Expected Air Date: 04/23/18
What comes after you have mastered the fix and flip game? Passive Income.
Hello everyone. What a great day we had Saturday at FlipStarter Atlanta! It was my honor to share some of my best secrets for Fixing and Flipping Houses to the group there and welcome new members into the Flipping America Mentoring Program. If you couldn’t make it we missed you and I want you to know that later today I’m going to put up a link on our home page that will give you the opportunity to buy the FlipStarter workshop on video. So head over to FlippingAmericaNetwork.com and check it out.
Speaking of the Mentoring Program, our next Three Day training camp is coming up May 9-11 and it’s not too late for you to join us. However, since our program is invitation-only, you have to jump through a couple of hoops in order to receive that invitation. Hey it’s not like getting into law school or anything but we just need to talk. You can schedule a call with me by going to your web browser and typing this in exactly:
When you do that you’ll have access to my scheduler and you can pick a time. Then you will be given instructions for accessing a conference call you’ll need to dial into at the appointed time. It doesn’t matter to me where you are. I look forward to helping you in any way that I can.
VIP lunches at FlipStarter – Lunch with me every Wednesday at Baraonda.
How to Reach us
Twitter and Instagram @FlippingAmerica
Call our National Comment Line: 404-369-1018, ext 1. Leave your message or your question.
- My upcoming speaking engagements:
- Tonight I’m at Atlanta REIA West at 6:30, Cherokee Cattle Company in Marietta. .
- Details on the website and at FlipStarterEvent.com
Topic – The Next Level – Passive Income
We started last show talking about Hitting Your Stride. Today I want to talk about what you do when you are operating Active Income business at peak efficiency and are throwing off excess cash. You will want to consult your tax professional and if you don’t have one, it’s time to get one. What we are talking about today is creating Passive Income and heading toward true financial freedom.
You are not necessarily free when you are making really good — or even great money in your business. Because when you stop operating that business – even to take a week or two vacation, your pipeline feels the effect and depending on your product cycle – in this business 4-6 months — your income is going to take a hit. If you need this money to pay your bills and maintain your lifestyle, then you will feel the pinch and suffer.
No you have financial freedom when your passive income pays the bills and your lifestyle can continue whether you are working or not. When you reach this point you may conclude that you no longer need disability insurance, although you may want to continue coverage for long-term illness or injury — this would be a question for your insurance professional and made in consideration of your health and lifestyle. Motorcycle riding may indicate a higher need for various health care additives.
So how will we get to financial freedom? Let’s consider a couple of approaches that I will have time only to outline, but these are topics we cover in much more depth in our Passive Income Mastery course.
- Free and Clear Single Family rentals. Flip 3 or 4, buy one.
- Buy small, brick or low maint. Exterior.
- Consider area, stability, upside.
- Try to buy where there are good schools.
- Locate near you for better management.
- Educate yourself on how to manage or outsource.
- After you have 10, consider outsourcing management anyway.
- The only truly cash-flowing single family rentals are free and clear.
- Borrow money for SFR
- Know the loan constant. Cost of payments (1 year) / loan amount.
- Know your expense ratio and calculate NOI.
- The spread is your cash flow.
- Most people fail at this. Either paid too much or poorly structured debt – the property never actually cash flows.
- It could be OK if you have plenty of cash to cover AND you are speculating on greater than market appreciation.
- Buy small multi-family. Up to 5 doors
- Finance like SFR
- Cash flow better, typically.
- Higher turnover anyway, so upside matters a bit less. Usually single or newly married, no kids. Schools not much of an issue.
- Convenience to employer is more important.
- Solid employment opportunities
- Stable or growing population.
- Buy apartments
- Distressed props, force appreciation, re-fi.
- Use syndication to do A.
- Loan Money
- Flip loans
- Rate and Term
- Equity Partnerships
- Rental loans
- Long term
- Steady income
- Watch your loan to value – keep it below 70%.
- Borrower pays for appraisal when needed.
- Borrower provides proof of insurances, pays taxes, etc. and provides proof.
- An entire section of our Passive Income Mastery Course.
- Flip loans
Motivational Thoughts for the day
- “Never Give Up, Never Surrender”. -Jason Nesbitt, Captain, Galaxy Quest.
Comment Line calls and Questions
Call 404-369-1018, press 1 and leave your message!
Questions@flippingamericaradio.com Tell us where you’re from!
- Carl, Oconomowoc, WI, “Do you still use other people’s money in your own flips? If so, why? Wouldn’t it be better to just use your own cash at this point?”
- Cindy, Westchester, PA, “I heard you talking about the advantage of leverage in real estate deals. How do you reconcile this with Dave Ramsay’s teaching that we should never borrow money – ever – especially for real estate investments?”
Questions@flippingamericaradio.com Tell us where you’re from!
[0:28] Time for flipping America the show that teaches you how to make money in real estate wherever you are whatever your situation there is an opportunity for you,
flipping America is brought to you today by Braswell Capital Solutions commercial lending made easy on the web at Braswell Capital solutions.com.
And now you’re sad flipping America guy Rodger Blankenship everyone and thank you Kathy wow what a great weekend we had in,
it’s it’s an amazing drenching rain power was off exciting storm last night in here in the Metro Atlanta area but.
That’s just a nice drenching cap to a wonderful weekend we had a great day Saturday at flip starter Atlanta,
it was my honor to share some of my best secrets for fixing and flipping houses to the group there and welcome some new members into the flipping America mentoring program if you couldn’t make it we missed you.
