because of that reason. Link to it is this like they have an aversion to just spending money period. They'd rather just try to sort things for free. Reminds me of my friends in Denver here that won't pay the company to come pick up their dog **** in their yard, which costs like eight bucks a week or something or no, It's like eight bucks per visit. Our dog's **** a lot. We haven't come three days a week. So I'm spending 120 bucks a month on hoop service. But I don't want to go out there and do that. I don't want to spend the time doing it. I don't like doing it. Right. And you guys are probably like, what the **** you're talking about Ryan. But I have friends there. We'll not spend money on things like that or having food get delivered to them even if it costs a little bit more or having their grass cut because they're just like, Well, if I can do something myself, why would I spend money on I can just tell you if that's your mindset. You're shooting yourself in the foot. If you want to be an entrepreneur, you want to be an investor. You want to do like high leverage activities with your time. You're going to have to shake things up in your brain about how you think about spending money. So that you can get time back instead of spending time to save money, you don't want to do the latter of those two. Third reason, people dread handling the phone calls that will come in from direct seller marketing. I'm just thinking ahead like all man, well, if I drop these letters, are all these people are gonna be calling me. I gotta call him back. I'm an introvert. I don't like being on the phone. That's a big one. Then just don't want to add anything to their plate. I talked to a guy in this program recently who has kids, who has a full-time demanding job? We were talking about what we're going to go over tonight. And he was just saying, you know, I think one of the reasons I've been resisting director seller marketing because I just don't want to have to do any more work. I'm already stressed to the max and I needed more time for my family. So I don't want to add this new responsibility. Okay. Now, if either of the last two, the ones I had in bold describe you. In this training we'll mentally unblock you. It's going to get rid of that reason so that you will become excited and ready to market direct to sellers. You guys ready for this? You excited for it? I hope so because this is going to really put a much needed piece of automation in your rental buying business. So let's take it back a little bit to my story. I started out wholesaling as some of, you know, and I was terrified of taking seller calls like freaking panic attack, terrified. I would actually go and put on a suit that I had, a full suit with pinstripes. Even though it was a piece of crap suit, it was too baggy for me. And I would wear like dress shoes and pace around the suit and a tie and the dress shoes. Somehow like the clicking of the shoes on the floor. It like gave me confidence that maybe I was worth a ****. Maybe I deserve to be talking to these sellers and making them offers on their properties. Maybe I'd know what I was talking about because really I was a beginner and I didn't. And I would drink all this coffee and I even had a little Bluetooth peace through my ear acts. I thought that made me seem like more professional. It was all BS. But I just did all these things to try and get over it kinda like when I first started playing music, I live in front of people that drink lots of alcohol. I got these weird coping mechanisms to get over anxiety. But it worked just like my suits worked for talking to sellers, but I was terrified of it. Like people, I would do all the steps and out the marketing. I loved all that. And then when my phone rang, It was just like this tightness within me. Kinda like No, I don't want that do not want phone to be ringing. Don't want to talk to anyone. What if they're ****** off at me? All these stories I'll tell myself. That was like kind of in the early days they didn't know what I was doing. Even once I partnered with my eventual business partner and we really started to blow things up. Then I was our acquisition manager RAM for two years. So I was like doing what I still hate it. I was a little better at it but, you know, taking calls, my phone ring all week. Just analyze them leads, calling them back, following up, texting them, email them, meeting them at their house, making offers, following up. Man. It's a lot of work. And we eventually hired an acquisition manager. Did we ported like all that activity to that one person? We love the business and the business actually tripled in the next 12 months because we just stepped on the gas because our marketing was really working. That the bottleneck was the sales and the phone calls. When we put that piece in place, that was when we blew up and I got to never talk to a seller. Again. In fact, I hadn't talked to one until I started director seller marketing back for rentals just this year. I hadn't talked to one in many years until this year because we had always had an acquisition manager in real estate. Regardless of your exit strategy, all of us want deals. I need to fix that sense. We just want someone else to bring them. Right? We all want deals. We just want someone else to bring them to us on a silver platter. If that's you raise your hand. If you're just like I wanna do deals, but I don't really want to go out and hustle too much to find good deals. Well, today I'm gonna show you how to make that happen. So one thing that it's important to understand is that proper working of leads takes a lot of hustle. It's like its own job. You know. If if I got let's say I cranked up my marketing to where I was getting. I don't know, 20 or 30 new leads a week. Let's say that would be a full-time job for me to actually work all those properly. Like I wouldn't even be able to be a real estate coach anymore. In fact, I wouldn't be able to do anything but talk to sellers and make offers and follow up and, you know what I mean? Like even the rehab, once I bought it, I'd have to find someone to do that because I would just be like of a sales guy. It's all these different steps. You take those initial phone calls. There's little phone tag usually goes on. You call him back, you'd fill out the intake form, you figure out what they want. They talk your ear off for 45 min. And then you might hang up and say, alright, I gotta go analyze the property and determined what I can offer. Then you call back, you get a hold of them, you negotiate. And then a lot of the time the dealers are made and so those bleeds go into follow-up and then you've got to follow up with them at least every three or four weeks. Because you get a lot of deals from follow-up. You guys are probably already cringing in your seats like, ****, I do not want to do any of this, Brian. I want passive income. I get it. We're going somewhere with this, so sit tight. You're going to follow up regularly. If the deal is not put together. If you do get under contract, you need to coordinate a contract or inspector to visit the property. Then you've got to coordinate the closing with the seller, schedule it, you know, get the leases, it's rented, and the keys and the deposits and the prorated rents and the tenants information and see if they can be at the title company on Tuesday at 02:00 P.M. and it's all this crap, right. To take a lead to the finish line. So what I recently realized was this, I got. Recently I got about ten inbound calls from my marketing within one week. Pretty normal if you drop 1,000 letters to get 1%, you know, calls. So nothing shocking there. But I call it three to four of them back. I got there info. I promised them follow-up calls once I had run the numbers. And then I was still having to call them back. And I started to think about like, how I hadn't run a high-volume wholesale flip business. And I was like, I know what it takes to really work these leads to really squeeze all the juice out of everything that was on the previous slide. I was like, I don't have time for that. I actually don't know between what I am doing for my investing business and between wanting to grow the coaching business and help more people do this. And then just all the personal stuff. I don't really have time. I don't want to do more work than I'm doing now. Right. I have the time, but I just don't want to put it towards that. Also really don't enjoy talking to sellers. You know, it's not it's unnecessary part of the business, but it's not something that I am super stoked about. And so I started to think about a solution. And one of the things that my coach has really taught me is the power of delegation. Building a real machine where you can sit back and watch it run. Very little of you as required, right? Like your car works. You know, unless you're unless you're talking about Ryan's 990s Buick. Most people's cars work without a lot of upkeep, right? You have to change the oil. You have to take it to the shop. But the thing is automated, right? That thing churns. You, turn it on and does what you're supposed to, it's supposed to do. You want to think about your business like building an awesome car? You want to think like an owner, not an employee. And so I started to think, well in terms of these seller calls, who could work these leads better than I can. Because someone just go out and get the best leads under contract and then let me know. You know what I mean? Like you get ten calls a week, wouldn't you rather have someone else call all those people back, analyze all those deals and negotiate with most people, sort out the good ones from the crazy ones, and then even go on appointments for you, take pictures, and then just come back with the one deal where it was priced right? Or the owner was willing to do a seller financing or whatever and say, Hey, I got it. I got you one, got a good deal under contract. Do you want it? That's what I was imagining building. Then I was like, well, who out there is really dying for these leads? Who wants opportunities like this? Who would jump all over the opportunity to talk to sellers? I'm sitting here like resisting it. You know, like, you know, one of the days when all these calls are coming in, I was just like already doing a lot of stuff and I'm watching my phone ring again and again and again and I'm just like, **** it. More work is building up for me. I was sitting there resisting that. Other people would love it. How can we click things into place? And that's when I thought of the wholesaler. Because there is a person out there who loves to take calls, call people back, negotiate, analyzed leads, go on appointments, make offers, follow up, grind the phones. In fact, that is what wholesalers do all day. That is their full-time job. They are marketers basically, and a lot of them are bad at it. And they need more leaves, especially in today's market. Okay. And so what I did is, I call it a wholesaler guy I have a history with. He's actively doing deals in my markets together and I just floated the idea. I was like, hey, here's the problem I have. You probably have a problem with not enough leads. How can we work something out? In a quick 15, 20 min? We worked out the following arrangement. So I'm going to pay for and send out the marketing. He's going to handle the seller for the initial call all the way to the closing table. Okay. So he's in charge of all the seller communication from start to finish. And when he gets a deal under contract, I have the first right of refusal on it, obviously, right. Because I'm paying for these leads. These leads wouldn't exist if it weren't for me. And then if I do keep something, I say, Hey, I want that one, I'm going to buy it. I'm gonna give him 1,000 bucks. So he gets a little something for his time for the deals that I keep. 1000-dollar commission, no sweat. Now for every lead I do not want I just say it's yours. Go work at this wholesaler gets to work to lead like you usually would heal likely try to wholesale it. And based upon how much he makes, He's going to give me 10% of that. He makes ten grand, I get 1,000 bucks, he makes 15 15 grant. I get 1,500. Sometimes you might make make 30 and I'd make three grant. Really that's just going to reimburse me for my marketing because he'll probably get a wholesale deal in month out of the leads and I'll probably get a rental deal every month out of the leads. If his wholesale deal nets him ten grand, He's going to give me 1,000. And if I keep one, I'm gonna give him 1,000 and it's a wash. So this is the arrangement that we came up with. And this is not an uncommon arrangement guys. Okay. In fact, this guy, he was actually already doing this with another investor. He's, you know what I want? I floated him the idea. He's like, Yeah, I'm already doing that for a guy. I made sure he had the bandwidth to do it for me too. But this is not uncommon. In fact, there are some coaches that just teach you to do this and just basically be the marketer. I think if you guys know Joe McCall, wholesaling, lease options guy, he partners with wholesalers in different markets. He he markets for the deals and then they work the leads and then they split the profit with him some way. So we're kind of modeling that approach just with buying rentals. You need to understand that if you're the marketer, you pull the strings. The one who has the leads, has the gold. So your time is best spent learning how to generate leads. Ironically, that's going to be true for any business you start, like few of my buddies, and I want to start a brewery here in Denver called ten or better brewing. Or every beer is 10% alcohol or higher. It sounds pretty bad ***, right? And yeah, maybe the concept would work. But that idea itself is not going to save the business. What would save the business is customers, right? So you have to get the word out, you have to get people in the door. Leads, right? Even in a brick-and-mortar business, people that know about you and they're going to come, there are leads. And the one who controls the leads, the eyeballs is in the real power seat. Your time is best spent generating leads and putting pieces in place to handle the rest. So let's talk about if you're going to put this person in place to handle that for you, What would they do? What type of expectations do you have for them? This is really important. First of all, they don't have to be a wholesaler. Okay? This person could be a variety. We'll talk about that in a second, but they don't have to be like actively wholesaling to be your person, okay. It should be someone that has some level of experience talking to sellers and is available to go on appointments in-person. So they should be local to the market you're going to invest in. And I just want them to have some experience because talking to sellers can be a bit of a hairy thing for a newbie. Some sellers are ****** off, rude. You get intimidated by that. You're not a good fit to do this job. Your person that does this should understand that they've got to call these sellers back within 24 h or less. If they don't, they're wasting your money. They've got to work these leaves aggressively. They got to squeeze all the juice out of the fruit. If you don't get the deal, It should not be because of them. It should be because the lead was not a good one. They should be expected to follow up with lead. So a lot of leads aren't going to close on the first phone call, the first appointment. That doesn't mean it's over. You got to put those in a follow-up bucket column every 234 weeks because people's life situation changes and then they might be ready to sell down the road. Also, they will be expected to put leads into a CRM that you'll have access to and be checking it regularly. So this isn't just some plan where you just like put money into marketing and put the calls to their cell phone and just wonder what's going on. No, I'm going to show you how to set it up to where you'll be able to see all the calls, listened to all the voicemails, see the result of those calls. C, the property information, and what happened when they call the seller. You are still involved in that regard so that you can see what's going on. You need to be able to see if you're marketing is working. You need to be able to see if you're, whoever you choose to do this is actually doing their job. So you have to add access to all that and they have to keep up a CRM and give you access. They also have to communicate with you about the leads, the offer strategy, etc. Like the guy that I chose messaged me last week. He said, Hey, one of your leads was for a mobile home. Here's the rent numbers. The guys opened a seller financing. Here's what he's thinking. What do you want me to do? When I sent him back some thoughts to consider about where I would kinda wanna be before he goes on the appointment. And, you know, because I don't want him to get it under contract at the wrong price and then I don't want it. And then that was kind of a waste of my money too. Right. So there will be some communication with you and the person that takes your calls. And I might buy my first mobile home if this comes through via seller financing. Wish me luck on that. So one thing to remember is that this all boils down to trust. Okay? It doesn't matter who you choose. It can be someone local to the market who is just getting into real estate. And they're hungry and they have a lot of time on their hands. I've made people like that into my acquisition managers before. Wholesalers, especially experienced ones, will probably be your best bet because they have the experience and the infrastructure with which to incorporate your new leads. But I want to make sure more than anything, you get a good feeling about the person that you choose because the relationship depends on trust, more than anything else. Okay? You are going to oversee what they're doing. But you don't want some micro managing a situation where you're always like thinking in the back your head like is this person doing their job more than anything? It's going to depend on you trusting them. And I believe that our intuition, or some might call it your gut, is way and wiser than we give it credit for. A lot of times. If you're willing to slow down enough and listen to your intuition about things, it will give you your answers. In fact, Malcolm Gladwell wrote a book called Blink. The book is about how your intuition gives you the answer almost immediately, which is why the title is blink. And then if you're if you're present enough to notice it, then you've gotten your answer. I'm going to go on a little bit of a tangent here. But like if someone says, Hey, do you want chicken for dinner or do you want pizza? You immediately know which one you want or if you want neither. But if you think about it and you ignore that intuition, you might end up going, let me say. And now your brain is kicking in. Your thinking mind is not always intelligent as like your heart or your gut. That comes from somewhere deeper than your thoughts. Same thing goes for like when you are at the mall and your trying on clothes and you look in the mirror to see if you like it, you know, immediately if you'd like that are not immediately. It's when you start to think about it. When you screw up. If you have to think about it, the answer is no. Okay, you'll know immediately. You'll also know immediately. If you get a good I mean, I'm not saying like the first word that comes out of someone's mouth. You'll know immediately for this, you might have to like have a 10-minute conversation with them. But then immediately following that, you'll know, I want you to talk to multiple people and pick the person you get the best feeling about because your intuitions way smarter than you think. And at the same time, don't overthink it. Because if you pick the wrong person and they don't work out, so what? Pick someone new. You control the phone number. I'll show you how to do that in a second. Or you can just pick a new, you can pick a new person, drops some new mailers and sever the whole relationship. So this is something too like you can cancel it real quickly and easily if it doesn't work out. So let's talk about getting setup. Once you choose who will take your calls and you agree on a commission structure, set things up so you have access to the incoming calls as well as the leads and their status. That's going to help you hold your person accountable. I need to come up with a name for this role. For now, it's your person. How would your person accountable? And you will be able to oversee their activity. So really all you need is a phone number and a CRM. So you're going to use Google Voice. Google voice is a great free phone number service. And you want to allow whoever you're going to use for this, you know, your person. You're going to allow them access to that Google account. So they'll have like the e-mail and the password to sign into the Google account to access the Google Voice number and the calls and the texts and have the app on their phone and use it. And you obviously don't want to give them access to your existing Google account. You're going to create a brand new Google account just to create a Google Voice number for it. Then you and your person can, can login to that Google account and look in both look at the calls and the texts that are coming in. So then you share login with that person and then find out if they're already using a CRM. Any wholesaler worth their salt is hopefully not putting things on three by five index cards like some guys I know. And they're actually up-to-date with post year 2000s technology there on the Internet. And they've got a CRM of some kind. I mean, hopefully they at least have a Google spreadsheet. Right. But better off. Codio Trello pipe drive, whatever. It doesn't really matter. But some place to just input property information. And then there's a comments field so that you can in a next follow-up date kind of thing. So you need to find out if are they using a CRM and confirm, Hey, I need you to create like a separate pipeline or workspace within that in which CRMs have that capability. So don't get confused by what that is, is just a thing. A CRMs come with to divide one set of leads from another. And then you'll be able to keep your leads separate and that separate area within their software. And they're going to add you to that workspace. So you'll get notifications when something happens, you can login, you can look at the status of each of lead. You can see the last time they were personalised, called back what happened. And you want to be able to see that. You want to be able to oversee what's going on with the leads that you're generating. And also on this don't over complicate it. Simple arrangement. Have you set up that phone number and they add you to some kind of CRM where you can see the leads where they're going to they're going to input them as those calls come in, then you're done. And again, I want to remind you guys because we're getting in the weeds a little bit here. To keep the long-term vision in mind. We want to be marketers and decision-makers, okay? So the whole reason we're doing this is because we want to pull the strings on the leads. And then we just want to make the final decision on, yep. I want to buy that. And then have your assistant if you have one, handle. The rest, you know, like when it comes to managing your portfolio, my assistant does a lot of the work dealing with the CPA and the bookkeeper in the property managers and the bankers and other private lenders, and she deflects 90% of the requests from all those people. And you can see like the way my business is set up is to be as automated as possible. But while still using the best strategies that work in today's market, you know, if you want to succeed now you gotta do direct seller marketing. But then you have the issue of that taking a bunch of your time. So you've got to build a system that requires as little time as possible. I hope you guys take this mindset that I have that I'm teaching you, infuse this into your business and into everything you do from here on out. Because this is this is how real business owners thing. I know you guys joined this program to get some tips and tricks on by your next task, will get that to you. But I want you to, I want you to also learn to think like real business owners. I'm not saying I'm the most Mark Cuban guy on the block very, very far from it. But when you watch a show like Shark Tank and you're like, How the **** did these guys keep buying all these businesses? Aren't they just like adding more work for themselves while they're not because they have a system that can absorb all that new activity. They have people that run their whole portfolio for them. So when you do a new deal, they're hugging and high-fiving. They're happy. Because I know it just means more money. It doesn't mean more work. One of the biggest reasons that people resist doing instructions that I give them or anyone gives them, is because deep down inside of them they know that that's gonna be a bunch more work and I don't need anything else to do, Brian. Like my plate is already full. I got a family or I got a job or, you know, I have a bunch of hobbies. I just want to travel more. I don't want to do more stuff. So slow down and think about things a little bit more than you are now. About putting pieces in place where someone else will take the ball and run with it. That is key takeaway to be successful as an investor, as an entrepreneur. This training is a reminder of that. It's instructional on how to do it for one piece of the business, but not the whole thing. And so you want to be a marketer. You want to make the final decision of whether you're adding a new deal. Just like on Shark Tank. They're sitting there. They sell themselves and then they make the decision. And then boom, they're pretty much done. So I hope this has been helpful for you guys. Here's what to do next, okay. So first of all, decide whether or not you're going to delegate your calls. Are you going to do this or not? You don't have to do this. You can take the calls. Maybe you think you'd like it or whatever. But go one direction or another. If you decide you're gonna do it, create a list of potential people you can partner with to do this. Wholesalers, people you know in your market, make some posts and the different Rhea groups, Facebook groups for your market. Find out if there's anyone young, hungry, ready to go out and hustle a little bit? Come up with a rough idea of the deal structure you want to use. You know what? I came up with a 16k a commission in the 10% of the wholesale fee. You could start with that. But it's good to have a rough idea before you hop on the call with the potential people. Because then you're going to call them and you're going to float the idea to them very much like candidates might not be a good fit for you. But here's something that I am looking to set up and make them tell you, oh no, I want this. It should be like they should be excited about it or otherwise, you're probably not a good fit. Again, go with your gut. Who's the most qualified to do this and who's the most trustworthy. And someone that you, you know, you just vibe with, you feel like they're genuine. You get along with them. You both have the same goals, that kind of thing. That's it guys. Deploy your marketing with the new phone number, wash the deals role in hop on that CRM, communicate with this person and go and get some deals under contract. And you guys are going to love this system. Never going to want to go back to having to hustle or mess with listed properties or anything ever again. So I hope this has been helpful for you guys and go out and crush it. 15. What To Do In Hot Markets: We are going to talk deals tonight, guys. I think that this is probably everyone's biggest bottleneck just from the feedback I've gotten from the group. People can pick their markets, they could build their team. They can find private lenders that can learn how to analyze deals and make offers. Find those contractors, et cetera, property managers. But deals are the big elephant in the room. And so we're just going to really stay on this until it's 100%. Figure it out by you guys. And I'm going to show you exactly what I do. I hesitated to even recommend some of the stuff that I'm going to recommend to you tonight because it wasn't really necessary. Even just a year ago. Okay. But because the market is where it is now, I'm going to change or alter some recommendations that I've made in the past. And I'm going to explain why I've made that decision as well. So this training is about what do you do when the markets too hot to keep finding good deals? Okay? So let's first define what a too hot market is like. What does that mean and how do you even know if that applies to you? Well, a too hot market is where nothing on the MLS is a good deal, okay? Like if literally every single thing that you see is way over price on the MLS, that's a good starting sign. The next two would be you've already done the traditional recommendations that I give you. So you have ten or 15 wholesalers that are finding deals. You have five or ten property managers. And you're reaching out to each of those two groups at least every two weeks, you're saying, Hey, remember me. I'm that guy, um, that catch fire. What are you working on? Let me make some offers on some stuff. You're proactively doing that. Then when they're sending you stuff, if they're sending you stuff, you're making offers on those deals and you're sticking to your criteria, which admittedly is a bit on the strict side, the way I teach people to invest is two, really stick to your guns. Have a certain amount of cashflow and equity. I don't really make exceptions on that because you wouldn't really be a savvy investor if you weren't getting good deals that had positive cashflow and then had equity in them. So you're going out and you're making offers where you would have those things. And those offers are basically far too low compared to the other offers that these people are seeing. Okay. I know some people in the group, hey, I'm offering 50 grand and they're saying We got offers coming in at 70 grand all day. The house only rents for 700 a month. It's like those people are buying a rental where it's going to add best, just break-even for them, there's gonna be no cash-flow, right? That is the reality of the market right now. Like I am selling a little zero lot line sound like a condo, but it is a shared wall with other properties. No. Hoa. But I bought that thing for like $12,000 like six years ago. I did put 30 into fixing it up, but I just listed it sold for 145. And that person that offered 145, I mean, they way overpaid. It was like a mom-and-pop rehab couple probably going to go do everything themselves are gonna go up to Home Depot and take out the tile and install everything. And they're gonna be able to squeeze out 20 grand and profit because they're not going to pay contractors is probably take them six to 12 months to do the flip. But they're probably retired and there's like, this will be fun. A lot of times you guys are gonna be competing with people on those types of deals like those people offered like $15,000 more than the other investors on that property that listed. Right? So that's if that's going on in the market that you're in with every single deal that comes across, then you have a problem. If you've been doing that and let's say you've made at least 30 offers and you hit really haven't even gotten close on a deal yet. Okay. Then your market may be in this what I call too hot state, okay? It's really important to make sure that you are doing all of the above are ready. Because if you're not, then doing that may be your solution. It might work. It's all market dependent. Okay? So what I have recommended up here, but the wholesalers and property managers might get you more than enough deals. Some of you might be content to buy a deal every three months. So it's not like you don't want to overdo the marketing and make a job for yourself if that wasn't necessary, okay. But I know some of you are doing this and it's not enough, it's not working for you. So I'm going to tell you what the next step is to make this work for you, okay? Again, make sure you're doing the above things because there's no point in taking on more work or complexity if the above, the above things might work for you. So assuming you're doing all that, you're still not finding good deals, there's really two major adjustments that you can make, okay, and this is what I'm seeing other investors doing. I definitely checked with my real estate investing coach and I checked with other mentors of mine from the past are just investors who I respect all these things to make sure that they agreed with me before I'm recommending this. And so what they are is number one is to start looking at a fringe market outside of your home market. That basically means the different small, usually smaller cities that surround domain, larger city you have selected as your market. We'll talk more about that in a second. So that's the first major adjustments that you can make. The second one is to begin direct to sell or marketing. Okay. So instead of dealing with wholesalers, property managers, Realtors, et cetera, you bypass all of those people and you mark it directly to the sellers themselves. We're going to talk about that more as well. But for best results, it's really recommended that you do both of these right now. If you want to guarantee that you're going to start seeing a bunch of just better deals right now, Then you have been sitting. And also remember that I think that everyone on this call is a committed real estate investor like you didn't just show up to dabble in this for a month and if it doesn't work, you're going to piece out and go trade stock options, right? So just to understand that your skills, you're going to level up your skill set by making these adjustments and you're going to need those skills again down the road in your career. Okay? So this then also the state of the market as