The Way Real Estate Investors Make Money

The Way Real Estate Investors Make Money



such an echo so so great everyone okay today on today's show I want to talk about today's show we're going to talk about the ways that real estate investors make money that is today's show welcome to the investing in real estate live stream thank you so much for joining us I hope you get a chance to join us in the chat and have a conversation with us we'll open it up to some question and answer a little bit later but there's a lot of misinformation about the way in which real estate or real estate investors actually I'm gonna call them that from now on real estate errs real estate investors make money and I go back to the great Gary Keller model of real estate investing so can anybody I'm gonna watch in the chat to see if anybody can answer this question but there are three stages of real estate investing can anyone answer me what's the first stage of real estate investing I'm gonna give you five seconds what's the first stage of real estate investing anybody answer that what anybody answer that anybody answer that hmm anybody answer that looks like no one can answer that today okay the first stage of real estate investing is to buy to buy the second stage is to own and the third stage is to cash flow now cash flow of course is the number one way that people in Vetri estate investors make money right most people think of making you know cash flow is the number one way to make money in real estate investing and that is a very important component of it so real estate investors yes the beauty of being a real estate investor is you're purchasing a piece of property okay you're making some improvements to the property that allow the property to last a number of years you know you update the roof if it has less than ten years of life on it you're gonna put a new water heater in and if it needs it you put a new furnace and if it needs it and those are minimal costs you know water heater is like seven eight hundred bucks depending on where you buy it you know furnace can be like thirteen hundred bucks depending on where you buy it and the labor but you know do you need to put those in right away do you have a working water heater well then wait two years to put it in right do those things on a case-by-case basis upgrade your windows if you need to put in new vinyl windows if you need to I put in like Pella Pro windows or you know filling yeah they can be like a hundred bucks a window but you don't need to do it all at once you can upgrade your property as you see fit so cash flow yes is important getting that property up to date and and and and flowing but the beauty of real estate and the way that real estate investors make money is not necessarily just from the cash flow the cash flow is really the byproduct at the end of the sequence buy own and cash flow one of the number one ways that real estate investors make money and they don't think about it is you're buying a tax shelter taxes make you money as a real estate investor and you need to start thinking about this the right way so when I talk about the three stages biown in cash flow what do I mean I mean if you have a goal of buying $1,000,000 worth of real estate that could be you know 20 single-family homes I buy a lot of single-family homes you know in the 5060 thousand dollar range that's what I do and those cash flow you know seven eight nine hundred dollars a month in cash flow I'm buying those properties the cash flow comes the leader I'm not necessarily concerned about the cash flow just yet okay so buying those properties however you buy them if you buy them with you know money from a 401k private money maybe you leverage money from a from a mortgage however you're doing it you're buying it but the beauty of purchasing that million dollars worth of real estate is that you are now your net worth has increased by that much and guess what if you maybe bought a million dollars worth of real estate but you paid $200,000 for it or $300,000 for it because you took out loans or you use a home equity line of credit which is a killer way of buying real estate the beauty is that you get to depreciate that full amount of real estate that you purchased the IRS doesn't care that you only used a fraction of your money to purchase it this is one of the most powerful ways that real estate investors make money you now get the full tax shelter of that real estate even though you paid this much for it now a home equity line of credit right I live in this house we just actually expanded our home equity line of credit because I want to buy more real estate this year I want to buy a lot more properties and so I expanded my home equity line of credit because we have more equity in this house now and so we went back to our local bank we got a brand new home equity line of credit I think we got like 200,000 or $300,000 home equity line of credit and I'm gonna buy like six properties with that you know why because now I could leverage this property to make me richer and I'm going to add six properties on top of what I currently own now I'm increasing my network by those six properties and guess what I used alone to do it I used a home equity line of credit to do it so yes I'm paying back a bank and I'm paying that interest rate back but I was able to buy these properties on the backs of a bank I'm able to buy these properties with someone else's money essentially right but now I've increased my tax shelter by six properties now what is a tax shelter and why why do I love a tax shelter more than I even love the cash flow I'll get there in a second but again the three stages right by owned then cash flow so I'm buying these properties with this home equity line of credit for instance right or maybe you're borrowing it from a friend or your 401k or however you're buying properties once you have them paid off right or the tenants are paying down those loans then you own them right then you officially own them then we worry about the cash flow later so when you're in this first stage of real estate investing most people make the mistake that well you know what I just want to go right to the cash flow I just want to skip the buying part or the net worth increasing part and go right to the cash flow and that's the mistake that real estate investors make they get allured by that cash