Real Estate Investing – AirBNB? HELOC? OPM? WOW! – Q&A #11
Kris Krohn here with Limitless TV. Today I’m gonna be answering questions from what you’ve been asking and posting in comments below about real estate and hang tight because at the end of the video I’m gonna show you how you can start submitting and uploading video questions to us so we can shoot specific videos to your questions Okay before I jump into our awesome Q&A session today with your awesome questions I’ve got two awesome people it’s the word of the day that are here with me. One of them is my incredible wife and one of them is our incredibly good friend Maryanne DeNovellis. Both of them have this real estate experience. They’ve been working with me. This one kind of didn’t have much of a choice I think but Maryanne I just wanna start with you. Years ago when you got started on that journey of real estate and that’s how we kind of met, I know that the very first deal you guys did you got creative on that didn’t necessarily require a whole lot of money. Can you share briefly your experience. Totally we had our eye on a house and we were like, how do we do this oh I’m so glad I have this real estate thing in my back pocket. We found someone who also wanted to partner. Partnership was a huge key in this they brought money to the table we brought money to the table they brought their credit to the table and we were able to get into this house for the first years we rented it out and now we’re actually living there and we love it. And it’s a beautiful house and you were able to do that largely using you split the money, you use their credit, way to be creative and rock that out. I just want to share real quick that house has actually increased about $100,000 in value in the last three years. A hundred thousand dollars in value. Here’s the cool part, did it take a whole lot of money for you to make this happen? No not at all. Yeah and I do want to ask how much money did you have to bring to the table? eight thousand dollar in it. That’s it Ok so an $8,000 investment. Partner put in the rest. Partner put up the credit and you’ve seen a hundred thousand dollar increase. So by the way, when it’s time to sell and Bank on that, you can go into your next several homes. Yep we’re in the shape. hey way to go that’s really awesome I appreciate it. And then also I got my incredible wife Cullen here and you know you’ve been on this wild whirlwind with me since we started. Especially when we first got married and it’s like, oh why can’t my husband just you know go to college and get a job. Like, what was it like for you when our journey began? So we were really young. I was 19 when we got married and 21 when Kris came home and said, I think we should buy a house and I was terrified. I was scared that seemed like such a big person thing to do like adulting you know. And I don’t, I didn’t think I was ready for it but we jumped in. We did and it ended up that little house covered our entire mortgage payment because we rent out the basement to Kris’s sister and she lived there and when I was like, okay we don’t even have a rent payment anymore and we could just live here felt like for free I’m like okay baby there’s something to this let’s see if we could do it again and we’ve been doing it again and again with partners sometimes without partners, most time with partners. And we’ve just seen our portfolio grow and grow and grow and now you know we’ve been reaping the rewards last few years where we keep turning them over and time to sell them time to sell them and checks keep coming in and it’s just been awesome. I’d just actually close one yesterday. Now another thirty thousand dollar check coming in. So I do want to ask this question especially actually for both of you and the question is because this one does come up, what do you do if you have a spouse that wants to invest in real estate and you’re nervous and you’re seeing that it’s risky and bottom line is real estate is risky and you can lose money. Is it important to get on the same page with your spouse and is it important to support them? Yes it’s important for both it’s important to be on the same page. Find a way to you know decide together that this is something that you want to do because I’ve never been a proponent to two spouses disagreeing and when it comes to a big decision and also yeah if it’s something’s really important to your spouse take a look at it and give it a chance yeah. and I do want to ask you this Marianne, knowing that there’s risk if you were not on the same page with your husband or you know there are other spouses here that are not on the same page what do you think it’ll lead to if they can’t get on the same page? This goes for anything if you and your spouse are on the same page no matter what your building, has to collapse. A house divided cannot stand. I mean sorry for the pun but that’s the way it works. You’ve got to get on the same page no matter what you’re doing and what that means taking a look at the big picture what we want to build and how do we get there, if that’s what you got to do, you got to act together. Awesome Marianne, Kalenn. thank you guys for hopping on. We’re gonna keep this video going right now. We got some questions coming your way. Always good to get other people’s perspective and so I really appreciate Marianne and Kalenn jumping in on that. So one of our first questions today comes from Tim Kirkpatrick. He says, excellent tips Kris love your videos. I watch them all. What’s your take on Airbnb? I want to learn more about it. Okay so Airbnb is this idea that you buy a house, maybe you buy in a strategic location or a popular well-traveled place and then you actually put it up on a website for people to rent out. Uhm, I can tell you that it’s really not my niche Tim but I’m gonna give you the best advice that I know from having a lot of buddies that are successful in real estate. It