The 5 Mistakes New Real Estate Investors Make

The 5 Mistakes New Real Estate Investors Make



Oh tonight today we're gonna talk about the five worst mistakes that real estate investors make I hope you're doing great tonight so we're gonna start the show just in a few minutes I want to get a bunch of people on on the line I hope you're doing great so we're gonna be doing a lot more live shows I'm really excited about this so if you're new to the investing in real estate channel we produce a number of videos every week in helping you you know in an effort to try to help you become a real estate investor we teach you everything from you know setting up your LLC's to tax benefits to how to find the best deals how to structure your your entities your your your checking accounts and all of those pieces in order to make sure that you have the best legal structure the best bank account structure and all of those different pieces I want to make sure that you guys have so so thanks everyone we're gonna get we're gonna start the show just in a few moments tonight we're gonna be talking about the five worst mistakes that real estate investors make Jonathan welcome to the show by pie welcome to the show so we'll save some Q&A for a little bit later in tonight's episode love for to find out where everyone is coming in from Chris welcome in Chris Lujan hey Jason you FC fan nation from Iowa welcome in welcome in all of you guys tonight I'm trying to get the camera Justin properly Arkansas welcome in grant I'm up here in our mountain mountain house for the weekend or for the week coming in from Chicago Michael welcoming Michael Michael has a great story to share by the way in fact Michael I would love to have you on the podcast to tell your refinancings story I think he purchased a property from us for like in the 40s mid 40s and it and you just did a refinance pulled money equity right back out of the property and it's ready to start shopping for second properties I love stories like that because we have investors that do that all the time so love love love love that you had a great success I think you're so you you you you bought it for like in the mid 40s and I think it appraised out in the mid 50s which is great or 53,000 which is great after the rehab so that's great so thank you for sharing that story with us today 45 5 you bought it for 45 5 and it appraised for 53 after the rehab awesome and you're able to pull that equity right back out again that's sweet Michael sweet so thanks so much for sharing that story it's like Twilight here in the mountains hopefully won't get too dark Hercules wants to know do I need to own my property to work with Lima 1 capital M no I mean you can buy rental properties through lima 1 any day of the week frederick from chicago enjoy your videos thank you so much and hopefully you guys are subscribers to the channel thank you so much i really appreciate that thank you so much alright Eddie wants to know what do we think of tax deed properties to get started with investing you know I always say it really doesn't matter what type of property it is foreclosure tax deed short sale I don't care what it is as long as you're able to find a great deal and you have a team in place that can make sure you're getting a rehab properly and up and running and renting properly that's all that matters so you can find a you could find a property of a tumbleweeds rolling down the street I don't care how it hits you in the face as long as the numbers make sense and you're able to make sure that you can get a refinance I'm sorry rehabbed and rented and up and running and that the ROI is very high that's all I care about is the honor line I don't fall in love with real estate I fall in love with ROI as many of you know all right so tonight we're going to talk about the worst mistakes that real estate investors make I want to dive into these to get started with and it will open up to some Q&A about tonight's topic and I'd love to hear what's on your mind and we will talk a little real estate investing if you are new to the channel welcome in this is the investing in real estate show I'm Clayton Morris on the host of this channel we're gonna be doing a ton more streaming we're actually building a brand new studio I'm super excited about this we're building a brand new sort of television studio what we're gonna be doing a lot of live shows a lot of live question and answers if I can tell you how many emails that I receive a day I should show you some day my inbox I get hundreds of emails a day and that's not because I'm special in any kind of way it's because you guys have a ton of great questions and they're all very good questions everything from okay I have an LLC in this particular state and I want to buy a property in that state will that cause me issue I mean questions like that they're all excellent questions what I want to start doing is a lot more live shows where we can answer a lot of these questions to help you become real estate investors or to help you maximize your overall your overall income or how to mitigate your taxes in order to make sure that you're keeping more of your own money I mean I have questions that I asked we we just literally asked our tax accountant today in the office we asked the our tax team this afternoon a very specific question that I didn't know the answer to so there are no stupid questions and that's why I want to be I'm really excited about doing a lot more live shows and bring you a lot more content so I am up here on a family vacation in the mountains with my family this week so I apologize for the beard actually I'm thinking about growing a full-on beard because I just hate shaving so I can't wait to uh to not shave on a regular basis it's not like David Letterman or something alright so tonight we're gonna talk about the five worst mistakes that real estate investors make let's start and there's no there no particular order these are five common mistakes that I see new investors make real estate investors who are long-term real-estate investors maybe they've owned a property for many many years it doesn't matter these are comp 5 common mistakes and I'm gonna kind of give you ways to avoid these five common mistakes as well so let's dive into it number five and I'm just gonna throw this out there to you guys and see how many of you get this question correct so in the comments thread right now what do I like to say is the most important thing when investing in real estate let's see how many of you guys under know know how much I love it I know how much I love this particular answer jeffrey moon you got it you said ROI exactly grant wait ROI James ROI I love it Hercules ROI cash flow cash flow are oir oir why you guys get it number five on our list the number one mistake well number five does again no particular order but the first in this list not focusing on ROI and I can't tell you how often this happens when