flow now I love the cash flow don't get me wrong it enables me to not have to work in a job because of the cash flow from my rental properties however I am much happier with the tax shelter that I've now created come tax time the money that I'm saving because of real estate the money that I'm putting into my pocket because of real estate most of you have a w-2 job show of hands out there how many of you have a w-2 job how many of you have a paycheck right how many of you actually worked nine to five jobs just say yes say yes in the comment I want to see how many of you actually have a paycheck job how many of you let's see yeah yes yes yes yes yes let's see how many of you have a paycheck job let me know just say yes I'm gonna rattle your names off right now I'm gonna rattle your names off prudence says yes Bruton says yes John John says yes Jason says yes Jason Quinlan says yes Vanessa says yes stir-crazy says nope John Parata says yes Sean Davis says yes yes yes yes yes yes all the way down the line Peter Cook says yes Jimmy Roger says yes Rachel flower says yes so think about this for a second when you invest in real estate the cash flow is great it enables you to quit that day job but guess what many of you might even like the job you have right so you have money coming in that's great that's great that you have money coming in and so so John Houser reached out to us because we'll take care of you my friend I've got some good solutions in place so so when you cash flowing from these properties when your cash flowing that's great you're able to bring that extra cash flow in maybe a thousand two thousand three thousand a month right then you're not as scared about your day job but now that w2 job that you have that paycheck under the new tax law guess what guess who's hurt the most under this new tax law you you the paycheck employee without real estate or the paycheck employee who does not have a business now you might be saying how am I going to start a business how am I getting in a real estate guess what I've done it many of our wot Watchers right now who are who are doing it are doing it the same way starting an LLC very simple to do for a hundred bucks right start an LLC you purchase real estate in that business okay now you are in business now the government is going to treat you differently come tax time now your business you know John's holdings LLC pot buys a property buys three properties your net worth is increasing but what you've just created is a shelter had a great conversation with a multimillionaire real-estate investor not too long ago and we were talking about hurricane Irma and I asked him how his properties fared he said oh they got slammed they got slammed I said oh I'm sorry to hear that he said why why he said I love repairs and when he told me that it really it affirms something that I already knew inherently which is I love repairs on rental properties people get all panicked about off this repair this is gonna be fixed that's gonna have to come out of my pocket most of the time though the property management company will handle it and it'll just come out of your rent right but guess what repairs are great for your taxes because it mitigates your overall w2 income and you're creating this tax shelter is lowering your financial burden from your paycheck job so you're making a boatload of money from your paycheck job but you're being taxed ridiculously right and that's why under the new tax law you're getting hammered as a paycheck employee your you've made off the worst under this new tax law and like Warren Buffett likes to say right his secretary is taxed at a higher rate than he is as the owner of Berkshire Hathaway why because she's a paycheck employee being taxed a certain way and so when you've got that paycheck you need to find ways to mitigate that income with real estate or other performing assets that are providing cash flow but enabling you to create a tax shelter so purchasing real estate with an LLC and then being able to take that LLC and depreciate those assets so your the cash flow for you're getting from those tenants is almost nothing right I'm sorry is your not being taxed on it that's why real estate investors don't pay taxes so think about real estate not in terms of the cash flow but of the tax shelter so when I had that conversation with that multi-millionaire real estate investor he said I don't he goes I'd love that I had repairs are you kidding me because I've created an amazing tax shelter he's like I don't sell real estate I don't buy real estate he goes I don't care about real estate he goes I care about buying tax shelters as a wait a second yes that's the answer right it's not about buying four walls and a roof right I don't really care about what my properties even look like my rental properties right four walls and a roof I don't care that they've got green shutters or red shutters I really don't care I care that they are tax shelters and if I have to put in a new water heater in three years great got you know why those repairs enable the tax shelter they enable my overall financial fund financial well-being at a conversation with our tax accountant last week and we were texting and I said how do you feel about repairs and he said for real estate investors I love them I love repairs so think about falling in love with repairs is your real estate investor and think about creating a tax shelter that enables you to make money if you're a real estate investor you should pay nothing in taxes remember you're purchasing six properties 10 prompt we just had an investor who bought eight properties and I said congratulations you know why because they were kind of going back and forth on what strategy they wanted to use and I said you know the strategy that you chose I wasn't gonna push you in any one way but you made a great decision because now you even created an enormous tax shelter for yourself you've now increased your family's net worth by like you know six hundred thousand dollars your net worth and that's how true rich people measure their wealth by their net worth not their paycheck their net worth is what matters for wealthy individuals and your balance sheet that's what wealthy individuals look at so remember buy owned the property then cash flow comes later but the reason that real estate investors buy until they die and the