all comes down to being in the right location with the right priced property and all the numbers coming together. I mean right now I could move and buy a house in LA or Hawaii that are popular destinations but if I don’t rent, if I don’t buy the house at the right price because those are often super expensive homes then you might be required to rent the house for 20 days of the month before you actually break even. An Airbnb there’s a lot of these properties that only ever fill up 20 30 or 40 percent of the time. I think Airbnb is a really great solution for homeowners that have a house and they don’t know what to do with it but if you want to strategically go in I’m positive there’s got to be some strategy on it, I just know that it can be super hit and miss. So be a little bit careful with your Airbnb. Next question comes from 3dx. Have you ever been sued by tenants? Yes. Actually, I have been. It happened one time and a suit is a strong word they filed a small claims court issue they said years ago when we did the rental agreement with the property management company that if they put money into the property that they should get it out. Well actually just last month they ended up going to court with the property management company I didn’t need to show up or be there but the outcome ended up being the judge saying, hey you guys I can’t really decide left to right just split it down the middle. I needed to bring a $600 check to the table and that was the outcome. Sue is a really strong word I have been sued before unfortunately we live in a day and age when you do a lot of business that, that can happen. The most important thing is to protect yourself. next question here comes from from gearson rod. Have you ever bought a real estate and a hundred and fifty thousand dollars and learned later that was really worth a hundred and ten thousand dollars? That’s funny. I think you might be playing off of my house where hey I bought for 110 and ended up being worth 150, have I ever done it the other way? Rod if you do due diligence this is something that should not happen. With time however, a market can drop and the value of a home can go down and so that’s why you want to make sure that you’re buying your real estate as intelligently as possible and you want to do your research especially if you’re out of state. If you’re buying in your backyard you have a really good concept of that. When I take my clients and we buy in the hottest markets around the country I’ll set up shop and do hundreds of homes in a small area. So I got brick and mortar boots on the ground and we really know what’s going on in that market and with 365 sub markets there’s bound to be four or five that are the best. What I’m doing in Florida, North Carolina, Memphis Tennessee, is my cash flow markets or my growth markets. We’ve got a really good understanding so no I haven’t bought a house where I found out later it was deeply underwater that’s what happens if all the due diligence isn’t done. Which due diligence do you need to do rod? You need to make sure you have a competent CMA by a competent realtor and watch one of my videos on that to know how to read them and hopefully that helps you out along with everyone else here. Great question. Ok this next one comes from Daniel Sarang. I have a question, why would anyone sell their house if there’s equity in it? Daniel this is a good question. It’s not like every house for sale is going to have equity in it. In fact that’s why I often refer to real estate as treasure hunting because it’s out there but you got to bring your shovels and your pickaxe and you got to dig a little bit. So I might evaluate a hundred homes to find the deal of the decade that means that most of the people are selling their homes roughly at what they’re worth and in a strong selling market it’s going to happen even more frequently. But the deals are always out there which is why the person that spends more time looking or established as a team like right now I’ve got a team of 200 experts in my acquisition department every week they’re looking at thousands of homes to find a couple dozen of the amazing homes with amazing equity. So Daniel, why would someone ever sell a home with equity? lots of reasons. You need to sell it quick because you’re in trouble with something financially, you don’t know, you don’t care, it could be that you inherited the family from a relative that passed away and there’s a lot of people trying to split the check and no one wants to put money into fix it up and so it’s just a sell and dump all sorts of reasons come up why someone will sell a house for 10 20 or 30 below market but you got to know how to find those deals and often the people selling them, they know it. They get it and they’re okay with it. Great question Okay this comes from the az1 attic. I think I have enough info to make the purchase but I do have another question Kris, how do you determine the rent amount on the property? is there a formula? Well there is a formula and that comes down to getting comps. Normally you can get comps on a property for what it’s worth you can also get rental comps. In fact, the best way to get rental comps is to talk to a property manager. You can call them up and say here’s a property, the square footage bedrooms and bathrooms I’m thinking of buying what would you rent something like that for? And those property management companies are usually gonna be right on inside of twenty five or fifty dollars the more homes they have in the area for rent the more Intune they are with what that rent price really needs to be so that’s where I would go. Fantastic question. This goes to my novels Jeff. Hey limitless, so when you purchased this home and have the equity do you live in the house or sell it? or do you sell it right away? or live in it for a while? Okay Jeff this is a really really good question I’m gonna assume your name is Jeff okay? With