What's going on everybody?
In today's video, I'm going to be going over the top seven most frequently asked questions
I get from newbie real estate investors.
So if you're a new real estate investor, you're going to want to stay all the way to question
number seven.
I basically compiled this list from having worked with hundreds, if not thousands, of
new real estate investors.
Before we jump into this video, please smash that like button below because it helps the
YouTube algorithm.
And that being said, let's jump into question number one.
Question number one is, do I need a real estate license to be a real estate investor?
And the easy answer is, no you don't.
You can do wholesale deals, you can do rehab deals, you can do rental property deals, you
can pretty much do any type of real estate investing deal without needing a license.
Now that being said, I would highly recommend getting your real estate license for a couple
of reasons.
Number one, it's very easy to get.
I think when I first got my real estate license, I might've studied for maybe a couple of weekends
and took a couple of practice tests and then passed the exam.
It's a pretty easy exam to pass.
In fact, it's shockingly easy.
Being that it's the largest investment of most people's lives, you would think you would
have to go to school or take four years of this, two years of that.
But it's a pretty easy test to take, and it's not that expensive either.
The next reason to get it, is that you'll have MLS access.
If you're a real estate investor and you're trying to pull comps on a property, it's going
to be very difficult to just ask a real estate agent to do that for you and get you the comps
in a timely manner.
So you really need to have your own access.
And sometimes, you can work with another agent and get secretary access and there's different
loopholes and things like that.
But you need to have your own access one way or another.
It's going to make your life a lot easier.
And then lastly, the third reason why you want to get a license, it's going to make
your business more profitable.
You're going to get leads sometimes that are not going to fit the investor model.
In fact, most of the real estate investing leads that you're going to get are not going
to fit the investment model.
They're going to fit more of the traditional real estate agent model.
So you can either refer those out for a fee or some type of commission split, so long
as you work it out with the other agent.
Or you can take those leads on yourself and get some listings and some buyers out of it.
It'll just give you another income stream.
And not only that, but when you're making offers on properties, you can factor in the
fact that you might be the listing agent, which could easily save you 10, 15, even $20,000
per transaction so that you might be able to pay a little bit more and still have a
very profitable investment deal.
Okay, so question number two is, how do I finance the deal?
New real estate investors, that's always on their mind and it should be on your mind.
If you find a great deal, the last thing you want happening is not being able to actually
complete the purchase.
I'm going to give you three different strategies to finance your first flip or your first couple
of flips.
Number one would be the obvious.
If you have a job, in some cases, not every fixer upper property is going to need a complete
gut renovation.
So many times you can just use a conventional loan.
Now each lender's going to vary, but if the property is not in terrible condition, and
sometimes they're super motivated sellers and the property is actually in pretty good
condition, so that's one option.
Just looking at a conventional loan to get the deal done.
The second option would be hard money lenders.
The way a hard money lender works is, they'll charge you typically a few points and they're
going to charge you a higher interest rate, usually around 10 to 15%, to give you money
to purchase a fixer upper property.
And this is a pretty common investment strategy.
And the thing to know with hard money lenders, is that each hard money lender is going to
have different ways of doing business.
Some are going to be very easy to work with, some are going to be very difficult to work
with.
Some are going to have 15% interest and five points, while others might just have one or
two points and then 10% interest, let's say.
So with hard money lenders, you really want to shop around and find the best rates and
find the easiest people to work with.
And the thing I like about hard money lenders, even though they're typically the most expensive,
number one, they're going to usually tell you whether or not you have a good deal or
not.
A lot of new real estate investors think that their first deal or two is always like the
best deal ever.
And a hard money lender will tell you pretty quickly whether or not it's a good deal because
they've seen hundreds, if not thousands, of different deals out there.
They're also very flexible.
So whereas a traditional lender might take 30, 45, even 60 days, to close on a property
and they might need different repairs, a hard money lender's basically just giving you cash.
And some can close in as little as 10 days or 14 days.
It just depends on the lender.
They're very flexible and they're very fast, and a lot of real estate investors use them.
So you should definitely check out a few.
And the third source of funding is what's called private money.
This is my favorite because it's typically the lowest rates, the most flexible, and it's
just a win/win for both parties.
And the way it works is like this.
There are plenty of wealthy individuals, wealthy professionals across the country that often
have their money just sitting in some 401k or some IRA or maybe even just a checking
account that's not getting a very good return, when in fact, they can be investing with you
and making maybe let's say eight to 12% secured by the property.
So if the individual understands real estate, or maybe you can just explain to them that,
look, you're buying properties at a discount, your money is going to be secured by this
discounted property and all you're doing is you're bringing the property up to the current
market.
You're not expecting some crazy appreciation.
In fact, you might be more on the conservative end and say, look, the comps are right here,
but we're going to go for the median of the comps.