And I want you to know that later today I’m going to put up a link on our homepage that will give you the opportunity to buy the flip starter workshop on video so plan to head over to flipping America network.com and check it out.
[1:40] Speaking of the mentoring program our next three-day training camp is coming
May 9:10 and 11 that’s May 9th and 11 that’s a Wednesday through Friday,
here in Atlanta Georgia and the industry day intensive this is the flipping America mentoring program and it’s not too late for you to join us however.
Since our program is an invitation-only you have to jump through a couple of Hoops in order to receive that invitation.
[2:10] It’s not like getting into law school or anything but we we just need to talk.
There’s a conversation that we’ve got to have and and you know we’ve got some questions to ask you and we wanted really
I kind of get a feel for how serious you are about this business that doesn’t mean that we expect you to do this full-time that’s not it at all but we do want to know.
Your level of commitment and to be perfectly Frank with you we are just trying to discern your level of commitment.
To this now we don’t expect you to drop your job where he even if you take the mentoring program we’re not looking for you to become full-time but.
We’re expecting that this it you are going to make a serious commitment and turnover you know a few houses a year and be successful with this.
Alright so if you want to talk to me about this you can actually talk to me and it’s me and it’s not somebody on my team or my staff you you get to talk to me by just going to.
Write write this down exactly OK bit. Ly / talk to Rodger.
[3:23] That’s b i t. Ly / talk to Rodger there’s no D in my name it’s Rogers and,
capitalize the word talk and capitalize the word Rodger
make sure that it’s okay I think we’ve put it in there then all the different possible variations but bit. Ly / talk to Rodger and when you do that you’re going to have access to my scheduler,
and you can pick a time and when you pick the time you’re going to be giving instructions for accessing a conference call you’ll need to dial in at the appointed time.
When you have selected the time it’s reserved look no one else is going to get me during that time my assistant can’t override it I won’t override it I’ll get a calendar notification
you dial into that conference call number and if I’m not there right when you call it’s because the previous call when a little bit long but I try really to honor everyone’s time and I hope that you will on her mind and be on time for the call and I’ll be there,
and we’ll talk we’ll do a little strategy session and we’ll see whether our mentoring program is the right fit for you,
all right if you’re driving and you can’t write down the bit ly link don’t worry about it just go to flipping American network.com later on and at the top of every single page.
On the website in the header section there is a big blue button that says press this button to schedule a strategy call.
[4:47] And if you press that button I’m the only one doing strategy calls from our team this week so you’ll be able to get ahold of me and talk to me.
And ask your questions or whatever you want to do all right now.
[5:03] I look forward to helping you in any way that I can and of course we do this every week you know at the flip starter event
we sell a VIP package that includes the opportunity to have lunch with the flipping America guy that’s always great when we’re out of town but it’s a little bit of a joke when we’re in town because.
You can if you’re in Atlanta you can come have lunch with flipping America guy every Wednesday and if you’re ever in Atlanta on a Wednesday,
I would love it so much if you would take the time to come have lunch with us at boronda that’s baraonda boronda.
And if you go to boronda atlanta.com you can find out where to park the validate the parking is right downtown just a block away from the historic Fox Theater.
And in a beautiful part of midtown Atlanta and a wonderful Italian restaurant and we have lunch there every week so you can come join us if you want to alright.
Hey when we get back we’re going to cover some new stories and I’m going to take today’s topic which is The Next Step Beyond hit.
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[8:08] I need to know during the break I forgot to make some announcements about my upcoming speaking engagements so tonight I’m going to be speaking here in Atlanta at the Atlanta reia West meeting,
if you are in metropolitan Atlanta and you want to come out and hear me in person I’ll be at the Atlanta reia West at 6:30 and it meets at the Cherokee Cattle Company in Marietta Georgia.
And the Cherokee Cattle Company is a local steakhouses part of the Marietta Diner group and I’ve never eaten there but I hear it’s good and so come join me have a little steak dinner,
Lobster whatever it is you want and tonight I’m going to be talking about knowing your numbers.
[8:47] And the really understanding and numbers I’m going to be showing my deal analyzer which according to many is the best one out there and I kind of think so too and and I really I mean this when I say this if I can find a better when I would use it
my deal analyzer I developed it for my own business my own used to cover all of the different possibilities and I keep adding to it over the years.
[9:11] It’s not just a spreadsheet it’s a
workbook that has seven spreadsheets into it they’re all connected and it covers every possible aspect of the deal analysis,
plus it has a built-in database or some of the typical cost of a rehab and will be doing all of that and I’ll be talking about the flipping America property grade app which is in the App Store and by the way the property great app is in the App Store please download it,
give it to you give it a try and let me know what you think it’s if you answer 10 questions about a potential investment flip property
it’s not really set up for rentals yet but if you answer questions about a flip property
it’s going to give that property a letter grade telling you how good the property the deal is and also it’ll tell you how much money you’re going to make and what you return on investment is,
all right so that’s the property grade app and it’s in the App Store now it’s absolutely free there are no costs or obligations or up cells or anything it’s just,
completely free it’s our gift to you my dear friends and Real Estate Investors of America.
[10:17] Okay now the other the next thing on the speaking calendar is tomorrow night,
and this could apply to those of you around the country that are not in Atlanta tomorrow night I’m going to be doing the big or the beginning Investors Group online meeting for the Atlanta area.
