How To Succeed In Real Estate Investing [40 TIPS] – Part 4
I know it’s kind of a sad day. This is the fourth video in our four-part series, these are the final ten success tips and today’s tips are going to be focusing specifically on how do you successfully manage real estate and how do you attract partners that have additional money and resources that can help you do more real estate more quickly. We are back for more success tips, these are the final ten tips in this four-part video series and this one is going to be focusing on managing your portfolio as well as how do you dive into partnering where you can access more money and more credit without using any of your own dough. You’ve heard of OPM, it stands for opium. – No, it doesn’t. It stands for Other People’s Money. Let’s jump into tip number 31 and this is what we like to call our swan account. – Is this rated R because we had a drug reference? – This is Swan. What? – Okay, swan account. That is your Sleep Well At Night account. This isn’t Billy Madison, this isn’t stop looking at me swan.. – Isn’t it more like SWANA? Because we say SWAN but it’s like, Sleep Well At Night Account. – No, because we say SWAN account. – SWAN oh, SWAN account, see it works that way. You’ve got to prepare. Now so many people jump into real estate unprepared and what that means is they just get in thinking, “Oh I’m going to make so much money, this is so exciting you know so and so that I know is making a lot of money in real estate and I can do it too.” So they just jump in unprepared but you have to understand that real estates is a business. Real estate is going to provide income and real estate is going to have expenses. – For example, if you have a house, guess what can happen to it? It could be vacant longer than you were planning on. It could have repairs more than you thought so when you buy a house, you’re always setting enough money aside for the purchase but you always got to have money set aside for the deal itself and there’s always a way to work it in whether it’s your money or someone else’s money. I’ve even seen people and have myself use credit cards temporary, home equity lines of credit, all sorts of creative ways of funding real estate because at the end of the day, it’s all about trading less for more and trading money on credit or partner’s money or my personal money for doing more real estate. Make sure that you’re prepared and I want to drop this, if you’re going to buy an investment property, it’s a good idea to have at least six months worth of money in the bank after repairs for vacancies and with every additional property, my SWAN account gets, I need less and less but I’ll always be adding to it until I have enough for four or five homes and then after that, you’ll find at some point with experience how much money is in there. Don’t deplete the account and put your operation at risk because you didn’t properly plan and prepare with your sleep well at night account. – Absolutely. Number 32 is the taxman. Now sometimes, the taxman can come to you, sometimes the taxman can come to you and slap you in the face. – You’re such a brat. – Right, you’ve got to be prepared. Taxes actually, real estate’s one of the things that can actually help you save taxes in the long run and in the now, so there’s so many things that you can look into but you want to be aware of this as you’re getting into it because if you again, you go in unprepared, you’re going to miss out on a lot of great tax advantages and the reality is this, you need to have a competent person that does real estate. There’s a lot of tax preparers out there that will tell you, “Uh-huh, I can help you and I’ve been the one preparing your taxes.” Do yourself a favor, you may need to upgrade to a different accountant once you start owning real estate and ask them, do you actually help people that have real estate portfolios, manage it because you want to start getting all the business owner tax write-offs, you want to be able to write off the depreciation, for some of you that’s a big word, your tax guy knows what it is, you want to be able to write off all the necessary expenses on the home, you need to have a tax man that knows how to take the income and write it off against the mortgage, the first many years I owned real estate, I don’t owe any taxes because I had so much real estate and yet, I was making money by the way, but the code is written in your favor, the constitution was written for those that owned real estate which is why it’s so crazy to me that word. You know, we’re sold so easy to do our 401k’s with, we’re gonna give you the match, it’s super seductive and the reality is, real estate will always, done correctly, outpace the market, the stock market, 401K’s and IRA’s and so have a good competent tax person. Number 33, management. Once you buy your real estate, you need to have a competent system for doing that bond going management which means you’re managing it or you have a property manager that’s being paid to manage it or you also have a tenant in your lease option than they’re doing the management but even with the lease option, you still go to collect money, you got to make sure that the mortgage gets paid if you have one and there is some management at the end of the year, there’s working with the tax guy to make sure things are properly set up, management also includes an LLC. Watch one of our other videos for making sure that you are safeguarding yourself and protecting yourself. I actually just finished a really unfortunate incident with an individual that I had done a deal with a long time ago, took a wrong turn at Albuquerque with the new wife that really wanted to interpret a real estate agreement in a very different way, he was very passive at the time and when he couldn’t remember the deal, you know, it looked like it could have gone a lawsuit. Now fortunately, it didn’t but I had myself protected because the home was sitting in an LLC. So that’s also part of management