We're not even going to try to sell it for the top level prices, just to be on the safe
side.
And so, even if everything went wrong, that investor would still have the property secured
in first position.
So there's a lot of value in that because it's hard to find secured investments of any
sort.
And always do your own due diligence.
I'm not any type of financial advisor or anything like that, but it's a great way to find money.
And the best way to find these private lenders, is just by asking around and networking with
different real estate professionals.
The way I found several of my private lenders, was just asking different mortgage professionals,
just traditional mortgage professionals, if they know anyone in their company that does
hard money lending, because it's kind of a similar business.
And I can guarantee you that your lender, your conventional lender, will know someone
in their company or maybe in a different company that does hard money lending.
And the great thing about them doing hard money lending, is that they're going to be
a lot less strict than a typical hard money lender and a lot lower rates as well.
All right, question number three, how do I find a deal?
Everyone always wants to know how to find a deal.
Well, there's proven strategies of doing that.
My favorite way is direct mail.
And I have entire videos just on finding deals, but I'll give you a couple of quick tips with
direct mail.
You only want to market your direct mail to motivated sellers or potentially motivated
sellers and that would be maybe people with high equity in up and coming neighborhoods
that could be a pre-foreclosure.
You do have to be careful.
Some states have different pre-foreclosure laws against the marketing to them, probate,
inherited properties, tax liens, different things like that.
A great resource is listsource.com because you can go in there and you can find properties
that have high equity in up and coming neighborhoods, have been owned for at least, let's say, 15
years and then you can market your direct mail only to those people.
And that's how you're going to find great deals.
99% of the sellers out there are not looking to sell at a discount.
They probably don't want to sell quickly or anything like that.
In fact, most sellers, they want $1 million for their house.
Maybe you're aware of that, maybe you're not.
But to find the motivated ones, you really have to target your marketing very specifically
and then you have to get at least 25 of these seller leads to find one deal.
But if you can make your phone ring just 25 times per month, typically, you can find one
really good discounted off market deal.
Another way to find deals is just by networking.
Going to meet up groups, go into [inaudible 00:07:29] groups, going to any type of real
estate investing group and just building your network.
The more you build it, the more you meet people that are in the business.
And tell them that, Hey, you're looking for deals.
They might have a deal, they might know someone that has a deal, they'll keep you in mind.
So you can build up list of wholesalers or other real estate investors, and they'll start
sending you deals.
Sometimes other real estate investors, even your own competition, they may have too much
on their plate and they might say, Hey, this deal is not for me, but maybe you want to
check it out.
Let me know what you think.
We'll work out some type of assignment fee or maybe they'll just refer it over to you.
You know, a lot of your so-called competition, they want to work together almost in partnership
sometimes.
And there's many ways to partner on deals with private lending, different types of joint
ventures, [inaudible 00:08:12] sales, different things like that.
So there's a lot of options.
And then a third way of finding deals, is just looking through the MLS.
Maybe you set up searches for as is, foreclosure, inherited, needs work, handyman special.
You can set up different keywords and just keep an eye open for different properties
and different deals.
And you can call the agency to see how flexible they might be.
And a lot of times, properties are over priced and you can get the seller down quite a bit.
A lot of people say the MLS is too competitive, but if you're strategic about it, you can
definitely find a couple of deals every month or at least every year.
Question number four, how do I know if it's a good deal?
Well, there's three different ways to know if it's a good deal.
Number one, you should be using the 70% ARV maximum allowable offer formula.
And the way that that works, is you just take the ARV, the after renovated value of a property,
you multiply that times 0.7 to give you that 30% margin of profit and commissions and everything
like that.
And then you subtract for the cost of repairs.
So if a property was $300,000, if that was the after renovated value, multiply that times
0.7.
I think that's $210,000 and then you subtract for the cost of repairs.
So if it needed $50,000 worth of repairs, you subtract that and you get $160,000 as
the maximum allowable offer.
And if you stick to that formula, most properties are not going to come anywhere close to that
formula.
However, most properties are not going to be good deals.
But when you get a property that's at that formula or even around that general formula
number, chances are it can be a very good deal.
The next way to tell if it's a deal, is using a deal analyzer.
And you can download one for free on my website.
I'll put the link below.
But sometimes properties are not going to meet the ARV 70% formula, but you still might
make 30 or 40 or $50,000, and the property might not need a ton of work.
So there might be less risk with that.
By using the deal analyzer, you can factor in, especially if you're a real estate agent
and you're using private money, that could save you 20, 30, $40,000 per deal just right
there.
So be sure to check out my deal analyzer.
And then lastly, if you still don't know if it's a deal or not, from using the ARV and
a deal analyzer, just ask another real estate investor what they think about it.
If you're friends with different investors, which you should be, you should be networking
and things like that, another investor is not going to waste your time.