it is right now, is simply not going to last forever. We don't know what it might. Maybe it only lasts another six to 12 months or whatever. But I don't recommend sitting around and waiting and hoping that things change. I recommend adjusting, taking action, finding new ways to do deals now. And that's what this training is about. So some of you are probably wondering, like, why is it okay to go to a fringe market, right? Because the way I've taught you is like, Hey, pick a really great market, population growing. I don't want it to be this size, economically diverse, this rental price ratio. You're going to have lots of appreciation in the long run, stuff like that. And I've been pretty gung ** about that advice. Okay. So why is this suddenly okay? Well, for one, it's okay because that economic strength and diversity that you identified in your home market is really going to spill over into the fringe markets. Okay? So if someone can drive from a French city to the main city, then they can work in the main city where the economy's growing and there's jobs. And then they can live in the French city, right? So that would be like your tenant. And your tenant is benefiting from the economy of the home market. Makes sense. The tenant is the fringe market is basically linked, are connected to that home market. They're not totally separate from one another. Another reason is why this is a good idea is you're not abandoning your home market, okay? You're just saying, Hey, you know, there's just way too much competition right now. There's way too many people overpaying right now in this area. And I'm going to go ahead and just go over here and buy some houses in this fringe market. But once the prices drop, once things cool off, you can simply go back and focus more on your home market. Because a lot of the things that you've already set up apply. I mean, as long as it's not more than like a 30-minute drive, your contractor will drive out there and do the rehabs for you in your fringe market. We're home inspector, right? Maybe the same wholesalers and property managers that you're going to tap for deals, know of deals and that fringe market because it's close by enough that that property manager probably manages some properties out there and they would actually be your property manager when you bought something, etc, makes sense. So you're not reinventing the wheel and just go in somewhere entirely different. Also, it's really important for you to go through this process and complete a few deals if you are still trying to do your first deal or maybe it's been awhile since you've done a deal. Maybe your confidence isn't super high or whatever. It's really important for you to get a win. Okay? You don't have studied like what makes coaching programs successful. And they say, well, you need to get a series of quick wins. Clients and show them the roadmap. And it really, because it's all about lifting your confidence and say, Hey, I can really do this. I can really crush this. And being candid with you guys, I want you to get the quick win, so to speak, okay? If you're going to think about this, if you're gonna be an investor who has 100 rental properties one day, does it really matter that much if you bought your first two or three in a smaller fringe city because the market was too hot and expensive for you to buy it in. A bigger, possibly better long-term city. Not really. In fact, it might be the absolute best thing you could have done. Not just to get confidence, right, but understanding what that process is like. Alright? It's not, it's not gonna be any different, like the process of buying an a fringe city versus your home market. The process is all going to be basically the same thing. You're going to get to experience the whole process end-to-end, 123 times now. And yeah, maybe the downsides of those properties don't appreciate quite as much in the long run or whatever. But as long as the numbers make sense, It's still a good decision. And then you can go back into the home market. Once it's stabilized again, the biggest thing I can do, guys, is to get you to go through the process one time from a to Z of buying a rental, rehabbing it, getting it rented out, getting it under management, refinancing with the bank, using the private money lender to take it down. The whole due diligence process of using a home inspector and a contractor and then managing that contractor. That process is like what really overwhelms people when they're new. They just think about it all the time. Like well, how is it, how would that part work and stuff? And they just really need to do it because it's not really as big of a deal as someone might typically make it in their head. Okay? So this is another big advantage of you just do a good deal in an outside market. Then lastly, if you're picked a rapidly growing market like I've instructed you to do, then that market is going to spread to those outer cities eventually anyway. So they can't be other way, right? Growth goes outwards. It can't really go upwards except in the form of like skyscrapers or apartment buildings, right? It primarily goes outwards because there's a limited amount of land. If you look at Nashville and the way that it's grown, it's grown so much that a lot of the fringe markets around Nashville are actually doing really well. Because the success of Nashville is like spilling over onto those other cities, makes sense. So what is the criteria for this thing called a fringe market? Okay? So first of all, it should be within 30 min of your home market. Reasons for that I kind of alluded to already is, you know, you've got the same team, is it'd be the same private lenders, contractors, wholesalers, property managers, inspectors, et cetera. Right. And then also, um, it's close enough for people to drive to that home market so that they can go to work there or go to a restaurant there, something like that. It's important that it'd be drivable. If you came to me and you said I got one, but it's 45 min away. I'd probably let you do it as long as I took a look at it and made sure that it met all the other criteria. But 45 min is really pushing it. Tried to keep it within 30, population over 30,000. Normally, though criteria is a market should be over 100,000 in population. But for fringe markets, I'm okay with going down a good bit. But definitely you got to cap it somewhere. You don't know how many people send me deals and they like Brian, look at this deal, I found it's only $22,000 for a house or something, and then I looked, I just quickly am suspicious, so I just Google the name of the city and it says population in 2,700 people. And I'm like, ****, no, you know how much trouble you're going to have like finding any professionals to help you, like real estate professionals in a city of that size, and then tenants. And there's gonna be no appreciation lot of vacancy, right. So like 30,000 is like a decent sized city. I've got some Reynolds in a city called Columbia, Tennessee. And it's like thirty-something thousand population. They do fine. It's not the end of the world, but it's like a small town. You go there and you kind of see the same people in one weekend. But it's a it's a nice size. I like the vibe there and the size. I just wouldn't go below that for a rental market. And you shouldn't have to, and there should be lots of fringe markets around your home market that have 30,000 plus people. Next, population should be growing. This is still a non negotiable. You do not want to invest somewhere where the population is declining. That's a big no-no. People mess up a lot of the time. Your population, there should still be increasing, ideally 1% a year or more. Then I always make sure that there's other real estate investing taking place. For one that's just proof-of-concept. You're never gonna be a first one. Are the genius at figured out someplace before anyone else. Just don't even try to do that. We don't want to be like the pioneer that gets the arrows and our back. We want other people to already have arrows in their back. Because I went in and figured it out. And they proved that it is a good place to invest and the rentals are stable and all that. Then also you can tap those people and say what are the good zip codes? Were there good neighborhoods? Who is a good contractor out here? Same process as with the bigger cities. So you definitely want to make sure that there's some real estate investing taken place. Then you need the big two out there, a good property manager and a good contractor. You can probably get those from your home market as long as they're willing to make that drive. One time I had a great contractor in Nashville and I went to buy some properties in Clarksville, Tennessee, 45 min away and that contractor would not drive out there. They were just like that's too far. I kinda understand because It's not just like them driving out there. It's them hauling tons of materials out there for rehabs. So picture driving on the interstate with a trailer full of like lumber for 45 min every day of the rehab and he had a crew of five or ten people. It's like that would have been pretty hectic. So I can understand why he didn't want to drive 45 min, but it kinda sucked having to find a new contractor instead of using the guy that I trust it. So your takeaway if you want to do this, is to look for, look on the map and your home city and then see what all cities are 30 min away. And do they meet the above criteria that we've gone over? Example, I could give you a B like Murphysboro, Tennessee. If you look it up, it's like 30. I think it was lifted up it as like 39 min from Nashville. It's got 115,000 people. And it's a good fringe market. I've actually only got one rental there. But I didn't really focus on it for whatever reason because I felt like some other markets were booming more. But Murphysboro is like a decent market and it's got to college. They're MTSU, it has 37,000 students, pretty big. It's it's definitely benefiting from Nashville's economy. Totally would be totally an okay city for you to be buying rentals. If you'd like if you had been in Nashville and then it got too expensive and you got pushed out. Makes sense so that you can keep doing deals now. So we've talked about the fringe market piece, That's the one big adjustment you can make. And then the next piece is direct seller marketing, okay, and I want to show you a little bit about what to expect, what I'm doing right now with that myself. So when you mark it direct to sellers, the good part is that you bypass the middleman. There's no wholesalers, no property managers know realtors. It's like you're going straight to the source. Everything is always more complicated when there's less parties involved. Okay? And so you're not gonna, there's gonna be very little competition at seller might be talking to five other investors possibly, but if a wholesaler has their deal when her contract, he's probably blasted it out to 300 investors guys. So the competition is way less. It's also easier to do no money deals, right? Because like if you want to do a bird deal and a 50 K house or whatever, and the seller wants 50 is worth 75 or whatever. Like, you can get the money from a lender to buy that, right. But if the wholesalers involved and they want ten K or if the property managers involved and they want a 2000 dollar referral fee. A lot of times the lender won't put their funds towards covering assignment fees or referral fees. And so then that piece of the required cash that you need a closing must come out of pocket for you. So, you know, you're going to have an easier time doing the types of deals we talk about without the middleman as well. Same thing with seller financing deals. Wholesaler lock something up there looking for quick cash seller financing doesn't work as well, even when you do, like I was negotiating on to duplexes and huntsville recently and they were actually I think the seller is actually opened a seller financing. But the wholesaler. 20 or 30,000 as an assignment fee, which if the homeowner were to carry the note for me, I could do the deal with no money, but I'd still have to pay that 20 to 30 K to the wholesaler at closing. So it's like that's definitely not a no money deal. It's a 20 to 30,000 dollar required cash deal. That all goes away when the wholesaler goes away. Another thing to expect as you're going to spin, have to spend money to finance guy. So you're gonna have to write checks and you have to ask yourself if that's comfortable. You're comfortable with. But I want you to understand it will be more than recouped on the deal itself, okay? So you might spend literally $1,000 to get a great deal from director salary marketing. And you're probably thinking like that would be really hard to stomach Brian, like I've already invested in coaching and now I got to spend more money to get a deal. Well, let me help you reframe the way you think about that because if you go and get a deal on your own, you're definitely going to get it for probably ten to 15 grand cheaper than you would have gotten it from a wholesaler. That's because the average, like I've asked a bunch of wholesalers like what is your average spread right now? And they all would, they usually say like 12 grand or 15 or ten. It's always something in there. So they're getting the deals for ten to 15 K cheaper than you are. So you're spending $1,000 to save ten to $15,000. So once you do that one time, you will have a bit of a paradigm shift about this. I've spent like hundreds of thousands of dollars on direct seller marketing over the course of my investing career. When our wholesaling business was at its peak, we were spending over $200,000 a year on specifically direct mail. You're probably like, why in the **** would you ever do that? Well, the business was grossing over 1 million, right? So our marketing cost was 15 or 20% of our gross, which is actually pretty healthy and normal. And the only reason we would spend that much is because every time we spent $2, we made back $10. Marketing is an investment, not an expense. That's a big mistake. People make. You watch Shark Tank that people get on there and you're like, yeah, We've grown our business to $300,000 a year and we did it with no marketing. And they're like proud of it. Because they think marketing is like a cost to it. Hopefully you can avoid it if you want to. And then there's sharks are like dang, That is pretty good. But why, why are you keeping yourself small? Like, why would you spend money on marketing? So as you can blow up, definitely view marketing as an investment into your business the same way you would invest in your assistant or getting an LLC or like the downpayment on a property, it's easy for people to cough up money on a property because you're like, that's an investment. It's ten grant down. It goes into the purchase price, you know, it's part of it. Well, marketing is really the same thing. You're investing in. Your ability to get deals for a lot cheaper and go straight to the seller. Lot of people though they will not spend that one k. So that might be something that might be a new pill for you to swallow. I don't know if it will cost you that much. Okay. Our cost per lead vary pretty widely in our wholesaling days. Or cost per deal, I should say. Sometimes we spent $3,000 to get a deal that made us 12th. Sometimes we got it for 500. It really just depends on the list that you choose. I'm going to talk about that today. The marketing message and the competitive of direct mail in your market. Okay? Then definitely how you work that call, how you follow up, how good you are at sales, etc. But definitely expect to be more involved. If you decide to pull the trigger on director salary marketing, you'll have to set up your marketing and you will have to talk to sellers. So let's talk a little bit about criteria for direct mail. This is what I'm doing now. You guys can wait and let me spend a bunch of money and report back to you on how it's going. If you'd like if you like, let me try let me try the other stuff first and Brian, you let me know how that's that's totally fine with me. This is my job is to go out and pioneer and test for you guys What's working right now. But I haven't really needed to do this until now to find deals. But because me and especially you guys are having More trouble finding deals. This is what I'm here for us to solve these problems for you. So I'm gonna share with you what I'm doing right now as we speak. And then you can decide if this is something you wanna do and we can go from there. So again, I recommend you start with direct mail. That's just because I know it works because I've done it. And I know that a lot of the wholesalers that are sending you deals that are overpriced and there's too much competition. They got those deals from doing direct mail. I know that because I talked to them and I used to be one of them. One thing to remember is the direct mail is competitive, so you have to niche down a good bit right now. I'm going to show you that. And I'm going to rattle through the criteria on this slide just because this is being recorded, it'll be put into the course. And so you'll have that where you can see it. But don't worry because I'm going to go through all this again when we go into prompt stream. You want non owner-occupied, mean absentee owned houses, minimum of five years ownership. No one's going to sell you their house at a discount if they just bought it last year, you know what I mean? That doesn't even make sense. So five years or more, you can bump it up to seven or ten if you want to cut down the amount of records you have, it should be vacant. That's a piece of criteria that the software I use can do. There should be no HOA fee. Single-family house. Then don't select a bedroom. In some cities. Again, you're probably like, what does this even mean, Brian? I'm going to explain it. But I recommended that you maybe don't put three bedrooms or more because it messes up the software. Sometimes you need to exclude the duplicates on your list. Remove these following organizations, and then your postcard copy is really important as well. And I'll show you what I use. So I'm going to kill this slide here and hop to prompt stream. This is what I'm using now to run comps, to look at deals, to add, to do my direct seller marketing. In my time as an investor, I've never actually seen a platform that was as slick as this one when it comes to being able to do everything in one place. Okay. And I'll show you what I mean because we already know that this is used for running comps and analyzing deals, right? That's the primary reason you either are using it or thought you needed to use it. Okay. So check this out. Okay, We've gotten mount beer stout over here. I've actually climbed that. Sorry, I've got to scroll brain, 14,000 ft. That's pretty cool. I don't know how this thing knows. I'm in Denver, but we're gonna put like Clarksville in here, a market I invest in and that I like. Okay. So you see I just searched for Clarksville, Tennessee. And it shows me the high level like numbers here. Okay. And there's 70,000 properties. Okay? Now, if I click Filter right here, then I can go and start to add some stuff. Owner-occupied, yes or no or any I want to say no because I want it to be absentee. Landlords notice that took it down. We were at 70,000. That takes it down to 23. So you can watch your like ticker count over here as you make criteria adjustments. Now this is a really cool feature of prop stream, whether or not it's vacant. Okay. You see how much that took it down 23000-1400 and you're probably like, well, what constitutes as vacant? Well, this software prompts stream gets data from the US Postal Service on people who have not been responding to their mail for five weeks or more, and then they are counting that as this must be a vacant house. Okay. So vacant has always been one of the best performing direct mail lists that we've used. Okay. You know what? I just thought of something I didn't put on here. Free and clear. Okay. So property characteristics, we're going to click residential. We don't want the commercial stuff. We're going to click single-family. Okay. We're going to click free and clear. Boom. You see we're getting, like when I said in the slide earlier about how you need to niche down. This is a kind of stuff you gotta do if you want to get deals right now. Like the property is owned free and clear, right? It's owned by someone that does not live there. It's been marked as vacant. We're going to say they've owned it for at least five years. What else are we going to put on here? Nothing in there. Thinking they're not worried about liens, or I'm not going to really mess with estimated value. Here's the thing guys. Like, some markets don't really have data on. Every single thing. Like I could put nothing more than 150,000. It's going to strip it down some more. But for one, I don't actually really want to eliminate expensive properties because I'm currently learning how to do lease options and you can do that on more expensive properties. So I want to keep them on my marketing. But also I don't really trust that they have all the data there. I was pulling records on Huntsville earlier and when I put it, I put three bedroom property characteristics. I tossed three bedroom and right here and the list went to zero. Okay, and that's just because they don't have the data. And so we screwed it up. But notice we have owner-occupied, no. Free and clear. Yes. Vicky? Yes. Residential, single-family, five years or more ownership include unknown sale dates. Yeah. We probably want to go ahead and include that. It's not a small list. So did we hit everything? Yes. Okay. And so then I can sit there and just click Save. I can actually what I can do is I select this. I have 506 unique properties. I click Add to List, and then I'll just say Freedom Accelerator. We'll list. All right, so that creates a marketing list. Okay, and then I can go to campaigns. I can click new campaign. I can just call it Freedom Accelerator, Clarksville list. Then I can click that one. You see how it's down to 435. Now? I'm so sorry. I got a little sidetracked. I'm going to tell you. So for 35, it wasn't 500 and something. This software eliminates duplicates, which I have mentioned you had to do here. What that means is like there's gonna be, you know, one guy who owns 20 or 30 properties in Clarksville that meet the criteria that I select it. I don't want him on this list 20 or 30 times. I want him on the list Just one time. So you don't want to mail like 20 letters to one person in the same day and just load is mailbox up and each one's about a different property. It's assumed that, hey, if you're a buyer, you'd be interested in any property that someone has the cell so you don't have to mail a separate letter. Okay? So anyways, you want to you can go in here and you can create a postcard campaign. Did these 435 people, you select your size and then you select your postcard. Okay. Like you like these are all bunch of like kind of tried and true postcards that you can select. And then you just have to go in here and you click Advanced Edit. You can move, you can click and edit all this texts. Just, you know, Brian blah, blah, blah. You can just change stuff like that. You can click an image and remove it if you want to. And then you edit the front side too. And you literally just like click print and mail. And boom, boom. This is going to cost me 200 bucks. And if I click this, it's going to order them for me. Isn't that cool? 53 sense. It's a little expensive. Like I typically paid $0.32 per per postcard back when I was making thousands every week. But when you're mailing only four or 500 at a time, they have to up charge you. It's not terrible price. But I'll show you something I was working on earlier. Like this. This is something I wrote out earlier. This is really the Angola I'd prefer you take when you're writing copy for your postcards. So this seller, of course, has the weirdest name ever. You'll see that kind of stuff on your list. But I said, you tired of getting postcards, asking you to sell your home. The truth is selling her house a real estate investor, as is for caches, not a good fit for everyone. If you want to have a real conversation with a real guy and the pros and cons of selling to an investor. Shoot me a text, we can find a time to talk. I'll be honest about everything. You can decide if it's a fit for you. So can you see how I'm really leaning out there and I'm just like not acting all mediums. Like, you know, you need to stand out because like all those other templates that you saw, like to me, these are just like someone sees it and just throws it right in the trash. Plus I feel better about the one that I selected because it's me, it's authentic to me. I feel okay. I'm being honest with the person. But anyways, the last thing I want to show you is you need to edit your recipient list one final time before you send it. So it already eliminated duplicates, but you don't want to mail certain entities. You can mail like if it says a living trust hear you can you don't want to mail like Bank of New York Mellon, right? So since these are smaller lists, you can actually kinda just manually do this. It's not the end of the world. Who else would I commercial floor products. I don't know who that is. Crocker rental partnership. That's probably just an investor. So I'm going to keep that on there. Eagle bluffed partnership, that's fine. What else? Methodist Church, we're going to remove that. And handicapped Properties trusts, we'll leave that there. Llcs are fine. Like I said, Construction Incorporated, you know, probably going to remove that just because I feel like it's probably a builder. Emergent Montgomery County emergency communication like anything that sounds like government. Or you're just basically wasting $0.50 every time you mail someone who it's definitely not going to say other house. So what else would be like this is in Tennessee, I will say if there's any things starting with Tennessee. Now there's not US bank, we delete that. Yeah. I didn't like look at that closely but then you just click Remove Selected. I'm not sure what's going on here. That I was quick and stuff to click staff you click Remove Selected. Yeah. It took them off that there was a pop-up and then you're done. Okay. Like you have you have this list. And it's pretty cool the way this works. I definitely prop stream is 99 bucks a month. Okay, So it's pretty expensive actually. But it's your one-stop shop. Okay. You can even, they even have things in here like skip tracing. Like I can build that same list and I can select, I can say I want phone numbers for everyone. Select my contacts. I can go back to that same list. Done. I want phone numbers for every, every single person. Thought I selected this. Add select contexts. Point being is like I can take that and then I can purchase their phone numbers via skip, trace and then you can send them text blasts. With this, It's pretty cool. The way that prop stream has been built there. Definitely head and shoulders above. Anything else. If you're going to get into director salary marketing, I would recommend coughing up the 99 bucks a month. Just look at it as you're spending $1,200 a year as an investment on your business, that's going to make you a lot more money than that in the long run. 16. Your Highest ROI Activity: When I first got into real estate, I was terrified of all this stuff. Okay. Like probably worse than you are because I'm just normally kind of an anxious guy as is. Like, if I had like an emotion, you, you could say that I struggle with, It's probably anxiety. It's not really that bad nowadays have been working on it. This is a great book you guys should read. If you haven't read The Power of Now. That's a whole another side note, but I happen to have that sitting here. But when I first got into real estate, like my anxiety was through the roof guys, I remember putting on a suit. I had this stupid baggy pinstripe suit. It wasn't even like tailored to fit me and dress shoes and I would put those on and literally like paste the floor in my house and try to feel like I was professional life was like Argo suit on. And I can hear the clicking of my dress shoes on the hardwood floors and that makes me sound powerful. So I am worthy to make these sales calls. I was a mess. That's literally like the thought train that was going through my head. When I first got started in real estate, I was just like trying to basically fake it till I make it a trick myself and believing I can make these calls. And I've drank way too much coffee and got all jacked up and over thought everything that finally make you know that one call to a lender or a seller or whatever it was. And men It's sites like I can still feel what that fear felt like. Like I know what you guys are going through. I know what it's like to be a newbie, to be a beginner at anything. It's not fun, right? But if you don't face that pain, head-on, if you don't look the monster in the eyes and move forward into that, you'll never get past where you're at right now. Any there's this, there's a quote that says if you want, what does it say? It's like if you want to something you've never had before, you're going to have to do something you've never done before. And that makes sense if you think about it conceptually. But it's easy to try and find other things to do, right? Procrastinate, like if I have something that I know I really need to do to grow my business, but it's kinda scary and uncomfortable. I'll literally like, start playing video games. This computer that I'm filming this on is like is my gaming computer. I have a pretty cool setup here that I've built. And so it's tempting because like I can be like, well, I could do the hard thing that I know I need to do or I could just click this button here and start playing some video games. And that will be easy. And it's a nice distraction from what I know I really need to be doing, right? So you have to know more. You can just be self-aware and honest about what's going on the better. It doesn't mean you're some bum. You played video games one time he said it made those calls. You just know. Well, that's why I was really playing video games is because I was just trying to avoid doing that thing that is kinda scary. And tomorrow i'm, I'm going to, I'm going to attack this again and I'm gonna do better. You're calling it, you'd call a spade. A spade, you're moving forward, that's progress. The same time, don't beat yourself up kinda as you go through this journey. But it is scary. You're human being doing something new and unfamiliar for the first time. Other human beings are involved. So there's like, sorry, I got a hair in my face. I can't remove. Other human beings are involved, right? So there's that fear of like possibly screwing up or looking stupid. And so yeah, it's, it's normal. You're a human being and you're going to feel this way when you do anything new, like literally just try to think of anything else that you might get into. Well, if you've got a new job, a new sales job and you had to make calls or go knock on doors. Terrified at the beginning, like until you figure it out. This is no different. So anyways guys, I want to get into the lesson today because I always say there's a couple of activities that you can do to grow your business that trump everything else. Like they are by far more impactful than anything else. And so today, I'm going to go over what one of those are because I know that, you know, if you guys are anything like me, you wake up and you want to know what you're supposed to do every day to move forward, right? Like you wake up and Drink your coffee and you sit down and you're like, what am I really supposed to be doing today? To make a difference? Like what are those high leverage things that I could be doing today? And then what are the time waster, et cetera? Even today, sometimes I'll wake up and I'll be like, alright, Now what am I supposed to be doing again today, right? So this is kinda like a never ending battle to try and figure out these sayings. And I always wished someone would tell me like, what Mr. successful person, what what what did you spend time on? What did you prioritize in order to get results? Like what are the things that really moved the needle? What kind of things were just distractions and it never ended up mattering anyways. I'm sure you guys also want to know what's the simplest and most painless path to getting passive income, right? Like, what's the quickest way to make that jump to having a few dozen houses read checks coming in every month and you have the option of whether or not to work, right? So we're gonna go over, like I said today in depth, one of those too high leverage activities because I think there's two of them. And then I'll tell you what the other one is at the end, just so you have a little bit of foreshadowing and cover that one in a separate lesson. Okay, so let's back up a little bit and I want to tell for those of you that haven't heard this, I want to tell you guys a little bit of my story of getting into real estate. Kinda just skip to the bullet points, but a lot of, you know, that, you know, when I got in this, it was all about wanting to get passive income. Passive income stopped trading time for dollars. That was the whole plan. But then I got into wholesaling and flipping and I got all distracted and I kinda thought I couldn't buy rentals. Like honestly, I put that on the back burner for years and years. And then I finally got fed up enough and I bought a rental with cash. And, you know, I'm talking like 18 grant, I think is what we paid for this house and I split it with another guy. Okay. Then we had to put money into fixing it up. And then like after that one, we didn't we didn't have any more cash and that was all we had. We had this one crappy rental. And then I was like, Well, I can't get a loan from a bank because I'm an entrepreneur. I've got this shaky income history. Like I literally made like 8,000 bucks or something my first year as an