[10:35] They’ll Andrea founder Dustin Griffin has asked me to
be the speaker and that’s he’s asked me to talk about numbers and I specifically we’re going to be answering the question how do you find an arv if you are not a realtor,
the arv is the after repair value so how do you determine the value of a house if you’re not a realtor if you don’t have access to the MLS what do you do well I am not a realtor,
and it’s not because I couldn’t be as because I choose not to be for a number of reasons but that means I don’t have access to the MLS,
and that’s okay because even if I were a realtor I wouldn’t have access to the MLS in Greenville South Carolina or Tampa Florida or Orlando or Jacksonville
or Charlotte or Nashville or Chattanooga or any of the other places not in Atlanta where we analyze deals and take a look at possibilities,
so what do you do when you’re not a member of the MLS are end in your not a realtor how do you get the arv I’m going to answer that question or at least,
I’m going to share what I do that’s tomorrow night and the other thing that I’m going to do on there is I’m going to talk about how you come up with your rehab numbers,
especially in the market the way it is right now.
You have to make your offer really sight unseen and we make a lot of sight unseen offers and I mean hundreds of sight unseen offers how do we come up with what the repair costs are going to be.
Well I’m going to share with you my secret for that.
[12:04] That’s a tiny little part of one of the things that we discussed that link that bring the flip starter again but I’ll give that tomorrow night I don’t mind sharing that
. there’s a formula that I created and invented the knife,
manage to get some puzzle looks and some aha moments with people in audiences cross country as I share this not so secret formula,
for determining repair numbers even when you haven’t been to the house we also have a a way that we get a repair number.
Just by doing a drive-by assessment when we’re doing pre-foreclosure assessments on properties.
And I’ll probably end up talking about that little bit too and if we have time I’m going to talk about the other important number that you need to know and it’s an important part of your deal analysis and that’s the cost of the money.
So all that’s coming up tomorrow night now if you want details on the event tonight or tomorrow night go to Atlanta ria.com.
And just look at their events tab you have to look around little bit at the top menu,
but when you when you click on the events tab just look for the West meeting and that’s tonight or look for the.
The Big O that’s the beginning Investors Group online and they call it the Big O so just
click on that and you can register and it’s a webinar so you’ll be able to register it doesn’t matter where you are in the country just register for the webinar and we’ll see you online tomorrow evening.
[13:34] Okay hey let’s take a minute and do some news.
[13:43] Okay we don’t just talk about single family real estate investing here we make an attempt to cover a lot of different asset classes and we talked about the fact that you can invest in real estate,
without actually buying a property in one of the ways you can do this is to invest in a real estate investment trust or a wreath.
[14:03] And accordingly and let you know basically as a desire to provide a valuable service and information for you I do a lot of reading on the subject I always want to know what’s going on I have a general fan seekingalpha.com if you haven’t,
checked out that website you probably should especially if you’re interested in this type of thing,
Seeking Alpha has a story out today and on the website real estate earnings preview.
5 Trends were watching and this is really a review of we’re about to be into the earnings season the reports are coming going to be coming in from the first quarter of 2018 but already,
there’s some interesting indications what’s going on in the Reed send there are some things in there that you probably ought to pay attention to,
the typical Returns on the rates but also I’m just suggesting to you that you take a look at.
The comparison they have a nice chart on this and takes a minute to get your brain wrapped around if you’re not used to this but the comparison of the net asset value of the reach compared to their.
Ffo which is there funds from operation.
So when you look at the net asset value compared to the funds for the operation you’ll see that a lot of reach right now are trading at a discount from their net operating value where a year ago they were trading at a premium.
[15:28] What does this mean this means that the general optimism level about REITs are down now of course you can’t really say.
[15:38] You can apply this across the board so this this article from Seeking Alpha actually does a nice job of reviewing individual asset classes and what’s going on there.
Dell retail sales were up all across the country last year but we continue to see the closure of big box stores and we continue to see the ongoing demise of the American shopping mall some of those things are discussed here malls are still doing.
Okay but there aren’t any new ones and they’re not growing and it seems to be a thing that may be a thing of the past.
[16:28] Flipping houses I want to show you how to flip houses and there’s probably no one in the country better qualified than me to show you I flipped hundreds and hundreds of them,
and I also have some training and degree and experience and education so I could show you how to do exactly what I’ve done hundreds of times don’t believe me.
Head on over to put starter event.com but in the meantime Give a listen to Pat caywood my name is Pat caywood.
[16:53] Cleveland Tennessee and I’ve been.
Doing some flipping since about March of this year and had started with a Nationals program that was very expensive I’ve spent today with Rodger Blankenship.
Learning about his program and boy do I wish I’d met Rodger.
[17:15] He has a clear concise program and many tools that are going to be very hot.
[17:21] And starting and managing the program and the mentorship and Leadership and coaching that he’s offering our invaluable.
Thank you so much Rodger for your time and sharing.
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[18:27] And we’re back. I am Rodger Blankenship your host Tonight teach people how to make money in real estate.
And we’re going to have a specific section on that toward the end of the show today where I’m going to teach you what to do after you have hit your stride now two shows ago we talked about.
How to really get going how to get started in the business in the last show that I didn’t know we had to rerun Saturday because I was a flip starter but the last show that I did last Thursday we talked about hitting your stride in real estate investing
and today I am going to talk to you about.
What to do next taking those next steps the steps toward true wealth building and Financial Freedom that’s coming up
in the latter half of the show but right now we’ve got a little bit more news to cover I’ve got a story from middle market growth middle market growth. Org,
and the stories until it’s the Small Things real estate and Industry trends,
and here are the trends according to Middle market growth number one real estate is having a senior moment demand for senior housing tops the list of all residential segments.