reason you if you get started real estate investing shoot because people ask me all the time like well when is enough you know should I show stop after ten properties you could but here's what happens when you stop after ten properties guess what now you you're not offsetting that cash flow anymore the cash flow is coming in you're not adding an 11th proper which mitigates that cashflow right so as you add properties and you add those tax shelters that's why smart real estate investors pay zero in taxes zero because the cash flow is mitigated by repairs by the tax shelter that you're creating do you understand are you starting to hopefully understand the method to this madness there's so many great ways to mitigate that paycheck as well as that cash flow I love cash flow but I actually don't like cash I don't want cash I don't want it because then you're paying taxes on it the cash flow you need to have mitigated by the tax shelter that you're creating with real estate investing so that's my that's my message for today I would love to I'd love to help you answer any questions you have about this so let's try to stay on topic today about this and the idea that real estate investors make money so you guys are talking about I see some of the chat questions about having an LLC and you know having an LLC so there's a lot of questions right now about series LLC's which would you know you just went by get one series LLC now according to our lawyers an accountant team they don't recommend that for us yet because it's not battle tested in court and regular LLC's absolutely so we purchase our rental properties in limited liability companies LLC's will put like we have one LLC that has like ten properties in it so having an LLC purchasing real estate now you are a business right and can you find a way also to become a real estate professional could you spend fifteen hours a week on your real estate that changes your tax classification to an active investor versus a passive investor and the tax benefits even become more beneficial to you we've got a great episode coming up very very soon with Tom wheelwright the smartest tax accountant in the country for real estate investing we did a great episode with him on passive loss and passive investing and that's going to be coming out very very soon and he just blew our minds with some fantastic strategies if you haven't had a chance to go listen to our podcast it's the investing in real estate podcast on iTunes downloaded check on some episodes on the tax code with Tom wheelwright it's the investing in real estate podcast with Clayton Morris and Natali Morris joins me on Wednesdays on those episodes as well so check those out ken says there Clayton is there a video in your archive regarding purchasing single-family properties in an LLC the finance companies we were dealing with would not allow us to borrow via an LLC yes we do have we do have videos on that and I believe our team just linked you to that ken so thank you for that and we work with we work with a few different like lending companies for our clients that will do that will allow them to buy it in an LLC so that's one of the tricky things right now with the federal government and purchasing properties in it and a you know whether or not they'll let you like get funding in an LLC and you know you have to buy it in your own name and you're only allowed to buy up to ten properties in your own name which is a ridiculous law that happened after the crash so it looks like it looks like Congress is going to be rolling back some of the regulations around the dodd-frank law some areas and I hope we don't roll back to pre 2007 levels but allowing people to buy you know up to 20 properties in their own name investment properties why not write with with with a mortgage let's see what other questions do we have deepak mo so is there any insurance product which provides blanket coverage for a number of properties absolutely he reached out to our team Deepak I think you're already a client where those reach out to our team because we have now got a whole new insurance team which we're super excited about which will allow you to do sort of a blanket coverage for your properties which is pretty killer I think that's how we've set it up sort of a blanket policy you can put you can add properties individually you know you can add them into your umbrella so to speak instead of having to do just like individual individual stuff okay hey Juan wants to know hey Clayton I've talked with someone from Morris and vast our company wanted to see if you had just ten minutes to talk about strategy on which properties from your company to choose from from from my situation well Juan why don't we do it right here in front of everyone what is your situation let's talk about your situation right here and I'll see we can talk about strategy for you because we do C and B Class properties you know some of our mostly in the 45 to 50 thousand is gonna be a C Class up to 55 thousand and then we do also some B class which push you know where we do a little few extra bells and whistles because the neighborhood sort of demands that we might even put in granite countertops we might do you know hardwood floors like those types of things we'll push them into the 60 70 even 80 thousand dollar range we just did a house for a hundred thousand because it was a gorgeous huge house and so just depending on that we kind of play in that range right there between fifty and a hundred depending on it Joe Braves wants to know how do I become a client Oh super simple just go to our website Joe Morris and vest com booked a call with our team we'll jump on the phone for 30 minutes with you it will help you out Steven wants to know in what state do you establish your LLC's we you know there is no rule on this and our accounting team says you know there is no rule but just to make it easier on you why not establish your LLC's in the state where you purchase your properties so there are so many websites for each state so we do our rental properties we renovate properties and we sell them to our clients in Indiana Michigan and Ohio right now and each of those states has their own website Indiana registered agent com Michigan registered agent comm and Ohio registered agent calm and you just log on you pay like the one hundred or two hundred dollar fee to set up