I'll talk to you let me just give you an example I think a real world example is a perfect example I had a husband and wife out of Philadelphia they owned a property they owned a property that they lived in for a number of years in Manayunk which is a small town just outside of Philadelphia cute little town you know great little young family town with some breweries and some good restaurants and close enough to the city you could take a quick ride to downtown Philadelphia they owned this townhome and they moved well guess what they kept it right I hear this all the time so they kept this particular property and they tried to rent it great its renting so they told me on the phone this was like a year ago they said you know we want to we want to keep this property because you know we think in a number of years we'll have it paid off or paid down and it'll really start to it'll start to be a great investment and so I just a whole full stop right there I know we're talking about doing rental properties with us that's great but let's stop right there and let's talk about this property I want to understand the psychology of why you're keeping this property and they thought that if they worked on this property and got it you know paid down the mortgage maybe even increase the rent at some point maybe even did some repairs that eventually the return on investment would be good so I ran the numbers with them right on the phone I said how much you're you know how much you're bringing in every month what are you paying for a mortgage on this property how much are you actually cash flowing at the end of the day after you're paying taxes what are your taxes look like on this property they hadn't accounted for their taxes in this property when we all got finished with it I said look I hate to break the news to you you are in the negative that you are producing a negative return on investment on this property why are you holding on to this property and the answer that they gave me is that they they just had a sentimental value connected to this property because it was their first property they owned together so they thought in their heads they could get this property to cash flow eventually again this is gonna bring us to another point on tonight's show and that brings me to my second point so number one they didn't focus on ROI they were in the red and I said here's what you need to do you need to immediately call up a realtor and you need to list this property and get it sold you're producing a negative cash flow with your taxes you're actually you're not breaking even you're losing money on this property the ROI on this property is terrible why are you attached to this thing get rid of it so anytime you're entering into a new real estate transaction simply run the numbers I'd like to do that back of the book envelope test you can do the 1% test if you like it's what my father-in-law does you know will will it produce cash flow at 1% of the purchase price or you can do my ROI formula which is a very conservative ROI formula it's not for the faint of heart because it's incredibly conservative meaning I take out 40% for vacancy repairs and expenses in my formula and I know a lot of people make fun of me for it because it's so conservative but if you can your monthly rent times 12 so $700 a month times 12 multiply that times 0.6 that means you're moving 40% for vacancy repairs expenses what are you left with now divide that by the all-in cost of the house and that's what you're left with is your return on investment number the ROI number it'll be a point 1 1 point 1 to point 13.10 just move that decimal point over and that just means it's a 10% 11% 12% 13% look the stock market gives you about a two to three percent return so if your net ROI on that is higher than 2 to 3% net not gross your net ROI okay it's better than the stock market but I like personally like to shoot for about a 10 to 12 percent net return on my properties net but because I'm doing repairs and because we're placing a tenant in the property I don't really worry about the repairs for 10 to 15 years so that 40% ends up being kind of a pipe dream at the end of the year it ends up looking closer to that gross number than the net I asked my wife the other day I said how many repairs do we end up having in our properties you know what's that number look like what's our repair percentage on that all the properties that we own and she said I can't remember the last time we've had a repair and that's the point that when you take care of the property upfront those repairs are almost non-existent hey thanks MJ live in dal Lindvall thanks for the great backdrop yeah we're up here in the mountains so just give you a little little preview here what this actually light over here is a little bit better huh that's way better actually sorry about that so here's our little log cabin up here in the woods and now that's a little to pixelate is that look all right and there's the lake you can see the lake right down there got some puzzles out here yeah the light is it's Twilight out here on the lake so me just try to get a little better a little better picture for you guys and I sorry for the jumpiness I don't have tripods I don't have any of our studio stuff set up tonight so I'm just kind of winging it I hope this is OK and you don't mind and you don't mind this I apologize so let me move to the second one in this list out of the five because this brings me to my next point so first is not focusing on ROI the second is investing emotionally which if I go back to my Philadelphia example with this particular cusp for this particular couple they were investing emotionally in this rental property they weren't investing with their with their heads they were investing from their hearts which is which is okay it's sweet it's adorable you know that they wanted to keep this property Sean welcome to the channel thanks so much Sean he just recently discovered the channel yes we we all have a lot of emotions but real estate I don't fall in love with real estate it's four walls and a roof and someone needs to live in a property someone needs to live in these particular areas so why shouldn't you own those properties you know one of my mentors in this business Robert Simon he likes to say that he likes to say that when he dives down the street he'll see high-end properties mediocre properties low-end properties and guess what somebody's living in almost all of them why shouldn't he own them so don't get emotional about real estate let me just show you this house right here so this is this is our mountain place right it's got four walls and a roof we actually used this place as a rental property for a little while we we did a we did a vacation rental with us for a little while and we didn't like that this was our place and we just decided to stop doing that but I didn't get emotional about it we just wanted to spend more time up