entrepreneur, like bird dogging for other investors. I don't even know what my credit score was, but I'm sure it wasn't that great, right? But banks weren't going to loan me money. I didn't have cash. And so I was kinda stuck. I had that one rental But I was just like, What am I supposed to do to keep moving forward from here. I got invited to this mastermind meeting with all of these other successful investors, right? And I was kinda known as the wholesaler there because I had done a bunch of wholesale deals. But I had the one rental and I go to the meeting and there's guys there with hike hundreds of rental properties in the group. Guys that have like what my dream is. It's just like, wow, this guy is 200 and something rentals, this guy is 150, This guy is 100, this guy is 75. Rounds, this guy is 40, this guys is 60. Like they were just crushing it in terms of the whole buy-and-hold thing, right? So I naturally, I kinda felt nervous or inferior around all of them. And I I took notes, I started just kinda taking notes. I didn't talk very much. And I noticed that these guys were talking about private lending a lot. They're talking about OPM a lot, which is other people's money, right? And that seemed, they seem to have like all these sources of funding. Like they would just say, you know, I got a lender who loans me at 8%. And like the way they were talking about It was like they could just email them the deal information and then the money would be there. Like it was like a phone call kind of arrangement. I still didn't really understand. Like was it a bank or was it a person? Like who are these people like I was really confused. Similar to how you guys might feel right now. Okay. So just understand that if you're still confused by the whole lending, have been there. But I realized that I also met a lady there who had, who was like a traditional lender or something or she knew about traditional lending? I think so should she was telling me, Yeah, you know, you can only get ten loans from a bank, like ten, 30-year loans and your cat, I'm like, Oh, really? Well, dang, like these guys that have 200 properties obviously are not getting those 30-year bank loans, right? She's like, Yeah, definitely not. They're using all their funding. So that kinda realized. There were some other world of funding out there besides banks and cash. But I didn't really understand it. So I went home from the mastermind meeting and I started studying. I started reading about OPM, other people's money, started reading books, taking courses like talking to other people about it, getting on the phone with mastermind members and all that. And I grew to understand it a lot better. I realized that this whole other people's money thing. It's like, if you think about banks which are like the other option, well, whose money to banks to loan out. Loan out other people's money to you. If there were going to loan you money. That's literally how a bank works. They go out and they're like, Hey, you want to keep your money with us. We'll give you a quarter of a percent and a savings account or whatever. And then they turn around and blend that out at 5% to people for mortgages and stuff, right? That's pretty much how banks work. They get money and then they lend it out. And if you weren't like giving them, if no one would put their money with the bank, they wouldn't be able to lend any money. They're lending out other people's mind. I was like, Well, can't you just skip the bank, banks like the middleman and go straight to those other people. And it turns out you can. And that's exactly what all those guys in the mastermind we're essentially doing. And they were avoiding all the red tape from the banks and just going straight to the other people. Yeah, they were paying them a little more interest than you have to pay a bank, right? But it's almost like banks or like suffering people out there, like taking their money. They're taking our money and paying us nothing on it. And then they're turning around and lending it at all kinds of different rates. I've gotten like a business loan from Wells Fargo for 13% before. They loan money at all kinds of different rates depending on what it is. They're not really paying. Of course, they provide a service like they actually give you a checking account and check card. Keep your right. So it's not just they're not just a middleman who takes money and loans money. But I realized like, you can skip bags and go straight to the other people. But hadn't ever done one of these deals, right? And that was when this little cheap house in Clarksville, Tennessee came along. And it was like a no-brainer rental deal like the seller wants 33 grand for it. I knew it would rent for like 900 a month and only then the contractor says it only needs eight grand and repairs. You guys know how to talk about the 1% rule and it needs to be at about 1.5%. And this one was closer to 2%, which is rent to the price ratio. So it was like a no-brainer and it would have bunch of equity and it'd be worth 75 grand. And I was only going to be in it for 43 or something right after rehab and closing costs and purchase price. But just like all the other good deals that have come along where I passed on it, I still didn't have the money to buy this one either. And it had I not gone to that mastermind meeting, I would adjust wholesale to someone else or told the seller no or whatever and moved on. But luckily, I went to the mastermind meeting. I've been reading about this OPM other people's money. And so I thought about other person, another person. I thought about like someone who might loan me the money and it was a another landlord investor dude in Nashville that I was friends with. So I call him and real nervous leave voice shaking on the phone. I'm like, Hey man, would you would you ever consider loaning me money for rental property, you know, like all weird like that. And he thought about it and he was like, yeah, you know, I might consider that, send me the details. So I emailed the stuff and he calls me the next day and he said, yes, my my jaw just literally dropped because the other people's money thing actually worked. He agreed to loan me the money to buy the house and for fixing it up and the closing costs and everything. So I ended up coming out of pocket. Nothing. He wants to 9% wants his money back in 12 months. I'm just like, sure, whatever, Give me the money. Right. And then I bought it, fixed it up, rented it out. And then when the 12 months came up, I just refinanced him out and found in another private lender to take his position. I think that one's for like 18 months. So I had a little bit longer time then. But my monthly payments, even at 97, We're such that like I was still cash-flow and get almost 300 bucks a month on that house because the numbers were so good, even paying him the 9%. So that, that deal and that whole sequence of events was what opened my eyes to this whole thing. Okay. And I realized that if I had a bunch of other dude's like him, that guy's name was Jeremy, right? I was like if I had a bunch of Jeremy's with money to give me like this, I could crush it. And so I just decided I was like raising money like this, calling lenders, asking them, that is a high leverage activity. Okay, So I just created a basic spreadsheet on Google Sheets. And I started posting and all these Facebook groups and asking around and finding every possible lender that I could. I put anyone on the spreadsheet, banks or like individuals or companies that did private lending. I didn't care really. I just was like massive action like Tony Robbins talks about. Just pick up the phone dial asked people hanging out. Next one, next one. I'm going to tell you guys like the process of how to do this on this call. I'm gonna tell you the step-by-step of what to do. But I literally was grinding the phone. I think I've locked off like Tuesday afternoons 1-3 or two to four or something like that. So it was just 2 h a week that I blocked off and it was my money raising time. And I did that for like five or six months. And so I was either calling names or I was finding new names to call because sometimes I'd run out and I'd ask them a series of questions that I've kinda Greenlight certain ones or put them in red if they weren't a good fit. And like guys in five or six months of doing this, I was done. Like done. I mean, that I had enough money to buy all the deals I needed to buy. I didn't really need to find more sources of funding. I had found enough options that worked for me where they said they would loan me the money and all that. Where I was good. Okay. And that is when I realized like that, then this kinda brings me, you already know what the one thing is. Raising money. Raising money is one of the top two highest leverage activities you can do to make progress in your business. If you think about it, like when I was wholesaling, I used to think about like, what is the bottleneck and my business. And I was like, Well, I want to sign contracts. I want if I had I was thinking if I had 100 sign contracts, I could probably flip all of those and that wouldn't be a problem. So, you know, the the like selling the contract part isn't the bottleneck. The bottleneck is getting the contracts because if I had them, I could deal with them, right? Um, and so when you ask yourself, like, what's the bottleneck in your real estate investing efforts? For a lot of people, it's the money or it's going to become the money pretty quick. Like maybe you have plans for the way you're going to buy your first house or whatever. But then like me, you might be tapped out of cash or whatever and then you'll be stuck right? On the flip side. Like, I know people that you could call these people kinda lucky or whatever, but I know people who got into real estate and their dad had 1 million bucks and it is Ira was like a sun loan you 500,000 of this to get going and your real estate and I'll charge you a really low interest. And for, you know, the dude has ten rentals and it's all from his dad's line of credit established or whatever. Right? You could call that guy lucky or whatever. But what if you could find for guys with 250,000 to loan, right? You wouldn't be in the same situation. And the people that have the money sitting in the wings. And it said a good interest rate and it's quick and easy and there's not a lot of red tape. Like they dominate everyone else in terms of the speed at which they are and grow their portfolio. If you think about it, like if, if, if you had, if I told you, I'll loan you $1 million at 4% interest or whatever to buy rentals. Wouldn't you be able to crush it? Like, wouldn't you just literally be able to go out and buy the next ten deals that come across your desk. Or you could, you could make offers, but confidence, just knowing like Dude, I've got 1 million bucks waiting in the wings. I can buy this one for 40, this one for 60, this one for 70, this one for 30, are still only used. 20% of my money. Like you could, you could go fast and you could close fast and all that. It would really help if you had something like that, right? So that's why spending time getting that is like one of the highest leverage things you can do. Okay? I want to talk a little bit about the philosophy on kinda like, why why would someone want to loan you the money, right? Because I know some of you are probably thinking, yeah, Brian, who wouldn't want this, right? Like who wouldn't want to get tons of money and have private lending. Problem is I got to go out and do it, Brian, like I gotta go out and make these calls and pitch people, you know, and I don't know what I'm doing or what what's in it for them. I don't want to beg for money, like, I get it. I felt that way too. I really did want you to put yourself in the shoes of your potential prospects, like the person that might loan you money. First of all, it's someone who has money and it's probably someone who is trying other forms of investing. Sometimes you'll get someone who literally just has all their money in a savings account. They have a bunch of cash, but they're probably not happy with that. Most people realize that if you keep your money in cash or just losing money due to appreciation inflation, right? So like think about the current options of a potential lender. They can keep their money in savings and lose money because of inflation. They can put it in stocks and maybe they'll make a reasonable return. But their money is like, they don't really know what's going on. But stocks, usually, most people are not really savvy when it comes to stocks and thereby like an index fund or they'll spread their money out among a bunch of the nasdaq, five-hundred or whatever, like the top stocks are the blue-chip stocks or whatever. Kinda just spread their money out. Or they'll do like a Roth IRA and they'll put money in this thing that invests diversified and it differs taxes. Or they will invest in their companies for a one k, which just invests in a safe blend of stocks. It's like this. It's such a passive approach to investing. And all those provide a pretty low return compared to what you can make as a private lender. Like, like maybe you make 5% and knows where you can make ten or 11 or 12% lending. But also you're always at the risk of losing your principal investment. With those types of investments, like you could put 50 grand into Google stock. If the stock goes down half, you have 25 grand, right? And you had no control over that. It's literally all like in Google's hands and whatever decisions they make are whatever happens in the global market, right? So compare that to having the 50 grand in one house. Okay? Like if I came to you and I was like, Hey, look, here's a house I need 50,000 on. 40 of it is to buy a tendency to fix it up. Here's five comps that show that this thing is going to be worth $80,000 easily. Once it's fixed, you will have a lien on the property will be the first lien holder in first position. Meaning if I sell this house, the first $50,000 has to go to you before I am to receive any money. So all that is done like aboveboard with Tidal attorneys recorded at the county courthouse. Like it's the same like lean that Wells Fargo would have against your house if you went out and bought a personal residence through them and they were your mortgage broker or whatever. If you didn't make your payments to them, what happens? They foreclose on you, take the house back as well. Wells Fargo would never loan you more than 70% of the appraisal because they want cushion in case they have to take the house back. Private lenders, the same thing. You never want to get them in at about anymore than 70% of what the house will be worth. That way they're protected. So if you had 50 grant, would you rather throw it into a mixed bag of stocks and hope that that thing doesn't tank. Or who knows what kind of return you're gonna get. It's just like cross your fingers and check the news every morning. Or we could agree to 10% guaranteed. Plus your principal is backed by the house. There's a lien on it. It's one house. You can go see it if you want. You can knock on the walls. It's like it wouldn't that be way easier to understand for you? Like as an investment? I know for me personally if I had 1 million bucks and I was just like I just wanted to be I just wanted to invest this and not do anything. I would much rather put it into private money deals. And to put it in something I didn't understand, like a mixed portfolio of stocks where it's just you're at the mercy of what all these businesses are doing. It doesn't really make any sense. So you need to understand how good of a deal this is for your potential lenders. Like if you had like if you were trying to invest like your grandma's money or something, right? Someone or your mom or just thinkers like the person you care about the most. So you really want to protect their money. You want it to be as safe as possible. But you can't go with like a bond where you're getting 1%, right? Like you have to like, even that's not guaranteed because the government could change things or they could go bankrupt or who knows, right? I don't understand all that stuff. But wouldn't you want to put it into something where the money, the what they contributed, their principal was backed by collateral. Right? Like if a foreigner and the driveway if I was like, Give me give me 15 grand and if I don't pay you back, you can have the foreigner, it's worth 30. And we'll draw up all the legal paperwork to show that. Wouldn't wouldn't you be more comfortable loaning me the 15, knowing that you get something worth 30 if I don't pay you back. Now a car is not even as good of an example because I can wreck the car or go hide their car. But you can't hide a house. You can't really wreck a house. I mean, you could, but that's what insurance is for. Systems of checks and balances you can put in place to make sure your lender doesn't get screwed. If they were going to loan you 50 grand and ten event was for the rehab, they could loan you the rehab in chunks of 2,500 for payments and they need to see proof that the work's being done. Pictures and videos before they release so that other tin granules stay in escrow at the title company and it gets loaned out in chunks as you prove that the work's being done. And that protects the lender even more because that additional ten grand They loaned of the 50 doesn't get lint out unless the works proven. If they gave you the ten all up front, you could technically go to Vegas with it. The reason I'm telling you all this is because I want you to be able to turn around and tell lenders this when you're talking to them, so that they know that there's really an infinite amount of ways you can protect them. You could structure this deal. However, it makes sense. You could even get them in at a really low loan to value, like if the house is going to be worth 85, you could borrow 35 from them and still have them be in first position. Meaning if you sell the house, the first 35 goes to them. Now, in a house that's worth 85 is not going to drop that far in value, right? At least I don't think it is, right? And even in a market going down, it's just too big of a percentage drop of the original value. So their risk is even less and less the less they loan as a percentage of what the house is worth. Now of course, you'd have to be able to purchase that house. You'd have to be able to do something with that 35, right? At least be able to buy it and hopefully by it and fix it up. Or maybe you'd have to put some of your own money and for the repairs on that because that was just a hypothetical example. Normally you're not gonna be able to buy and fix up a house for a total of 35 and then it's worth 85, like you might be able to write, but you get what I'm saying. It's a hypothetical example to show that you can shrink the amount you borrow in relation to what the house is worth to protect the lender even more if they're new and they're not super comfortable with it or whatever. That is, why someone would want to loan you money. And the more I thought about this, like, it's a really good deal. Like I wish I have loved ones that I care about that still invest in the stock market and stuff. And there's certain people I don't really want to be pushy about approaching about this, Hey, you should give me your money. But like in the back of my mind, I know that their money would be a lot safer with me in deals where their money is protect protected by collateral. They're in it a safe loan to value percentage. I'm not doing massive rehabs. I'm just doing rent ready type stuff. It's in good markets, good neighborhoods, you know, I did all that research making sure the economy was strong, population was growing, where they invested. I know that their money would be safer with me. And because I know that like, once you understand this, then you're gonna be less hesitant or bashful about going out and asking people for money. Okay? I hope that can help like snaps and things in your brain about like okay, this is, I need to think about this differently. This isn't meat begging for money. This is me going out and offering something that for people is really a win-win for them too. So the whole purpose of this call again, is for you to get a nice line of credit. It's not really a line of credit, but you need a nice like Rolodex of private money lenders waiting in the wings, right? You need someone that has, maybe you find multiple people, but it should add up to a few hundred grand or something, at least that you can borrow and payback and borrow and payback. And haven't kinda revolving. In order to accelerate and do this fast, right? So that's what we want for you. But when you realize that if you were to go out and create that, it would actually be a win-win for the people to. That's when it gets cool because then you're like helping people and getting what you want. Okay? So I want you guys to see it like that. Does that make sense? If you see it like that, you won't be as hesitant. You won't procrastinate as much to make these calls. Okay. So let's talk about now, I'm kind of what the calls should look like. Okay, let's kinda transition into that. Give me 1 s. I always get hot when I do these coaching calls, man, I think I just get you fired up anyways. So grab a pen and paper. We're going to walk through this step-by-step. You have any questions about this, type them in the comments at any point, even if you're watching this later tonight. And we're gonna go through what to do next, okay? To make this real, to make this happen for you. You guys ready? So the first thing is to define when you're gonna do this. Like I told you guys, when I realized that this was a powerful thing for me to do, I set a time block where I was going to raise money and it was 2 h a week. I did a Tuesday afternoons. Just pick a timeline. When can you commit 2 h a week? Maybe it's two one-hour time blocks, doesn't matter. But 2 h a week that you need to spend raising money until you have enough money. Okay? If you do that, you'll succeed fast. If you don't do this, You've probably struggle. I really you guys have to do this. And if for some reason you don't believe you can or you don't understand until I don't understand why this is important and you're not going to do it. Just tell me, type it in the comments, send me a message, whatever. Let's work through that together and get that blockage cleared out for you. Okay. So let's say you have your time block every Tuesday 2-4. You're just going to sit down and grind the phones. Okay? When you sit down to do it, like do whatever you gotta do, like you could, you could type up a script to follow for awhile so that you don't get nervous and forget stuff. Um, you know, are just like if you're worried that what if he asked me about this, type out, what you would say and have it in front of you, drink tons of coffee and go put a goofy looking suit on like I did. If that's what it's going to take for you to have the confidence to make these calls. I promise you it gets easier. The more you do it. The more you do it, the easier it gets, just like anything else. The first one will be the scariest, the second one will be the second scariest. Third call with the third scariest. Eventually they're not that scary guy. Then. Now that you have time to do this, you want to start a spreadsheet, just use Google Sheets. Google Docs is awesome for everything. I use it to run my whole businesses. But they have Google Sheets, just spreadsheets like in the Cloud so you update it. It's like updated everywhere instantly kind of thing. And you're just going to start filling that spreadsheet in with people that would possibly loan you money for rental properties. Okay. So initially you can think about someone you already know. You have family members. Do you have friends? You have friends of family members or family members of friends, or uncles or cousins, or old business partners or colleagues, or just professionals in the real estate industry or some other industry that you know, just make a list of everyone that you, you could proposition with about this. Alright? And then I want you guys to join every Facebook group that exists in your market. For real estate. There should be a couple of them, at least Facebook groups or pages, it doesn't matter, you're gonna like those pages, join those groups. Then I want you to join a bunch of like national ones too. Like there's a page. Let me pull it up right now. Real estate real estate investors group, look at this 95,000 members. That's what it's called, real estate investors group. Look on the very top. This guy says fund wise capital is our preferred lender. Fund wise. There you go to new lender. Martin Weisberg just posted this like literally, this is what you're looking for. So I would literally see that fund wise capital, but don't put it in my spreadsheet. And then I would make posts in all of these Facebook groups every two weeks or so. You know, looking for more lenders. And you just say in the post, Hey, I'm a I'm a real estate investor. I buy rental properties. I'm looking for sources of private money. Please post your information in the comments. Thanks. That's it. Something like that. You can copy and paste it in every group. So the same post, copy paste, copy paste, send, doing ten groups a week or something. See how many names you get. It will blow up. And you can even just Google to like private money, private money for real estate. I'm doing this right now. Let's see what comes up. My integra, hard money lending, bridge loan, private money, cost fund lending one. Here's a list on bigger pockets indicate capital connected investors forest Financial Group. I'm not kidding guys. When I tell you that, I will call all these people, that's what I did to figure out where my lenders are coming from. Some of the best lenders did come from the local Nashville real estate investors. And I get like a individual's name and number. Will actually the, really the best lenders are like your family or your friends, like somebody you would find in Facebook. That's why I say star with that. But then you are wider and wider and wider. And like, I just didn't give a ****. Like I just call anyone that I saw like anywhere that said they wouldn't land. And when I get on the phone with them, I would ask the following questions. You guys ready? I forgot first of all, what type of loan products So they offer, right? Like do they offer long-term, short-term? Most lenders will have a few options. So it's not just gonna be, here are my terms. It's gonna be, I have these three options and here's the terms for this one. The terms for this one in the terms. I gotta get it all out on the table first. Then the next thing is like, what are the terms? And the terms would be, what interest rates do you charge? How many points do you charge was just interest paid upfront. Then like how long you loan the money out? Is it three months, six months, 912182, years, 30 years. Like it's all over the place, right? Then what percentage like loan to value will they go, you know, that's always different from their different products. Like some will go 100% loan to value on a short-term, but only 60% or long term, right? I have a linear that's like that. You have to figure out what is the, what are the terrorists for each one. Okay. Then do they require any money upfront? They require proof of funds or they want you to have cash in your bank account. Do they want to see your credit scores and your tax returns? Do they require that you have any kind of experience for a track record right? Now, I've told you before that the beauty of private lenders is that they don't look for that stuff. Some do. If they're more institutionalized. And it's definitely if they're a bank. And I'm saying you should even just call banks when you're doing this. There's nothing wrong with it. Commercial bankers, they do five-year balloon loans. Those are great. I know a guy who has 600 units and he does a mall in five-year notes from a commercial bank. And you want to be turned down like, you literally want people to like, tell you No, Okay. Commercial bank or you say, I can't do this without a credit score. Boom, put his name in red and move down the list. Don't get emotional, don't take it personal. You're just trying to find lenders that will work with you in the state that you're in right now or in the state of like bank ability that you're in right now? You might ask like, is there anything else you would need for me in order to approve me for a loan. Right. So you're kind of you want to you're trying to almost get to a yes or a no on that first call so that you don't waste each other's time. And then you find out down the road when you really need 17. Deal Analysis For Dummies: What's up, guys? So in this video, I'm going to show you how to analyze a potential rental property to see if it's a good idea to buy it or not. Now this same spreadsheet that you're seeing right here, Sybil available for download down below, click the link and I recommend uploading it to Google Drive, specifically Google Sheets. Google Drives version of a spreadsheet. All the formulas will stay in it. Then it's in the Cloud and it's live and updated. And Google Drive is the bomb. So download it, put it in Google Drive and you'll see it just like I see it here. So let's go through this. Let's say you have a potential rental. You're thinking of buying. Come to this spreadsheet and run the numbers, make sure it's really a good deal. So here's how you do this. The yellow fields on here are the ones that you're going to fill out. You pretty much don't have to fill out these white ones. I'll actually make them gray. They will pre-populate for you. So the first thing that you're gonna do is put in the purchase price, okay? So $40,000 is typically around the price where I buy houses. So I've got 40 grand in here. And then you're also going to put in the repair amount, how many repairs are needed to get this thing fixed up now, you may not know the exact number at this point. You may have just been given a number by a wholesaler. Hopefully you had a contractor go over there and give you an estimate. But we're going to call this ten grand for the sake of this example. So 40 to buy it, tend to fix it up. And I put here add $5,000 to be saved because usually things always cost more than 5,000. They cost $5,000 more than what you've been told. We always discover things behind a wall or some things rotted in the floor and the plumbing is masked out. There's always something right? When I was taught by my mentor, they call it the, oops, budget and they would add five or 10% to their numbers. They were doing bigger rehabs, but having an, oops, budget of five grand is a really good habit to get into. Then downpayment. You'd put that if you are required to make a down payment, a lot of the houses I buy, I'm able to borrow all the money. So I put zero for here, for this example, closing costs. This is one thing people often forget to factor in, but it's something you have to pay. It's basically title insurance, dock prep fees from the title company. It's all title company stuff. Right. And usually it's two grand or $1,500 or so. In Tennessee, you actually based upon the price of the house, it's a percentage of it before title insurance. So the more expensive the house, the more the closing costs are. Money costs are the costs that go to the lender. If you go to a conventional lender, they might call these loan origination fees. If you go to a private lender, they may call it points. They're actually the same thing. And I'm just guessing it's going to be around 1,500 bucks. That's generally about what I pay for the loan origination fee. Again, this is another number that people forget to factor it. So here in gray we have the actual real all-in price to buy it, fix it up, pay the lender the loan origination fee, pay the closing costs much different than just $40,000, right? Then we've also got your out of pocket cash required. In this scenario, this hypothetical scenario. I'm just pretending that the lenders only going to give me, let's say 4035 and I'm going to have to come up with ten of my own money, okay. I need to adjust this 43,500 as the loan balance. Then we're moving on to monthly rent. You guys know how I got this right? Loan balances all in price minus any cash that you're bringing to the table, which in this case was the down payment. So let's say a lender is going to give you 4035 against this house. You do your research, you find out it's going to read for 850 per month. Okay. You talked to a property manager, you check other Reynolds in the area, put that in here. Next. What is your payment going to be to the lender every month? Now we're trying to figure out how much cash flow is going to be on the deal, right? And we've got to 95, 25. This is actually I need to redo this. I'll show you how to do it. Loan balance is 4035 here, right? So go over to this other tab at the bottom. Mortgage calculator. We're going to put 43,500. Then you change the interest rate to be whatever it is, and then the number of years. So we're pretending we're getting a typical 30-year loan here at 5% interest, right here is what the payment is going to be, 23352, Okay? Then it also shows you, if you scroll way down, it has the whole amortization schedule. This basically shows you what your payment will be every month, how much goes towards principal, how much goes towards interests and what the remaining balances, right. So if you see over time here, the amount that goes towards principal goes up only by a few bucks. Every payment, you know, it sucks in the beginning, the interests goes down. If you go way down, you see here. Now, a few years into this, basically, most of it's going towards principal and very little going towards interest because you have it on almost all the way, pay it off. But anyways, he really just going to come to the screen to get the payment amount and this scenario, it's 23352. So then we come back here and put it right here, 23352. And then you're going to estimate how much you're going to spend on insurance every