your LLC you pick your name and then you also get they become your registered agent because you need like a local registered agent and so they act on behalf and it's super simple and then your setup usually takes like five minutes so again Indiana registered agent comm you know depends on where you are if you're buying properties in Oklahoma or something I'm sure Oklahoma registered agent comm also exists someone at arts investing some info on fund and grow what I want to hear about it so call fund and grow is amazing we've now I think they've raised over twenty two million dollars for our clients to buy real estate at 0% interest and you get five hundred dollars off I think if you sign up through our website they only charge you if they get you money which is great so we were able to get one hundred and seventy six thousand dollars from them zero percent interest in it in order to purchase rental properties so just go to Morris invest comm slash funding and you just jump on the phone with them and see if it's a fit for you again you'll save five hundred dollars if you go through through our website to do it because we've partnered with them again I think they've raised now 21 million 21 million for our clients who bought properties with us so I want to see if Juan responded yet I asked him that question Juan have you had a chance to respond to Diego wants to know do you have a video explaining how to transfer a property from your name to an LLC no we don't but that's a good idea it's a fairly simple process basically you're just deeding it over your I think you're doing a quitclaim deed and your title company can do that or a lawyer can do that for like a few hundred dollars it's very simple to do you're not selling the property to your LLC you're simply deeding it over therefore it doesn't trigger a due on sale clause I would recommend Diego listening to the podcast episode that I did with Garrett Sutton incredibly smart attorney he is Robert Kiyosaki's attorney garrets Sutton go to the investing in real estate podcast on iTunes and look for Garrett Sutton or maybe our team can link it up right here in the in the chat thread Garrett Sutton he talks about how to do that transfer and why you should not have any fear about it at all and he's an attorney he's a real estate attorney so check that out Diego CEO plays Clayton how do I get more emails on listings available can't wait to get started well you can hey come on over come on over and say hi coming to the pub Natalie's here with the baby so we're answering some questions say hi hello she says she's so tiny you can't see her you want see baby hello hello hello all right so we're answering this is this is Eve and you say hi do you say hi can you say hi everybody say hi you say bye-bye you say bye-bye okay Juan wants to know I kind of want C plus B minus property for many factors one being the area where the property is because of the tenant quality also I want a solid hard ally with it with as at least as possible headaches well if you want as least as possible headaches I mean I would go with I right in there C plus B minus you know in that fifty five sixty thousand dollar range is probably gonna push your quality of tenant up just a little bit that allows us to do a little bit more on the bells and whistles you know we might be able to do some hardwood floors and it just kind of depends on the market it's a real real narrow thing but again go back to what I said at the very beginning of this podcast which is don't get so hung up on real estate remember you're buying a tax shelter and also don't get so caught up in repairs right you might think of a headache as a repair I don't didn't we just have a roof we had to put on a property you can talk yeah we did yes we had a three thousand dollar on one of our New Jersey properties yes Macker there were it was like gonna be a $1,500 repair to kind of get it fixed or three thousand bucks for us to replace it and you said right I'm like absolutely because we love repairs also the new tax laws allow us to accelerate the depreciation on roofs HVAC so I was like absolutely I'll take a depreciation on a $4,000 roof right rather than pink repair which you don't if I paid for the repair it'd be a third of that cost and I can't depreciate the repair costs right I mean I can deduct it but anyway okay so this girl is going to nap okay bye-bye night-night say night-night bedtime I love you okay bye bye that little interlude brought to you by Natalie Morris and Eve Morris I Jose Santos so if they do get you the money what is the interest on that money our time i fund and grow again yeah at 0% and then after about a year or 18 months it jumps up to credit card rate but by then you've now refinanced it or pulled that money back out using you know like a refinance loan so that's why I would definitely suggest getting like a b- property if you use them because it's very easy to do pull out you know cash from that to do like a refinance pay off those cards and then fund and grow actually helps you get extend that again they do it like every year sort of rinse and repeat which is a great strategy ken wants to know am i standing on a crate and what my that much taller than Natalie no I'm six-two Natalie is like five four I think so I'm a lot taller than she is and when I worked in television you know a lot of the women I worked with at Fox News Channel did would stand on like an Apple crate when they stood next to me okay stir crazy wants to know why depreciation is better than a deduction that's a great frickin question that's a very intelligent question so and I've got a whole video I just shot on that exact question so please check that out very very soon but bottom line is under the new tax law the IRS is very specific about the difference between maintenance and repairs okay maintenance think of maintenance like putting oil in your car and just prolonging or just continuing to do what the car should be doing that's maintenance maybe changing an air filter on a furnace that's maintenance okay so if your maintenance guy has to go out from your property company to take care of it that's simple maintenance that you have to deduct in the very same year that it took place so you'll get your statement from your property management company might say you know had a snake a drain might have to replace air filter you