here but the problem with that Philadelphia couple that I was explaining to you is that they were emotional about this property they in fact buried their heads in the sand and did not want to even run the numbers to know what their cash flow looked like it took me on the phone asking them what are you paying in taxes what do you cash flowing on this property and the wife actually she kind of kept quiet she didn't even want to admit that the taxes that they had to pay on this property and when I got the calculator out the bottom line is that they were in the negative she was tied emotionally to this to this townhome that they had purchased so don't vest in in real estate emotionally now what does that mean when you're selecting properties well let me give you an example sometimes and Michael knows this he's one of our investors if we sent a property to an investor they usually sell within a few hours when we send it and when we sometimes work with a new investor we'll will say Mary Jonathan we want to let you know that our properties sell within a few hours so if you you know if you're interested in just let us know and we'll we'll get you a purchase agreement sometimes new investors wife/husband they'll look at it for a few days they'll they'll say to themselves well I really wanted like an adorable little bungalow you know with some nice trim and some potted plants or and they have this sort of emotional feeling because they think they're gonna be living in the house you are not gonna be living in the house and so therefore you're you're you know mindset about curtains and the types of paint colors that you think you want in a property it doesn't matter at all you have to really come outside of yourself and realize that if you have a nice house we take care of it rehab it and get a cash flowing that your your sentimentality about you know pink or having potted plants or certain blinds hanging up or certain carpet color and all of that it goes totally out the window who cares what you want I know it's hard sometimes but who cares what you want no one cares what you want right it matters what the tenant lieutenant likes and if you know your neighborhoods like we do then we know what's gonna cash flow we know exactly how to rehab our properties because we know and so we know exactly we know exactly what it's gonna we know exactly what's gonna look like so I apologize did we skip a beat here hopefully not I know that we just had a little internet hiccup here for a second but is it still the same livestream going let me know if you guys can still see everything okay the beauty of the beauty of doing live can you guys still see everything okay are we all good its blipping a little bit it's all good we're back we're all back good good good all right thanks guys you actually had a contractor calling me and actually kicked me kicked me off the internet for a moment yes I used to be on the daily buzz thanks for rule Styne okay so number one number one mistake that new investors make all the time is they're not focusing on return on investment ROI number two they're investing emotionally number three number three the third biggest problem that people make when they're trying to invest in real estate is that they try to self-manage their properties self managing rental properties no no no no no please please please do not try to become your own property management company property management companies have one of the hardest jobs in all of real estate investing not only do they have to deal with you the buyer the person who has this property they also have to deal with the tenants they also have to deal with the city they have to deal with the code enforcement they have to deal with any number of issues that can arise you do not want to be in the property management business it is a thankless job they work incredibly hard they work incredibly hard and they don't make a ton of money and you do not want to be in the self management business now I know it's alluring if you're just starting out in real estate investing it's you think you're gonna save ten percent right a typical property management company almost every property management company I work with charges 10% a month so if your property rents for $700 a month take out $70 and that goes right to the property management company before they direct deposit your monthly income I'm happy to pay that 10% number one it's an expense for your company it's an expense for your business it's an expense for your real estate investing journey and career on your taxes but it's also lets you off the hook if you truly want to create passive income and financial freedom why the hell are you managing properties yourself the problem is that most people think they can do just one right so you buy one property and you think oh this is easy I can manage this one property and you've written you rent it to your you rent it to your high school friend or your brother-in-law's friend and everything's going smoothly it sounds great right well what happens when they move out and then you get a troubling tenant in there and you're doing all of the legwork the background checks and all of that but it's fine what happens if you get a second property this is what I like to try to tell people it sounds great when you have one property great you want them self-managed it okay but I don't want you to just own one rental property how are you gonna build wealth second third fourth fifth and six properties I want you to then start thinking about what it would be like to have all of those managed by you as well because you're not that people don't think the long game well enough they only think short term so think about what that would be like to manage all of those properties 1015 units and then you're showing properties at night in 10 to 15 units chances are you're gonna have a vacancy in one of them right and therefore you're gonna be out on 7 p.m. at night 8 p.m. showing properties to to potential tenants at night after they get on work etc is that the world you want to be in or would you rather have that in the hands of property management teams that then can take out you know show those properties at nighttime those particular people who are showing the properties the leasing agents for the property management team they get like a you know bonus if they get it rented to a quality tenant etc you do not want to be in that business and it just adds a level of headache that you do not need so again don't self manage your rental properties it is a bad bad mistake all right number four on this list not forming a legal entity the fourth biggest mistake that people make when they're getting started and realizing when they're investing in real estate is that they don't form a legal entity to buy their rental properties now this is a little complicated in the United States our accountants have advised us to purchase real estate in a limited liability