month, and then how much you're going to spend in property taxes every month now these are paid yearly. But if you know it's 600 bucks a year than it would be 50 bucks a month. You just want to have something in there to make sure you account for it doesn't have to be spot on. My insurance and taxes are roughly about that each month per property that I buy. Okay. It's different in every area just depending on your county and what insurance provider you use. Vacancies and repairs is a big one. Usually you go off of a percentage of gross rent here, and it's usually somewhere in that 510 to 30% range. And it really just depends on how rural or how rough and crime filled the area. Is the reviewer running in a really nice neighborhood? You could maybe get away with using five or seven per cent here. If it was a really bad area, you might go all the way up to 25 or 30%. Although if you're having to use 30%, because the areas that bad, I almost question whether or not you should buy the deal anyways. I like to buy in sort of blue collar C plus level neighborhoods. And I use 15% regularly for those types of areas. Not high crime, it's not rural or anything like that. So you see I've clicked in this cell right here. And then if you look up here, it says be ten times 0.15. So it's multiplying the gross rent in B2, which is a 50 by 0.15, which is 15%. So it's calculating 15% of the gross rent is 12750. You're just budgeting that out upfront because, you know, you're going to have things break. You're going to have people move out. So those two things have to be taken out up front. Just take 15% off the top. And then you'll get the real picture of how much your cashflow you're going to have. Next, we have property management. This is standardly just 10% of the gross rent. So 85 bucks HOA fee. I generally don't buy houses with HOA fees because it's not in my control. It's some other HOA organization that can decide whether to raise the fee, to lower the fee. They've hit us with crazy fees and things like that before. I just don't like that. Someone else is can mess with my cashflow. So I just avoid HOA fees altogether. But if you do have one, enter it right here. So then you have your total expenses all tallied up for you here. Your payment plus your insurance, plus your property taxes plus vacancies, repairs, plus property manager plus HOA. This scenario, it's 546 bucks. Okay. So we remember we started with 850 in gross rent. So we're netting $303 per month on this deal. This looks like a good deal. I say over here in the notes, you're looking for at least 200 here a month and net rent. And you want more than that if you're going into a bunch of debt. Some one thing that we don't talk about a lot, but if you're going to buy a house for 150 or 200,000, only to make 200 bucks a month. That doesn't seem right to me. When you could go to my market and spend 50,000 and get two to 300 her every 50 in debt you go to, you could buy three or four houses and have three or four times the amount of cashflow for the same amount of debt that you would have if you bought a house for 150 or 200 and you're only making two or 300 bucks a month in rent. So consider the amount of debt you're taking on in relation to cashflows as well. But two to 300 bucks per house is good and healthy. You've got a cushion there, and that's what's going to allow you to quit your job and replace your income? The amount of cashflow is crucial. You do not want to be sitting here looking at 50 bucks, like, let's say this thing only rented for 500 a month. Let's see what that would be. $41 a month. People do deals like this. It's stupid. They're just going to be breaking even or cutting checks to keep their rentals of flood. I still have a couple of my portfolio where that's the case and I probably should sell them. I'm holding onto them hoping that the rent goes up over time, but it hasn't. And I bought them back before I knew any better and I wish I hadn't, so don't make that same mistake that I made. Then. You know that your monthly rent here, your net rent is good. Cash on cash is another thing I included on here. It's just how much cash did you put in the deal? You put in ten grand. And then how much are you making each year? You're making $300 times 12, 12 months, right? So it's about $3,600. You're making a year on your ten grand. That's 36% cash on cash return, which is really good. Now this isn't super important because sometimes you might not put any of your own cash in the deal. And if you did that, you had a zero here. There's not gonna be, nothing's going to show up here because it's infinite, because you can't calculate the return on $0. So don't worry if this little error thing shows up. And then the one to 2% rule, I threw this in here because it's a popular way to look at deals and analyze them. But it's not a way to make a final decision. It's like the first thing you look at just to eliminate some of the really bad deals. And what it is is the one month's rent, which is 850, divided by your all-in price of $53,000. Let's make sure I have that right. Divided by B7. Yep. So 850/53501, 0.59. That's good. You definitely want to be above 1%. I put over here 1.3 or higher, that's really the lowest algo is 1.3. If a deal is lower than 1.3, I just pass on it because I know I can find a better deal. This is it guys. This is the spreadsheet that has everything. One thing that's not in here is like, what's the after repair value going to be? How much equity you you're going to have. And that is important. But you don't absolutely have to have equity in the house you really are buying for cash flow, equity is not really spendable. It's just sort of it adds to your net worth. It's like a security blanket if you were to sell the properties. But the only thing that's going to allow you freedom to quit your job, replace your income is monthly checks, heating your mailbox every month, right? And so cash flow is king and that's why that's all I've included here. So I hope this helps guys. If you have questions, please post them in the Facebook group piece. 18. Deal Analysis Checklist: Alright, so in this training, I am going to share with you what I think is one of the most important pieces of really getting real estate right, like really nailing it. It all comes down to truly understanding how an intelligent investor thinks, okay, like really getting inside the mind of someone who is doing this. This is something that I used to lean on other investors for so heavily all the time because I just didn't really have an idea how they would determine whether or not a deal was good. I would literally just say, what do you think about this? I'd say yes or no. What I didn't realize is that these investors were doing all these different calculations in their head. They were checking off all these boxes in their head and not really telling me what their thought process was. Just saying yes or no, it's a good deal, Brian, and that would allow me to move forward on a property, but I had no idea why. This training I'm taking what is inside the head of the experienced investor, the person that can make good decisions and has done this multiple times. And I'm putting it on paper, okay? So that if you are new or if you're just learning this, you'll have a proven process to follow. That really is airtight. Like if you follow every step on the checklist, I'm about to share with you. You're not going to make a bad decision. There's always a slight chance that that could still happen, right? There's nothing is proven or guaranteed 100%. But this training is really going to take you 99% of the way there when it comes to analyzing deals, doing your due diligence on deals, and just making sure you make that good decision. Okay. Because that's literally what people hire me for. Brian, please look at my deals. Make sure I'm not doing something stupid. This training is going to make you and Intelligent Investor and puts you inside the mind of me and other investors who have done this dozens of times so that you can follow our same thought process but in a printed out checklists kind of way. So why is this important? First of all, it's really hard to remember everything when you go to analyze a deal, okay. I use this checklist myself because I don't always want to rely on my own brain to remember everything. It's way more reliable to system IS things. And it's really important guys that you don't overlook something that could end up ruining your deal, costing you tons of money. I mean, that's the fastest way to just lose interest in real estate or real estate didn't work or whatever. Well, what really happened in those scenarios is the deal that you bought didn't work. And usually if you dissect the process that someone went through when they were leading up to buying that deal. Like 99% of the time, you can point a finger and say, Oh, well, you didn't order a home inspection. So obviously you missed the fact that the plumbing was corroded and it's a 10,000 dollar oversight, right? So you have to identify all these things so that you can make a really intelligent informed decision. So I'm gonna go over every question on the checklist in this training to give you more context on why each question is important. So I want you guys using the checklist, but I also want you to go back through this training as you start to use it just to refresh yourself on why each question or each part of it is important. So you really understand it too. And you'll see down below, there is a link where you can download a PDF copy of this checklist for yourself, and I recommend that you print it out. Start using it for every deal. Really, brian, use this checklist for every single deal. Well, let me explain that. The checklist is an exhaustive list of everything to look at before you buy a property. Okay? However, when it comes to making an offer on a property, you don't actually need to do all these steps, right? Because that is not even how it works. Like you make an offer. That's kind of general upfront just to see if you and the seller are close, right? You're trying to gauge how close to you and the seller are. Is this going to even end up being in the ballpark of being a deal. Then if it is, then if you get close to reaching an agreement or you do, that's when you print this checklist out and you really go through every single step. Okay, hope that made sense. Also. Is this really everything I need to do, Brian? That's another question I get. This checklist is everything that you need to look at for the deal analysis portion of the process, okay, So this checklist, these are the steps you take to make that buying decision. Whether you say Yes, this is a good deal, I'm going to buy it or know the steel is not meet my criteria. I'm not going to buy it. Okay. So this checklist does not include every step that you need to take to close on the property, right? Like it doesn't include 0. No. Remember to get copies of the keys and get the deposit and get the loan process started with the lender deposit, the earnest money at the title company. Attend to the closing. There's other steps, right? The literally from start to finish. That's not the purpose of this checklist. Okay? The purpose of this checklist is when you go through it, you will be able to say with confidence that, hey, this is a good deal, or no, this is not a good deal. And you can make that final buying decision. And even if you need to back out of your deal three days before closing because the numbers just aren't working. That's still way better than buying a bad house, even if you did end up losing your earnest money. So this is what the checklist looks like, okay, and again, there's a link down below for you to download it, and I recommend you do that now. Okay, so now we're gonna go through every single line on this checklist one-by-one. And I'm going to explain to you what I mean by these steps and why they are important. So the very first one, determine if the property is in the market you are investing. Okay? Now, this seems silly to even bring up or obvious. But I see a lot of people get sidetracked here. Like they might decide that they're definitely going to invest in Fort Worth, Texas. And then a deal comes along in Indianapolis where it's only 30,000 and they're like, Oh man, that's a cheap rental. I could buy that. And it's not a good idea to do that, Okay? You need to stick to the market you picked where you understand all the different areas like, you know, what zip codes or hot, what neighborhoods to stay out of. You have a team there that can go look at the property, give you rehab estimates, property manager that you trust. You know, that market is economically solid, meaning it's, the population's growing and it's economically diverse. Like you would not just by a deal in some off market. Because you didn't do all this research and do all this foundational work and building work to set you up to make intelligent decisions okay. Number to determine if the property is in a desirable ZIP code. Okay. So is the house in one of your target zip codes? Simple question. You're just making sure that you're not investing in like a zip code. That's I really like not turning around. Like you want to focus in any market. Once you pick a hot market, there's gonna be a few hot zip codes, okay? And those are the ones where a lot of investors are looking. Prices are still cheap, but lots of flips are happening. Lots of rentals are being bought. And things are turning around there like blowing up really quick. You want to invest in those zip codes if you can, because your property would do a lot better, better long-term appreciation, and your rents will go up more. So you've confirmed, alright, this property is in the market of my choice and it's also in one of my targets, zip codes. Again, try not to get sidetracked by cheap deals that are not in your target zips. Next, ensure the property is in a C class neighborhood or better, okay, C class neighborhood. What does that mean? So I'll tell you what is not. A C class neighborhood would be like a war zone. Where you drive down the street and you just don't feel safe. And there's like people walking around everywhere and beat up cars in the yards and trash blowing around. It does not appear like a lot of the occupants of that neighborhood even have jobs because there'll be at home all day. Maybe it's a bunch of people that are like on disability or unemployment or something like that. And you know what I mean when I say, you just generally don't really feel safe in that neighborhood and you would never personally live there. That would be like a D class neighborhood, okay? Now C class is a step up from that. C class is like typically blue collar working class neighborhood, where the houses are kept up. And it's clean looking. It's nothing fancy by any means. Okay. But the area is safe enough, right? Like you might say to yourself, I could live here if I had two. That's how I feel about a C class neighborhood. And C class neighborhoods are really the sweet spot for real estate investing. Typically because B's and A's cost too much. D classes are not a good idea because there's too much uncertainty. So you want to make sure, like right out of the gate, this thing is in a C class neighborhood or better. Because zip codes guys, they're broad. Zip codes contain a lot of different neighborhoods. Different neighborhoods are what makes up a zip code. Okay? Then so even if it's in one of your targets zip codes, you're confirming if it's in that seat class neighborhood or not. And again, the reason C-class is the minimum is because it ensures lower crime is going to happen there, there's gonna be less vacancies in your properties are going to be less damage to your property. It's gonna be easier to rent it, stay rented. And when you get into the d.school class stuff, it's just way too much of a headache. Is a property and a C class neighborhood or better. Next, determine if the property is near commercial. Now, by commercial, I mean commercial businesses like restaurants, gas stations, liquor stores, coffee shops, banks, auto dealers, you name it, right? Anything that's not a residential property is basically a commercial property. Right? And so you want to like, look around and see if your property is near any of these things. Now some commercial will help the value of the property. Other commercial will hurt the value of the property, okay? All depends on how nice or desirable that commercial property is itself. Like e.g. you might love living near a few good restaurants where you could walk there, right? But you would despise living near a big gigantic lumber factory that was just sort of an eyesore. And I had like a big chain link fence around it and a bunch of bulldozers outside. I have bought rentals near something like that before. And the tenants that I placed there didn't enjoy living next to that either. So it's really important to take into account these things. Generally like, you know, if something's near undesirable commercial property, like there's a gas station right across the street or something? I would just knocked 10% off of the ARV and the estimated rent. That's something one of my first mentors taught me is you need to account for all the little X factors. We're going to talk more about those today. Because another example is if a property is on a busy street now that's also an X-factor. A busy street would mean like four lane roads, one-way streets that have lots of fast moving traffic. Basically any street that is busier than the average neighborhoods street where it's all chill and peaceful. Qualified as a busy street. Again, do you want to live on a busy street if you have the choice? Probably not. Neither do your tenants. Neither would a buyer if you were to sell that house, doesn't mean it's a bad deal. But you need to account for this in your numbers. And again, if you typically just reduce your ARV Andrew monthly rent by 10% to account for the busy street will suffice. So what if you had like a busy street and it was near some commercial property, I would go ahead and take 20% off, 10% for each x factor that you find makes sense. Next, determine if the property is in a flood zone. In 2010, nashville had a massive flood. It was like a 500-year flood. All of Downtown flooded, like big parts of neighborhoods were completely flooded. And as a result, Nashville created this massive flood zone map. And all of these properties that had flooded, we're now in a flood zone. And it really changed a lot of how people invested in Nashville because everyone was trying to avoid these flood zones. Okay, So you really need to know the market you're in. Where are the flood zones? And is the property that you're going to buy in their flood zones refer to the areas that have been mapped by the city to be at a high risk of flooding. And these areas often require flood insurance, which can be hundreds of dollars every month. Okay. I mean, hundreds of dollars every month, that's going to delete all the passive income that you thought you would get from a property. Also, given that water damage is arguably the biggest enemy of your rental property, even for houses not in flood zones. It's advisable that you guys just steer clear of flood zones all together, okay? You can do better. That's in a flood zone. Just move on to the next house. Next, we're going to determine the monthly rent. Okay. We've kinda nailed down the big things about the location and where the property is. So now we're going to dig into some of the other important numbers. So this one is pretty obvious. You, what will the property rent for once improved? Now your property might currently be rented for 400 bucks a month. That's not what you're interested in. You're interested in what it's going to rent for once you make the improvements, like what's the top of the market, okay. You need to know that number. You just use comparables and the area within a half a mile that are saying bedrooms, bathrooms, square foot, in a similar condition to the way your subject property is going to be once you renovate it. And I also use tools like rental meter that are really good at estimating the monthly rent as well. But you've got to determine what this is as the next step. Next, determine if there is an HOA fee. Hoi a stands for homeowners association and they have a fee like a regular monthly fee that you have to pay if there is a homeowners association. Now, this typically only exists with condos, apartments, and houses that might be in this sort of organized type of neighborhood that will have a neighborhood association. And HOA fees are out of your control like they could. You could buy the house and the HOA fee is $100 a month. And then the very next month I could increase it to 250 because they want to get some cool bushes to put out front or something. And that's totally out of your control. Okay. So these HOA fees, whether or not they are big or small, they cut deeply into your monthly net cashflow. Okay? So it's advisable to avoid houses with HOA fees for this reason because you can't control it. And I want to be able to control every expense that's related to my rental. So I would recommend that you just avoid properties with HOA fees. Next, we're going to verify that monthly rent them out with your property manager. Okay. So you've already done your own homework and then you're gonna confirm it with a property manager who manages rentals in the same neighborhood where the subject property is. Now that's often going to give you a much more accurate idea of what your property will rent for. The property managers. Number is usually closer to the truth, although they can lean on the conservative side, meaning you can maybe get a little more than what they say. But what they say you can get is usually pretty guaranteed. However, it's always good to do this on your own first. So you're not always leaning on your property managers, so I want you to do it on your own and then I want you to run it by. Your property manager. Will also allow you to make offers faster if you're learning to do it on your own and you're getting pretty dialed in on how to determine it was something will rent for. Next, you want to determine the ARV, which stands for after repair value. So what will that property be worth once it is renovated? You're not really interested in what it's worth sitting there as is. You want to know, what's it going to be worth once I do my rehab. Remember, I want you to use comparables for this that are in rent ready shape, not retail cops. Because you're going to renovate the property to a rent ready condition. You're not gonna do it to like full retail where you got it and put the nicest stuff in there. See if you can't, you can't use a comp that is maxed out and says nice as possible because you would never renovate a rental to that level. Once you determine the air V on your own, I want you to verify that with your realtor. Okay? So just run it by or just send the deal to a knowledgeable realtor who does business in that zip code where your property is located. And you're just getting their opinion, getting a second professional opinion of the value of the home that you are thinking of buying. Super, super important, that you guys do this. Because there's always a reason why you should just get a second set of eyes on things they might see something that's you didn't. And you really are trying to, with this whole process, you're constantly removing uncertainties and honing in on the truth. That's the whole process of following this checklist. Next, you wanted to determine if the property is currently rented or people living there. Okay. And are those tenants going to stay or are they going to leave? It's important that you think about this upfront or you're going to inherit those tenants, or are they supposed to be out at closing? You're going to do different things based upon those two different scenarios, then what are the tenants currently paying per month? Always helpful to know. Then if the property is rented, you need to ensure that the contractor in the inspector will be able to access all parts of the home. This is something that is often overlooked by investors who buy rental properties. There cannot be junk piled up everywhere guys. That leads to an inaccurate repair estimate and an incomplete inspection report. I bought property in Huntsville that was occupied by a hoarder and there was entire bedrooms filled with stuff. And the inspector told me, Brian, I can't give you like a really accurate inspection report. And the contractor even said, I'm not sure I can give you an accurate bid. I decided to roll the dice and do it anyways. And then finally, when we closed and all that stuff was out of there, we discovered all kinds of defects on the walls and the floor and in those rooms on the window sills and stuff that the contractor and inspector had never been able to see because there was too much junk. Then I was going to buy another property in Huntsville a few months later, and I was in negotiations with the wholesaler. And it turns out that house also had trashed piled up everywhere. Like I'm talking piles of water bottles and trash bags like floor to ceiling in some areas. No one was living in this place. Thank God. But I told that wholesaler that if you can't get all that stuff out of there, I can't buy it because I can't get inaccurate bid for my contractor. And so it's too risky. And he was unable to get the house emptied. The seller wasn't interested in paying for that or anything. So I literally just passed on that deal and it was a shame because it probably would've been a good deal. But sometimes you have to make a decision like that. The contractor and the inspector again, have to be able to access every room like the attic, the basement, and a crawl space. They have to get everywhere. Nothing can be closed off, blocked off, sealed up, any of that stuff. Otherwise, you're just you're just buying a house where there's surprises waiting for you that you didn't know about before you bought it. Now, if the property is rented and the tenants are staying, you need to find out the terms of the lease, okay. Now, there are the tenants on month-to-month, meaning like, you could ask them to leave and they have to be gone in 30 days. Or is there a specific term on the lease, like, did they just sign a fresh one or even two-year lease? Because if they did, then you can't kick them out, like you're stuck with those tenants, but those terms for one or two years or whatever it is. And so I'm sure you can see why it would be important to know that going into the deal, to know exactly what you are walking into, the lease legally comes with the house, right? A tenant could have, at least with the current owner, but the least follows the house. So if you become the new owner, you inherit the lease. So it's important that you know what you're inheriting. Then you're also wondering, in regards to the way that the lease works, can Lorentz be raised? If they're month to month? It can, but if they're already on like a one or two-year lease at a certain rent amount. You can't raise it until that leases over. Next, you want to verify the neighborhood quality with the property manager. You've already done your due diligence on how nice the neighborhood is, it's time to verify it with a property manager. So it's just an extra step to ensure you're investing in a safe C class neighborhood like we want you to be. Okay. And you also want to ensure that your property your manager will manage it? I've had property managers that I sent to deal to say, yeah, Brian, I think I would rent for 850 a month and then I'm like, cool. And then when I go to buy it, like, oh, we don't actually manage properties in that area. It's too dangerous or it's just I'm like crap, you know, I wish I would have asked you this ahead of time. One, so maybe I wouldn't have bought it, but even if I did, I would've known that I would have had to find a brand new property manager to manage it. That can also be a sign if you're if you are looking at a property and then you call several property managers and they say We don't manage properties in that area. It's probably a sign that you should just not buy the house. Because property managers know cities and neighborhoods really better than anyone. They are in the trenches every day managing properties there. If they've decided that an area is not even worth their time, then it's probably not worth your time either. So big way to figure out if houses in a good neighborhood or not as to speak with these expert property managers. Next, you want to confirm pre-approval for your loan that you're going to use to buy the house with the lender that you plan on using at those same rate in terms you use to analyze the deal. Okay? Really important. If you ran the numbers based upon like a 30-year note that 5% interests. Are you approved for that from your lender, okay. At least get a verbal confirmation that you're good to go so that you know that what you project will actually come true. You also want to confirm the amount of the points and the closing costs that you can expect to pay that well, you can go ahead and start factoring those into your numbers that we're going to talk about here in a bit. So you say to the banker, you know, what are the loan origination fees and all that that I can expect to pay when we close on this loan. Next, you want to obtain a contractor estimate, okay. And if this is your first time getting a contractor estimate, like you're new to the market, you haven't bought anything yet or are you don't have like a trusted contractor yet? Basically, you should get multiple bids. And what you do is you send the contractor to give the entire house a once-over. You say, Hey, Bill, I want you to go over there and look at the entire house top to bottom and give me an estimate of what you would take to get it rent ready. Contractors know what that means. They're going to use like vinyl plank flooring and they're going to paint and they're going to put in rental level appliances and you know, they're not gonna do anything too flashy because they know that you're an investor and you're trying to work on a budget, you want to get those bids from those contractors. And again, if it's your first time, you're obtaining multiple bids, this ensures that you don't overpay and that you have several options, okay? And it's really important to be able to spread those bids out on the coffee table and look at them side-by-side and say, wow, this guy is charging $5,000 for the floors and this guy's charge and 2000s, what's up with that? If someone's charging 2000, the other two guys are charging 5,000. The 2000s guy is not necessarily the best option. Sometimes they are just under bidding the project to get it and then they're going to raise the price on you later. But it's important to get all this information. And you want to have multiple bids so that you also know you're not getting ripped off. It's the same reason if you're going to buy a Toyota foreigner and you're gonna go to a dealership and get the quote on the limited model with whatever leather trim package. And then you went to two more Toyota dealerships in the area to see exactly what they were going to charge you for the same car. You'd have a much better idea of whether or not you were gonna get ripped off, right? You'd be like, okay, they're all charging me 41,000 about for this. So it sounds like this is the standard price and there's not like a big discrepancy a treat the multiple contractor bids situation in the same way. Next, you want to verify that contractor estimate with your mentor and with other investors in the market, okay, so show your contractor bids to your mentor and at least one active local investor. And just make sure you're not being overcharged for any two items in the bid. Make sure nothing looks wacky, are out of line. And what these contractors are charging you. Again, if this is your first time using the contractor, do some research on the contractor as well, make sure that they're reputable. They have some reviews. They can provide you with some references. All that stuff should definitely be looked at and make sure they have insurance, makes sure they have a license, and you can look them up online. Very important that you do that before you pick a contractor to. Next, you'll want to review the contract or estimate with your property manager. Okay. So again, we're reviewing this contractor estimate and we're doing it to just be really sure that we get it right. It's really important to dial the same. So why would you review it with your property manager? Your property manager will know to what level you should be renovating that property. So you've told the contractor give me that ready estimate, but the contractor doesn't really know what you want. Based upon that. It's not like you're giving them a ton of specific direction. So you see what they send you back. Then you show to the property manager because they manage a bunch of other properties in that neighborhood already. And so they're going to know things like e.g. Hey, this area does not require HVAC. You can just put window units and I learned that on a property and it saved me $5,000. The property manager said, You know, they've got H vac and your bid here, but none of the houses in that neighborhood have h FAQ. And it's probably not going to increase the amount that you could get for rent. Hardly at all. And I was like, oh, shoot, I'm not putting an H vacuum. Then. I went to the contractor and hadn't changed the bid to do window units and it was way cheaper. And I'm really glad I went that route. So again, the purpose of looking at it with the property manager, you're finding out if you need to add certain items or if you're overspending and you can remove some things from your bid. What does the Expected level of rehab in that neighborhood for that type of property to bring in the expected rent that you want it to bring it. You're really honing that in here. Next, you're going to obtain and review a home inspection report. So you're going to schedule them complete a certified