[19:36] Projected to grow by 25 million in the next 15 years.
The present Supply is lagging are you listening folks if you’re looking for an asset class if you want to do something a little bit different than single family fix and flips.
Here’s something to consider think about investing in or buying or owning senior Assisted Living.
The baby boomer generation is getting to that age and it’s going to be a thing here’s my other thought on the other side of that coin.
[20:09] What’s going to happen when this,
baby boomer generation dies off you’re going to have a lot of vacant senior housing places because the next segment of the population just
but doesn’t have that many people not as many as the Baby Boomers so you need to have a longer-term plan in place,
if you’re in your twenties and thirties and thinking about investing in senior housing you need to think about what you’re going to do with those buildings when you get to your forties and fifties okay,
number to Home Sales growth
goes south when it comes to home sales growth bet on Southern cities to beat the national average in 2018 this is consistent with what we’ve been saying so I don’t mind reporting it here
they’re saying Tulsa Oklahoma Little Rock Arkansas Dallas Texas and Charlotte North Carolina are expected to see 6% growth are more compared to
2.5% nationally now we’re projecting a little bit higher National return but that would also include Atlanta Georgia and one of those hot cities Atlanta.
[21:09] Tends to be disrespected in a lot of ways I don’t really know why well okay when you think about our sports teams maybe but.
When it comes to real estate market it’s booming here and we’re projecting a 7% growth in the Atlanta Market this year and of course you can,
take your pick of a lot of Southern cities they didn’t mention Nashville Tennessee they didn’t mention Tampa Florida and these places are exploding not to mention small or cities like
Jackson Mississippi Huntsville Alabama.
Auburn Alabama these places are going kind of crazy next Trend in this article coworking is flexing its muscles and we’ve done plenty of Stories on co-working here but this is definitely becoming a way to,
to do office.
[21:57] And in fact the flipping America is now considering moving into a co-working space because we’re about to go through a growth phase and we like the flexibility of co-working
number for Real Estate Tech is virtually Unstoppable despite the commercial failure of 90s era virtual reality products.
Commercial real estate professionals agree that VR time has finally arrived with virtual reality sales predicted to reach 40,
.2 billion by 2020 according to Super data research Inc.
[22:30] Interesting now I know that there’s a lot of money being thrown at real estate Tech right now and I do believe,
that there will be a time in our very near future that if you’re trying to sell a home or a property and you don’t have a drone either flying through the property or over it.
With a little video there you’re probably not going to be competitive in what you’re showing to the world so just mark my words on that folks.
And if you really think that you don’t mind making small money and you enjoy the Drone and photography drone photography is going to be a great thing in the real estate market.
You’re not going to grow wealthy doing that but you can have a lot of fun and if that’s what you want to do go for.
Number 5 building or showing off their smart buildings are showing off their smart smart buildings are all the rage and they’re getting smarter all the time.
And we’re making continual Improvement and the technology and the interface ability.
With the consumer markets and markets report.
Capital markets and markets report predicts the global smart building Market will grow to 24.7 billion by 20 21 from
6.7 billion in 2016 that’s increasing at a compound annual growth rate of 34% over the. All right.
[23:51] Number 6 invest for success by 2020 investable real estate will have grown by more than 50 56% of 55% compared with 2012 and by 2025
Emerging Markets will host 60% of Global Construction activity that.
[24:07] Is kind of vague I’m just saying never seven perennials Millennials are the perennial favorite,
now in what it is otherwise an interesting article I have to take issue a little bit with the article here Millennials are a perennial favorite Millennials were the largest group of home buyers 34% for the 4th consecutive year according to the National home.
[24:28] National Association of Realtors 2017 well guess what Millennials are attending now to be first time home buyers,
and throughout the history of record-keeping with regard to home buyers first time home buyers have been the largest group,
every year since we’ve been keeping records it just happens that over the last few years the first time home buyers tend to be today’s younger adults which we call millennials,
there’s no great big news in that it has nothing to do with the Millennials themself or all of the demographics because if you’d look a few years back it would have been the generation xers the gen-xers would have been the.
Largest group of home buyers in before that was a Generation Y group and before that it was I don’t know whatever the now generation is whatever generation of young adults in their 20s and 30s,
buying homes for the first time is always going to be the largest group of home buyers are you hearing me,
always always the largest group of home buyers is first time home buyers and that’s why I
really like to say when we’re teaching people how to flip houses and so forth if you want the largest market segment possible by a house that you’re going to sell to a first-time home buyer.
[25:41] There are a number of other reasons for this to that we won’t get into on the show.
[25:47] Now we go from We’re progressing from relative over from Super informative to relatively informative to just plain silly but that’s okay we got some good stuff coming back up in just a minute this one is just silly and I’m only bringing this up cuz I’m going to make fun of it.
I’m from Fortune Magazine here’s the headline climate change is already depressing the price of flood-prone Real Estate.
[26:09] So naturally I clicked on this which is what they were trying to do to get us to click on this and I read through this and okay here I’m going to read you two paragraphs from this if I can get to it before the next break happens and it’s a hard break so,
here we go.
Work by Harvard researchers published last week and highlighted by The Wall Street Journal finds that after accounting for an array of other factors home prices have appreciated more slowly in lower lying areas of Miami-Dade County particularly Miami Beach,
a broader study using data from Zillow still under peer reviewed found that properties exposed to rising sea level sell at a 7% discount to comprable properties not subject to climate-related risk.