corporation they take about five minutes to set up it cost about a hundred bucks to do it you pick a name a lot of times our investors will just pick the street address one two three Main Street great that's the property they're buying they stick an LLC at the bet at the end of it they file it with the state it takes about five minutes to do it on the website incredibly easy to do so you know one two three Main Street LLC the reason that you want to incorporate is because now your legal protection as a business owner with that property being owned inside of an LLC is incredibly beneficial not only from a legal perspective but now your income is being taxed as a business opposed to an individual right so you're taxed at a certain tax rate as a human being as an individual you're taxed at a different tax rate as a business as a limited liability company if your tenant slips and falls and you were negligent for some reason or the property management company was negligent even though they have their own insurance and they're covered chances of you being sued are pretty slim but nevertheless they can only come after your LLC and the value of that LLC they cannot come after your personal assets what does that mean well that means all of the rental properties I own are in different business entities LLC's that means I don't want somebody suing me and then being able to come after the home I live in I don't want people being able to come after this home you know that's something I want I don't want that ever to happen to me and that is a huge mistake that if you are not invested and you not in you don't have an LLC set up you're gonna be in for a rude awakening so please please please make sure you purchase properties in a limited liability corporation or some sort of business entity if you are an international investor we work with a lot of international investors Canada we actually have an investor from Slovenia who's joining us soon China New Zealand you name it typically international investors may set up a different structure inside the United States so we will have Canadian investors for instance set up AC Corp because it offers Canadian investors a level of protection and liability protection that they would not get with a limited liability corporation because they're not American citizens so this is very important for you to talk to your tax accountant if especially if you're an international investor but I will tell you that inside the United States if you're living here then an LLC is definitely going to be one of the best ways for you to go and again seek the counsel of your your your accountants and your lawyers on that but you are offered a level of protection in that it's such a smart move now you may say to yourself but what about buying properties with a mortgage I won't be able to do that if I have an LLC well if you've listened to my most recent podcast or one of my most recent podcasts on the investing in real estate podcast on itunes with Garrett Sutton I would encourage all of you go check out that interview with Garrett Sutton he is Robert Kiyosaki's tax excuse-me lawyer and as he will attest it's very very simple to purchase a property in your own name and then if you're getting a mortgage then once the mortgage is closed but once you've closed on the property transferring it over to an LLC it's incredibly easy to do it just listen to that episode that's mind blowing you will definitely learn a lot about how to be able to transfer that once you have it in your own name transferring it over to an LLC it's very very simple so there you go so that's number four on the list not purchasing properties in a legal entity number five on the list it's a simple one it's overspending on your initial purchase so when you're buying real estate for the first time you're buying real estate investments for the first time please please please just don't overspend what does that mean well it simply means that if you are buying properties on you know the open market and you are you're seeing a retail price for a property and it still needs $20,000 worth of rehab for instance up here in the mountains there's a there's a house next door over here okay let me just give you an example it's a perfect example this house over here you can't really see it yeah maybe can in the woods a little bits of blue house it has been on the market for like a year now and it needs a ton of work on the outside I'm a real estate investor I live next door to this thing I wouldn't buy it they're asking a retail price for this house it needs a ton of work therefore if I were to buy it i donnelly I'd have to put an additional thirty thousand dollars worth of work into the property it means new it needs new siding I think it needs an updated roof it needs a new paint job it needs updated appliances there's a whole slew of things it needs needs updated windows so that is overpaying for that particular property now it might be a good vacation rental for somebody if someone wanted to do that there's a couple of ski resorts near here there's a big lake right near here so it's perfect for summer season it's perfect for the winter but again if the ROI is off because I've overpaid now if I can get a deal on that house and I could buy it maybe for 60% of what they're asking or even you know cuz I know I'm gonna have to put in about 10% more for repairs so that I might be still be about 70 80 % below when I'm done maybe but even then it looks like it's way overpriced so that's the problem people don't know where to look for deals they overspend they go out on the weekend because they want to become a real estate investor and they don't run their numbers they don't know there are and they go out in the meet with a realtor and a realtor says well this one's been on the market for a hundred days I think it's a really good investment you're gonna bring in a thousand dollars a month and yet the property costs two hundred thousand dollars and you have to put another twenty thousand dollars into it that's not a good investment that is not a good return on your investment so please please please know your numbers and make sure you're not overpaying now I overpaid on the first two properties I ever did I bought them off the MLS with a realtor and I put in I over upgraded the property I did all I put in appliances i-i-i did all sorts of like hardwood floors i overpaid guess what do you think it's gonna rent for more hmm I wish I would have saved that additional fifteen thousand dollars in rehab because it would have rented for the same amount if I didn't do those things and that's what you'll learn as a real estate investor and I've got a whole video here on the channel by the way on things to not waste your money on when you're doing a rehab bathrooms kitchens I walk you through why you shouldn't be spending money on these these additional items because at the end of the day you're gonna spend fifteen