which is, alright I gotta make sure now that the property is getting paid, the mortgage is paid, expenses are covered and if you’re like me, it’s important that I know those things are happening, I don’t want to do that because I believe that in life, you should only do the things that you love and so for me, that means surrounding myself with a great competent team that ensures that those things are happening correctly. – Alright, tip number 34. Now this is about refinancing and reinvesting. – Growth. This is the best part of any game plan is. You’re going to put all those efforts into like a property but if you do it right, it’s like, how is that property, this cute little vaguely gonna turn into two or three or four more properties at a time. – You know I was sitting down with a potential client just a few weeks ago and we were talking about this, I said, look, you know that you can take this bank account of bricks your primary residence and you can access equity in that home to actually invest with and they said, “Well what? How do I do that?” I said, “Well you need to do a cash out refinance.” I said, “We’ve never heard of that before.” I said, – Mindblowing. Really? – Head explode right? You’ve never heard of a refinance and reinvest, a cash out refinance, this is one of the ways that our clients and our partners actually make the most money is because they’re able to implement this concept and philosophy of the velocity of money which is the faster you get it moving, the more you get it moving, the more it goes to work for you and the more money you make. – Awesome. Number 35, when to sell. It’s one thing to know how to do the cash out refinance where you get to hold the property and buy another property but there’s also an optimal time in the market for, I’m done with this property. Now this part is kind of crazy and probably new for many of you because Steven and I meet people everywhere with you that are like, “Oh I’m going to buy a house and I’m going to keep it forever.” And I’m like, “Do you know that seven years from now you got ten to twenty thousand dollars or repairs because it dilapidate, there’s wear and tear.” and I like to get out before we get into deep into that stuff which means the short-term buy and hold strategy, we recommend is, recycle your real estate. When I went to Jerusalem and Israel, had a chance to visit the Dead Sea which if you know anything about it, it’s the lowest body of water on the planet, it’s like 33 percent salt content so by the way, I was doing a full-on superman with my head out of the water, every part of my body floating, normally I just sink in the water and it was a really cool experience but there was a lesson behind it because the river Jordan will flow into it but then there’s no outlet so it becomes really stagnant, your real estate portfolio needs to be oxygenated with its water, it needs to be in flow which means we’re always trading less for more. A time will come and you need to sell that house some of you have held on to real estate and properties far too long and what happens with time is you actually end up getting a diminishing return on your investment. How you keep that from happening as you buy the house and you’re going to get your steepest gain on it and then before you start getting to that diminishing return, it’s time to recycle it. So usually, before we sell it, we’ll do a refinance if we can so that we can keep it, cash flow it and have the equity and the down payment sitting in another property and on that same token, we’ll also recycle it by knowing when to sell the property. – Yeah, absolutely. I guess this is number 36 which is trading less for more. I think about this.. – Say it again. – Trading less for more. Trading less for more. Trading less for more right. Trading less for more is really simple. It’s saying, “Hey I want to give you less and you should give me more.” – I don’t know what you’re up but this reminds me of opportunity cost. I’m just going to get into the center of the screen here. So when I took my econ class in college, there was this concept that I could not get in my head for like two months before my T8 is beaded in there. It’s called opportunity cost and it’s very simple, you can get this. What is the next best opportunity that you are for going with the current choice that you’re making. So for example. – Trading less for more. – So opportunity costs would mean, alright, I help Steven buy a property and he’s making let’s say, 15% a year on it and you guys would say, “Wow that’s pretty cool.” But what you don’t know is that a year later, I could come back to Steven and say, “Steven if you take some equity out of this house, you can keep this house, your 15% return is going to drop to 12% but you’re going to pick up another house earning another 15%.” What’s 15 plus 12? It’s 27% on the same dollar that is sitting in two places at once. How cool is that? So you want to start thinking about all of your assets in terms of opportunity cost. How do I trade less for more? Oh I have money in the stock market producing X, is there something where I could be earning better and safer? More isn’t always more but more plus safer usually is. – Absolutely. So 37 and 37 it’s all about partnering. Now.. – Oh, we’re shifting gears, this is cool stuff. – Partnering is one of the most powerful conversations and it’s one of the conversations that most people are so afraid of right? You’ve all heard the horror stories like, I partnered with my brother, I partnered with my uncle. Don’t partner with family, don’t partner with friends. And we’re told these things because we hear all the horror stories around it right? Where someone embezzles or someone steals it or someone takes advantage of whatever situation but the reality is, partnering is one of the most powerful forms of doing real estate the right way. – Please never allow a passed failed partnership or marriage to develop such an energy of betrayal and mistrust that you can’t create