know whatever basic maintenance okay you have to deduct you can deduct that in the same year now when you make a repair okay or repair think of the think of the the mnemonic bra b ra the bra method okay think about that so so the BR a method b ra is to better the property restore the property or alter the property okay what does that mean for a repair that you can depreciate over many years the beauty of repairs is that you can depreciate them over many years on your tax on your taxes and you create that tax shelter like a roof so are you bettering the property are you restoring it maybe you bought a lot of the houses i violate a hundred years old so it's not working guess what that's a tax shelter but i can depreciate that right so if i put a new roof on at ten years from now i'm now restoring that property and giving it another thirty years of life if i am a bettering the property by putting in a brand new bathroom if i am increasing the value of that property and pushing it forward so that it lasts another thirty years i'm bettering the property if I'm restoring it I'm bringing it back to life and making it workable again that is depreciable okay and then if I'm altering the property so let's say like I bought a six bedroom property and I kinda didn't know what to do with it and I had like it was on ten acres it was a real oddball property well instead of just like trying to sell it as a normal six bedroom house what if I altered that property into a long-term care facility okay would that had six bedrooms create like a main sort of air there's a kitchen and a TV and hired like a 24-hour nurse on the property and I've added additional you know generators and things like that I'm altering the property from what it used to be to a new function a new functionality and those are depreciable and man you want depreciation maintenance is fine you can deduct it this year but actual repairs who go way into the future and that's the beauty of depreciation so great question did it do to do see video TG wants to know hey Colleen here I'm in West Orange New Jersey going through a short sale my primary residence here I've also have rental condo in Weehawken New Jersey with a positive cash flow of one hundred dollars by thinking about 1031 exchanging that I also have a rental in Pittsburgh with cash flow of four hundred and seventy five dollars I don't know if I can refi the PA house add that to a 1031 exchange and invest with you well you know here's the rule that I have on 1031 exchanges which is I think one of the most important ways to build wealth a 1031 exchange is an incredible way that rich people make money okay so if you can use it wonderful if you've got a property in Weehawken New Jersey that you saw massive appreciation on but your cash flow is real low I would definitely take that property and sell it and take the proceeds from that appreciation that no isn't you know remember appreciation isn't doing anything for you right cash flow is but great that your house appreciated who cares who gives a rat's behind people like the house I live in is a great investment is appreciated I had it for ten years and it went up sixty thousand dollars or good who cares what's it doing for you nothing is that putting cash in your pocket no so that house at Weehawken New Jersey I know I mean it's right across the bridge from Manhattan right next to the Lincoln Tunnel right it's where Alexander Hamilton was killed right so you take that property roll it into a 1031 exchange use that sale of the proceeds and buy a bunch of CMB class is that our have a high ROI on our cash flowing I would be doing that all day long so the rule is let's say you've got a portfolio of 30 properties and you've got a couple of B class properties in there let's say you own five B class properties well guess what you want to analyze that portfolio every couple of years because if those B class properties start to become a right that's the goal right they're gonna move up and they've appreciated well now that fifty sixty thousand dollar property is worth one hundred one hundred and ten but the cash flow is the same I would sell that bad boy I'd roll that into a 1031 exchange and guess what I'd buy two properties with that and if I had five of those now I'd trade up for ten so that's why you want to look at those appreciating assets that you have in your portfolio it sounds like the Pittsburg house I don't know what that one plays but that we Hawk in New Jersey house I would definitely think about rolling that into a 1031 exchange we've got a great maybe our team can link it up right here lay one of our team members that we work with who does 1031 exchanges does a great job he helps a lot of our clients with that his name is Lance Growth he's been a guest on our show and we have his contact info we'll drop it right here in the chat thread for you if you want to talk to him about it because some very specific laws about the way that 1031 exchanges work but we work with a lot of clients we had a client recently who sold two or three homes in Arizona that were like four hundred thousand dollar homes that he bought for like two hundred thousand cash flow was awful and the ROI was awful but he sold those than they bought like 20 properties with us and now the cash flow is through the roof and his ROI is through the roof so he traded up for like and kind and now he's built even more wealth and his net worth has gone up significantly as a result of that so that's why the 1031 exchange is one of the most powerful tools for building wealth in this country did you do Anil Ali says are you at all concerned about lead-based paint in properties you purchase also you have commercial property insurance if you purchase the property in an LLC no you don't do commercial property insurance no you don't do that but no I'm not concerned about lead-based paint if we see it on a house we get rid of it you know we scrape it and get rid of it that's the bottom line what we do and you know you also sign in your property management agreements with tenants like you have a lead-based paint I think disclosures in there so that if you know I don't know they're scraping a wall and they discover it you're not held liable for it like there's state-to-state but you've got a if we see it you know on window sills and things like that we get rid of it it's not a big deal