[26:51] Thanks bro guy says as many as 13% of Americans are still convinced climate changes and happening at all and 30% are confident that humans Play No role in it but real estate prices now seem to confirm the chestnut attributed to author Philip K dick.
Reality is that which when you stop believing it doesn’t go away okay here we go.
[27:11] Trying to resolve a scientific discussion by popular vote it doesn’t work that way although the popular vote does have something to do with sales however.
The conclusions this article draws are bogus because their logic is flawed and when we get back from this next break I’m going to tell you why.
[27:45] Are you one of the 70% of Americans living paycheck to paycheck and tired of the stress if so I understand as I used to be in that 70.
I start investing 2003 with my net worth with -80 thousand.
Since then I’ve built a business that generates over $500,000 a month in income and allows me the freedom to do what I want I’m Brad Chandler and I tease people just like.
How to find Freedom through real estate investing using a tactic that doesn’t require credit or tons of cash for a free training on how you too can do this please visit Brad camel.com.
[28:16] Hey flipping America listeners have you ever walked into her property and said I have no idea what it will cost to repair this home,
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[29:55] Okay we’re back I don’t care what you think about global warming and you don’t care what I think about.
Global warming all right let’s just assume that we don’t care what each other thinks about climate change it could be important what,
people think about climate change when they’re thinking about buying Coastal property but the article is already said that a lot of people just don’t believe it’s happening a lot of people don’t believe that humans cause it and then they go on to make a big deal about it anyway
this is the the the thing that I want to point out and make fun of this article about.
[30:31] You know one of the basic rules of studying correlation is that a correlation does not prove cause and effect.
[30:40] There could be a number of reasons why Coastal real estate doesn’t move as well as Inland Real Estate you know what about the tax hikes.
We talked at some length in on this show about the the.
The fact that it’s not necessarily text Heights but the the reduction and what you’re able to deduct from paying property taxes with the new tax bill and so essentially
some of the people that own these very high price Coastal properties are going to be paying more taxes I even noted that before the tax bill even passed
real estate was slowing down in New York City I also and have noted that real estate is slowing down in Miami and Miami Beach we documented that on the show
outside of Miami and Miami Beach you could start in Washington DC and go all the way to Boston and you could see a slowing down in real estate does it have to do with global warming
who knows nothing in this story attaches that the global warming it could be a number of other factors.
[31:43] Part of it is the inventory is it is at an all-time low interest rates are going up.
Prices of wheat we talk about these overheated markets for the last 6 months and sales are declining because of the overheating in the market the average person can afford the average price home in these markets and then has its effect.
It may have something to do with people’s concern about global warming but it may also have nothing to do with it.
[32:11] And nothing in this story establishes a connection.
That’s the part that I want to make fun of it doesn’t matter what you think about global warming doesn’t matter what I think about global warming because this article the only thing about global warming in it is a paragraph in a headline,
it doesn’t connect it at all.
[32:29] Alright so let’s move on to something that’s a little bit more helpful from forbes.com I have an article that I really did like you know at 1
I’m going to link it to the other one too on social media don’t worry you can read it for yourself at 8 tell me if I’m wrong but this is one that I think that you will appreciate evaluate this factor to find the true winners among Today’s Hottest real estate markets,
It Is by Eddie Wilson of affinity worldwide have a tremendous amount of respect.
Trinity worldwide and Eddie Wilson and so that’s another reason that pulled me into the article but you know if there is a.
There is a factor for evaluating a market that I haven’t considered I want to know about it and.
[33:11] You know I have been calling it the Starbucks factor for a while rather than do a whole lot of R&D myself,
if I see the Starbucks is building new stores in an area then I’m just going to piggyback on there or Indy because home prices tend to go up where new Starbucks open up
them Eddie is taking that and then he’s being a little bit more thorough and scientific with it but,
like the article to you and I I do recommend that you read the article but he dives into the idea.
That you should consider what’s going on in the retail Market if you’re looking at a Numark.
What’s happening with the retail Market he gives one example of an apartment building he was thinking about buying and all the numbers checked out and everything else that he uses checks out you know demographics in that sort of thing
but then when they were there in person evaluating if they noticed that there was a big shopping center right across the street that was completely vacant and abandoned,
and that was a concern so he negotiated a lower price based on that.
[34:12] Smart thinking good idea what’s going on in the retail area where you are not just whether or not they’re opening Starbucks but what’s going on in general.
[34:22] Been there I’ve got one more story for you Springs 2018 real estate market is a good news bad news story and there’s nothing wrong with the article it’s well-sourced and well-stated.
I just want to say that you could use that headline for just about any real estate market in back just about any investment category and class and here’s what I mean by that.
And every challenge there is an opportunity.
And in every opportunity there is a challenge we discuss this even Pat this past Saturday
here in the Atlanta area right now if you’re a real estate investor welcome to the club there are probably 10,000 people in metropolitan Atlanta that call themselves Real Estate Investors,
there are probably 5,000 that are full-time Real Estate Investors in this city and we’re all you know out there scrapping away looking at the properties and making the offers and that sort of thing.
You know I have not even
well I think we’re maybe the third or fourth largest networking group here in Atlanta and we have 1,300 members 1300 Real Estate Investors as part of our meet at our local meetup group but some of the other groups are
a larger and much larger than ours.
And so that young people can be in multiple groups I understand that but there are thousands of investors here and so here’s the challenge it’s tough to find a deal.