thousand dollars more on this crap and guess what the property is gonna rent for the same amount as if you didn't spend that extra money so it's not worth doing these big upgrades and overspending on these cosmetic items and doing this stuff that's not gonna come back to benefit you in the end so there you go those are the five items I'm gonna run down them real quick again five mistakes that new real estate investors make when they're just getting started number one not focusing on ROI that's a really important number to investing emotionally don't invest emotionally in real estate number three trying to self manage your properties please use a property management company please please please number four not forming a legal entity when you buy your rental properties not only to mitigate your taxes to help you with that but also for the liability protection that you get it's a whole other game once you start setting up and become a business and you start buying real estate and number five overspending on your initial purchase please please please don't overspend on your initial purchases make sure that your you know you're buying smart you're getting a high ROI and your cash flowing consistently so those are my five five tips for tonight so let me just open it up for a few minutes to some questions and answers here I see a lot of questions coming in and trying to stay focused on getting you through these five tips that I wasn't able to read read all of them so let's fire off some questions here first up anyone have a question they'd love to answer love love to be answered I can't believe it's August since that's like 60 degrees it does feel nice I'm up here in the mountains of Pennsylvania all right Terrence says let's say you get approved for 50k for minimum theoretically you can use these alone to buy two properties at 25k yes Terrance theoretically however banks don't like to loan on properties below $40,000 in value so it's gonna take you some finessing to find the right bank and then also to find a property that's also rehabbed and rented you know like the properties that we do are mostly a pre excuse me like pre rehab so banks gonna come in and say oh this house hasn't even rehabbed yet it's way easier to do what Michael who's watching did with one of our properties which is buy it for cash we do the rehab it gets cash flowed and then you pull the money back out on the back side so you have that 50k you buy a property free and clear pull that cash out and you're able to do a refinance that way and pull that money out and buy another property that way banks are much more willing to work with you when they know that you rehab the house and now it's cash flowing Jason Ali says why I mean Wyoming Holding Company in one Florida LLC per property good corporate veil yeah and Jose I'll get to yours in a second well yes absolutely our tax accountants have advised us to set up a Holding Company LLC in the state of Wyoming and then in the states where we own our rental properties we have LLC's in Indiana Michigan Pennsylvania and they report up to the Wyoming holding company now it's important you get a lawyer to set that portion of it up for you because they need to be able to talk to each other correctly important Miguel just closed on my second investment property today happy happy happy awesome Miguel Congrats Pam Dolan says I always feel smarter after listening to you thanks for the info Thank You Pamela please tell my wife that I would love for her to say the same thing I think she's mad at me tonight you know what we're out in the lake today and she said can we just go home cuz you I'm gonna have to fight the baby like the whole time and we didn't we went to this restaurant and then of course guess what she had to fight the baby the whole time and so she's angry with me so I have to deal with that later Mark Henry can you recommend property management companies akin just kind of depends on where I mean so many and depends on what market best way to purchase a first property did you do that's a pretty wide open question best way to buy your first property mark no I don't know any property management companies in Fort Lauderdale I apologize I know I'm not in that market best way to buy your first rental property I mean literally listen to what I just said tonight in these five tips make sure the numbers are right make sure it cash flows properly make sure the ROI is there don't manage the property yourself set up an LLC now if you're asking me about funding and where you're gonna get the money I've got a whole bunch of videos on this channel to help you with that how to get private money how to use a home equity line of credit to purchase properties all of that so incredibly incredibly important you combine them with credit cards that's right you can do a whole bunch of things and if you're interested in some different funding options we partner with a great company if you go to our website Morris invest com slash funding some fantastic way to use business credit cards in order to buy your first properties is Pittsburgh in Youngstown areas good area with ninety billion dollar shell gas plant moving there yeah Pittsburgh is a great area to invest Youngstown is as well but there's a little oversaturated and you may pay higher in taxes and also I'm not a big fan of some of the crime in Pittsburgh as well I went to school to University of Pittsburgh and there are some troubling areas there that it just gets to be a little hairy so Peter Oates how are your Jacksonville properties doing fabulous really really well it's one of those few untapped areas right now Florida where we were seeing it's just a ton of growth which is great rule Stein buying a duplex as your primary residence is easiest way to get into rental properties yeah that's a great way to absolutely that's called sort of house hacking right you buy a duplex you live in one side of it and then your tenants and the other side are paying your mortgage basically best area is Omar you're looking to buy in Indiana we'll reach out to my team my friend you're looking to buy in Indiana that's what we do best I've got three offices there I know you know we do about 50 properties a month so trust me I know every nook and cranny so please please please book a call with our team right now go to our website Morris invest calm click on the schedule a consultation button we'll jump on the phone for 30 minutes with you and help you figure that out Rob I have a 90 K HELOC live in California look at my first investment shoot sorry they're just going so fast oh here I go I can scroll back what do you know what areas would you recommend for a 50k range well again Rob I mean that's what that's what we do all day long we were like for instance I spoke to a doctor yesterday he's his doctor in Los Angeles his friend is also a doctor owns four properties with us with our company and he said he's like look I own an 8 unit