ken Davis says we purchased a house requiring total rehab last year that house was built in 1966 we were worried about lead paint but since it was already done that was taken care of yeah you know here's that here's my thing here's the thing you can worry about as much stuff as you want it's your choice right you can lose sleep over lead-based paint a bad tenant what do I do in an eviction I don't care I have a property management company that handles that we have two evictions on our properties we bought New Jersey we have ten properties in New Jersey we have two evictions right now they're in collections great they'll handle it you know oh the tenant didn't pay in one of my Michigan properties because it was the holidays okay the property management companies into trying to work with them get them back on the right track if they're not they're gonna go through an eviction process you know oh we got a leaky roof on a one two three main street okay am I gonna lose sleep over it so as an investor as a human being when you walk through your day you have a choice to be as worried about things as you want to or realize and kiss what at the end of the day everything is gonna be okay and that's the way that I try to operate in real estate there's nothing you can't fix there's nothing you can't fix everything is fixable everything so that's how I want you to kind of think about it I hope that makes sense on the the lead-based paint don't get too in the weeds with this crap please it's not worth it do you think like Robert Kiyosaki that has 6,000 properties worries about that kind of stuff ever no he doesn't Qwest Trinity have a client invest through Morris invest by the way it's not investment Morris investment it's just more less invest we if people ask us sometimes like there's a company out of Cincinnati called Morris investment is that you guys know I don't even what those guys do and who knows what those people are that's nothing it's just Morris invest is our company where is where do we make money why does the company sell off houses remodel that could get a high ROI because that's what we do that's we make money on the sale of the house so our labor and the property you know my contractors are in there ripping out walls and so we have a little bit of margin on each property I could charge a lot more per property and sell it on like the retail market if I wanted to but that's not what I do I want people to hit financial freedom so I want them to get 10 properties in 12 properties see my thought is if I play the long game with people that don't rate people over the coals get them a great property with a high ROI then they're gonna work with us for years and we're gonna help them achieve financial freedom that's the goal so we can charge literally you know twenty thousand more per property if I wanted to thirty thousand more if I lied to let's see ken Davis wants to know hey this clayton's is hard money come into your model at all for investors or since it seems you are doing turnkey does that it's not apply we've done hard money on one of our properties I mean we have a lot of investors that use hard money it just depends on the property because certain hard money you know hard money it's just basically a hedge fund right it's not an FHA loan it's not Fannie and Freddie it's you know a group of doctors that got together and started their own private fund of money right and they dictate what value of a property they're gonna lend on so most of them won't lend below 60,000 or so and so a lot of our properties are kinda like right there and it just takes to you know it takes a long time to close with these people so a lot of our investors you neither pay with cash or they they buy with cash and then do do a refinance later that sort of thing so happy to do it did you do at Flores says hey Clayton how does an investor obtain financing for over ten properties at an attractive long-term rate yeah I can we're gonna put up a resources page on our website Morris invest calm to help people with that very question because we do get that question a lot and we have some preferred partners that we've been talking with and working with and that we that we a blue that we believe in so we're gonna hopefully add that very soon Devin McCray says love your channel guys and thinking about buying my first property under my own name do I need to tell the mortgage company my intentions about renting it out no we've done hard money on one of our no not at all you're buying a property in your own name you can then quit claim deed it over later again listen to the episode with Garrett's son our team just published the I think put it in the show notes put it up here it's episode 197 197 on my podcast the investing in real estate podcast go listen to that episode with Garrett Sutton because he talks about how easy it is to just transfer it over to an LLC later after closing so it's not hard at all James wants to wear a Michigan do I invest currently I'm in Inkster I'm in Detroit I'm in Warren Redford so up in those areas I love Detroit I love it love it some of my best properties there I love there's like little treeline brick homes they're bulletproof they're gonna be there a hundred years after I am driving alive that's for sure financial investor do you still use ocean Pointe for rehab repair on some properties and no they they were under it was a rumor that was started by a competitor about you know you know you have these turf wars from these property management companies that like to kind of trash talk other people and hurt other people's businesses so no but we we actually have started our own crew as well so we've got our own teams right now under Morris invest so sometimes it depends on smaller jobs will contract with them you know for putting in furnaces and things like that because they've got great teams that do that would you invest in the area with a declining population about one percent a year it depends I mean I look at a whole number of factors so hey Zack is here is that good ton of Eskie am I saying that right I hope so so here's what I look for and I've got a whole video series on this on our channel on what what I look for in my rental markets I want areas worth american-based jobs that's why I like Indiana that's why I like Michigan I like Ohio because of the crossroads in the country you know