home inspection using a Nazi certified home inspector, that stands for National Association of certified home inspectors. I've always found that the Nazi inspectors are a lot more thorough and trustworthy and they follow a process and they just provide better reports Skype. So when you get that inspection back, it's important to review it with the Inspector either over the phone or in person. And you want to catch them when they're fresh when they have just recently seen the property because they do multiple inspections every day. So really if you could say, Hey, you're gonna be over there from 12 to to doing the inspection, right? Yeah. Can I call you write it to and you can just give me your initial thoughts or maybe the next day they send you their inspection report and as they're sitting there typing it out while it's fresh on their mind. Haka, we do a quick call and go over this together. You're going to spend a few hundred dollars on this report. So get your money's worth by talking with the person who did it with the person who went in the house. Home inspectors called the attic and the crawl space. They test the electrical, the plumbing, all the appliances, the H FAQ, like, they really do the house. A thorough once-over. And so you want to review that with them, figure out what they came up with. And I just generally like to get the inspectors opinion on the most concerning and important areas of the property that need attention? While say like, Hey, Mr. inspector, What were the most concerning things to you about that property? Hey, Mr. inspector, what parts of that property really needed attention? What parts of that property do I absolutely have to address right away. What other parts are like longer-term, more deferred maintenance things I can expect to fix in the next like five years. Great questions to ask. It'll tell you a lot about the property. Next. You're going to speak with a foundation expert if needed. Okay. Now, sometimes the inspector and inspectors are not Foundation experts. They can they can spot things. They can say, hey, there's cracks in the foundation or the joists are rotting. There was soft spots in the floors. And I've seen this on inspection reports before where they say it is recommended that you speak with a foundation company or a certified structural engineer or whatever, however they word it right there. Just differing you to someone who specializes in foundations. I have ignored that advice before and bought a property and then immediately discovered that it had like $20,000 and foundation issues. I had to sell it. I lost thousands of dollars. Really stupid mistake. Wish I wouldn't have done that. I don't want you guys to do that either. So by all means, if the inspection report and or the contractor estimate says anything about the foundation being wrong or messed up. You need to speak to someone who's an expert in structure before you buy the property. And honestly, if they say that's anything, that anything is wrong with the foundation, I would just pass and buy another house because it's a big problem. It's hard to fix, right? Without tens of thousands of dollars and you can find a property that doesn't have foundation issues. Okay. So next, you want to review the inspection and ensure that important items are covered in the contractor bid. Okay. So you have your inspection. You have your contractors estimate. Right? You want to put those two side-by-side on the table. And you want to review a contract or estimate and makes sure all the important items are covered in the bid. Okay? So like if your contractor estimate is sitting here and it just has like paint, carpet, whatever. But the inspection says the roof is worn out and has to be replaced. You need to go and make sure that a new roof gets added to that contractor estimate because that's really what needs to be done. So I like to look at these two side-by-side just to make sure did the contractor did he include everything that the inspector found in that bid that he gave me? Then if he didn't, The next step is to get a revised contractor bid if needed. Okay. So after reviewing the inspection, the original estimate you're getting with the contractor, you're saying, Hey, I found the inspector, found some other stuff that was not in your bid. It's important. I need you to add these two or three things and get me a revised bid, okay? Now, you're going to run some numbers, okay? You've gotten a lot of information at this point. You know that the properties and a good market and a good zip code, it's in the right neighborhood. You know that? How much it will rent for you. You understand the situation with the tenants. You have talked with the contractor and then the home inspector, and then you've gotten and then the property manager about the rehab, and then you've gone back, you've revised the rehab estimate over and over to really dial it in on what needs to be done for this area and what needs to be done per the inspection. And you really should have a much tighter idea on whether or not this is a good deal at this point. Okay, so you're going to run the numbers again, just like you did in the beginning, but with the new more accurate numbers, you're going to ensure, Hey, do I still have positive cash flow? Okay? Do you still have at least $200 a month per door in positive net cashflow. Really important that you do that, then you're going to do the same thing for the ARV, okay? You want to make sure you have equity. And so you're going to run the numbers again based upon what that real Realtor told you. It would be worth based upon what you know, you're going to have to put into it to fix it up plus the closing costs and stuff. And with the revised numbers, you want to run them again and make sure you're still going to be in for an all-in price of no more than like 70% of the ARV. Okay. So if you determined through your research that that property is going to be worth about 75,000, then you wanna be in it for no more than about 50,000 bucks or so, okay. I think that's either 50 or 55, but it's 70% of the 75,000 dollar ARV. That's where you want to be. The reason for that is one is we buy smart deals with equity. We want when you go through all this work, not only do you deserve to own an asset, to be getting two or $300 a month and net cash flow. But you also deserve to have 20,000 bucks and equity. I mean, why did you why wouldn't you just buy a property that was already fixed up? If you weren't going to get any equity in the stupid investors invest for equity. And another reason is if you are all in it like 50,000 and it's worth 75. Let's say you use a private lender to fund the purchase and the rehab. Cuo that private lender 50,000. When you go to the bank, how much is the bank and they give you, they're gonna give you 70% of the ARV. You refinance with the bank and they're gonna give you 50,000 as alone, which goes to the to pay the private lender off. And then you didn't have to come out of pocket to buy the deal, okay? So we're really aiming for the 70% of ARV and the $200 a month of net cash flow as criteria that we really do not want to compromise on. Okay, It's really important. Next, you're going to start the title work and you're going to get the closing costs estimate, okay? You're simply sending the contract and the title company get the title work going and you're getting an estimate of the closing costs you can expect. So not only does the bank have 19. Running Comps 101: Let's dive in. So this is a short training video on comps. This is just gonna be a high-level overview of exactly what you need to know in order to protect yourself to make good decisions. Just the philosophy of how to think about comps, the different types of values you look for, et cetera. Why this is important? First of all, a comp is short for comparable, which just means comparable property to your subject property. Okay. And you're trying to determine what a property is worth right now. And if a property needs work, you're also wondering what's that future value going to be once it's fixed up, okay. If you saw a bike for three grand let's say for sale. But then at the same bike store, you saw another bike that had the same frame, wheels, tires, brakes, and shocks as the first bike. Then like number two, that would be a comparable bike ride. Like if everything was virtually the same. If that second comparable bike that you saw was only 1,500 bucks, what would you think? You would think that bike number one at three grand was a rip off and you're probably going to buy bike number two. Okay. So comps are a way to really just determine like if you're getting a good deal or not. Okay. Comps are a way to determine if you're getting ripped off. He's like one way to look at it. Because you're just thinking like, well, what are other people paying for properties? What are other properties in rent ready conditions selling for this neighborhood? You know, what's mine gonna be worth? That's why we do this, okay? And I'll be honest, running comps is a bit tricky. That's why people rely on realtors to do it. Please send me some comps or I like people don't really know how to do this, but it's a skill you have to have as a real estate investor, right? Like not learning how to run comps would be like trying to get buff but not be willing to use a barbell or something, right? It's like one of the staples of real estate investing is learning how to do this. And it's not as easy to determine the value of a property as it is a bike or a new car. Or the values they vary a lot less and it's a smaller range. Cheaper stuff is easier to value because there's a smaller range like this. Mountain bike is gonna be worth three to five grand or whatever. Houses. When they're worth two in the tens or hundreds of thousands of dollars, like they are going to vary more wildly. And also because there's so many different variables to a property. Like unlike a bike, There's dozens of different factors that go into houses. Not just the stuff that's in the house itself, but then all the stuff that's around the house, right? Like the neighborhood or the street it's on or what commercial stuff is nearby, or any other weird stuff. We're gonna, we're gonna talk about that tonight. Also. Remember that the value of a house, which other things are true with this, but it really comes down to what someone will pay for it. And so emotion can even play a role in the value of houses, right? If someone's real excited about a property, that will actually overpay. You've seen all these multiple offer waving inspection scenarios in this upmarket, right? Where people are just like, Oh my God, Bob, like we went to the open house on Saturday and there was 12 other couples looking at it. We've got to make a good offer. I don't care. Let's overpay let's just wave the inspection, wave the appraisal contingency. We need this house. That's how people have been about properties for the last however many years and this bull market. And what that does is it raises the comps of all the other properties, right? Or it raises like the comp. So if someone crazy buys overpays for a few houses on the street, then all the other people in that street with comparable properties are going to be like, Well, my property is now worth that much because look, this one's sold for that much. And so they get cocky. And what that ultimately does is creates over inflated values of properties. And that all has to come to an end eventually, right? If you study investing in market cycles and things like that, a lot of it's based around emotion, okay? And the way people are deciding to spend their money, when people tighten up. Everything comes crashing down. I think that's going to happen soon. I hope it does. And I know we talked about that some already. So potential pitfalls to look out for when running comps. One of them is not finding apples-to-apples comps. Okay. So you are like trying to see what the value of a three-bedroom house is. But you're looking at two bedroom houses, or you're in this neighborhood over here, your your subject property is, and then you're using comps that are in different neighborhoods and it's just a different feel over there. It's not as nice or whatever. Or your subject property is on a busy street and there's a liquor store down the road. And the comps are on nice quiet streets with sidewalks, you know, but the square footage and the bed bath is the same. That's still not an apples-to-apples comp. Like. Pretty much everything has to be the same. And if you can't find everything that's the same, you're going to have to adjust for that and I'll show you how to do that. Another thing is overestimating. I am, I guess you could call it like an eternal optimist. And a lot of ways like at least when it comes to business and life's challenges. I just haven't I've always had an attitude. Well, not always, but something kind of woke up in me when I was in my late twenties and I started doing personal development and all that. And I was like, You know what? This is all on me to figure out my life. And no matter what challenge comes up, I can figure it out and everything's always going to be okay and I'll always find a way and I'm not worried about failing. And that is, of course, a good thing to have on your side, right? When you're trying to go do new things and succeed and you're going into fear. I encourage you to be that way, but I got into a lot of trouble by not like balancing that with actual logic and being rational. And I would look at one property and be like, well, you know, I'm not really seeing any current and we needed to be worth 80. I'm not seeing any column. The columns are all with like 65, but I mean, surely it's gonna be worth 80 eventually because this is a great neighborhoods on the up and up, you know, and I would just like make up stories like that for myself, like reasons why everything will be fine. And it didn't always turn out that way. Every were like hiring people for our wholesaling business and I'd be like, I don't know if we can justify another 50,000 a year and payroll, but surely it'll be fine if we just get one extra deal out of this on the flip or whatever, I would just like be overly optimistic and just don't do that with comps. So this is basically like doing math. So you're really just being conservative, you're being logical, you're still being excited and positive overall. But if the numbers don't work, you just simply don't do the deal. And the third one is forgetting to run cops altogether. I see people do this more often than you would think, right? Is that they just kinda get in the game, get really excited, and buy their first or second deal. And they don't really look at the value. They don't really know what it's worth. You know, I've I've actually talked to multiple people who already bought a property. I was like, so what does it say you're rehabbing it and then like, what's the ARV? Like wool. I'm not really sure. I mean, the guy said it was worth going to be worth 100 or whatever that I sold it to me. But they're not really clear on that. And it's just a common beginner mistake. And you don't want to make it. So why do you need to know the value of a property? Well, simply it so you can determine a few things, what size alone you'll have on it. Then if you're going to cash-flow with that mortgage payment, knowing that the bank is going to give you like 70%, right? What kind of alone you're going to end up with? Will a cashflow. What is it going to be worth in rent ready condition, right? So you know, if you can get the money from a private lender for the purchase and rehab or if you're going to have to bring money to the table. Remember again, if you're all in purchase plus repairs is about 70% of the value. You can usually get all of that lint to you from some kind of short-term lender, right? Then also, what's it going to appraise for? Once you, which is really similar to B, right? What it's gonna be worth in rent ready condition. But you're also needing to know that you know how much of a loan you can get from the bank, okay, So B and C are the same thing, but you need to know that for two different reasons. The short-term money and the long-term money. Now there's a few different types of values you can determine. There's ARV and then there's current value. Nrv is of course, the value after you fix it up. And current value is the value as it sits right now. And a lot of people don't really look at that right there. Like, you know, they don't look at like, how many other crappy three bedrooms are there in this neighborhood that need ten or $15,000 worth of work. And what does that what are they selling for? And you notice, we don't really talk about that too much. Do we? Like trying to determine specifically what something's worth as it sits, where it needs to be fixed up. That's because current value really isn't as important, okay? You're not really worried about paying the exact amount or less than other investors that have been paying for deals that needed work. Okay. That's because those values are all over the place guys. And it really just depends on that one deal that investor could have negotiated any possible scenario. Seen. Scenarios where if I was to look at this and I was like, okay, what are investors buying? Fixer upper three bedrooms for in this neighborhood? If I looked at all the sales in the last year, it would be everything from $50,000 down to $10,000. I remember just looking at some deals with my business partner to be in. Like, how in the **** did someone get that house for ten grand? They just found maybe a desperate seller or someone who lived in California and inherited the property and they are already rich and they just wanted it off their hands. Like, you don't really know what went down. A lot of those were sold off market. You know, if they're being sold to investors. And also, it's kinda hard to tell specifically looking at if you're looking at a bunch of properties like the pictures and they all need work, they all need to be fixed up. It's kinda hard to to get apples-to-apples comps for that. Because some houses will have like mold damage or something, but it's not really evident in the pictures. And you don't have contractor estimates sitting there attached to the comps, so you don't know what each of the ten K house might have needed 30 K and work. And the 40 K house might have needed ten K or whatever. Or 30 K might have needed ten K, right? So they both end up being 40 kaolin. And so again, you don't really need to worry like, well, what are other investors paying? You can look at that if you just want to see like what, what not to pay more than typically, that can be a good guide. But honestly guys like when the market is really inflated, like it is in 2020, than what other investors are paying is not the greatest guide because people are actually overpaying for stuff all the time. Okay? So again, your goal with this is just to make sure you got a deal for 70% of the air V and a cashflows with the mortgage payment you're going to have on it. So there's two types of ARV. There's rent ready and there's retail. And don't make the mistake of looking at retail cops. Retail comps would be like fresh rehabs. Okay. Like hardwood floors, granite countertops, stainless steel appliances. They might have like laid down new sod in the yard and landscaping and new windows and you know what I'm saying? Like retail, like top of the market, type comps where they almost couldn't have done anything more to the property without it just being stupid, like overspending, like they did the max rehab, That's a retail rehab. You're not looking for that. You're looking for comps that are going to look like your property after you rehab it. So typically that looks like pink carpet, simple but clean kitchen and bathroom. Maybe you have the vinyl plank floors. You guys have probably maybe you live in one now. But I'm sure you've lived in like just plain rent ready places in the past, maybe like back in college or something, you know, you go rent an apartment and they put down some new carpet, right? They painted, they put some new blinds up. But it's nothing fancy. Right? Dad is a perfect comp for what you're looking for because that's all you're gonna do to your property. Platforms you can use to run comps. Prop stream is like the most popular paid service right now. And they're really gaining a lot of steam. I think it's like 80, 90 bucks a month. I'm splitting a membership with Ryan right now who you know, is in this group. And I actually just dove into it over the past couple of days. I'm gonna go through it with you tonight just as best as I understand it, but I don't really know it as well as I could. But that would be a platform if you're just like, I want to know all the data, I want the best, most robust platform and get a crop stream membership. But you can also do it on. Places like Zillow and Redfin or it's free. It's just gonna be a little more complicated. We'll do some on Zillow as well, just to show you what that looks like. And the CRS is the platform that I used for a long time before deciding to switch to prop stream just so I can be using the same platform is a lot of our students. You know, that just makes more sense because CRS is not available in every market. And yeah, we'll kinda go over some of the differences between these paid services to look at comps and the free stuff. So variables you should be looking for our square footage, right? So if your subject property is 1,200 sq ft, you're looking for something around 1,200. Maybe. You'd put it in like 1,100 to 1,300. Give it a little bit of a range, but you keep it pretty tight. You want it to be the same bed bath combo. So if your subject property is two-bedroom, then don't look at three bedrooms or one bedrooms for cops only find other twos. Again. You want it to be in rent ready condition, right. Your comp curb appeal. So if the street that your subject property is on is like not that great and it's got just like the whole chain link fences and a couple of cars parked in people's yards, you know, that kind of vibe going on. Don't find a comp. That it's for streets over where the house is all like cute and cookie cutter and there's sidewalks and manicured lawns and all that, right? Because, you know, it's not apples to apples, you really need to find something else that's on the same street. Similar year built range. Okay. I'll if I see a house that was built in 1945, I might go down to 1930 and up to 1960 or something. So maybe 15 years on each side. I don't have a real hard reason for doing that. I just know that if you get too far off, then you're not gonna get the right comps. I've made the mistake before of not knowing about that. And I would be looking at a house built in 1940 and I'm looking at houses built in 2006 or even like 1985 or 95, like and that's not a good comparison because the house is a lot newer and it's a lot different. So you can like as houses get newer, you can actually start to see it. You guys know what I mean at all? Like, you know what I mean when I'm talking about like a house that was built in the nineties or the early 2000s. A lot of them have like the like the vinyl siding on them and stuff. So it kinda got away from the rico block or whatever they call it walls or the brick. And you just don't want to be using properties that are from a whole different era as comps for your subject property. So if you can keep it around the range or when your property was built, that's good. Also, same neighborhood. We're going to talk about that a bunch tonight. And it's just making sure that the constitute user in the same neighborhood is your subject property. That's one of the biggest pieces of advice I can give you if you go across the interstate or across the railroad tracks or into a totally different neighborhood to find comps for your subject property, you're probably going to get the wrong numbers. Neighborhoods are a big determiner of value, so try to stay within a neighborhood. I kinda show you what the neighborhoods look like when we get into some examples. Other X factors to look out for, like busy streets. If your subject property is on a busy street than you want to either discount for that or find comps on a busy street, commercial stuff. Like if there's like a liquor store, that might hurt it a little bit. Whereas a restaurant that's nice might actually help the value because it's cool to like be walking distance to a restaurant. Then electrical towers, other anomalies like there's weird stuff. Like I bought a property one time and two doors down. There's a big lot that was fenced off and filled with bulldozers and there's a warehouse and it had like whatever. I don't know why I can't think of it but, you know, the the spiky stuff on top of the fence to keep people out like in prisons, but to keep people from getting in. And that detracted from the value of the property. Right. Because it was just an eyesore like the tenants were going to have to see that field of bulldozers every day. And then when I went to sell it, luckily, I sold it to a developer, but he probably bought it for less for me knowing that when he built houses there, they were gonna sell for less because of that, the bulldozers makes sense. You're looking for anything that doesn't make an apples to apples and you're just being really diligent with us. And if it detracts from the value of the property, then you're going to subtract 10% from your ARV for each x factor. So if you found a property, let's say you found a comp that was worth 100 grand, but it was on like, you know, it had no x factors. Right? And your comp was on a busy street and there was a big electrical tower across the street from it or something like that. I would deduct 10% for the busy street and 10% of the electrical tower. So a total of 20%. I would think that even though you found a comp of the same square foot bed bath, etc, same neighborhood worth 100. That I would think that my subject property is only going to be worth 80 because we're going to subtract 20% for those x factors. Now that might be a touch conservative. Maybe it's worth 85, but like you need to be careful, right? And the 10% rule PER big, significant x factor is your friend. And that is something one of my earliest mentors taught me. That really saved me because they were building tons of new properties. And they had a huge business that was really fortunate to be mentored by these people. And they could not afford to screw up because they were borrowing millions of dollars in construction loans and stuff. So they were looking at every little variable and it taught me the importance of doing this when you're running cops. So final thoughts is, again, be conservative when running cops, deduct those ten percents. Don't be overly optimistic. Always double-check your work with your mentor, check it with me, check it with the group, and check it with your realtor to your realtor in your market will be a great person to bounce stuff off of. They typically are experts at this. If you imagine yourself sitting down and doing comps like all day long, wooden, you get pretty good at it. If you just did it all day. That's basically what realtors do. Guys. They just do comps like all the time. Okay. And so we leverage them. You'll eventually need them. People asked me, Well, am I going to annoy the Realtor because I'm not buying anything from them and I'm not, you know, you're eventually going to like like, I'm selling a couple of properties in the next couple of months to do 1031 into some multifamily and stuff. And I'm finally throwing those realtors a bone, hey, thanks for helping me out. You want to sell these properties for me? You know, you'll you'll, something will come around. So a bug. Your realtors also lenders will give you their columns, okay? Your private lender, the one that's going to loan you the money, guess what? They run comps to because they have to, they don't just trust you. They run their own comps to see if what they're loaning you on for the purchase and the rehab and all that makes sense. Okay. I'll check with them too. I'll say, Hey, what are you getting as the value of this property? I'm just wondering if you know how much you'll be able to loan on it. I'll just email lenders that question when I'm thinking about a deal. Then when making initial offers, again, just use the ARV provided to you, like by the property manager, the wholesaler, or wherever you got the deal for him just for a quick offer. Okay. So if the e-mail from the wholesaler says 75 k ARV, you can just use that for the quick offer just because that's testing the waters and seeing, hey, is this person even serious because you always having to negotiate down on their purchase price, right? So you're just seeing if they're negotiable, then if they are, then I would recommend going in and doing the full process for running comps. And lastly, you always have to go back and verify the value on your own before you ever close on the property. So I do all this like high-level quick down and dirty stuff when I'm just exploring for a deal. But when things get serious, when we go under contract and that inspection period is like taking away. That's when I geek out and I bunkered down and I'm like, alright, it looks like I'm actually buying this thing. Let me really makes sure that I'm not making a bad decision. Let me check with my local expert in that market. Let me let me double-check with this other property manager. Let me check with another realtor. Let me just look at the column. So one more time. Let me just look at this Contractor's estimate. Let me look at the inspection one more time. It's worth it, guys. Like it's a big purchase to buy a property and this doesn't have to take forever. I'm not saying like you're going to like hide away in a cave for a month and ignore your family because you bought one property. But do your due diligence. And this is a big part of it. You're really just making sure that your property is worth what you think it is. And as you get good at this, you don't need as much help and you're more confident and stuff. But when you're a beginner, you should definitely be double-checking with other people to see what a property is worth. Alright guys, with that, go out and crush it. Go out and start running comps. And I hope that has been helpful for you guys. 20. "Fast Offers": Lot of people are running into this issue. A lot of people are running into this problem where they are trying to get in the game, trying to get their first rental. And they're kind of just seeing deals fly across the table all the time and getting scooped up by other investors really fast. Their messaging me like Brian, you know, I didn't even have time to get my contractor in there. Or how do I even know what to offer? People are offering, you know, way faster on these deals and they're beating me out. I wanted to address this because there's a way you have to approach this. The way that the market is today, the way the market is in 2019. It's a very fast paced game. I'm going to talk about how it used to be here in a little bit. But nowadays, like, I mean, you see a deal, get emailed out. You have to jump on it that day in order to have a chance of getting it. Okay. Speed is your friend now a days. Okay. So what you guys need is like this simple, rough down and dirty formula for making offers. If you could just glance really quick at a deal, you'd be able to just send that wholesaler back at least a range just so that your voice is now in the conversation. So that email comes through. And instead of being like, Oh my God, how much are those new cabinets going to cost, right? Instead you're just like I thinking, pay around 35 to 40,000 for that. Like if you could do that within five or 10 min of research, would that not be valuable to you guys? Would you not be able to move a lot quicker through potential deals and come off as actually a serious buyer to these wholesalers and actually have a chance of going under contract and then getting to do the more further due diligence. So this video is not in any way intended for you to make stupid offers, right? Obviously. And then not really double-check them. This is intended for you to like jump the line and say, Hey, I think I want it, here's my price range. Does that work for you? If so, let me get a few days of inspection period to really get my contract or an inspector in there. Then I'll be able to tell you 100% for sure and I'll put down non-refundable earnest money and all that. So that's essentially what you're doing. That's way better nowadays than sitting back and trying to calculate this exact offer and getting a contractor out there and calling your property manager, or especially like paying 300 bucks for an inspection all to arrive at. What you think is this exact offer that you can make only to find out that deal sold like a week ago. So you have to be able to do this nowadays. Alright, so again, there's really, there's two reasons. One I've already gone over why this is valuable for you. One is you're jumping in front, you're waving your hand, you're raising your hand, say maybe, maybe I want the deal. Here's valid. I could pay getting the attention right as that deal goes out. So it doesn't get stolen from you. The other reason you want to do it this way is because 90% of the time and you guys will feel me on this when you see deals. You know, the way things are here in 2019, there too expensive, right? Whether it's on the MLS or it's from a wholesaler or anywhere else or for sale by owner. It's always too expensive. Okay. It didn't use to be that way. I'm going to talk about that next, but that's the reality of the world we're investing in, at least today, okay? So if someone sends out a deal for like when the price is 59,000 and you run the numbers and you're like, ****, I can only pay like 40 for this tab. It actually cashflow the way Brian has taught me. You need to go ahead and make that offer upfront before wasting a bunch of time on the deal. Okay? Like, if you know that your offer is probably going to come in around 40, It doesn't really make sense to be like, Hey, I'm