How to Buy Multiple Investment Properties
Kris Krohn with REI TV, today were gonna talk about again one of my favorite topics which is how to buy multiple investment properties? And you can see that be in favor right? Because if you can do it once, and that benefits you why not ten times. And if you like ten why not a hundred, and I like a hundred so I like a five hundred.
Listen, if buying one property taste good and produces good cash flow increases your net worth and works towards a greater retirement, then, why not two times or why not five times or why not ten times. But if you do that you gonna make sure that you got the secrets to qualify to as many properties you get. So I wanna go through three different strategies.
The first strategy is doing careful management of your DTI or Debt To Income ratio.
This is really important because when you think about your debt to income ratio normally if you buy something on credit it’s going to add to your DTI and the banks gonna say “o oh Kris you now qualify for less”. So they like to see assets they don’t like to see debts. Well when you buy your first investment property here’s one of my secrets:
If I buy it using my very strict formula were I maximize cash flow, here’s how I maximize my debt to income ratio. If I have, let’s say a house that has a mortgage of $600 a month. And it rents for a thousand, I can show that rental contract to the bank and they’re gonna count 70% in general of the rental income. So, for example 70% of a thousand is seven hundred. What’s my mortgage payment? $600. So, there’s a delta or difference of a hundred. So, the banks says “Oh my gosh Kris actually buying that house. Guess what? You’re actually a hundred dollars more well off, we not only cancel the negative debt to income ratio. But you actually qualify for even more houses. Well guess what, you buy a house with a lousy cash flow, this strategy does not work. And you won’t be buying very many houses. And if you’re not buying successful in first place, it’s not really gonna matter.
Strategy number two. When it comes to qualifying for as many of this properties as you can, is having partners.
This is an excellent strategy when it comes to, uhm…, whether or not you can actually qualify for a home. If you cannot qualify for a home, then a partners way to go. Because, guess what, they got the job, they got the income that they qualify. So, there are really great way. Ahh.., with really limitless boundary, to continue buying real estate, in fact, once I had purchase my first four homes, I got to point where I didn’t have the money, I have the credit but not the money to buy my next house. I brought a partner in, have to be my father in law made the guys great money on a deal. He kept coming back, I started bringing more partners, well, doesn’t matter what the banks says to me, it doesn’t matter if they tell me “Kris you can’t qualify. You’re not good enough on paper. Listen, nothings gonna keep me from buying real estate especially if I’m doing it with a system and a strategy and it’s working. So, that’s a good one.
The third and final strategy I wanna share with you today is making sure buy right.
What do I mean by that? We’re I already talked about buying with cash flow. But let’s talk about equity. Why is that important? If I buy something below market, let’s say I buy three houses below market. Well guess what, I wait a couple of years, I let those properties season, I get a good cash flow of them. If I bought them correctly, I can consolidate those three homes and buy six. Why? Because if I buy each one well let’s say $40,000 equity possession. If I were to sell those three, I get all my down payment back plus my one hundred twenty thousand dollar gain, I can do little bonus here, 10-31 tax exchange, that’s an IRS code that basically means that I can differed the taxes. And I can roll that money into a bunch more homes. So, if you buy right with the right equity in addition to cash flow, that’s also in time gonna help you qualify for more more real estate.
GO! Buy real estate. In fact go buy as many as many as you can. Use this systems use this strategies. Be fruitful, multiply that portfolio. Thanks so much for watching . Don’t forget to subscribe. We’ll see you next week.