[35:44] But here’s the opportunity if you find one when you finally get it rehabbed it on the market.
It’s easy to sell it’s going to go fast and so you can kind of count on that.
[35:57] Turn it over and go back 10 years and you would see it was easy to find a deal opportunities were everywhere the problem that you were having is you don’t know
if you’re going to get it sold and the number that you evaluated as you know on a RV that you put on it today.
Might be and probably will be less than 30 days that makes.
For scary times and so whether the market is good or bad the news is what you make of it.
Because if you look for something to depress you to frighten you or to paralyze you you can find it.
But if you look for something to excite you and motivate you and get you out the door you can find that too.
That’s why I say the news is to a large extent what you make of it when it comes to the markets in the economy it doesn’t really matter what the markets in the economy are just get out there find that next deal get going.
[36:53] Okay when we come back I’m going to talk to you about what to do after you hit your stride you made your money and you want to take the next steps you want to get toward Financial Freedom.
We’re going to discuss that,
I also am going to open up the mail in the answer a few questions as we have time and I want to encourage you now send your questions to questions at flipping America net worth,
how come questions at Flippin America network.com will be back in just a moment.
[37:34] Hi it’s got the Curtis here for the Whitestone Real Estate Investors Institute where you can start a new career for as little as $500 now I want to be upfront with you
the program’s cost more than that but the Institute offers financing for most of its programs
the cool thing is that you’ll be able to pay off that financing quickly usually with the profits from your first deal and you will do a deal because your coach isn’t going to let you go until you’ve done at least one
I have Hayward on the phone right now Hayward introduce yourself and tell us what you think about the coaching so far.
Call my name is Hayward Bryant Junior.
This not really knowing anything about it to be honest with you but I knew it was you no money in it I knew it was something that I want to do something I want to try and so I kind of got geared up to read a lot of,
red lighter information and just do all of these things that was going to kind of set me off for.
Seven eight months in preparation but I got with my coach and you know he definitely,
it got me out there I mean just from the get-go it was just all at you know it wasn’t no real pain this or read up on that you know he gave me a lot of information as we want you put me out there and gave me a lot of action things to do physical in.
That you know I couldn’t have learned two things that I learned in the way that I’ve learned them no other way.
[38:58] Hayward what would you say to your friends were thinking about signing up for this training.
I think without a doubt that anybody who has any kind of interest in dealing in real estate,
they need to join this course because like I say I mean I walked in I know anything–but immediately.
I was making offer in and just dealing with lenders than just that do you know,
checking out houses physically and just saw it was so much I was involving you know about myself with from the get-go and my coach he pushed me to do that,
I was kind of nervous at first cuz I didn’t know anything but you know once I start I realize that it wasn’t so bad and I and I learn quickly,
quicker than I would have liked I say taking any other route so I would definitely advise anybody.
Not just my friends but anybody to continue to give this program,
friends here’s a chance to add another source of income for you and your family get out of debt pay for college or maybe even find a new career just go to www.wreg.com and get started today.
[40:20] We started talking on the last show about hitting your stride and today I want to talk about what you do when you’re operating,
I your active income business at Peak efficiency now I chose to work
the phrase active income in this context were talking about fixing and flipping houses but this can be any business where you got active income from from the business,
and when you got it going and you’re throwing off excess cash what do you do next.
You’re going to want to consult with your tax professional and if you don’t have one it’s time to get one because we’re going to do some things that are going to require you to have a good strategy
with someone who knows what they’re doing now let me just say a word or two about your tax professional.
All due respect to the people that spend their time looking at the tax code
just because a person that has the word CPA after their name it does not mean that they know what they need to know about your real estate investing business.
To be honest the first do CPAs that I had helping me with my business.
Did not understand that when we’re fixing and flipping houses this is just a product.
[41:33] That goes through they were trying to think of it in terms of long-term hold and capital gains that sort of thing and I knew more about the tax rules for me than they did.
You don’t want you don’t want that kind of financial professional trust me you want someone who is well-versed in.
[41:51] The tax code as it applies to Real Estate Investors and so one thing you could certainly consider is talking to my friend Rodger Herring right here in Atlanta but he’s at he works with investors nationwide heat only works.
Real Estate Investors his business is 100%.
[42:10] Real Estate Investors and the you can find them on it at on the web at investors accounting.com just look for him there and tell him I sent you if you decide to do that
definitely you’re going to need a tax professional who can help you understand your positioning in your real estate business whether or not you are a,
real estate professional it doesn’t necessarily mean real estate agent but whether you are a real estate professional
the tax benefits that come from that but also the requirements that you must meet and qualify for every year to be a real estate professional and all of the things that I’m about to talk to you about have tax implications that’s why I’m spending a minute.
Stressing this do not do this yourself.
[42:57] You do not have time to be a good real estate investor who is out there making offers and doing what you need to do in your business and also know everything that you would possibly need to know about the tax code you just can’t do them both.
[43:10] Okay now what we’re talking about today is creating passive income and heading toward true Financial Freedom.
You’re not necessarily financially free when you are making really good or even great money in your business.
Because if you were to stop operating that business either by choice or because life hack.
Even if you took a week or two vacation your pipeline is going to feel the effect and depending on your product cycle and this business is four to six months your income is going to take a hit.
If you need this money to pay your bills and maintain your lifestyle then you’re going to feel the pinch and you know it might even suffer a little bit.
No you have Financial Freedom when your passive income pays the bills and your lifestyle can continue whether you are working or not.