interested, let me get in the house, let me get my contractor, let me do this. Let me do that. Like put tons of time into analyzing it and kind of wearing out your team, getting them over there. I've given you bids and stuff only to offer something that was never gonna get accepted in the first place, most likely. Okay. Now there are exceptions to that. But It's really good to just go ahead and throw that offer out there and see how the wholesaler reacts to it. Sometimes they'll say, ****, no, I already have three full price offers. And other times they might say, you know, Brian, I can't do 40, but I might be able to do 45. And then all of a sudden you've got them in your sites, right? Then you're like, okay, let's, let's, let's, let's meet in the middle of this. Let's go under contract here in the 40, 45 range. Let me get my contractor in for a few days and then I'll give you earnest money and give you a firm decision at that point. So you're seeing if you're even going to be in the same universe as the wholesaler when you throw out your offer. And you want to throw out as low and offers you feel comfortable with because that's the price anchor is what they call it. You can't really go down below that anymore in the future. You can try, but it doesn't work well, it's a bad negotiation, you know, kind of mistake to offer 40 and then go back and try to offer 35 later. But if you offer 35 and then he came up to 40, that is acceptable. So make sure whatever offer you offer is low because just know that coming up is easy, but going down is virtually impossible. Okay. So yeah, let's dive into a little bit about the history of how it came to be this way. So I'm not the most experienced investor in the world, right? I've been doing this since 2011, 2012, right? But when I got started, this was a different game. The game was a lot slower. There was a lot less competition. When I first got started. It was a lot harder to get. Bank loans. And ARVs were lower, meaning the values were lower. So harder to get a property of $0.70 on the dollar. Sometimes when the, what, what the value is has tanked, right? But buying prices cheap enough to cashflow based, based against what it will rent for was not the hard part, like it is now. Okay. So it was a different game back then. Back then, you saw a deal come through and you could take your time. I mean, there wasn't like, tons of competition. There was properties listed on the MLS in Nashville for 30, 40 grand when I was first getting started. And now all of those would be hundred and 50 to 200,000 dollar listings, right. So they would not work as rentals, but back in the day, properties that like clearly would have made sense for my cash-flow perspective or just sitting on the MLS waiting for you to buy. I'm sure you're probably sitting there thinking like, ****, why can't that be now? All I gotta say is Hang tight because it will come back. Alright, the history has proven that the real estate market goes in cycles and then it'll come back. There will be a time when that kid, those conditions exist again. So even though you if you're just getting into real estate, you're probably like frustrated. Like why did I wait until now to get in when it's never been harder to find good deals. The way I see it as you know, focus on the positive, which is that you got in now so that you could learn the trade. You can learn how to pick a market and identify a good neighborhood and find a good house and do a proper rehab estimate, and build a team and figure out what something would rent for and find lenders to give you the money and build like a little flow of deals coming your way from wholesalers and whatnot. The fact that if, if that's just the stage you're on, you're really doing that at the perfect time to position yourself for when the market goes back down. Because a lot of people will want to get in the game once everything gets cheap again. But they're gonna be newbies that have no idea what they're doing. And you're already going to be poised to clean up, okay? Like I just read an article recently that said Warren Buffett is moving a lot of his portfolio into cash right now. But why do you think he's doing that? Because he sees the coming change in the market and he wants to have a lot of cash so that he can buy a bunch of businesses or stock or whatever it is that he's buying. And he can clean up. We can do really well, just like he's done in his whole career. He's done the opposite of what everyone else does, right? So you guys are getting in a position to be able to crush it when it gets really easy to start scooping up houses. It doesn't mean you can't buy houses now, but it's a little harder. You have to be patient, you have to wait longer, you have to make more offers you're gonna get, you're going to miss out on a lot more deals now than you otherwise would have. Back when investors are not as interested in properties, it's kinda weird how people are the most interested in real estate when real estate is the most expensive, it doesn't make any sense. So that's why it's smart to be a contrarian investor and invest more heavily when people are less interested in, less heavily when people are more interested like now. Anyways, when I first got started, That's how it was. Honestly, I sadly enough, like I wasn't really buying a lot of rentals are really none for the first handful of years of my career because I was just scared to buy rentals. I would wholesale houses all day. I wouldn't even know what even do like a fix and flip deal, but something about like long-term ownership just scared the **** out of me. And I've talked to people since then, like in this program and other coaching programs that feel the same way. They're crushing it and flipping or wholesaling, but they don't want to actually own something. But that's what makes you like a real investor is when you own property, you invest in property investor for the long haul. Okay. So like I said, when I first got started, there was a bunch of cheap houses everywhere. Over time. It got harder. Right. So I couldn't just take my time with the due diligence and be like, yeah, I might buy that house. Let me think about it. You had to adapt and we had to adapt and create a quicker model to be able to have our hand in the cookie jar to be in the game. And now here in 2019, it's like you need to be as fast as possible. So that's the purpose of this call. I want you guys to picture a fisherman. Okay. Picture of fishermen sitting at, you know, one little corner of the lake with one fishing rod. And he saw a fish jump over there earlier. So he's like Just trying to catch that one fish and he just keeps like his rod right in that corner trying to catch that one fish all day. Right? Then picture some other fishermen on a boat out in the middle of the lake and the deepest part of the lake. And they have a fancy fishing boats and they have like, you know, how you can attach fishing rods. Like you can stand them up on the side of the boat where they're not being held by human being. And just watch them. Imagine them having like a boat full of those like around the entire edge, like an 81012 lines in the water. Which of those two do you think is going to catch more fish? Right? The first fishermen, the guy with the one line and the water is the person that is seeing one deal and just getting tunnel vision and being like, Oh my God, this is gonna be the one. I've got to go all in on this and analyze it to the nth degree. And I'm going to take two weeks to figure out if I want to buy it or not before I make an offer. The guys on the boat with all the fishing rods in the water are the investor who is making ten offers a week with the down and dirty formula that I'm going to show you guys here, where it's just really quick, okay? So by making more offers, even if they're just verbals or you can send an email or letter of intent is like an informal but professional way to make an offer. You can say, Hey, this will be followed by a contract if you accept. That is like having a lot more lines in the water. Those ten offers a week. Each one of those is casting on another line, right? Nine of those rods might not catch a fish, but one of them will. Okay? So the reality of it is that you have to go you have to go wider and take more action, but stay more surface level in today's game to be successful. Okay? So, alright guys, we are going to go over the four-step process now to make an offer. You guys ready for this? I'm going to write it on a fancy whiteboard here. And I want you guys to take notes. Because at the end of this, I'm going to challenge you guys to go out and do it. To go take this formula and start making offers this week, next week when as soon as you can. And this will put you in the game, I promise you like I have a small group of people that I coach. And like the last call, we were wrong. It was like everyone's accountability commitment as we're all going to make at least one offer and everyone made like at least one or two or three offers. And it totally changed the game for everyone. Just like so much excitement and nervousness and so much more action. Because. Once you reach out to another person and say, Hey, I will pay 50,000 for that. Like it's kinda like your neck is on the line. I mean, you could always back out, but then you would hurt your reputation a little bit. So nobody wants to do that without being able to back it up. If that offer were to get accepted or a lot of times off forgets countered, right? So what do you do? Well, getting in the game and making offers is the way to figure out all the other steps because you can delete daily on the sidelines and just take more training courses and stuff. Forever. You can procrastinate forever if you want to. If you're really serious about financial freedom and you really are sold on the benefit it's going to create in your life than making offers is the next step for you. If you want to take things to another level and you're not making regular offers every week. Every week. I'm just telling you that that's the one thing you need to do. If an offer gets accepted, you're gonna go, Oh crap. Now I have to figure out what the rehab estimate really is. Now I have to find funding to buy it. Now I have to find a property manager and make sure my rent estimate was accurate and all that. So it forces you to learn really fast if you're out there making offers because you don't want to make offers and be backing out all the time, your reputations on the line. You don't wanna look stupid. And people magically have an ability to just crush it and take tons of action when they are caught in that mix of making offers. Because like once you're in, you're in, you can't get back out. And so that's a way to really commit yourself to real estate investing. We're gonna go over the four-step process. And a quick caveat. Everything was about to go over. It is all under the assumption that you are investing in a good market and that be the house is in a good neighborhood. Okay? So the market is good and you're in a good, light sea level neighborhood. It's not like a war zone or anything like that. If you're not really sure how to pick a good market, go to the membership site where all the coaching call recordings are that have ever happened in this group. I've done at least two or three calls on how to pick a market. Cool. So assuming all that's true, step one is determined the ARV. Cool. I'm just going to make sure you guys can see this. Play the video real quick. Yeah. It's pretty good. Yeah. All right. So step one, determine the ARV. What's that house gonna be worth once you do your rent ready, rehab. Ok. Now notice I said rent ready, right? That's because sailors often send out comps that are four, whoops, sorry, let me kill that. Audio. Wholesalers often send out comps that are for fully renovated houses in the neighborhood and they're like, yeah, ARV is 110. Well, the area is 110. If you fully gut and rehab the house to sell it retail, which would mean like tear in the walls out. You put a new electrical plumbing, new roof, new windows, new h vac, completely new kitchen and bathroom. Like we're talking like, at least, I don't know, 35 $50,000 rehab to do everything. Then you could sell it for that 110,000. But you don't do rehabs like that unless you are fixing flipper. Okay. There's probably some exceptions I've done. I've done at least one rehab like that I can think of for a rental property, but like, we overdid it, we bought the house for 19,000 and put like 36, 37 into it. We basically did everything. And now it's like by far the nicest house and the neighborhood, we probably could have done less stuff, but we just kinda made the mistake of getting into it. And then we were just like, Well, if we're going to do this, we might as well do that. And next thing we know we did everything. But you are looking for a house that's in the same shape yours is going to be in when you do your rent ready rehab. Okay. The reason for that is when you go when you go to a private lender and they're like trying to figure out what they're going to loan you. The loan you 70% of whatever the house will be worth when you're done fixing it up. They're also going to look for comps that are at that level. They're not going to look at that fully gutted, brand-new like everything's new house. Sold for 100 something, right? They're going to look at that one that's sold for 75, that just has like basic updates, right? And they're gonna maybe base the loan to you at 70% of that. So one reason you need to get the ARV for that level of rehab. So you know what a private lender is going to lend you. But then also when you go to refinance with a bank or another lender of some kind to pay off the first lender wants that loan comes due. Most blenders or banks that are going to do a five-year or longer loan require an appraisal. They're gonna do an appraisal of the property and give you 70% of whatever that is for your longer-term loan. So you want to make sure you know about what that house should appraise for as well. Okay. So I've overestimated it before. I've used like a comp where it was too nice of rehab and I thought it was like the household we're going to be worth 90. And then the appraisal came back 75 because I use the wrong cop. I should have used a crap your crappy or comp. Basically there wasn't as nice. And so that's the reason why you want to you want to determine what the ARV is. And then I want you guys to be at no more than 70% of what that number is. Why? Well, one, you can get pretty much all the money for the deal from private lenders and banks. If you're at 70% loan to value, because banks and lenders lone about 70% loan to value. The loan you all the money, as long as they're only loan you 70%. So you want your all-in price, purchase price plus rehab plus every closing costs to be about 70% of what that ARV is. And again, it's the ARV of the, um, house and rent ready condition, not a full retail gutted house. Okay. So you're looking for a house it's like in the same shape as yours is in. Okay. We've kind of gone over that already. Within a half-mile of your subject property. Okay. But also, if it can be in the same neighborhood, that's even better. So sometimes like you can see like there's a house right here. And then there's a bunch of streets. And then there's like a river or something that runs right here. And then there's a bunch of other houses over here, right? But these are two different neighborhoods. Neighborhood one, this is neighborhood to however, you know, they'll still be half a mile from each other. And these this house and this house could easily be 0.5 mi away, as the crow flies. But these houses are in a different neighborhood from these houses. So they're not the greatest comps. This neighborhood could have a very different feel from this one. Alright, so really same neighborhood that has the same feel. If you can find a house that's over here. I couldn't draw high enough, but let's just say let's say this one was actually 1 mi away, but it was in the same grid here. I would almost prefer that comp over this one over here in a different neighborhood that was closer. Now appraisers are crazy and often wrong. They might not even agree with that. I've had some really bad appraisals in my day that any investor would know was wrong. But appraisers are not held to very high standards. Okay. So you are always taking a little bit of a risk. But anyways, comps that are half-mile away, ideally, they're also in the same neighborhood. They have the same amount of bedrooms and preferably the same amount of bathrooms. So if you have a three-bedroom house, don't use two bedroom houses is comps. You can kinda use those to get a like a price per square footage to throw into the mix. But don't comp. If you have like, if you're trying to figure out what the value of a two bedroom houses. And you're looking at three bedroom houses as comps, you know, you're gonna get the wrong value even if the square footage is almost the same, because that extra bedroom is worth a lot. So you're looking for the same amount of bedrooms and then you have your ARV. Okay. Let's pretend that the ARV, we must pretend we determined it was 75 k. Alright, because we're going to do like a little example deal here, goal. So okay. Just making sure you can see that step number two is determined. The rent. We know that this deal will be worth 75 when you do a rehab. Now we've got to determine the rent. This one is quick and easy. I'm not going to spend a lot of time on it. Okay? For this level of analysis, you can just use something like rental meter. Centimeter catches some crap for not being the most accurate thing. I've found it to be accurate enough. Honestly. It might give you a wide range of like this house is going to rent somewhere 700-800, right. But the median rent for the area for three bedrooms is 750. And it has a bunch of examples. I also will look at what's currently listed for rent, even though that stuff's not rented, so it's not the best felt like a comp. It's still counts in my mind. Or occasionally I'll check with my property manager, but I don't do that all the time to make these rough initial offers because I don't want to wear out the property manager by asking for too many rent estimates. If you're ever unsure, you can always just subtract 50 bucks. Just to be conservative if you're like, I think it might rent it for 800, but I'm not sure. Just use 750 for the purposes of making these rough initial offers. Okay. So we're gonna say we're gonna pretend we got on rental meter. It was like the rents are 7-800 and we're going to take the average of that and we're gonna say that the monthly rent is seven fifths. That's step two. Step three, is to determine the all-in price. Okay? So what does that mean? That means like you're determining the most you can pay. So actually let me let me let me change that to MA the classic. Ma. Oh, okay. That means u max allowable offer. All right. So what you're looking for is what is the most you could pay all in on the property. Okay. So you have let's pretend that there Let's pretend the wholesalers, Since you a deal for 35,000, okay. And then you need to add the repairs. Okay. That's the biggest thing. And so for repairs, there's two ways I'll approach it. One is I'll just use with the wholesaler recommended for repairs, knowing that if that's wrong when I go do due diligence, I can just use that against them and be like, hey, you told me it would be ten grand and my contractor says 15, so I need you to knock another five off the price, right? It's hard for them to argue with that. When you have a real Contractor's estimate, you can do that. You could just use the tin. Or sometimes wholesalers just don't put repair estimates because they, you know, they know that they don't really know well how much it's going to be. And so you need to come up with a good price per square foot estimate for your market. So for like Huntsville where I'm investing now, it's always about ten bucks a square foot. And that's not including anything big like a new roof or new H FAQ or new Windows. Ten bucks a square foot is gonna get you like the basic stuff, like brand new floors, brand new paint. It'll get you like a vanity in the bathroom or a toilet or maybe a patch up the wall here. Are there some new blinds? It'll get you some new electrical outlets and light switches, hovers and maybe there'll be a dumpster for trash removal. Again, this is all a very high level guests. Those things obviously in reality, cost fixed fixed amounts. But I'm just saying it's pretty safe unless a house is like, already been renovated. It's pretty safe to assume that it's at a minimum going to need ten bucks a square foot to get it ready. Ready. Okay. In my experience, so let's say the house is 1,500 sq ft at ten bucks a square foot. That is 15. Okay. And repairs. Alright. So now we're at $50,000, right? Then we've got to factor in a few more things. What are your closing costs going to be? How much is it going to cost you to borrow money from a lender for the points? Then are you going to pay a project manager like 1,000 bucks to manage your contractor to make sure it gets done right. I generally find that for about 4,000 bucks, you can get all those things on the deals that I do at least. Alright. That'd be like 1,500 for closing costs, 1,500 for money costs, which would be like three points on 50 grand. And then a 1,000 for the project manager is 4,000 total. Okay. So again, we're just doing down and dirty numbers here. But I'm teaching you a fast way to give rough estimates of what you can offer, okay? So they want 35, 15 and repairs and for k and closing money costs and project management fee. 54 k is what you would need to offer if they want if you wanted to pay them full price. Okay. However, you cannot do that unless you well, so the rent has to be a certain portion of this. There's two considerations to make. The first one, we get my calculator out. So we determined earlier that the rent was 750 bucks. We determined that the ARV was 75 k. Alright. So we know that we want of our all the money from the lender, right? And so we cannot spend more than 70% of the ARV. We want lenders and bankers to give us all the money. So 75,000 times 0.7 is 5025. Okay. So that would leave you bringing 1,500 bucks to the table with our estimates here. Okay. That's not bad. I mean, that happens to me. Most common most deals, I'm bringing in like one or two or three grand bone. It's all said and done. Not too shabby to get another rental with 20,000 and equity and making three grand a year in passive income, right? Really checks the box in terms of this deal, does at these numbers, in terms of being within 70% of the ARV. Now the other consideration is monthly cash-flow because having the lender loan you all the money for the deal would be great. But if the deal won't cashflow, it doesn't matter, right? So what we do for that, again, the down and dirty method is we want one month's rent, which is 750, divided by the all-in price, which in this scenario is 54,000. We want that to equal 1.5% or more. So in this scenario, 750/54000 is actually 0.0, 138. So that's what, that's 1.3%, it's almost 1.4, but it's not 1.5, which is where I would definitely recommend you make those initial offers to make sure you have cash flows so we know that the rent is 750. We can't change that to make this a 1.5% or so. What can we change? Well, we can change the all-in price, right? What we do is lower that 750/50000 is banned. It's exactly 1.5. Okay? So 50 K is really the most we can be all in on this deal. And if we can't change the rehab amount and we can't change the fixed costs, then we have to knock off for grand from the purchase price. Okay, so how much can we offer the person who wants 35 on this deal? That's right. If you said it, 31,000, guy, 31 k will be the most we could offer. I said at the beginning that this was a four-step process, but I ended up accidentally combining steps 3.4 into this part. So you just learn to all four steps. Don't worry about the fourth step. There is a one anymore. It's basically the way I originally had. It was like determined you're all-in price. And then step four is make your offer using that plus the 1.5%, right? So we determined that the most, we could pay, the most we can pay to be a 70% of ARV is actually was actually 50 to five. And then the most we could offer to be at a 1.5% ratio is actually 31. 31,000 is our max allowable off or do you go and offer 31 grand right away to the wholesaler? You probably should. Because that's the absolute most you could pay. I don't think there's anything wrong if they wanted 35 to start with like 27, right? And then let let them, you know, gets you up for a little bit more. You started at 27, they want 35. You're immediately going to see how much flexibility they have. A lot of people when you set an extreme low price anchor, like you could even start at 25. What that does is it causes them to psychologically they dropped to there. The minimum they can take right away. You know, if you go 25, they might go no. There's no way I can go below 30. And you're like yes, because I knew I can actually pay 31 for the steel. Right. So that's really what you would do. Next. You wouldn't just say 31, go ahead and say 25. Get comfortable making low offers. Feeling a little uncomfortable in the moment. Negotiation is really powerful. It's the fastest money you can ever make in your life is through negotiation. Okay? So let me know if this makes sense, guys. Just I'm going to recap that last part one more time just because I know it got a little confusing. So a deal comes in. We determined that when we do a rent ready rehab, it will be worth 75,000. We checked the rent estimates are rental meter or whatnot. We determined that the rents approximately 750, and then we used the square footage of 1,500 sq ft. We just multiplied it by ten $10 a square foot to get 15 k and repairs. Okay. Then we know there's about 4,000 and additional costs. And so the most we can pay, you know that your repairs and your fixed costs are fixed and the purchase price is the flexible part of the equation, okay? So we know that the most you can pay to get all the money from the lender is 5025, right? That's 70% of the ARV. But in order for it to be 1.5% or which just means cashflow. If we were to break it down like one month's rent minus mortgage minus property manager, minus taxes, minus insurance, all that, which you do need to do that like if this offer were to get accepted to be sure. But if it's a 1.5 per cent or, you know, there's probably going to be a nice chunk of cashflow leftover for you each month, which is the whole purpose of this, right? So in order for it to hit that ratio, one month's rent divided by the all-in price, you can actually pay only 50 grand, right? 7750/50000 is 1.5%. So we know that all in price needs to be 50. Because whichever, whichever of the two or lower, right? You could pay up to 5025 and get all the money from the lender, but you can only pay up to 50 dab. It hits your cashflow requirements. So you take the lower of the two numbers and that's the most you can offer. You already have to pay 15 and repairs and four and closing money and project management costs. The most you can offer is 31. 31,031 is the offer of 15 is repairs for as the costs. 50 is the all-in price, makes sense. Then you're gonna be able to get all the money from the lender and you're in that 750 a month, if you're all in at 50, will have positive cash flow after your mortgage and your property management. Unless there's some weird thing like your market has crazy property taxes. So you always want to justify that by breaking it down and finding the exact numbers for everything. But again, this is your down and dirty formula. So when you guys get deals coming in from now on, what I want you guys to do is go through this process, run cops, what's this thing going to be worth when I do everyone ready rehab? Term in the rent. What is this thing going to rent for? Then? When you have those two numbers, you need to come up with an odd number for your repair estimate. And then you just use the 1.5% rule and 70% of ARV, figure out what you can offer. And really you're always making sure to offer the price that hits the 1.5% rule. You're just doing the ARV calculation to make sure that you don't actually need to lower it even more to make sure you don't have to come out of pocket. Okay. So if the ARV was only 70, you can only borrow whatever that is, 49,000 or something from the lender. Even though you could pay 50. Haven't cashflow, you might offer 49. You might offer an extra $100 off. Just so you can still get all the money from the bank. Okay. That makes sense. So the last deal I did in Huntsville, the numbers that were basically almost identical to this well, not identical. They are viewed as 75 guy. The rent was actually 825 or 850. And I was all in at about 54,500 when it was all said and done. But 850/54500 is still a 1.5 per center. And I came out of pockets about 2000 and something dollars for the deal. There were some little bit of repairs that I didn't like. The water heater couldn't be salvage. I had to put a new one in at the very end, stuff like that. But it wasn't a huge deal because I did a lot of due diligence up front. But I hope this has been helpful for you guys, not just in learning this down and dirty process that I go through to make these rough initial offers. But also for you guys just to see what does a typical good deal look like, right? So more experienced investors were looking at deals like this, which you might be like, dude, I would love to get a deal like that, right? But a more experienced investors kinda like, can I pay, should I pay 31 for this? I don't know. It's a little tight. Really loved to get it for 27 or 28, you know, like we're haggling on these, like trying to get it for a little cheaper, just being really conservative. That's how to be a good investor, is to really stick to your numbers and stick to your guns to get real excited and emotional to get into real estate investing. But when you are doing deals, you get super like logic. I guess it's left-brain, whichever one is like the more mathematical side or are you shift to the left brain type thinking? And it's all numbers and data and logic and not emotion. Again, this process is just two, you know, like, let's say we made the offer of the 30 or whatever, 31. And they agreed to it. I'd say, alright, awesome. Put your right it up. Just let me get like five days of inspection period to get my contractor in there. I know those repairs are not going to come back above 15 grand, but I just need to see his bid and we'll be good to go. Then I'll I'll go ahead and mail the earnest money, check to your title company with the instructions for them to cache it if I do not cancel within the five days, right? And of course they might counter your offer for that, but that gets the conversation started. So you're always going in and doing more due diligence after this, you're getting a contractor estimate, you're making sure it really comes back at 15. You're checking with the property manager, making sure it'll really ran for 750. Maybe you do some more 21. Real Life Deal Analysis: Instead of me rambling the whole time about the theory of real estate investing or teaching you another topic that we would just get our hands dirty and look at some deals. I'll share my screen with you. I'm going to write a bunch on this whiteboard here. And we're just going to go through the real process that I go through when it comes to analyzing deals. So just as a little disclaimer, I don't I won't always have the appropriate software for running comps for the deals you sent me. If they're not in my market. And we're just gonna do like a down and dirty analysis. So the purpose of this coaching call is to see kind of how I think about deal analysis, how I actually do it, and how I produce an offer. How I produce like that initial offer. Because the way that you do this, did you make the offer first? Imagine if you tried. Let's say there's, I don't know, 101520 new deals available in your market every single week. Okay? Imagine if you tried to like actually get a contractor in every single one of those houses, or you went and looked at them personally, or you spent hours and hours running the numbers and trying to get everything? Exactly freaking Perfect. How do you think that would go? Well, first of all, it would be very overwhelming to try and do that for 20 different deals every single week. There's also no way you could get a contractor in that many houses, like in any reasonable timeframe, it's impossible. Okay, So the way that more seasoned investors approach this is they learned to make rough initial offers on a few properties that make sense out of that bunch. And then only if something gets accepted do they dive in. So you're kinda like your offers are like you're casting out your Laura, you're fishing. You're casting, casting. And after whatever, 20 casts out, boom, you sink something, you reel it in. That's the equivalent of you getting a signed contract backs, meaning someone accepting your offer. Only once you catch the fish or get the signed contract, do you dive in and send a contractor out there, maybe pay for a home inspection, really get down to the nitty-gritty of what would this rent for and you got to check with your property manager and all that before then you're just like telling people broadly what you think you can pay, showing real interests and then contract or a letter of intent or at least an email saying, Hey, I can pay 35,000 to test people's level of interest in your offer or their seriousness. Some people won't even write you back. Which means it's a good thing you didn't spend tons of time analyzing the deal, right? What we're gonna do today is like that upfront, rough down and dirty analysis that you need to figure out. It's not, It's still not like lazy. You're still really looking and trying to come up with as close as you can or the right number. But you'll see what I mean. Okay. So without