the answer of this question is, if I buy a home that I qualify for myself I can often get away with a three to five percent down payment. If I’m buying it as an investment property or what’s called a non owner occupied, we’re talking about the 20% down. So by the way anytime you’re ready to move and buy a home that fits this formula, yeah I’m gonna buy it with equity. Get a lower maybe my personal standards on what I want, I’m gonna think bigger picture investment is what I did on my first two homes before I built this home and on both of those homes I could have bought something nicer for me but I was also looking not just for a house but an investment. And because it was owner-occupied, I got away with very little money down and that made a big difference. Just like my friend Marianne here. She put eight thousand in. Sounds like her partner probably have also put in eight thousand and they were able to acquire a home that has seen a hundred thousand dollars of growth and that’s pretty amazing. Okay this next one comes from legalized. Hey Kris, how long did it take for you to own a hundred properties? I did that in my first six years of investing in real estate and the first 25 I bought on a fairly manual process one at a time. After that I systematized and that has enabled me to go a lot faster. For example, I’ll have some of you on this channel that will drop me a comment say Kris I’ve got some money, I want to partner with you, I want access to your deals, let’s be 50/50 or you’ll fly in town to my limitless wealth intensive for three days we got one coming up soon. And when we meet and we talk about it a lot of you will say well Kris you got the you got the system for the best ROI let’s just partner up together and my team can buy you a dozen homes inside of a three or four month period of time when it comes to situations like that because we’re really expert and we got a system. So a system enables you to go faster. Legalize, great question. Alright Jared Martin. I purchased my first home when I was 21. Hey congratulations that’s an awesome young age for doing that. I now have twenty eight thousand dollars in equity at the age of 23. That’s pretty cool I don’t know how much money you make but just waiting two years and having twenty three thousand dollars of greater net worth. Twenty eight thousand dollars? that’s awesome. I’m a real estate agent now and I’ve been selling for almost two years. How do I take the five thousand of equity on a conventional loan for a hundred thousand dollar house that’s worth a hundred and twenty five thousand? if I cannot use borrowed money for a down payment or would the bank approve me for a home equity line of credit? Jared you’re asking a very valuable question everyone’s got to listen up on this. You’re asking about, all right I’ve got a 20% equity position plus a little bit more so I can get a little bit of equity there. First of all, understand there’s two ways to get money out of a house with keeping the house. One is called a cash out refinance and the other one is called getting a home equity line of credit. Listen the cash out refinancing has a whole set of of costs that are 2 or 3 percent of the purchase price. So you might have two three four five six thousand dollars of costs to do that and all the sudden that five thousand gotten eaten up. Home equity line usually has many banks with no fees to be able to do that. So if you’re gonna choose between a cash out refinance Jared or a home equity line do the home equity line talk to a local bank that specializes in those and they usually a little bit more aggressive on the values so they might be able to open up five, seven, eight thousand dollars for you of equity in that property. Generally speaking, if I’m buying a home as an investment, I’m leaving that 20% equity in there so if you really were doing this as a strategy to harness and pull money out you need to go in on a better buy that has a bigger margin and then will make it more possible not to pull out five grand but maybe next time twenty thousand. My first house I got an eighteen thousand dollar line of credit and that was sufficient as a down payment to buy my second property. It was awesome because I didn’t need to come out of pocket because I bought the first house right. So remember everyone, buy your homes with as much equity as possible especially if you want to re-leverage them into another home. next one Relaxing Zen. I like your name. What books do you read for self-improvement? Right now we got listed conscious creator on the website. I’ve got a book list of 35 books that I really love and that I recommend people read and I just came out with my latest bestseller book called, limitless. And so um there’s a there’s an index in the back of books I like to read. Even at the bottom of this link my real estate book I have some recommendations as well so you can go there to find my reading list. Okay this next one comes from 220 volts 74. First problem, you bought a house worth 150 thousand for 110 that’s a 26 percent below market value. I’m not exactly sure volt 74 how that’s a problem but I guess we’ll find out. Today’s houses are selling for much more above than just market value. There are simply no deals like that anymore it doesn’t happen. And if there are, they are picked up by investors immediately. No chance for regular Schmo to find it. Alright I like you a lot you are like my now personal challenge on what we can do to help you volt 74 get where you want to go. So a couple things I want to share with you even in your even in this you admit that, even if there are deals then an investor get some but a regular Joe Schmo doesn’t. That’s where I come in. I will go in and I put twenty twenty million dollars to work rotating homes all across the country and I make them available to you my friends here on limitless TV. So I’ve already created a solution for you. So if you click