when I lived in Dayton Ohio where I do investments I lived in Dayton one of the reasons I love it is it was called America's most average City why because they would try out all of the new chain restaurants right there where the the major highways intersected I think Olive Garden started there Joe's Crab Shack right there's all the truckers would stop and sleep overnight vacationers would stop there and so they prided themselves on being called America's most average City well guess what a lot of the distribution centers are based there in Indiana Fed Ex distribution hub these are all American based jobs with a growing population so I don't like to invest in areas where is it there there's no reason to invest in areas with a declining population or to invest in areas like Memphis that have an enormous Lehigh crime rate and things like that so I'm not a big fan of those of those things that are the rehab cost for properties I buy from you able to be used as a deduction or write-off etc yeah yes it depends so if you've got like a scope of work so a lot of properties we sell we've already done the rehab also you're buying it after that's been done but if you bought it like during the rehab phase and you have the scope of work that's something you can submit to your tax accountant and get the write-off for that absolutely Watson says you're great Clayton you're hard at work and dedication to teaching is so appreciated I love you thank you so much I want you to build financial intelligence and that's what I am doing that's what am i huh my goal is anyway hey Michelle says he Clayton I'm looking to pitch for private money to buy properties from you should I show my properties or your turnkey operation sure hon properties or your turnkey operation either one it's totally up to you we've had a lot of people that do that Devin says I am looking hold on a second Francisco says I'm 22 I just bought a house set it up as a three Plex in Iowa how would I get a legal to rent it out I don't know I don't understand that question could you rephrase that question Devin says I'm looking to buy a rental under my own name do I need to tell the mortgage company that I'm planning on renting it out or does it matter no it doesn't matter like I said maybe I already answered that for you it shouldn't matter I mean if they're asking you what is the purpose of it you're allowed to buy an investment property up to ten properties under your own name so it doesn't matter if they ask you what the purpose of it is second home or investment it'll just depend on what percentage they're able to give you like whether it's 25% down or 20% down typically if it's an investment property they'll want you to put a 25% down so you don't want to lie to them you always want to do everything aboveboard Renee says what do you think of properties with a home pool is it a liability for me never knew well a lot of people in Florida who buy investment properties you know you've got to have that additional insurance coverage just talk to your insurance provider and make sure that the property management agreement is very clear and concise so you protect yourself legally and please do not buy that property in your own name absolutely not make sure that a property with a pool is purchased in an LLC okay you don't want them coming after your other holdings how do you find properties in Michigan well I've got a whole team Jerald so if you're interested in grabbing a property just book a call with our team that's what I do I find them we renovate them we place a tenant in them and that's what we do so just reach out to go to my website and book a call with my team video tichi says what are your thoughts on section 8 I like Section eight you know the only downside of section eight really is that they tend to take longer to pay meaning when you first get a section 8 tenant in there this the city holds the money for about 3 months and then they finally release it to the property management team so the tenants living there happy but the city holds the money back and like an escrow account and then they release it three months later now the great thing about section 8 is a lot of times the tenant will stay for many many years because they don't like to have to move and so you can also get a higher rent amount too and a lot of section 8 properties so I like section 8 Juan says alright finally Juan Juan says I prefer a 10% RI with normal things to deal with than a 15% with many headaches yeah I mean 15 percent ROI I mean come on if you're gonna find that's very difficult net ROI 15 percent you're probably buying a piece of garbage that looks good on paper but it's probably in a very high crime area like a Memphis or something like that so or Little Rock Arkansas so it might be attractive on paper you know that's what a lot of people do they like go to Zillow and they'll try to buy a property that way which is just the worst because you're gonna buy a piece of garbage to prance mold and foundation product you're gonna have all kinds of issues so I would stay away from that Chris Chris first live session with you we bought five properties with Morris invest and December and January rehab faster in summer versus winter well Chris this year it seems like it is normally you know I go to our property so I'm in like our Indianapolis market a lot and you know you'll have our our contractor crew will be in there with what they call salamanders which are like long heaters you know cuz they're inside doing drywall and doing other things outside work can be hampered by the weather right so siding can't be cut it can't be painting in five degree temperatures and it's hard to maybe put a roof on there when you've got snow for the snow on the roof so yes this year was particularly harsh we had a lot of new construction properties and pouring concrete in the winter you know it's very you can't pour it unless it's above 18 degrees so we had a without three four weeks there in December and January which is a horrible cold snap and so you had like maintenance teams running around the city Indiana Power and Light and Michigan Michigan Power and Light running around fixing power poles that are down and so we're like hey hi Indiana Power and Light we need you to come put a brand new power pole at our property we're renovating they're like houses vacant screw you we've got to