space to get partnering another try.. – Truth bomb. – Because I’m going to tell you right now, this is where there’s so much growth available. In fact, there is limitless amounts of real estate available if you understand what Steven and I are about to teach you right now. – Yeah. Guys, this is so true. So first of all, I want to help you understand, no matter who you are, no matter how much money you have or how great your credit is, at some point in your investment career, you’re going to run out of both right? – Money oh credit. – Money or credit. You’re going to run out of both. At that moment, the question is, do you want to continue growing in your real estate portfolio or do you want to stay stagnant? Do you want to be like the Dead Sea or like the Red Sea, right? What do you want? And if you want to continue growing, then partnering is the best way to do that. – Well and really, when it comes to creative real estate, Steven and I have two powerhouse courses that we teach people, one is on lease option but then we have our partner profits course and when you’re partnering for profits, what it means is, you can get into the game of real estate and learn how to leverage resources to bring value with great deals and growing your money and there’s someone else out there that’s like, I don’t want to do any of that but I got money sitting in my 401k stagnant like the Dead Sea, I’ve got I got money sitting in the bricks in my house that are earning at the rate of inflation which means that I’m actually losing money and what if we put our heads together and you can watch some of the other videos where I talk about the power of partnering because partnering means, one plus one can equal eleven. Not just two but eleven. Why? Because their money and your expertise together that you develop here with us is powerful enough for both of you to be far better off than you certainly are independently and individually on your own and so that’s going to bring us into number 38 which is, alright, Kris and Steven, explain to us partnering structures. What does that look like? – Now, real quick. This is not a partnering structure.. Hey good job. Thank you. Let’s do this. Good team. Right? That’s not a structure right, a handshake, a wink and a nod, that’s not a proper partnering structure, you want to make sure that you’re doing things legally as well right and so part of that is identifying well what structure do I want to use? Do I want to do an s-corp or a c-corp? Do I want to do an LLC? And I know that we’ve got some preferences, we want to talk about that Kris? – Right now. It’s an LLC every single time for holding real estate. Number two, we generally recommend starting out with a 50/50 arrangement. Someone that’s active and doing the real estate and the other person that’s passive and bringing the money and credit and then number three, you’re defining that you’re the one doing the work and putting in the sweat equity, they’re the ones supplying the funds. That’s the most typical arrangement. Now Steven, could it be a 60-40 or a 40-40? – It absolutely could. Actually, there’s other circumstances where maybe, you’re bringing the expertise and you’re bringing the money but let’s just say, maybe you’ve used all your available credit right now. – Great example. – So you may need to go to someone who has great credit but they have no money or expertise and so for that, maybe you’ll give up 10% of the deal, maybe fifteen, maybe twenty percent of the or you could even say, “Hey I’ll write you a check for $2,500 to rent your credit for a while.” – I just did one of these right now where I bought a whole pile of properties out of state and I brought my partner’s money in, he didn’t have any more credit available so I basically was renting credit, paid him twenty five hundred dollars and five percent on the back end, some of them took no money up front and ten percent on the background. I’ve done deals where the credit partner gets up to 20% and what it means is that, you can keep flowing your money and don’t get caught up on the percentages because by the way, let’s do some quick math.. If you don’t have the ability to do real estate and then we can show you how to bring a partner to the table but you have to give up half.. – you make fifty percent of something instead of zero percent of nothing. – Boom. Did you just get what just happened there? That’s the way I’ve built the majority of my real estate portfolio. In fact, Steven recently you know, we created a financial arrangement where I could help him buy his next home and all I had to do is do some creative restructuring So partnering is important. Structures normally start out 50/50, one’s passive, one’s active, the active person is putting in the time work effort with sweat equity, people will rent our team to actually work with you to do that, someone else is bringing the money, by the way, if you’re watching this, especially you youngsters out there that got started like when Steven and I were young. Listen up, mom and dad may have money, mom and dad’s friends may have money, you may know people with money and if you work with our team to bring the properties to the table and the management and you’re representing that and they’re putting the money and guess what you’ve created, a family partnership. This is one of the things that I love. My father-in-law was my first partner and I’ve been able to show so many families how to come together where often older parents had saved a little bit of a nest egg and they got together with their kids because parents often want to be in business with their kids, if that’s not true for you, you have father-in-law’s out there, you have people out there that can be like that, you’ve got people that you get to know in life and you can talk to them, you can take them to this channel, you can watch these videos and say, “Hey, I’m going to work with this team, I’m going to pay to join the club and then I’m going to bring these assets and let’s work