the link below and say, alright I’m ready to invest. I’ve got some money. You got to come out to my 3 day real estate event. You’re gonna learn so much and we’re also going to give you access to our nationwide inventory so you’re right it is challenging out there. But you know what? Some people are finding the deals and in my case I’m finding so many of them that I’m actually giving them away abundantly to my friends and those people that are working with me so hopefully that takes care of the first problem. Here’s the second problem you mentioned, partnering up with your father-in-law who happens to have a bunch of money? Most people are not that lucky to have father-in-law’s like that. Ok I want to be really clear with you, you’re right. My father-in-law he did think I was crazy when I bought my first house, my second house, and my third house and remember I was like five ish thousand dollars out of pocket to buy those three. But remember that after my father-in-law bet on me to do the next few houses, I had the epiphany. There’s gotta be other father-in-law’s out there. And what do we mean by that? I don’t mean a technical father-in-law so I’m not into polygamy. What I mean by that is there was this dentist and there was this successful person and this business owner and I would have dialogue with these different people and just keep him up today. Hey bought another house I’m doing this. And when I call him all up saying, can we do lunch this week? and they were curious and said yes. I bought them lunch, I showed him what I had done and all of them became my father-in-law’s. So you’re right, you don’t need a father-in-law but what you do need are people out there with money that are willing to invest in you and when people join my community that’s exactly what we do is I actually show you how to leverage Facebook, go online, and find investors and to take my deals that I put up someone’s money, I found, I fixed up that are available to you. And I show you how to shop them out and put them out there to the community and so we’ve solved that second problem. Now you’ve got one more here let’s look at problem number three. You have to live with people who are renting houses too. I guess if you’re dedicated enough I can see people and during those for one or two years but not the first two years. I don’t know if I exactly understand the question here I’ve got some tenants that will rent for five seven ten years and I’ve got others that every year we’ll just change over. Then that’s part of the math of doing a real estate. Both are okay, both exist, I don’t know if it’s a problem but volt seventy four I hope today helped answer some of your questions I really appreciate them ask some more. A few more questions for the day. This one comes again from 3dx. When you sell a rental, do you sell it once the lease contract and the tenant is up? or do you sell it with the tenant in it? Great question 3dx. Listen, right now in this market it’s pretty hot. So what I’m doing is I could be selling my homes with tenants but in most cases I’d have to actually drop the price ten or twelve thousand dollars that’s not something I’m really willing to do. It’s a pain. So what I’ve done with my real estate is I wait for the tenant to be up and then I actually get them out and then I list the house and I sell it once it’s in its tip top notch condition because in this market, for every dollar I put into repair I’m getting it back. I put in one I get two back up to a certain point. By the way, quick little bonus how much money do you put into our repair? Enough to compete in the middle with the other comparables that are currently for sale. Not the neighborhood, not the nice house, not the poor house down by the river, if there are five houses for sale within your mile then make sure that your home is fixed up right in the middle and yours will sell right in the middle. Alright great question there. Last couple of questions of the day, Dovo 88. I’m not from the US but I do want to be real estate investor there. What are my options? All right you’re not going to have any luck getting loans from US banks because you need either citizenship or you need some type of business tax ID, number social security number. So if you’ve got money you can come into the u.s. and you can buy real estate there. Honestly what you need is a partner. What I do with people is, all have partners come and bring in the money and then what I do is I line up someone with the credit and we’ll rent the credit and boom you’re now investing inside the u.s. If you’re serious about that click the link below. So last one comes from Scott Bodmin. If I live in Switzerland but have never lived in America is it possible or do I need citizenship? Well I think based on what I shared with Dover our other friend you don’t need to become a citizen that’s a lot of work and effort but you can own real estate here it’s gonna be done through partnerships. You know that might trust, that might require a little bit of trust because you’re a world away and needing to work with someone who’s putting up their credit, you need a reputable track record outfit that you can really sink up with to do that. That’s something that I do with people. Friends I want to thank you so much for being you know here with us today and learning about what we’ve been doing here. Please keep asking questions. Post your questions on the videos so that we can find them so that we can be doing our QA here together. I don’t want to throw one last possible something for you. We’re in the process of having you, if you click the link below you can now submit video clips with your questions and we’re gonna now start answering those questions with videos that way. So look for the link below, go ahead and shoot a video of yourself asking your question and we’ll provide the answer. Take care, do real estate and succeed. The deals are out there. Rock it!