property in Southern California and it's cash flowing terribly so I'm ready to take the plunge on buying some $50,000 homes and so he is he's buying I think to two of them right now from us and they'll cashflow about seven eight hundred a month we take care of everything we do the rehab we place a tenant our goal on every property we between a 10 and 12 percent net ROI net that's what we do let's see I hope that helps Rob so that would that would basically get you two properties with a 90 kg lock right there you could pick up two properties boom boom have them cash flowing about 700 apiece 1,400 bucks a month in cash flow that's the beauty of taking ninety thousand dollars and turning it into a stream of cash buy wants to know by pie what do I have to get a commercial loan to buy a four-plex no you don't four units and under is considered residential anything over four is considered commercial so five and up ever our dough wants to know if I can set up a call with you you bet ever our dough please you know jump on our website or you can just email me directly if you'd like as well and I can set something up with our team just Clayton at Morris invest calm Jose wants so finding a good tax accountant that knows real estate exemptions Oh Jose I would only recommend one company we work with pro vision wealth out of phoenix obscure house scottsdale tom wheelwright and his team if you listen to my podcast the investing in real estate podcast we've done now three episodes with tom he's the smartest tax accountant in the world he's the most smartest real estate tax accountant in the world he's Robert Kiyosaki's personal tax advisor he used to work in the Treasury Department he used to work under Ronald Reagan book a call with his team at provision wealth they are the best when it comes to real estate investing that's who we use Sora and Lloyd wants to know about to close on our third investment property so far all of our all for cash which non-bank lenders do you recommend for us to start to leverage our assets that's a great question non bank so you're talking about private money now I would say companies like Vizio lending vis IO Lima 1 capital is another good one but they require a minimum value of about $60,000 so they're they're private they're private money they're basically like hedge funds they can make their own determination of what they want to lend on so they're not governed by Fannie and Freddie and that sort of stuff I would check their start with those guys sleep is not necessary wants to know if we were in a housing bubble how would that affect the business it's too hard to answer because to me bubbles are specific to demographics and areas and geography and California for instance is may or may not be in a bubble I mean there's certainly areas like San Francisco absolutely look like they are because of all of the tech boom but like where I invest we're not at a bubble stable blue-collar jobs that aren't going anywhere minimal appreciation slight like one to two two and a half percent appreciation very stable no mortgages so you can't buy properties that I buy frankly with mortgages on the front end and well mostly I shouldn't say that and there you can get like you know State Farm and other programs will lend on in down to a low value but it's hard to get you have to prove income you have to prove stable jobs so I don't really believe we're in much of a housing bubble in you know most of the country I think certain areas we might see some bubble activity for seasoned pro wants so for your first few properties is it best to buy an estate where you live or you should be looking properties all across the country so please listen to my podcast the investing in real estate podcast with Clayton Morris I think episode three I talked about how the best properties are not in your backyard and I explain why so please go and listen to those that episode I walk you through step by step why that's not the case why investing in your own backyard is a huge mistake typically unless you happen to live in one of these great rental markets Mike Henry how about buying a $10,000 $15,000 duplex with cash there's a lot of those in Ohio and Pennsylvania Mike please please be careful okay I've had a lot of investors who think that there are greener pastures by buying one of these dumpy ass ten to fifteen thousand dollar properties because you found it on Zillow and I love you Mike I'm telling you right now that's gonna be the biggest mistake you ever make why because you're not gonna even have any idea how much it's gonna cost you to rehab that property then you get it fully up and running you don't know the history of that property foundation problems all kinds of issues right you know my team will walk these properties make sure that we know what we're doing before we buy it we have our contractors we have our inspection team we go through it we know what we're buying so please be careful like I know it can be alluring to buy one of these things if you're a one-off investor and you come into one of these one-horse towns and you start hiring contractors they're gonna see you as a it's like you know it's gonna be like the vultures are gonna be hovering over you like how this guy Mike he bought this property yeah Mike will fix it for you 40,000 rehab will cost you 40 what I thought it would only cost me like 20 yeah we noticed some things we didn't find before okay let me get another opinion you're gonna go across town try to find another contractor and now it's wintertime and now it's November in December I guess what a big snowstorm is coming now you own this piece of crap property and the city wants to start putting violation letters on your front door cuz you know what it's vacant and you have broken windows okay and this contractors don't want to touch it cuz it's winter so you need to be very careful just please please please be very careful Rob California is not good for cash flow no it is not I would say 80% of the investors that we work with amoris invest are from California no joke and half of my extended family is from California father-in-law mother-in-law they all own properties through us and California is in the San Francisco Bay Area just as an example the same property that my mother-in-law was able to buy with us she bought in Tracy California and spent $400,000 on the same square footage same bedroom bathroom count she just sold it two years ago and said I'm done so just to give you some perspective on how much she then end up buying one with us which was like 45,000 Vanessa wants to know is it better to rent to section 8 or ray Giller personal preference Vanessa I love section 8 tenants you know why because the city unit does an inspection on it they make sure that it's ready to go they have to have income and they tend to stay a long time you can typically do like longer leases with a tenant like that I like I love section 8 the only downside I