further ado, let's look at I know there were at least two deals posted in the Facebook group. I appreciate you guys doing that. What's up? I think that's how you said to say it. Then what's up, Ron, How are you doing? So if you guys have deals, you want me to to look at post them in the comments. Okay. And I already see the 2805 High Street and 3,007 southwest 52nd Street to K. So we'll start with those two. We will start with Marx deal, 805 High Street in heart cell, Alabama. Okay, So let me share my screen. So rough initial analysis here. What I'm gonna do is just put this into Google, alright? And this is of course assuming that this a market that checks out and everything, then we're just kinda, kinda look at it from a high, high level, alright, heart cell. So this looks like a smaller town that's kind of on the outskirts of what would be the big count around here? Huntsville. Okay. It's outside of Huntsville. Southwest of Huntsville. I immediately want to know how close is it to Huntsville because proximity to a bigger city matters 48 min, but there's a crash show. I don't know how much it is when there's no traffic or anything. Maybe it's 35 min, we'll call it 40. So maybe 40 min away from Huntsville. So it's a drive away from Huntsville, which is good because you could technically live in a heart cell heart cell and commute to Huntsville for work and back. So this heart cell town can sort of leverage the economy of Huntsville. I don't know beyond that, If it's a great town to invest and I want to know what the population is. Population size real quick. It's only 14,000, so that's pretty concerning. That's pretty small. Alright. So the even though it is like within a drive to Huntsville, the amount of tenants that you can get is from a pool of 14,000. So it's just not very big. And then the next thing you would want to know is like, is it growing? And I'm not going to spend a lot of time looking at the markets in this coaching call, okay, but I just want you to know that this is how I think like if I've never heard of a city before, I'm immediately like real curious. Okay, and you can see here that the population is not really growing in heart cell, okay? It's teetering around 0% growth if you look at these numbers here, okay? So that's also kind of concerning, is just like, alright, what is the vacancy rate going to be? Right? How hard is it going to be to rent a property here? So those are some things I would consider before buying this house. However, for the sake of your learning, Let's go ahead and assume that this market does indeed checkout, okay? And let's start to look at the house itself. Sounds good. So I go to the street view and get try to get a feel for the neighborhood. And this looks like a pretty nice neighborhood. Right? It looks pretty decent. It's got a vacant lot next door on a really know if that's good or bad. There's actually another, a vacant lot next to that. So two vacant lots, that's kind of interesting. And then these houses look pretty new. Like they don't look more than, I don't know, 20 years old or something like that. I'm not great at guessing the age of houses, but these look maybe a little older. But this neighborhood looks like maybe a B class neighborhood. A little nicer than the neighborhoods that I typically buy in. That surprises me. I'm just like if I'm buying a house on the outskirts of Huntsville and astoundingly 14,000 people. How are these neighborhoods this nice? You know what I mean? Maybe I'm wrong to assume that, but that is a point of curiosity, is like, I want to know more about this neighborhood. But generally, the reason I looked at the street view was to see if there was anything sketchy. Like. If it was really like a neighborhood with tons of beat up houses are boarded up houses. There's the subject property again, so we can just kinda see it here. That was in 2014. So it's been five years since this Google Street View has been updated and you can see on the top-left. But again, nice neighborhood. It's got some sidewalks, it's got some big, decent nice houses, okay. So that all checks out and then look at the neighborhood. Then I go back to Mark's post and I'll try to zoom in so you guys can see or purchase price 2029, rehab estimate 30 to 40, which is what I would expect if you're only getting it for 22 ARV based on the wholesaler, 85 to 90 k. Okay, I'm gonna write some of these numbers down here. You're going to buy it for 23 basically, let's say the rehabs 35 will go in the middle of your 30 to 40, 354-550-5508 K all-in price. All know that actually, I think an easier way to do this together would be for me to pull up the spreadsheets since I'm sharing my screen with you guys. And let's look at what's, what's punch it in. So this is 805. Hi, I have a house on High Street to it's in Columbia, Tennessee. Your purchase price is 2029. Alright, and if you want a copy of this original analyzer, I'm using, just drop that in the comments. Remind me to share the link with you after this. But anyways marks the old purchase price, 2029. Rehab estimates 30 to 40. Alright, so we're gonna put that in the repairs. We'll do 35,000. We'll assume it's about 1,500 and closing costs. Alright. He says ARB 85 to 90, so I'll put 8075, just cut it down the middle. Okay. So your total cash needed to do this deal. If you bought it for 23, you put 35 into it. There's 1,500 and closing costs would be 59,400. After repair value being 87,500. Then I haven't here, What's the loan to value that the lender will give you, okay, private lenders or whatever, 65 to 80% usually, so I put 70 here. The purpose of this sheet within this tutors three sheets and the spreadsheet, the purpose of this one we're on here is really just to analyze the funding situation, not the cashflow. I realized that there's two steps when we analyze deal is it's like Willett cashflow and can I get all the money from private lender, right? Those are the main two things you want to know. So I broke it into a cashflow tab and an equity slash financing tab, which that's what we're on now. Okay? So if the lender will give you 70% on this deal mark of the 8075 that let's say he agrees or she agrees that it's worth than the most they're gonna give you is $61,250 on the deal. That's 70% of the ARB. Then there's also going to be points involved, okay. Too. We'll call it pretends lender wants, let's say, three points, which is the same thing as three. So that would be about 1,800 bucks as a loan origination fee paid upfront. Okay. So when you add that to the original cash needed up here, which was 5094. Let me zoom in. I hope you guys can see this. Alright. Maybe a little too big. When you add that. The points 1,800 bucks to the original cash needed, which was 5094, you get 61,237. Now that is the purchase price plus the repairs plus the coat closing costs plus the points or the loan origination fee. So 61 too, is like the total amount you're going to bring to the table. Funny enough. If you look at the max loan amount, it's the same amount. So like if a lender will give you 70% on this deal and the deal is indeed worth 8075. Once it's fixed up, they should be willing to give you $61,200 and that's how much you need. That's why this thing says out-of-pocket cash required negative $12.50. It's almost like exactly even I'm surprised that it turned out that way. It's kind of a good example, honestly, doing a deal with no money. Okay? So remember, this doesn't mean you should definitely do the deal. This is the stage where you check out like, could you do the deal with many of your own money? Because I know a lot of you either you don't want to use a bank or you can't use a bag, you don't have cash for the down payment. Trust me. I get it. I've been there. It's high was for most of my career. And so you want to know if this is possible? And it looks like it is. Okay. So the next tab we would go over two is the cashflow tab. And right out right out of the gate. You guys know, I'm pretty, I like the 1% rule, like to, to analyze things. So let's, let's first look at that. Okay. Which would be the so I have to fulfill these and again, 2029, repairs 35, closing costs, 1,500. Money costs were 1,800, all in price 61. And then let me see what you said. It would rent for seven to 801 point. Okay. I see you have a few examples in here. Got it. So call it 750 is the rent. Here it is. So 750 is the rent. All I'm price is 61 to 1.3% deal. Okay. And so when we looked at the loan to value ratio on that, it looked good, right? Like you could get all the money from a lender. But now when we're looking at the cashflow side of things, it doesn't look quite as good, okay? And why is that? If it's gonna be worth 87, you can get all the money to like, why is it because of the rent is kinda alone. Okay. It's a surprisingly low for what it would be worth, right? If the house is. Worth that much. It looks like it's in a nice neighborhood. It's sort of surprising that you can only get 750. You can see if you could get like 850, it bumps it almost to a one-point for. So there is a big difference here. But again, we're just trying to get to the point of making a rough initial offer, right? You might if you're offering gets accepted, you might then go to a property or property manager here and ask them, but that also brings up another point of concern is when you're in a town with only 14,000 people, how many property management companies are there? Are there any are there good ones? Right? Can you ask them stuff like this and they'll get back to you quick. Bigger cities, just like bigger cities have more restaurants and stuff, they just tend to have more professionals in every field, just more people to choose from. It just ends up meaning like, that's why New York City has some of the best restaurants, right? Because there's just so many, there's so much competition like there's gonna be some really good ones there, right? And the same thing's true with like property managers. There could be just one or two crappy property managers in the city. I have no idea. I'm just making stuff up, but could be a potential obstacle either way. 750 a month in rent as what we're going to run with. Okay. So let me fill out the rest of this. We looked at the 1.3% rule and we saw it was a little low. So let's see here. Okay, That one we know is zero out-of-pocket cash required. We know that after repair a values force himself, I could delete office tab. Your loan balance is going to be going back to the equity financing tab, right? If you get the full amount, can be 61. Alright. Monthly rent, we put in 750 mortgage payment to 63. That's not correct. Actually, I need to take so there's a third tab on the spreadsheet guys called mortgage calculator. I'd built in a little mortgage calculator here for you guys. And basically all you do is you get this loan balance, what you plan to borrow from the lender, and you plug it into this field up here, top-left, 61, 200. And we're going to we're going to pretend like we're getting longer-term financing down the road, okay, so this is not looking at it like will I cash-flow with them when I'm paying ten or 12% of the private money lender, you'll probably just more breakeven during that period, but you're using you're getting all the money to buy it. So you're okay with break-even until you can refi with the bank or were you stabilize the refi with a longer-term private lender at 6.5% or whatever. So you'd put whatever interest rate you expect to get down the road in this interest rate field, then I've got a three-year 5% loan here. So it's like the typical when you get from the bank. Then up here in the top right, it shows you what your monthly payment will be. 328. There's also other fields on here like how much you pay in total, how much of it will be interest when you haven't paid off. And this is called an amortization table down here. It shows you out of each payment that you make, how much goes to principal, how much goes to interest, what your remaining balances. But you see through all 30 years of making these payments, your payment always stays $328.50. We go back to the cashflow tab. We put that in 35823. Alright. Then insurance will assume is $50 and then property taxes, it's probably about 50. Property taxes are cheap and Alabama, It's like five bucks per every $100 of assessed value, which is different than appraised value by a lot, like the house I bought in Huntsville last week, appraised at 35, but the assessed value for tax reasons, there's only $5,000. Okay. So that's what you calculate the property taxes off of. It's $5 for every $100 of assessed value. Now that's in Alabama. It's in Huntsville. So this might even be a little cheaper because it's outside of the city limits. We'll call it 40 bucks a month. Okay. Now, vacancies and repairs, I normally use 15%, but I might bump this up to 20% just because it's such a small town and I'm a little scared of more vacancy. Property manager ten per cent. So your total expenses are 673. Let me make sure that's right. So we have mortgage payment 35850 bucks Insurance, 40 bucks property tax, a hundred-dollar 150-year-old Kinsey's repairs and 75 with property managers. 673 is your 673 is your total expenses and your monthly net cash flow would be $76. Okay? So that's obviously not sufficient enough. The reason that the cash on cash is showing as DIV slash zero here is because when you tell you when you put $0 in the deal, the out-of-pocket cash required, it can't calculate a return on that because the return is actually infinite. Okay? So that's good. So DIV slash zero equals infinite return equals good. So even though the cashflow is low, it's like you didn't put any of your own money in the deal, right? So that is something to consider. But the thing is, is when you're when you're involved in a deal that's tight like this. If the property goes vacant or there are unexpected repairs, you go from making that $76 a month infinite return to paying old money really quickly. You're only $76 above water. You know what I'm saying? So you're closer to like dipping down into the negative. So it's not advisable to do this deal at these numbers. Okay, mark, so what I would recommend is that you offer less, okay, that's really the only way that you can do it. So let's see, You said wholesalers that he could work with me on price. He would have to be because if I calculate 65%, most all and I could do will be 55 K. Yeah, that does sound like it might be more I'm workable. He said he believes 30 K would get it and rentable shaved 40 K retail already. Have a contract, are ready to drive over, give me an estimate. So what you could do is 50 bucks to run comps. That's kinda silly. I think you probably don't need to pay that. I've never heard of anyone charged in that, but I guess realtors got to charge for their time. I'm thinking like so what I'll do sometimes is with the wholesaler is I'll be like, alright man, You said that these were the numbers 30,000 to get it ready. So let's see here. So you offer like based upon what they say or worse, so we'll put 30 in here. And let's see how that's going to change things. 30. So you're all in price is now 56. Okay? So if we go back to the, um, you're still going to borrow all that from the lender, right? So we'll go back to the mortgage calculator 5062 or whatever that was, that brings a payment down to 301. So we go update that. So all we did was change the repairs. 301. So now your cashflow is 134. It's a little better. But we really want to see at least 200, right? You know what I'm saying? Like, for it to feel really good about this deal. We've already shaved everything we believe we can shave off of the repairs. So now we have to start shaving off of the purchase price. So let's pretend we offered 15,000. You're all ends. 4083 will go back to your mortgage calculator or the payments to 59. Go back to our cash flow tab, update that to 259. We're just working these numbers, guys is all I do to get them to where they make sense to you and they are a good deal for you. That's how you'd be a savvy investor. So we're still at 176 offering 15. All right, so our expenses are still high. I do have 20% is the vacancies and repairs. That could be wrong, but small town, I don't want to change it. So I'm going to and I don't want you guys to get in the habit of funneling the numbers to where you can make it work. You know, people will be like, well, you know, if it rented for 800, I could do I could do it. But you don't know if it's going to run for 800. So be conservative, keep it at 07:50, make it work into that price. Then if you end up getting a hundreds icing on the cake, let's lower the purchase price to 12,000. Okay. Now we're at 4053 for the mortgage. 243 a month to 43. Now we're at 192. You know, we're getting close. So maybe maybe you could offer ten or something like that. 10,000. 10,000. I know what you're thinking too. Like he wants 2029. I can't offer ten. I get it. But the thing is is like your numbers have to work. There's a ladder repairs, it's a minimum 30 Gran, you know, that's not including surprises or maybe paying for a project manager, you're still in at 4033. So we're gonna go back. 32 is now your payment if you've got it at that price and now we're at $203? Yes. Okay. Amrita, 1.7% or so I'd asked you mark or anyone else like that's looking at this deal, wouldn't you be like ecstatic to get it for ten grand instead of 20 to nine? Because you still got to put 30 into us. So you're still basically got to be in it for 4033 to make it ready to just be rent ready. Okay. Not retail ready. I mean, I just bought a house in Huntsville and it's going to be rent ready for about 50. And it's going to rent for like 825 and it's more close to town and all that stuff. So if you can get a house in Huntsville that performs better for only a little more than why would you pay more than ten for this? You know what I mean? Why not just go to Huntsville and buy one of the deals I'm buy-in. So that's a way you could position this to your wholesaler. But this is the process. You look at. They're asking price and you're like, Okay, cool man, that's the, that's the imaginary number that you came up with. It's time for me to come up with my imaginary number. That's actually based upon disciplined investing. So I hope that helps. I would literally just on the surface level, because this wholesaler probably might even have this under contract for ten grand and you know what I mean? So they might might actually be workable. Or if he says no, it has to be 15, maybe you get it under contract for 15. You go get a contractor in there and see if he can do the rehab for 25 and get it rent ready. Right. You still try to make the deal work, but you've got to start low because you can't go down. You can only go up once you start. So the last thing I want to glance at here, 35640, is I like to see what other houses are for sale. So we're off, we're in this little pocket, 31.36. So I'm going to just go to Zillow heart cell and we'll look at the map. You want to make sure like you're not play the sucker and getting ripped off. So there's not a lot for sale in this pocket. That's cheap, right? It looks like your subject property is right here. Okay. Hi street. It's right right here. And you look there's not a lot for sale. We can look at like, recently sold and for rent and be helpful. That gave us a lot of crap. Okay. So is it like all this stuff where the recent sales happened? Cheapest thing I'm seeing is six grand. That's that might have been a vacant lot. I don't even know. Or just a really torn up house. Here's one for 44. Then we don t a lot for rent, you know, here's one for 650. And you wonder like, How long has that been sitting on the markets of 21 listed for 24 days. Pretty good shape, but it's an apartment. Okay. So not a great comp. But like just the fact that when you look at the four rents in this city, like if I take away these other three, these other two. Like look in all of heart cell, there are two properties for it to okay. And this one has been listed for 34 days, the other one for 24. So this could mean a couple of things like one, people are screaming for rentals there and there's nothing available, so everything has been scooped up. Or it could mean that there's not a demand for it, right? And that's why there's nothing. Generally the cities I invest in and there's a bunch of stuff for rent. And for whatever reason, even though that seems counter-intuitive, it makes me more comfortable because it just means that there's more stuff happening there. So I hope that makes sense. But assuming you do check this market out and you feel comfortable with it, and you check off all those boxes. Then I say ten K is your first offer. You explain why you break down. These numbers here. And the good news if you got it for that, you only have to borrow 43 from the lender, right? And if it's worth 87, then it's way easier to refinance out. You're only in for like 50% of the value. But more importantly, you've got your 200 bucks a month of cashflow. That's my thoughts on that deal. Now, if you guys are posting questions, I will get to them. I may have to get to them at the end because I want to get to a naught steel here. Because just for the sake of time, took about 30 min to add to analyze that one. And you'll get faster at this. Like I probably wouldn't have it would have taken me maybe ten or 15 min to do it without explaining it alongside of doing it. So don't think it'll take you forever, but that should be a testament to why you should never wanna do more than this for every deal. When you don't even know, because you don't even know if that guy is going to take your ten K offer. He might give you the finger and never talk to you again. Or we might take it, right, but make that offer before you waste more time on the deal. Makes sense. So now we're going to Oklahoma City, Oklahoma. I'm again, I'm going to assume that this is a good market and checks off all the boxes and stuff. And this is like a good neighborhood and stuff because that's a whole different type of analysis that we don't have time for. It's not really the purpose of this training. So let's just look at this. We're in southwest Oklahoma City. See, it doesn't look like we're too far from downtown. Like to kinda know 20 min or so from what appears to be the city-center. Alright, and that's in traffic, so maybe it's 15 min. We shouldn't be having a coaching calls during rush hour. It's too busy out there. But we know it's about 15 min south west of downtown. Okay. I'm also seeing that it's close to the airport. So that is probably more of a negative. I would I would think it's definitely has its perks being that the convenience. But there's gonna be lots of noise, right? If this is a like, if this is like a, you know, unless this is like a commercial airport where it's not. But it doesn't look like it is. It looks like it's the airport. That's a lot of parking. So yeah, that's something to think about, you know, to tenants like being near airports or not. If I'm a tenant, I'm going to want to be further away from it just so I don't see and hear planes taking off and landing all the time. So that's just something to think about. So now let's look at the street. So this is the subject property, I think 3,007 southwest 52nd Street. You this one more way. Okay. That's what the house looks like. Skeletal carport on front. So it is carport and the left porch on the right. Where is it? Is it this house and maybe they removed the car port 3009. Okay. That's not it. So it's this one? No. 30, 13. This way, sorry guys. Sometimes Google Maps doesn't line up exactly. That house. It doesn't look like it. 3,007 Southwest 5050. It's weird because it doesn't really pop up on other websites other than this red fence. So this might be the wrong picture, possibly. If this was pulled from Google Maps. I'm not really sure. Like some houses or not. Let me just try to paste this directly into Zillow. And we are still in hard sell, Alabama. It says could not find this area. I'm sorry, guys. We'll move on here in just a second if we don't. 373119 We don't actually have to know exactly what house it is on the street BI for whatever reason, I cannot get this to pull up. But we will assume that that's the that's the street. And it looks like we have all the numbers here from you. So that'll that'll be good enough. So let's go back to the street and let's take a little tour. So this neighborhood looks a little less nice than the one. The deal that Mark had. It looks not bad though. This looks like a typical American working class neighborhood. You know, you're not seeing like trailers and busted down cars and boarded up houses or anything like that? That house looks like it's been somewhat updated. Let's go back down the street the other direction. Just make sure everything looks good. Pretty cut and dry. Okay. I don't see anything super concerning in the immediate area. There's that airport that we talked about, but yeah, so the neighborhood, it looks decent. So pending further investigation, which is about both of these exercises are let's look at what we could maybe offer. Okay. So we've got a three bed, one-and-a-half bath, great rental area, convert the garage and do a fourth bedroom. Closing costs are 1800s purchase price 64 or five are let's start to fill in our spreadsheet again, 64 or five. And closing costs for 1,800, which those that's negotiable. Rehab 15 say 155. And then the after repair, the value 90 to 95. Okay. I'll cut that in half and say 90 to five. Alright, so to buy it and fix it up and pay those closing costs, you're looking at 81,800. Okay. After repair value is 90 to five. If a lender would give you 70% of the after repair value, they're gonna give you 64,700. Okay. Meaning you're going to have to come to the table with almost $19,000, right? That's including the points you have to pay 3% on that. You're paying that up front, right? So they're asking price, this is a pretty cash intensive deal. Now, you could find a lender that we go up to 80%. Let's say you're still bringing $10,000 to the table on this deal, okay? That's at that asking price. So let's keep that in mind. Knowing we might have to adjust the purchase price solely based on the fact that we don't want to bring that much to the table. And let's analyze the cashflow side of the deal as well, okay? So 64 or five to buy it and 155 to wrap it up, get it written already. 60. Closing costs 1,800. When it costs for about 1,800 to 8036 again for the all-in price. And then we'll fill that out in a second. After repair value you said was 9025. I mean, very little equity in the deal, less than ten grand or so, then I want to know what it would rent for. Property tax and insurance should be 70 a month. Property tax is not in here, so we'd have to guess on that unless you want to type it in the comments. Now, we're going to put insurance is 70. Then C. I need to know what the rent is. Let me see if you type that in here. I have cash on hand one to use as long as I get it back. Didn't give you the actual address. That's fine. Property tax is 790. I'm guessing that's per year. So we'll do that tough divided by 12. So 65 bucks a month. All right. So I'm putting that in here. 65, then I need to know what the rent would be. I've had and if you can if you know it or if you have a good guess, I can also try and look it up, but without the real address, that's gonna be a little difficult. Go to like rental meter. See if we can find if this is a real address. 750 to 800. I'm not sure if this is a right. But tell me if that sounds right. 730 to 800. I'll put 775 is the rent. So let's look at what we have here. 64 to buy at 15 to fix it up 1,800 and closing costs, these generative money costs all-in little under 84 grand. Then see the ARV is 90 to the lender. The Mac side give you a B, let's say 74. If you got a lender to give you 80%. So that would be your loan amount, 70 for your payments, $397 a month. Okay. 397. Taxes, insurance are filled in, vacancies and repairs. I guess I could bump that down to 15% of her back in a bigger city. So you can see that your monthly rent, net rent is only ten bucks, or way too low. It's basically a breakeven property and you probably knew that and you're just showing me this deal just from looking at the all-in price divided by the rent, divided by the all-in price. You know, it's less than a 1% or so. Okay. 930 are saying so let's put that in. That's the actual rent. So now we're at 119, so that's better for sure. But it's not really good enough, especially considering you're gonna put $83,000 into this deal. If I can put 50 K into a deal that makes me 250 a month, you don't want to put a three into something that makes you 119. You know what I'm saying? At least that's how I feel like there's more money involved in the deal, even if it's coming from the lender. I want more back because I'm going into more debt, taking a little more risk. You want that to be higher. So let's see what we can do here. To tweak this to make it better. It's basically a matter of lowering the purchase price, just like we did with the previous deal. So we'll take ten grand off, we'll get on to about 55,000. Let's see. That would be so then you need 72 from the lender. Let's see. Hold on a second. What do we put in here before updating? So 55 at that point. Okay. So that makes it interesting. So 55 when you add in the repairs and the closing costs, the total amount you need is 72 before the points. Remember the max that the lender will give you is 74. So at 55, at a purchase price of 55, assuming you could get 80% loan to value. But let's not get down to 75 just to be conservative. You can get 75% loan to value and vulnerable and you almost 70 grand and you need about 74. So you're coming out of pocket like 5,000 at this purchase price, okay. But your loan amount, if it's 7023, you put it in the mortgage calculator, your payment becomes 388. So we go back to the cashflow tab 388 payment. So your monthly cash-flow is still only 128. So the moral of the story is that even though you can borrow, like, even though the lender would in theory give you all the money, they'd give you up to 74 here. Or is it no. 70. Even though they would give you that if you pay that much for the deal or if you, meaning and you take that much from them, then you won't be able to cash flow. Okay? So there's deals where you can borrow all the money from the lender, but it would make the deal too tight. You'd be up to your neck in mortgage, right? So you want to lower the purchase price down or put more of your own money in the deal, right? So if you Let's see. If you put in, it just depends on how much you want to put in. Do you want to throw money into the deal to make it work? Do you want to negotiate? You can do both. If you have the cash like you said you did, There's nothing wrong with putting it into the deal. Sometimes people are like, no, I don't want to put 1015 granted to the deal. But you got to realize you're gonna make a really good return on that ten or 15 grants specifically. I guess I like to look first at how can I do it with through negotiation. So let's pretend that you could get it for 50,000 50,000 repairs needed, 155 closing costs till 1,800. Okay. So that's 67. You're after repair value is 92 still loan amount 75%. Let's pretend that instead of putting in 60 or borrowing 69 on this deal, you decided you to only borrow 60, okay? You put the rest in yourself. So 60,000 would be the loan amount. 