[44:03] When You Reach this point you may conclude that you no longer need disability insurance although you may want to continue coverage for long-term illness or injury this is going to be a question for your injury in professional and made in consideration of your health and lifestyle.
For example if you ride a motorcycle you may have a higher need for various Healthcare additions to your policy the point is.
When you Achieve Financial Independence some of your other needs are going to change and there will be Savings in other areas of your life so how do we get to Financial Freedom.
Let’s consider a couple of approaches that I will
I only have time on this show to outline but I want to let you know some of the things that we teach and some of the things that you need to think about and whether you come to one of our courses or take one online or not
you can look up these topics and get more information on your own and you can dig for yourself if you want to but we cover these and in much more depth in our,
passive income Mastery course all right let’s look at some options number one free and clear single family rentals.
[45:10] I have this simple rule in and we’re keeping it simple at this level okay this is easy to understand.
Flip three or four houses don’t spend the money your do profit that you make on these houses don’t go out and buy a new car and do all this stuff with it no.
After you have set aside your money for taxes and you’ve made your charitable contributions you know 10% or more to your church or something like that then,
Bank the rest of that money and after you’ve done three or four of them.
Buy a single-family house as a rental and pay cash for it.
[45:50] That what you want is a small brick or low maintenance exterior.
Oh and I and I said get small especially when you’re new at this just get a small house one that’s easy to maintain you preferably would have hard surface floors,
not a stitch of carpet in the whole house in the carpets cheap to replace and it’s a lot cheaper than than wood or vinyl to replace but it’s the least durable.
And you have to end up replacing it a lot so I laminate floor hardwood floor tile floor that’s what you want easy to maintain low cost maintenance.
[46:26] Then the next thing is considered the area the stability the upside what’s going on in that community.
One of my interns reach out to me just yesterday and said that she had a line on a three bedroom house in Griffin Georgia that we can buy for $8,000 and she told me the road it was on and I’m pretty well familiar with that area and I told her no thank you.
In before the crash that house would have been probably worth $10,000 maybe 15 during the crash it was worth $3,000 or four.
After the crash it’s now back to being worth about 10 or 15.
20 years from now it’ll be worth 10 or 15 it’s in a high crime area in Griffin Georgia where when these tenants move out two days later all the copper will be gone.
And if I go down there and buy this house and I put copper in before I can get a tenant in there it’s very likely to be gone again.
[47:19] Plus the schools are terrible and the people who are concerned about their children’s education don’t want to live there so what’s the point of having a three-bedroom home then man if you can buy for 9000.
So you have to try to buy a property where there are.
Good schools and there is some kind of an upside where this house so you know you’re going to grow a little bit in appreciation over the years now I’ve got a few more things you want to look for in your free and clear rentals and I’ve got several more strategies coming up but
we’ll get to them right after this break
not too long ago we did a one-day flip starter in Chattanooga Tennessee and low and behold one of my old College friends came out to the event
his name is Peter Faulkner and here’s what he had to say about the event.
[48:09] Peter Falkner here I tended a one-day flip starter training session led by Rod.
[48:16] And I was amazed to see what has happened in Rogers Live from the last.
[48:21] Flipping over 800 houses and then this one day training he told how he did it and what.
Falls the blessings the benefits and how to do it.
[48:35] Impressed with how well organized and how smooth the training winner day you’re tempted or in courage to go.
Not a bad price and if you get a chance.
[49:05] Okay we were talking about the things that we want to look for in our free and clear single family rentals I said first of all by a small one and make it break or low maintenance exterior.
Low maintenance interior to consider the area the stability in the upside try to buy where there are good schools next locate near you.
So you can do a better job managing the property.
[49:29] Try to get in within 10 miles of of where you live so you can get there often and if you have a problem that you have to run out and take care of its not that far away okay now along with that the next thing you’re going to do if you’re going to have to educate yourself on how to manage.
Or you’re going to have to hire management at the beginning it wouldn’t hurt when you get your first one or two it wouldn’t hurt you to learn how to manage it yourself
because if you know some things about managing your going to do a better job of hiring someone else to manage,
right you couldn’t kind of know what you’re looking for then we’ve got information and training on how to manage property yourself and also what to look for when you’re Outsourcing it but after you have 10 you want to consider Outsourcing your management anyway
especially if you’re fixing and flipping houses you don’t want to spend all your time managing.
Remember what I say hire people to do the things that other people can do reserve the things for you to do that only you can do and then,
I have this little phrase that I’ve tossed around for years and I know it’s not precisely and accurately true but as a general Maxim I say this anyway the only truly cash flowing single family rentals are the ones that you own free and clear.
[50:42] That’s not necessarily true but most of the people that borrow money for single family rentals they don’t cash flow.
And there are a lot of gurus running on running around out there talking to how you can borrow money and have other people pay their mortgage off and then you’re sitting on Easy Street and you just need 10 and all this stuff.
I know I know it I hear it so let’s talk about borrowing money for single family rentals okay.
First of all you need to know the loan constant forget the cash flow projections know the loan constant that is the cost of your payments for 1 year / your loan amount.
It’s if you have an interest only loan they’re the same but if you have alone that’s amortized.
[51:22] Then the payments are going to be fixed based on the rate and term and.