really find from section 8 is the amount of time it can take to get your money from this from the state meaning when you get a section a tenant into a property they usually I think they accumulate the money depends on the state anywhere from 60 to 90 days before they cut you a check that doesn't mean you're not earning during that time it just means it'll take you about 90 days to finally get that first rent check if you want to start cash flowing immediately then that's not the route for you you also contend to get a higher rent amount with section 8 tenants so to each their own I like both of them I have I have section 8 tenants but I also have regular tenants what I know about commercial lending Terrance I don't know a lot about commercial lending I really don't there are some different laws that govern commercial lending and how many you you can bundle together in a portfolio so that's something you definitely want to speak to a commercial lender they're governed by different laws I don't do anything in the commercial space so I apologize on that James wants to know where your typical turnkey properties located state wise we are in Indiana Michigan Florida and Ohio Jill wants to know cash out refinance for 15 years or 30 years you know to me I would rather go for the lower interest rate and just funnel all of that cash flow directly towards that primary balance whether it's a 15 or 30 years so I would go for the lower interest rate frankly how many after how many property should you consider having a property management company I would say after the first one well thank you guys I guess so many great questions holy smokes Q McCall was soon after the first properties acquired how easy it to pull cash out should be very easy and you can do it pretty quickly I think like one of our investors is on here on the live stream tonight and I think he just closed in June and he was already able to pull the cash out of that property so maybe in the spring I think was closed and was already able to pull the cash out and it's now August so just a few months others can happen it can happen very quickly depends on how quickly and what bank you're working with some will require you know six months seasoning for you to hold it others a year it really just depends on who you're working with John Doe wants to know are you still aggressively snagging at properties oh yeah I thank my wife and I just bought two yesterday we bought two properties yesterday we I wish we could keep all of our properties but it comes down to capital so in a week my wife came to me yesterday and said we've got we need to our accounts have advised us we need to buy more properties ASAP so we acquired two properties yesterday if I buy from Morris invest in cash how long before I can cash refile Oh like I said I'm sorry I already answered that question a moment ago very quickly depending on your the bank you're working with or the lender that you're working with everardo wants to know I purchased a four unit with leverage and was not able to put the property in an LLC do I wait to pay it off and then open an LLC you couldn't no no again everardo go listen to my episode with Garrett Sutton on my podcast go to the iTunes Store right now subscribe listen to my episode with Garrett Sutton I think it was like four episodes ago the investing in real estate podcast is the name of it Garrett explains how to exactly do this with with leverage and an LLC transfer after purchase go listen to that buh-buh-buh-buh-buh Mike oh the property you're thinking about buying is eight unit apartment building in a small unincorporated community with a population of 342 people Oh Mike again I come back to what I know the reason I love the markets and the territories that I invest in is because of the stable blue-collar jobs that are there for instance in Indianapolis where I invest where my team is located the properties that I buy are right next to the hospitals they're right next to the post office to the Amazon distribution center these are areas at the FedEx distribution hub the NCAA headquarters the Convention Center these are all huge employers and drives enormous amount of you know of jobs that are not going to China that are not going to Mexico that during a recession don't go away the hospital unit doesn't cut staff nurses postal employees those type of people during a recession did not see one dip in my rental income so a 342 population town I don't know I don't like those those lottery numbers very much again I think you're being a little I know you're trying to analyze this deal just please be aware of the the jobs and what does the local economy look like for instance you know I like the towns that I'm in because the vacancy rate is very very low it's like 5% you go to places like Memphis Memphis has a over 20% vacancy rate and the crime is like oh is incredible it's like over 20% I mean the crime rate is ridiculous so just be aware of where you're buying like where I like to invest is like under 5% so Rob yeah absolutely I mean I don't want to turn this into anything about me really but just go over to our website if you're interested that's what we do I mean I I'm a real estate investor I've been through the wringer I rehabbed thousands of homes so that's what my company does Rob says hey can we give you can you give a brief overview of what you do with your company I thought you just invest so can we invest with you I run Morris invest which is a large turn rental company which our goal on every property we do is between a ten and twelve percent net ROI and our average property prices are between forty and fifty thousand although we just started some brand-new construction properties that are sixty eight thousand three-bedroom two-bath and they use cash flow nine hundred dollars a month and that's it we take care of everything you call us you booked a call with our team we try to we really want to know what your freedom number looks like meaning your financial freedom number you can download the free cheat sheet by the way if you haven't already downloaded our cheat sheet I'll just go to Morris invest comm slash freedom it's free it's like three pages and it'll kind of walk you through how to figure out what your freedom number looks like how many rental properties it would take for you to achieve financial freedom given our formula I hope that helps Thank You Anthony I do a great job Morris thank you I really appreciate that James wants to know do you offer forty to sixty K all-in turnkey houses in Florida Michigan and Ohio yes sir that's what we do it's what I do all day long but Nessun wants to know how long should you hold onto a property our goal in house is to hold on to our properties for the rest of our lives I want to hand my properties down to my children which is the way that I've structured them with our estate I don't ever want to sell my properties will go through economic downturns maybe