How do you get a good ROI in real estate? I am so glad you asked this question? So
check it out. Getting a good ROI is really going to be a function of 2
things. Number 1, did you get a discount on the property? And number 2, what is
your strategy? Okay? Those 2 things are really going to determine whether you do
well on your ROI or not. Like let me give you first a really bad example and then
I'm going to give you a really superior example. If we use as a bad example,
flipping. Because flipping often looks good on paper and in reality doesn't
turn out the way we want. You're doing this deal, you're doing a flip, you're
crunching the numbers and here's what you ultimately find out. I have a
property that has a value of $200,000. I can purchase this property for let's
call it $150,000. Now, you're looking at the
numbers and you're thinking, that's $50,000 of equity. It's worth 200,
I can get it for 150. $50,000. That's got to turn into a great
profit, right? You're thinking so. And what I want you to understand is this is a
25% equity position which means 150 is 75% of the
value of 200 or the difference between 200 and 150 is 25%. So
that is an excellent equity position for like a lease option or short-term buy
and hold which are strategies that I love. But in this case, you get into this
deal and you got $50,000 to play with and you're thinking, "I'm
going to make a big chunk of money." But as you dive into the deal, you might
actually find that hey, there's $25,000 of repairs. You
thought it'd be 15 but it turned into 25. And then you've got
closing costs. Let's call it five thousand dollars and costs to actually
close this. And then you have a realtor that's actually selling it for 200.
They're charging 6%. So that's going to cost you another $12,000.
By the time you add that up, you took that $50,000 a
possible profits and it's turn into $42,000 of expenses. That
leaves you, they didn't say in 1542. That leaves you $8,000. Now, some of you're
like, "Dude, I could use an extra $8,000." That's way too much risk. That's way too
much liability for such a small profit. You only need something to sweet go bump
in the night and be wrong and boom! You've lost your $8,000. So that's way
too small of a margin. You're asking this question of how do I get a good ROI. It
is a function of 2 things. Number 1, it's definitely going to be a function
of discount up front. And number 2, it's going to be a function of strategy. These
2 things are really what's going to help you get a good ROI. So first of all, let's
just talk about how you implement this. Number 1, you need standards. When you
find a deal, you're looking for a certain level of discount, right? I always love to
bypass realtor's and go right to the owners because they're already going to pay
6% out. 6% is is something that could be construed as savings. If I have someone
doing a 10% discount on the property and I get another 6% by not paying realtor
fees, that's a 16% discount. For me, I am always looking for a 15% discount
minimally, just in doing the deal itself. But on strategy, you'll notice (If
you're a subscriber to my channel. If not, fix that right now.) that I do this
thing called a lease option. It is one of my strategies. It is a beloved strategy.
Because the lease option, it makes me two-and-a-half times more
money than a rental. Like just quickly, a renter gives you a refundable deposit. A
lease option person gives you a non-refundable downpayment. These people
pay 1200 and rent, these people pay 1500 and rent, right? You
know, these people, you know, they don't have an interest in taking care of the
house. These people are going to do all the repairs and take care of it. You
start adding up those financial differentials and guess what?
This becomes... The strategy is going to impact my ROI. The discount is going to
affect my ROI. So, those are the 2 most important things that you want to be
aware of when you're actually out in the game of real estate. There are so many
people that get in the game of real estate. And you know what? They have not
put their focus here and the real estate investors that have failed
that I meet, if you want to know what they all have in common,
they didn't know how to crunch the numbers. They just got excited and
thought, "If I buy a home over time, I'm going to do well." That is not true. If you
buy something at market and you don't have the right Lease Option strategy,
then all the sudden when the home doesn't do what you want it to do, you're
going to get jammed up. You're going to get into a position where you need to pay
money every month to support your investing. And that's when you have done
it wrong. I remember the very first house that I ever did. The reason why I got
excited about it is because I ran the numbers. I knew it was worth X and I was
buying it for Y. That has been important to me on every deal I've done because it
is a function of ROI. Now, the discount the equity is not the most important
thing. The strategy then becomes the second most important thing because if
you're going to hold this home for a period of time, that's also going to factor in. The
reality is I wouldn't have a YouTube channel and I wouldn't be able to say
what I'm doing and I wouldn't be buying the hundreds of homes that I am. Unless I
wasn't doing these 2 things actually correctly every single time. None of it
would exist without this so. Don't get excited as a real estate investor to
just get out there and have a deal. You got to have standards. Now, I want to
share with you, as a bonus, what my standards are on ROI. What I'm actually
out there doing a deal, I have some minimums. Bare minimum,
I want to make 15% a year on my money. Now, a lot of my deals I'm doing
20% some of them 25%, some of them even more. But the reason why I
have this minimum is because if my real estate is earning 15% and compounding
every year, it takes roughly five years for my money to double. Now, just think
about that for a minute. That is a huge deal. If I got 50 grand in real estate
then 5 years later that's become a hundred grand. 5 years later it's
become 200 grand, 5 years later become four hundred grand. Now, there's
accelerants where you can go way faster than that. But this minimum ROI, this
allows people all day long to come to me and say, "Kris, you got the deals. Let's
play." And that's actually something that you yourself may actually want to do is
that I have people that will evaluate me, my system, my track record and then say,
"Hey, you either are one of 2 people." You're either going to say, "I want to do
this myself." Or you're going to say, "I want someone to do this for me." And both of
those options exist in the world of real estate. So ROI? two
most important things, if you want to have a good one. Get a discount on the
property, contemplate the right strategy. If you're not sure what the right
strategy would be, then I'm going to recommend that you talk to a member of
my team because I'll give you a full blown strategy. All you have to do is
click the link in the description below and me and my team will reach out and show
you exactly what it is to mentor with me. Have me show you the ropes and get you
out there doing profitable real estate transactions. For the rest of you that
are saying, "Well Kris, I actually thank you for the video. I'm on my way. I want
you to go ahead and subscribe to the channel." I drop nuggets and knowledge
every single day like this that can be useful and helpful for you. And at the
end of the day, a lot of people sometimes wonder, "Kris, why are you doing this?
Right? I mean, the videos they take some time and effort to put together. If
you're retired, why would you actually do this?" I want to tell you that I'm helping
you learn how to make a lot of money in real estate. But once you do, you're going to
have to figure out who you aren't really what you want to do with your life.
Because when you don't have a boss telling you where to be, when you don't
have someone else y'all yanking your chain and telling you what you have to
do with your life, it really puts you in a empowering place to discover how are
you going to leverage your freedom. And for me, part of it is playing, part of it
is traveling the world, part of its being with my family. Part of its enjoying the
nicer things of life. Part of it is serving my community. And a part of it is
giving back. And this channel is a way for me to build a community of
individuals that want to be super successful. I don't care how young or how
old you are. I don't care whether you have money or you don't have money. If
you want to be part of a community that can help you figure out how to do this
stuff the right way all day long, then talk to a member of my team in that link
below. And read the information on what we're doing here and let's actually show
you the ropes of the right way to do it. And then give you the support that will
make the difference. So that you can have that freedom and success in your life.