322 becomes your payment. Alright? So 322, now you're up to 194, you're getting close 22. Airtight Contractor Management: Alright, let's get rolling. Hope you guys are doing great. I have a lesson today that I think are really going to enjoy and really going to get a lot out of like guys, if you implement what I'm about to teach you, this is going to be worth the price of admission alone. And then some, okay. One of the biggest ways too, save money, get more money back in this whole world of investing is through the way that you handle the contractor relationship, the way that you manage them. And just like the way that you've decided what to do to a house like all that. I mean, people lose so much money. And tonight we're going to talk about how not to do that. Because what you want is to buy a house, get that thing fixed up without any problem, without any headaches, and get it rented out, right? You also want to be able to do that virtually sitting at your computer, you know, 2,000 mi away from the house like I do. Okay. There's a specific process you have to follow in order to pull that off. Okay. That's what we're going to go over tonight. A little bit about why this is important. So guys, I have already lost six figures. Easy doing this the wrong way. Okay? This one training is going to save you tens of thousands, more likely, hundreds of thousands of dollars over the course of your investing career. Once you see this process and how airtight it is, you'll understand what I mean. Guys. They say that weddings and funerals are the two times when people are the most emotional about spending money or they're the most erratic about it. Like they just don't care. There's just so much emotion going on. Money is no object, just whatever something costs will pay for it, right? Because it's a wedding or a funeral. Kinda understandable. Weirdly enough. People seem to do that for rehabs to okay. I don't know why, but people's sense of spending money kinda goes out the window because you start to think, well, this is an investment, it's not a cost. In some ways that's true. Like the money is better spent on a rehab than like on a new car that you don't need. But why waste money when you could be putting that money into future investments or something else. So also this, what we're going to go over is once you have already selected your contractor and you know they are reputable. Okay? So that's gonna be in a different training. This training is about, okay, I know who I'm going with and it's time to get that bid from them. It's time to get it down within my budget to make sure I'm not getting ripped off. And then start that project with that guy and manage them successfully throughout the whole thing and makes sure I'm protected. That's what we're going to go over tonight. First, I want to teach you some of the philosophy, okay? So I'm gonna show you how to think about this first. And if you haven't noticed already, I value philosophy over tactics. I believe if you can teach somebody how to think about something, then the, you know, the tactics, the what do I do here? What do I do there? That becomes a lot easier because you can essentially refer back to the philosophy. An example of a philosophy, you know, I have that I've already taught you is that rental properties are supposed to exist to bring checks to your mailbox or not supposed to create a new career or a new job for yourself. If you adopt that philosophy, then when you go out and you're making decisions in your business, you would know that every decision would need to be made with that philosophy in mind, right? So that is why I spent so much time on philosophy, because teaching someone how to think is always a more valuable gift than teaching them. Just, Hey, here's steps 12345. I want you to imagine this scenario for me. It's going to sound a little weird, but imagine you hired someone to build a website for you. Okay? Imagine they are the website expert. So you just trust that they're going to make it amazing. And they give you a bid, which you don't really understand. You feel powerless, so you just accept it because they're the expert. And then you pay them most or all of the money upfront to begin. And let's say in this hypothetical example, you can't see the website. They say it's not up, not live yet, but they claim to be making progress. You don't talk to them on any consistent basis. You sit back, hope to get updates. Maybe they send you some screenshots or whatever. They run into issues. They need more money and then they need more time all of a sudden, okay, so the project has somewhat been derailed. You look at the screenshots that they've sent you. It does not look the way you expected it to, okay, you're not happy with the way this project's going. You get mad, you confront them about it. I never wanted you to do this. You know, this is not what I wanted. This has taken too long. Whatever. They say no, you know, this is going to cost more money. We never agreed to what you're saying. Then all of a sudden they stop answering your calls. You call it a scam artists, you go leave them a bad review. Go find a new person to try and finish what they started or maybe you have to start all over. That sounds pretty miserable, does there? Now, what I just described, that would be kind of a dumb way to handle that project, right? Like just going into that you were pretty blind and uninformed and there is no clear communication or expectations, right. Wouldn't it make sense to communicate what she specifically wanted that website to look like? Or maybe just pay them nothing or a small amount to begin. And then break the rest of that whole project into deliverables and attach payment amounts to those deliverables. Wouldn't it make sense to be able to see the website in detail the whole time, give that contractor lots of ongoing feedback so you could get that thing exactly the way you wanted it. Now we're obviously not talking about building websites here, but the principle is the same. No matter what the project is. And that's what I want you guys to understand. So is anyone here a manager? Raise your hand if you're a manager, have you ever been in management? Have you ever managed people or maybe just projects which inevitably are going to involve people? Would you have been able to manage those people are projects without having a very clear pulse on what was going on at all times, would you have been able to do a good job as an absentee manager? Yes or no? My manager my corporate job was on my *** all the time. Right. Ryan, You have to do this. Here's the deadline, Here's the specific outcomes, you know, like you tell me, do you have any questions? But otherwise this is expected of you. I can see your productivity through the software that we use. Track everything that you're doing. I mean, I'm talking like they were they were dialed in like everything was defined and clear and my manager was a good manager right? Into r10, any projects smoothly to manage any projects movie, you have to have these things. You have to have clear expectations, you have to have clear communication. You have to have ongoing management of that project. You have to have supportive documentation, something that's written, that you can refer to that specific and that is an agreement. The reason people fail, because you hear all these contracts are horror stories, right? The reason people fail is they set themselves up to fail right from the get-go. Honestly, what you need to do is take an assertive position from the start. You can't be like the hypothetical person that I described that just hired someone to build their website and they're just all I'm in the dark. I don't know what they're doing, but, you know, I pay them a lot of money, so I hope it works out. Like that's, you know, it's funny. I just grabbed the website example out of, out of thin air. But, you know, people treat that the same way. Anything where they don't understand. They just kinda like take this like hands in the air approach. Like I don't know. Imagine like being a manager like a corporate America job and being like, Yeah, I don't know what Bob's do and he's always over there. Even Tootsie Rolls and playing Tetris on his computer. But I think he's working like you would lose your job as a manager if that was what you were saying about your people or your projects. I don't know what the status of this project is. Well, you can't do that with a rehab without expecting a similar thing to happen, without expecting this thing blow up in a negative way. So you need to be a good manager of your project. Traits of great managers are these things here I looked up some of these like what are the traits of great managers? And they understand people, they have good communication skills, decisiveness, confidence. They know how to be in command important, and they know how to communicate their vision, also really, really important. So I'm going to just challenge you a little bit. If you've had problems with this in the past, you came to me to get help. I'm going to challenge you and say what if your lack of success in those past contractor experiences boiled down to your lack of management skills. What if you didn't take that project by the rains like you should have and get it done. I remember failed rehabs in the past where contractors were taking advantage of us, not calling us back, not showing up for work. You know, we're overpaying. I remember one time my former business partner said something like, I'm just going to grab this project by the horns and just push it through to the finish line because someone's gotta do it. It was like we were mad that we had to do that. I can't believe I have to do all this work. Can't believe after grab this thing by the horns. In hindsight. That's what you have to do every time. And when he did that, guess what? It worked. Those contractors, we put the pressure on them. They ended up quitting. We found some new people. We finished it. We did the best we could to recoup a bad situation, still lost money on that flip. But that's essentially what you might not be doing and that might be causing this guy. So you have to take responsibility for how your project goes down. Also, this is your property. This is gonna be your rental property. After this is over, the contractor is going to move on. Okay. They're just going to be a distant thought. This property might live with you for years and years and years. You, you know, you need to make sure you get it done the way you want it done. Because you have to live with the end result and you are the only one paying for everything. Okay? So please stop being a pushover. Stop letting contractors run you over. Stop being so grateful that a contractor actually called you back one time or he gave you a bid, right? People are like that because of the way the industry is right now. Where contractors or so in demand that they're like, Oh yeah, awesome. I gotta guy going over there giving me a bid as if it's already a done deal. And they've never done business with that person. Unfortunately, you can't afford to be so passive when it comes to managing. You can't just decide that you're going to trust someone. And I'm a trusting person. Like I trust people. I'm not that cynical person who's like, Oh, everyone's out to get me or whatever, Not at all. At the same time. This is a complex enough agreement that you don't just go into it riding on the trust wave. Bad, bad idea. I'm not saying go out there and be an *******. I'm saying be in control of your project. The best leaders are two things that are calm and assertive. And I want you to be calm and assertive. When you buy properties. It's going to not only be more effective, but you're going to have a better time doing it to this training is going to show you how to do all of this. A little bit about contractor's perspective, right? Because it's really important is that it is talking about these contractors, you know, like Shouldn't we know a little bit more about them and what's driving them. So one thing to know is that right now their services are in high demand. Anytime the market is hot, there's lots going on. Contractor services are going to be in high demand. Okay. Like lots of people saying, Hey, give me a bit, give me a bit, I need this, I need that done and buy more houses. So they're able to turn down work. They're able to like overbid stuff, charge a lot more. They don't necessarily need you. Right now. When the market is hot, things change when the market cools off, okay? But you need to understand that they have a lot of opportunity. Also, contractors lose a lot of money, okay. Due to things like payroll, they have to pay all their subs and their their hourly guys. They pay a different insurance, they pay taxes, they have licenses, they have to keep up. They pay all these fees and stuff. There's all these things that eat away at their profit contractors are not usually out there, just getting rich off of that type of work. Also, contractors had been burned by investors to right. Just because, you know, some miscommunication went down doesn't mean it's the contractor's fault. And poor communication is usually the core cause of problems with this relationship. And poor communication that runs both ways. That wouldn't fly in intimate relationship if you really like, well baby, You didn't tell me I couldn't do this or whatever. And then and then she's like, Well, you should have told me that you wanted to do that or whatever. Like that wouldn't work. Like you have to be as transparent and open and as much, as much communication as possible in any relationship if you want it to thrive, right? This is no different. So you think about also, what is motivating this contractor? Are they getting? What is motivating them is getting the job done as quickly as possible. Little hiccups as possible. They want to make money, they want to provide for their families. Okay, that's what's motivating or contractor. Now a couple of random things I want you to know is that one, the price that contractors charge for work fluctuates with the price of houses themselves. And that's just because when the price of houses goes up, that means lots of, there's lots of demand for real estate. And so there's gonna be lots of demand for contractor services. So ended up market. Everything costs more. I've literally watched contractor prices like get close to doubling in this market because they can charge more, because they have so much demand for their services. Also, just, just to be clear, at this stage, you haven't bought the house yet. You're not buying a house until you arrive at the final revised bid with your contractor. We're gonna get to that point and pass that in this training. But just know that I've seen people just get like a rough estimate. They'll have a contractor go over there and the contractors like yeah, I think I fixed it for 10,000. No written estimate. They don't even know what's getting done. They'd go ahead and buy the house. That would be crazy to do. And this is going to show you how to do it the opposite way of that. Also, you need to have already decided which items are non negotiable, meaning they have to be repaired no matter what, right. So e.g. let's say you are thinking about buying a house and you get a home inspection done and, you know, there's holes in the floor. So obviously there has to be like patched up and then new vinyl floor put down. And maybe the roof is leaking and the bathroom is like a complete mess, like needs to be totally redone. You have three big things that are non negotiable, like. In other words, the property is not livable. Unless you fix those things, you need to know what are the must fix items and what are the kinda wishlist items when you go into this guy? Again, that's through working with your home inspector. It's you're working with your property manager like I'll ask the property manager what level do I need to even rehab the house to get that $800 a month in rent in this neighborhood. It's a great source of feedback on that. And then it also comes through working with the contractor to like the initial inspection. They'll come up with some things as well. But you kinda need to have a clear delineation in your mind between the must fix things and then the wishlist things. Another tip is that if you cut corners on your rehab, you will have to face that eventually. Okay. It's always nice to just think like, oh, well, I'll just kinda cover over that or we'll just patch up that roof for now. Even though it already has like two layers of crappy shingles on it. You know, it's gonna be a year 23 and then you're gonna get that call again. Hey, roofs leaking again. So you can defer maintenance, just kind of patch things up, but just be prepared to pay for down the road. I've found that typically as long as it's within budget, you can afford it. If you can fix things more the right way up front, then you'll have so much less headaches. I have some properties that we just completely gutted and read it everything. And it's been 56 years and, you know, of course I haven't heard of peep about it because everything is new. Like what would break, right? It's kind of like getting a new car. And I got a Toyota foreign or a couple of years ago new. And nothing's At All Happened to it, of course, because it's still real nu and I probably have more years before anything will happen to that car. And it's nice having that peace of mind, right? So you want to do the same for your house as much as you can. Again, this is little off topic, but that's why getting good at negotiating and getting good deals is so important because when you have more room to fix things the right way, because you're not up against this really tight budget. So let's talk about line item estimates. Answer this guy's, would you ever pay $20,000 for something and not really know what you were getting. Now have a really firm handle on what you are getting. Then don't do it on a rehab. In a line item estimate is going to help you with this. That is an estimate where every single part of the project is broken down line by line. It has a price attached to each line. Line out of estimates allow you to see exactly what you're paying for. It also allows you to eliminate any unnecessary items so that you can get down within that budget that you're trying to hit. Also, you want to separate materials and labor where necessary. Okay. So like if if a new bathtub was gonna be included in your rehab. The tub itself is probably not included in the estimate. The estimate you get shoved literally say, bathtub install labor only $300 or whatever it is. Okay, then you know, alright, I'm going to have to spend another $300 on a tub. It's not going to be on the estimate. We're going to talk more about materials today. Or you needed a new sub floor, right. Because the floor was rotted or something, you had to replace it. Materials for that are likely included because the subfloor is just decking like wood from Home Depot. And if you get a bid on a new sub floor, they're not going to say like the price to put it in as this and the materials or this. However, that needs to be stated on the estimate, right? Really, to make it simple, just make sure that the estimate now rotates every single instance where materials are not included, any material that they're going to need. This not included. Like the subfloor of the materials would be included. But if you're going to put luxury vinyl plank LDP down or if you're going to put some tile in the bathroom, the material, the LDP or the tile or probably not included. And typically the way that you're probably wondering, well, how do I know if something's gonna be included or not? A lot of the times, if anything, is like more customizable, like you, like, you might want to pick out a certain version of something. They won't include it because they don't know what you want. Okay. So they know like dry wall material is like the same thing. Like I don't need to ask them what kind of drywall they want or what would they want. But annuity to ask them what kind of Tyler you're going to put down in that bathroom. So they can't quote you a comprehensive price for materials plus labor because they don't know what you want. So if it's something that could be like customized or picked out in any way, it may not be included, but you need to delineate. Either way. This is what a line item estimate looks like. So look how specific this is. This is part of an estimate that I got and I'm going to provide you all with this full estimate as well as another one. So you'll be able to see these also provide these tier contractor and say, Hey, this is what I want you to make it look like. But you can see how detailed this is, right? And this is a line item must admit because there's a line for every single thing. Okay. Doorbell, locks, French drain repair, pressure wash, the patio, cover plates on the switches, put cover plates on the outlets, wire, the line for the kitchen and bathroom like every little thing and it's $250 for that, right? That is what you want. You don't want just a big list of stuff and then a big fat number at the bottom. Okay. So let's talk about getting your estimate on budget. When you get that first bid, you're going to probably need to push back on that to get it within your price range for your budget. So as an example, let's say the bid comes in at 25 grand and you need it to be at 15. That's a pretty big gap, right? And a lot of people will literally just throw their hands up at that point. Here's what you should actually do. Get back with the contractor, tell them you're maxed budgets 15, Graham, please send a revised budget. And of course, you're keeping in mind that you have to keep those non negotiable items that we discussed earlier in the estimate. Okay. You have to keep them in there because that property won't be rent ready without a new floor, without paint or without, you know, new bathtub and toilet or whatever it is. It's like you've decided you have to fix, okay. You may be able to do those items differently though, e.g. instead of putting actual hardwood down, you go with the vinyl plank or instead of doing H FAQ, you just put in window units. There's many ways to cut corners that where it's not, you're not creating a bad product. So cutting corners that phrase almost means like doing it sheep or skipping over stuff. I'm not saying to do that. I'm saying like, instead of buying the Lexis by the Toyota, you're still getting a good product, but you're not overspending unnecessarily. Also, again, keep in mind the materials costs, the materials that are not included in the bid. I like to make a separate list of those because that if you're picking out your own finishes for everything, I want this saying, I want this countertop, I want these cabinets. Like all that stuff starts to add up and it wasn't in that number that you used when you were like, I was trying to follow Brian's formula and purchase this property or whatever, you know, and then I use 15 K for repairs. But it turns out I wasn't factoring in the materials. You're just going to be hit with a bunch of surprise costs that you weren't planning on. You get the revised bid from the contractor. You're basically pushing back and say No, I can only spend 15. Tell me what you can tell me what you can make happen. And then it comes back, includes the items you have to have. Lot of cases. It's not going to come back at 15:00 A.M. I come back at 20 or 18. Then you're gonna have to get back on the phone and say, Hey, thanks for sending that revise a bit, we're getting closer. Could we hop on the phone and just talk about each item and see if there's any other ways that we can save a little money here and do that. More communication is better anyways, if you go through a bid with your contractor, you will always end up talking about stuff where you're like, Oh man, I'm glad we talked about that because that could have been a potential big time miscommunication. I didn't know that. You when you wanted me to like, rip out the closet door and build a case to opening. I didn't know you meant you wanted it to look this way or whatever. So not only will you find ways to save money, but it's healthy to talk through estimates, especially when you're just wrapping your head around this and then you're getting started. Also have a positive attitude. I always believe even to a fault, like I can figure stuff out and no matter what it is like, there'll be a way where I can figure it out, we can get through this. And that's always helped me. I don't just throw my hands up or give up on anything. And that's the attitude you need to take towards your projects. Negativity never helps. So just try to completely cut that out and just focused on the outcome. No matter what happens. Most of the time, there is a way to get the bids within range, okay? Again, this is why I'm conservative when I tell you guys to run numbers and make low offers is because you want to build in some space because of all these extra costs that get piled on once you really get into a rehab and you're like, oh, I forgot about the materials. Are I forgot about, you know, the fact that like this neighborhood requires, you know, whatever new kitchen and bath or all the rentals have new kitchens and bass. So I can't go with this old crappy one or whatever. Or the contractor opened up the wall in the bathroom and there was tons of mold and it's $2,000 to remediate it, right? That's why we're conservative upfront is so that we hit surprises were still comfortable because the project is still within our numbers. Now here's a big thing. Are you getting ripped off? Like how do you know if the estimate is fair or not? That's probably something some of you are sitting there asking like, I can't just sit there and look at a line item estimate. Know if like, is it okay to charge $300 and put in a bathtub or is it normal to charge $4,000 to paint the house? You know, some of these things like, when I look at them, it's just like Jesus seems like a lot of money. You know, is this fair? Am I getting ripped off? So there's really no like cookie cutter way to say yes or no to that because every market has different pricing. It's way cheaper to get work done in Tennessee than it is in Denver. Nashville, let's say then Denver. And it's way cheaper to get work done in like the middle of Mississippi than it is in Nashville, right? It's it's market relevant what the price is cost. And then you have all the different types of material. And then you have to calculate by the size of the job. You have to know the exact square footage and all that. So it is difficult to really nail that down. And here's what I do to make sure I'm not getting ripped off. I make sure I know that I'm within the range of what's normal. When it comes to contractors. Cheaper is not always better. That's something that if you didn't watch the call, we did in this group with Justin, my contractor in Nashville. He was saying get multiple bids in one contractors bid is way cheaper than the others. They're probably just under bidding the jobs so that they can steal it from the other contractors. And then they're going to raise the prices later. Or they're going to say, Hey, you know what, we actually ran out of money. We need more money. And by then you're already halfway into it with them. You end up paying the same amount or more as you would have paid the other contractors who probably had a better reputation because they weren't out under bidding jobs to desperately get jobs makes sense. So cheaper is not always better. What I do is I'll show my estimate to experience investors in my market. I'll just post it in the Facebook group of the RIA in Nashville or something I'll say I might say, Hey, I'm getting charged 6,500 for a roof on a on a on a 1,200 square foot house, is that feels a little high to me, is that what you guys are seeing? Everybody, I'll jump in on that post and say, Oh my God, I know a guy who can do it for 3,500. Do you want his name? And unlike ****, yeah, because that's going to save me $3,000. Right. And if that person has some references and they have a license and stuff like they've done some good work for other people. I'm going to use them. Okay. So if something looks off on the estimate, ask around, make sure you're not getting ripped off. Also check out this website, home wise.com. It's a great resource to see if you are overpaying. And I'm just going to exit out of this slideshow for a second and go over to Home wise and show you how to use this. So you would click on installation. And this website's a little clunky in that it keeps opening new tabs, like when you click stuff, but just don't stress it. So let's say I went to the home, I clicked on installation and opened up this tab. And then let's just click on countertops and then install laminate countertop. Okay. Then you see I've put in this is Nashville zip code. And let's say the countertop, you know, 120 sq ft of countertop is a lot. That would be a big job. Let's say it's more like 40 ft or something like that. Okay. So you see how that updated your watch these numbers and this bottom one down here. You don't want to change this 55. It changes. It's pretty cool. So if your job was 40 ft, this is typically what you could expect to pay for. Okay. So this is the cost of the countertop itself, 1,300 bucks. This is the cost of the installation, the labour 361, then other jobs, supplies like they might have to buy colic or sealants, another 100 bucks. This is called equipment allowance. I would uncheck that because I don't pay for their equipment. They usually have that 1,700 bucks. And I found out about this website from Justin as well. And I like it. He said that he's a very experienced contractor. He said This website is fairly accurate. If you look at the high number, not the low. Okay. So use this, you know, and make sure you pick like laminate counter top, right? Because it'd be different from Granite countertop, which was like right here. You'd have to fill this in. And it looks like, Let's say we did 40 ft for that. It's going to cost more, mainly for the purchase of it. Installs a little bit more. But this is a great way to double-check on what you are being charged when you look at those estimates, home wise.com, figure out what you need. Look at the high number. Cool. Let's talk about materials. So materials, two things you can do there. You can either buy them yourself or you can have the contractor buy-in provide your seats. Now, typically when you buy them yourself, what you do is you still have the contractor go to Home Depot and pick them out. You just give the cashier your credit card number, the register. They call you, you give them your number and they charged, or you can sign up for like a Home Depot card if you want it all to be run through that, make it a little easier. You could do that if you're just like I want to I want to keep track of it on my own. I don't want to I don't want that money running through someone else's hands. You can do it that way. I've also seen all these ways where people save money by asking for like competitive prices, like put pitting lows against Home Depot or buying like gift cards. There's, there's, there's these little strategies that I've never really dove into. But if you want to geek out on that stuff and try to save 510, 15% on your materials. You definitely can. I've seen lots of people talk about it in bigger pockets, Skype. Or you can just have your contractor buy stuff, show you their receipt and then you reimburse them. That's what I typically do. To pick out finishes. You go on Home Depot's website and you pick out things like vanities, tubs, countertops, sink, the fixture, whatever, and use rental grade materials like don't go for cheap stuff, but also don't go for the best stuff. You have to remember that. These are rental properties and these are investments. So every extra dollar you spend, you know, he's like, Is that really going to get your return? Like granite countertops would not get you a return on investment for the extra money that they cost in a property that the rent is $750 a month. You're not gonna be able to just rent it for more because it has granite. The tenant that wants a rental that costs that much. Like they can't afford extra money for granite countertops, you know, they don't want to pay for that. So it doesn't make sense for you to put it in. Typically make sure that products have good reviews. I often again, check with my local Facebook group on this. Hey, what's everyone use them for cabinets right now. Because other investors, they put a ton of time into saving money, finding the best stuff, and leverage their knowledge. I've never been too excited about calling all the different paint stores in town to see you sell and the cheapest gallon. But there's some dude who already did that and he knows the answer to the question. Again, You know, my philosophy is leverage other people's expertise. Don't become the expert yourself. So typically, like I would go to Home Depot, their website, I would put in countertops and then select laminate. And I just did this for this purpose of this slide recently. This was one of the top results that popped up. Okay. Hampton bay, it's a decent brand. I use it in rentals. It's laminate. It's a great material. It's not like super cheap. It's also not super expensive. It's like right in the middle. Stuff has good reviews. It doesn't cost a lot of money. That is typically something I would put in a rental. Then you get to pick out the finished. You see the different boxes there. You would pick one that matches the cabinets or the pink color or whatever you're going to put in there. Like typically, you could just go with grays and whites, work really well. Those are in right now. I'll talk about that more in a second. Contractors will provide building materials and you guys select the finishes. So you're going to select the countertops, you're going to select the cabinets, you're going to select the flooring, the toilet, the sink, the bathtub, the light fixtures, the paint colors, and whatever like if it's eggshell paint or the flat, you're gonna you're gonna pick stuff like that out. The handles that might go on the cabinets like the hardware. So there's all these little decisions that go into this. Now you can divert those to your contract. You can just say, Hey, just send me a couple of options and I'll tell you which one. Or you can get more involved. Some people enjoy it. It's really up to you. But just know that any good contractor that cares about you being happy with the result is going to ask you, what do you want for the cabinets? What do you want for the hardware? Because they're not just going to throw stuff on there. So as an example of this, they would provide things like lumber and drywall. You would select tile countertops. Think difference between building materials and finishes and keeping things the same at every house you do is a great idea. It's simplifies the whole process when you find something you like, just bookmark it, save it, and reuse it over and over. Like the same way Steve Jobs wears black or black turtlenecks every day. So we didn't have to think about getting dress and he could just go work. Just use the same countertops and every Reynolds. So you don't have to think about countertops every time and you can scale faster and bimodal properties. Light gray is a good paint col 23. What's Next? : You've made it to the end. Congratulations on consuming all of that content, and I hope that you did the action steps along the way out. If you are like, I still need a ton of help. I still have a ton of questions. My first piece of advice, if you don't want to pay for coaching, is to find a local mentor in the market that you chose, who has experienced and who can hold your hand and help you through the rest of the process. There's a lot of ways you can repay somebody for that, like sending them some of the leads that you generate. So that is a great option to have, really, no matter what you choose to do from here on out. If you do want some help from me personally, I do offer coaching packages. You can go to Brian elwood.net slash real estate coaching to find out all about those. And that's where people who want to be on calls with me on a regular basis have me looking at their deals, looking at their money lender terms, looking at their contractor estimates, looking at their market decision, and just having an expert set of eyes on all the things that you are doing. So again, go to Brian 0 with dotnet slash real estate coaching. If you want to see what the coaching packages to work with me are going to look like. But I hope this course has helped you a ton. And here's your success creating passive income through rental properties.