the values will drop five ten thousand at some point who knows ten years from now five years from now guess what they're gonna go back up and I don't care you know why cuz the cash flow will stay the same that same seven hundred dollars a month in rent is not gonna go down you know it's gonna stay consistent Thank You Rob I really appreciate it thanks everyone john wants to know what resources do you use to analyze markets again on this youtube channel I talk about crime data I talk about job growth I talk about a lot of those different things right here on this YouTube channel we've got a whole bunch of videos to kind of walk you through that basically I look for crime very I don't I don't care much about crime to be honest with you crime data websites are pretty awful so I want to make sure that you know my houses aren't getting you know blown up but when you drive down the streets of the properties that I own everyone's at work their blue-collar neighborhoods I've got property walkthrough videos on our website here as well on YouTube I look for vacancy rates I want our vacancy rates to be low cuz after all I want my properties to cash flow you know I don't want I don't want high vacancy rates like you get in places like Memphis and Little Rock Arkansas those types of places plus we have but job growth I want stable blue-collar jobs I want and also I love boring I want my markets to be very boring low volatility in all of that Anthony have ever thought about land investing no toilets or tenants yes I have however in a down economy people that own land or people that rent land you know for you know they want to drive ATVs on them and those types of things they don't tend to hold on to that they're much more likely to retain the house that they live in they're also much more likely to retain the car that they drive if they own a piece if they're renting a piece of land so they can go enjoy some ATV off-roading with their son or skeet-shooting or whatever they will likely drop the ball on that on that land investment and therefore you're left holding the bag also you don't get to enjoy the tax benefits of owning land in the way that you do with owning rental real estate being able to claim depreciation there's a whole host of reasons why I'm not you know I like land lands fine but there's a whole host of reasons why owning rental properties is a better to me owning rental real estate is the number one way to build wealth in this country bottom line there is no better investment there's no better investment not even land land is like maybe the closest but it's still not good enough what is my opinion on apartment buildings people ask me that all the time I've had great success and I've achieved financial freedom by buying single-family homes because they have a yard and the driveway and that's what I know and I know that tenants will stay a long time they come home after a long day at work and they feel like it's their house when you have a 10 unit apartment complex they're great you're always gonna have a vacancy it's incredibly rare that you'll be fully stocked fully occupied you're gonna be continually fixing things anytime you have you know two three four five six units on on and up multi families some multi families can be great if they're large but I'm telling you large multi families you're always gonna be dealing with vacancies so but again grant knows multi families he likes them he's a commercial real estate investor I'm a residential real estate investor I have achieved financial freedom from doing what I do best which is staying focus on single-family homes and I can't speak to how other people you know look you can invest in storage facilities you can invest in mobile home parks you can invest in commercial real estate you can invest in residential real estate you can invest in you can invest you know multi families you can invest in billboards you can invest in land as Anthony was just saying there's any number of ways you can invest in real estate find one way that makes sense for you don't go eight different directions though stick to one course of action that works well for you and achieve financial freedom so this channel we talked all about residential real estate buy and hold investing and mostly I do single-family homes so that's what this channel is all about I don't really talk about commercial so if you're interested in commercial I hate to burst your bubble you know but please please please don't seek my advice on large commercial properties that's not what I do thank you everyone I really appreciate it taking up enough of your time tonight please subscribe to the channel if you're not already subscribed driver to this YouTube channel please hit the subscribe button we're gonna be doing a lot more live events as we build the new studio the Morison best television studio I cannot wait we're gonna be doing live Q&A sessions just like this you can bring your heavy questions Natalie and I will both be on here we're gonna be having expert guests live as well folks like Robert Kiyosaki Garrett Sutton Tom wheelwright we're gonna be doing live interaction stuff I cannot wait so thank you guys so much us yes as everyone's saying here smash the like button can you guys hit the like button we have a hundred and ten people watching live it at this very moment can you hit all the the thumbs up button right now for me pound it pound it pound it pound it pound it I never asked for it and I just had one of our viewers say smash the like button yes smash the like button thank you so much Rob thanks everyone for all of your kind words I really appreciate it smash that like button let's see if we can get it up over 100 before I sign off here for the night for all of you any comments we didn't get to please just please leave them Jean thank you so much Jean Jeffery thank you so much you're very kind then again please reach out to me if you have any further questions I'm happy to help set up a call with our team we that's what we do we eat breathe this stuff and also we love about real estate investing is that there's nothing we cannot fix there's no problem that we can't fix tenant needs an eviction great get an eviction get a new ten in their roof is leaky great put on a new roof fix the roof water heater breaks great get a new water heater you get a violation letter from the City of Phoenix great deal with it there is nothing you can't fix and real estate investing and that's the beauty of this business thank you guys love you guys have a great night everyone I really appreciate it thanks Rob looking forward to working with you my friend reach out to me I'm happy to jump on a call again reach out thanks guys I really love talking with you guys and thanks for all of your really great questions you guys gave me a ton of great questions and I look forward to seeing you guys next time much love to you all everyone thanks Omar thanks Joyce love you guys