you know we've got people that need our help right now or like oh come on really so instead of instead of three days it might take in two weeks so yes this year was particularly harsh but most years not so bad last year was not not difficult at all so David Duffy wants to know the properties purchased turn your turn T company financeable yeah I mean I would push if you're gonna do that and you're thinking about like doing financing or refinancing go into the b-class because that way a bank can pull up comparable properties that were sold to a retail mom you know husband and wife who bought a property most of like c-class is like off market sold to investors and therefore it's not it's not ever on the Multiple Listing Service it's not public and so when an appraiser goes to do do an appraisal they can't find anything all they can find is like a foreclosure that a bank sold that's pre rehab so yes if you're thinking about doing that I would definitely consider going to like more of a b-minus property it's just gonna make your life a heck of a lot easier also who cares right because now you're doing on the backs of a bank so the ROI might be a little lower but now you're getting a property on the backs of a bank so any day of the week I would do that dun-dun-dun so I'm running out of steam guys you guys have had some many great great questions Julian wants to know my selling properties springfield massachusetts no taxes are way too high Joey once there was a four-plex good for a first home purchase if you're gonna live in it sure and you can rent out the other three if you're gonna buy it to invest sure just make again you're buying our line make sure the return on investment makes sense you know the ROI and the cash flow that's what I care about how much you add into your net worth zach wants to know I know it's off topic but when you expect the new constructions to be ready well they're finished we have new constructions that are coming across the finish line like every day we have some little finish next week next week because our crews are building a whole bunch of them simultaneously if you're talking about when we have new ones available for sale we just got seven in this morning and I think they sold like that and we have a waiting list right now I think of like 25 people for those so they're coming in as soon as they get out of surveys with the city then we're releasing them because surveys will let us know oh crap is this is this lot buildable or not and we had a hiccup with a few lots that were non buildable so we wanted to avoid that so once they come out of surveys we release them into permitting phase and that's when we're able to sell them to start the construction so once we start they take about eight weeks from the ground up once we break ground they're about and now with the spring it's very very fast david McDuffie yes you can video teaching how much our property taxes on your homes you know anywhere from 400 to like 1200 or so basically but hey financial investor says Mars does all-cash buys yes but we might be doing some interesting things coming here Sanchez wants to know can can moore's of has helped me in the California market no I cannot we do not do anything in California in fact I would say 70% of our investors live in California and buy properties through us honestly if I looked at the number of where they're located they're not there from they live in California like my whole extended family's from the Bay Area and they've all you know buy properties through us because there's just no way Cody says thank you for everything you do a much love to you Cody thank you so much I really want to help you guys build financial intelligence and chain your family's life that's the whole goal of what I do here Aaron issuer wants to do you recommend any specific banks for doing a refi on a rental property yeah North Point North Point Bank it's all one word with an e at the end they're a national company and they do they do refinances as well how often are tenants negotiating a rental price Rico I don't ever deal with that they we set our price for what the rent is going to be and they sign a contract a property management agreement and a lease and they pay it or they don't or they get evicted so guys you've had some amazing questions our goal is to try to do these live shows every Wednesday at 11:00 a.m. weather permitting God knows we've had some crazy weather which prohibited us from doing a flight delays all sorts of things so weather permitting we're trying to do these every every Wednesday so thanks everyone it really appreciates you guys all joining us really really appreciative and please any comments questions thoughts prayers let us know and a please please please subscribe hit that subscribe button how many of you have not even subscribed to the channel we just passed 40,000 subscribers here on our youtube channel specifically so thank you so much to all of you and thanks for checking out our our podcast as well please go over and check it out on iTunes or your Android device just the investing in real estate show with Clayton Morris and Natalie joins me on Wednesdays and with experts on Thursdays to talk about real estate investing so thanks so much much love to all of you we'll be back here next week for another episode until then Oh Stephen wants to know can Canadians invest with you yes we have investors from New Zealand we have a lot from Canada so very very simple to do I just reached out to our team and booked a call we'll take care of you Mahalo thanks guys thanks Michelle thanks everyone thanks f dual I love it hey Abdul you know what I'm gonna have our team reach out to you you said is there another way for us to reach out to you unblind and it's hard for me on the website to interface with your site is not accessible for me abdul i'm gonna have our team reach out to you privately here and we'll try to get on the phone with you that way if that works for you okay i want to make it as easy as possible for you so thank you so much abdul alright guys thank you thank you guys love you all thanks guys have a great rest of your week go out there build financial intelligence take action become a real estate investor again I believe it's the number one way to build wealth in this country thanks everyone thanks for all of your kind questions today really appreciate it