They're going to tell you whether or not they think it's a deal, typically.
So use those three strategies.
Question number five, do I need money to invest in real estate?
And the easy answer is no.
You don't need money whatsoever.
You need a little bit of money for marketing and maybe a $500 or $1,000 earnest money deposit.
But outside of that, you really don't need money.
I mean, it would probably be easier if you just had millions of dollars sitting around
in a bank account.
However, I've done plenty of deals where I didn't bring basically any money to the table.
With wholesale deals, obviously, you don't need any of your own money because it's another
investor that's going to be closing on the deal.
And then with rehabs, if you have a private lender, if you find a great deal and then
you ask a couple of mortgage lender friends, Hey, do you know anyone that does hard money
or private money lending?
Oftentimes, they might bring 100% of the money to the table, and you wouldn't have to bring
anything.
So you definitely don't need money to do real estate investing.
However, obviously, it would help and you should be constantly building up your resources,
maybe apply for different lines of credit from local banks, extend your credit card
lines.
You want to build up your resources just as much as possible.
Question number six, should I join a real estate coaching program?
And I would say yes, absolutely you should.
Because the cost of a real estate coaching program, and obviously, they can be pretty
expensive.
I mean, there's some that you can pay $50,000 for a real estate coach, essentially.
However, if you're serious about real estate investing, the cost of a coaching program
is going to be significantly less to the cost or expense that you could lose out on if you
don't have a coach.
I've done plenty of deals where I wasn't in a coaching program, and I lost out on a ton
of money.
Whereas, if I had a coach and I had a mentor showing me the way, I probably would've gotten
the deal done and made significantly more.
And what I also like about coaching programs, is the fact that if you invest money into
any type of program, you're probably going to take it a lot more seriously than if you
just watch a YouTube video, read a book.
The fact that you're paying for coaching program, is going to make you work a lot harder.
I know the coaching program that I joined, I paid a significant five figure fee and I
was waking up at 5:00 or 6:00 AM.
I was studying and then I was implementing all these strategies and then I also had a
mentor that showed me what to do.
I could reach out to them.
So it was very beneficial.
And if you're looking for a real estate mentor or a real estate coach, I've actually developed
a couple of different programs which are available on my website.
The link is below or you can just ask questions on this YouTube video and I'll probably just
answer them for free, of course.
But either way, I think you should definitely get a real estate coach.
Question number seven, should I go to real estate auctions to find deals?
And I would say this: auctions are pretty interesting and pretty cool.
You see a lot of things that you just typically wouldn't see on a day-to-day basis.
But as far as getting good deals, I would stay away from them.
And I don't know the exact quote by Warren Buffet, but if you look up Warren Buffet and
auctions, he says it's just never a good idea.
He's not even talking about real estate auctions.
He's just talking about the auction principle, in general.
He says something along the lines that people always overpay at auctions because it gets
emotional.
You see your competition right there, and you're so close to getting the property.
So just try to stay away from auctions.
And not only that, but the 10 years I've been in the real estate investing business, all
of the top investors, they almost never go to auctions and they say pretty much the same
thing.
There's no deals at auctions.
Everyone has their own strategy, there's always ways to make different strategies work.
But generally speaking, I would try to stay away from auctions.
Okay.
So I said there were seven questions, but I'm actually going to give you one more question
because people just bombard me with this all the time.
And I see it in social media and in different places like that.
People ask, does real estate investing still work?
Everyone thinks that their market is the most competitive and that last year was the best
time to find deals and that there's never going to be any more real estate investing
deals in the history of the world.
They think every good real estate investing deal is gone.
And when I was first getting started as a real estate investor, I actually believed
that.
I thought it just because I got this deal in this one county or this deal in this other
county, there was no more deals in that county, at least for another month or so.
And I could not be more wrong.
If you're doing marketing and you're doing networking and you're consistent and you're
getting at least 25 different leads every single month, you're going to find deals no
matter how competitive the market is, no matter what the economy's doing, no matter what someone
on CNN or Fox news says, no matter what your real estate agent, who's never done an investment
deal in their entire lives, has to say.
Because oftentimes, they'll tell you, Oh, there's no more deals, when they have no idea
what they're talking about.
They've never done a real estate investing deal.
And there's a lot of people like that will tell you negative information with basically
zero experience.
So you need to be very careful about where you're getting your information from.
And that's another reason why I recommend joining some type of coaching program, because
someone that's an active real estate investor, is going to have a much different opinion
on real estate investing than some real estate agent that's never done an investment deal
before.
Or someone like your neighbor, who just has an opinion on real estate because they watched
the news one time.
So be very selective with where you're getting your information from.
All right.
Thanks for watching this video, and if you have any questions whatsoever, just drop them
in the comment section below and I'll be sure to answer them.
And thanks again for watching, and I'll see you on the next video.
All right.
Bye.