You need to take the total cost of those payments and divide that by the loan amount and you’ll have what your loan constant is and
it may surprise you to learn how high your loan conston is especially if you do something like a 15 year loan
the prevailing wisdom is a 15-year loan is better than a 30-year loan because you’ll get it paid off sooner and so forth and so on will guess what if you get a 30 year loan it’s okay to pay it off in 15 years,
the advantage here is
if you run into a tight spot and you can’t make that 15 year loan payment you can go ahead and make your 30 loan 30 year loan payment which would they expect if you could what you really ought to do is
to get a hundred year mortgage and then pay it try to pay it off in 15 if you can or pay it off in five,
whatever but when you have the lowest possible payment and really the ideal thing is to get an interest only loan where they were there’s no prepayment penalty in so as you are able you can pay down the principal.
[52:24] They’re all these things about managing debt,
don’t really get taught and I’m not going to teach you here. Can’t we don’t have time but definitely you need to know what the loan constant is and you need to consider that now you need to know your expense ratio and from your expense ratio calculate your net operating income,
this is a lot more technical than I cover in my 18-minute 3 formula video that you can spend on the website but,
you need to know your net operating income because the spread then and the net operating income is a dollar amount but.
[52:55] When you divide that by your acquisition cost dude then you got your rate of return that your cash on cash return and.
Know what your cash-on-cash return is and subtract that from your loan constant then you got a little spread there and that’s your actual cash flow most people fail at this.
[53:18] I want to say it again most people fail at this either they pay too much or they poorly structure the debt.
The property never actually cash flows guess what folks I was new at this once in the first few houses I bought I was listening to the guru who said all you’re going to have the cash flow and I realize that their New Year’s
these properties are not really cash flow in and actually they’re costing me money but why is that because they technically have a cash flow,
it took me a little while to get my brain wrapped around it okay I know I’m a little slow on the uptake sometimes all right but I got it figured out,
at once I got it figured out I can explain it to you and trust me most people screw this up it’s okay if the property doesn’t actually cash float if.
If you have plenty of other income to cover the negative cash flow and you are speculating,
on a market appreciation preferably depreciation rate greater one than what the market is projecting all right now I have.
[54:21] 345 let’s see if we can get how many mm we can get 2/3.
Buy multifamily up to 5 doors do you finance these up to 5 doors just like a single-family home they cash flow better typically.
They have a higher turnover anyway so the upside matter is a little bit less hear people that live in a duplex or Triplex are usually single or newly married and no kids and so schools are not much of an issue.
I’m more important metric for this classification is to be,
convenient to employers to jobs because these are going to be young people getting started or little bit older and people that are
generally on their way to buying a house now it’s possible if you have single family rentals you can get people in there that say for years and years and they like it and they just don’t want to move so these kind of you don’t settle down that’s the best single family homes right there
but you’re going to have to turn over in your duplexes and triplexes in your quads it’s just going to happen because most of those people are in their own mind on their way to buying a house so this is just a short-term stop for them.
So the main thing is to be convenient and close to their jobs they don’t need a few they don’t need a river they don’t need a golf course they don’t need Great Schools what they need is a short commute.
[55:44] Okay so look for these properties that are around solid employment opportunities,
and I think you want to be where there’s a stable and growing population the next thing is to buy apartments and we’re going to do some entire shows on buying apartments one of these days
so I’m definitely not going to cover it here but the couple of things that you can do,
is you can buy distressed apartments and you can force appreciation into them and then refinance them and you can end up owning an apartment without having.
And I haven’t pulled all your cash back out of it it’s possible to do that with single families as well.
[56:21] But you can definitely do this with apartments in the other thing that you can do with partments as you can use it as indication of funds.
To buy the stress property Force preciation refinance pull out your syndicators cash and everybody is happy and the properties cash flowing in.
And that requires a whole lot more time than I just gave it apartments or a little bit of a bigger deal than single-family or.
[56:45] The small multifamily,
but I wanted to an end so we’re going to devote more time to do it later on but I wanted to get into before we get off the show today the idea of loaning money,
you can loan money and and create passive income be aware that loaning money the interest income you receive from that as a different,
taxable event then your rental income talk to your tax professional about this.
But just know that even though I’m both of them seem passive the income from loaning money is difference going to be taxed differently all right.
So you can loan on flips you can do rate and term loans like a hard money lender or be a private lender you can loan money on Equity Partnerships,
you can do loans on rental properties they have the,
Good Fortune of being long-term and they’re steady income here for things to think about number one watch your loan-to-value
keep it below 70% whatever you do,
when I’m working with our private lenders we never take them over 70% because we want them to be protected number to the borrower pays for the appraisal when it’s needed
if you’re good at running comps you may not need an appraisal but maybe you’ll need one if it’s an area where you’re not sure of the market but the borrow will would pay for that.
[58:03] Number 3 the bar or provide proof of insurance pays taxes etcetera and provides proof that they paid the taxes and the last thing I want to mention is we’ve got an entire section of our passive income Mastery course devoted to.
Loaning money how to protect yourself how to structure it the documents in the paperwork that you need all right.
[58:23] Hate that music means we’re out of time for today I’m sorry folks it sent the questions and we will get the questions on the next show and and keep the questions coming.
Will talk to you on Thursday.
[58:48] Original quote for today comes to us from Jason Nesbitt captain of the Galaxy Quest and it’s never give up never surrender.
And if you haven’t seen the movie Galaxy Quest you need to see it it’s hilarious all right.
Just to prove that they have a sense of humor this motivational thought was brought to us by the foundation for Renewal working together with communities Nationwide to improve lives everywhere find them on the web at renewal fun. Net.
Contribution in any amount is welcomed.