together on it.” And there are people out there that will consider doing that with you if you have training. Click on the link. Later we can actually show you exactly how we break that down. – Awesome, let’s go to tip number 39 and tip number 39 is all about finding partners through social media. As a matter of fact, Facebook is a wonderful place that you can go to find partners and part of that is learning how to have this conversation. This is one of the things that we love, is teaching people how to how to attract these partners, how to put a deal together and bring it out to them so that they’re interested. Kris, just give us a quick example, what’s one thing that you would say on Facebook that could potentially or that they could say on Facebook to attract a partner? – First of all, you can go to our website, you can access some of the deals that you can find there and you can post it on Facebook and actually be like, I found this amazing deal, who wants to get in on it and all of a sudden, you’re interacting with our team, boom, there’s a partnership and actually, I’m going to divert it, I’m going to take a couple minutes because for some of you, this one idea is a million-dollar idea, for some of you it is a multi-million dollar idea. Number one, grow your Facebook up to five thousand friends and that’s super easy to do, all you need to do is network with other groups and with other hobby interests and go out there and find people interested in finance and real estate but also your own hobbies, if it’s photography or dance or someone fire knife dancer moment fire knife dancing like skeet with us and you go out to those groups and you join the group and then you start making posts and creating value and meeting people and all the people that comment and like your post, send them a private message, be my friend, be my friend, be my friend, be my friend, and all of a sudden your Facebook page is going to grow with like-minded people, they’re not then once in a while, two times a month, you just take a deal and post it there or say, “Who wants to do real estate?” or “Who’s got 35 grand and can do a deal?” and guess what, oh my goodness, you started attracting people with money saying, tell me about your deals and you can come bring those situations to us and we’ll show you how to partner. This is one of the cool things that Steven and I do. So Facebook, social media in general, is a great place to network and meet people, as long as it’s in the spirit of creating value for others, by the way join our Facebook page, you’re going to want to be a part of it and bring as many people as you can because we have the dialogue of partnering all the time, we put our deals on there all the time and you have a chance to actually snag those deals and work with other people to help make that happen because guess who your power team is, we become your power team and this is super super powerful stuff here so Facebook is a great way to put yourself out there to find potential partners. – Alright, tip number four zero. We’re coming to the end now. Hopefully you’ve had a chance to take some notes and write these down because we are coming to the end and this one is just an amazing tip so if I can tell you one thing that you can do to be the most successful in real estate is to create your own turnkey team. – Oh my gosh, build a team of knowledgeable people that you can work with that are gonna help you do your real estate successful. – One of the first things that Kris did and he can speak for himself, one of the first things that Kris did when he wanted to branch outside of just doing it by himself, well is he called me. He called me up and said, “Hey Steven, I got this thing going, I’m starting to build the system and you keep coming to mind and you know I feel like this is a perfect opportunity for us to partner up.” And so we did and I’ll tell you, ten years later, we’ve been able to help thousands of people, thousands of real estate deals, millions and millions, nearly a billion dollars. – BOOM. – That is a huge boom. – So I just want to say this because I was tired of going it alone and right now, if you’re watching these videos and trying to get out there and you’re all by yourself, it’s kind of lonely, it’s not always fun, you don’t get other people’s perspective and you don’t have help and support that you need. We believe in the power of team, so build a team and my realistic book that you can download for free will give you information on how to build your own team, the other option that you have is come be a part of our team, it’s nationwide, it’s everywhere, you can plug in to what we’re doing and join the conversation.. Click the link become a part of this and if you’ve watched all of the videos at this point, we hope you’ve enjoyed these 40 success tips, I hope that they help you become the most amazing investor with time, remember it starts with doing deals now and whether you got no money, no credit, do the lease option system or somebody’s and get out there and start making it happen. If you got some money saved up in a nest egg, a 401K, IRA, money under the mattress, you got a little bit or know people that do, bring them to the table and we’ll do all the real estate, you guys get to make 100 percent of the money and those are just two of options. We’ll even, you know, share with you our partnering system on how to show you how to find real partners, how to cultivate them because we live in a world where today, if you want to do real estate, it’s too easy to do, it’s too easy to not do, you’ve got to start somewhere, you got to take action so either go out and do, it if you want some help, we’re certainly here to provide that benefit for you and I want to thank Steven Miller for coming on out, such an awesome guy who beat me and I push him to the ground every chest day. And I’m going to use my victimhood excuse. – Yes right. Aww aww. Friends, hope you enjoyed this and we look forward to sharing more with you soon.