Alright, what's going on everybody?
So in today's video, I'm going to be giving some real estate investment advice for beginners.
So if you've never done a real estate deal before or maybe you've only done a few real
estate deals, this is going to be specific information that will help you to become a
real estate investor and to do successful real estate deals.
It's information I wish I would have known when I was getting started.
So the very first thing would be to start small.
Now, it's completely fine if eventually you want to do billion dollar deals.
In fact, there's a real estate investor in my backyard essentially who got started flipping
houses in bad neighborhoods.
And over the last five years, he's done several billion dollars worth of real estate developments.
I mean, he wouldn't even look at a flip.
I mean, he's done basically nationwide developments and it all got started with flipping houses
in his backyard.
However, he didn't start with those projects.
He got started with the smaller flips, maybe in the not so great neighborhoods and he worked
his way up.
He built some experience to get to that point.
So if you're a new real estate investor, instead of doing a 10 unit condo conversion or instead
of building a million dollar house, you should probably start with small rehab projects or
small wholesale deals.
I remember some of the very first deals that I did, I actually got way in over my head
as far as construction budgets and prices and everything like that.
So you really want to start with something that's manageable and you just want to learn
the process and get a few deals under your belt before you start to really go after some
of the bigger projects and the bigger deals.
Okay.
The next lesson is to start in your own backyard and the same way with starting small and then
working your way up, you should start locally and eventually if you want to do nationwide
deals, I think that's completely fine.
There's ways to do nationwide deals both with turnkey rental properties, with buying multifamily
buildings.
And many different strategies that can be done on a nationwide basis.
However, if you are new to real estate, you shouldn't just go off and buy a house in Detroit,
Michigan.
You should stick to neighborhoods that you know.
Neighborhoods that are close by and maybe 15 20, 30 minutes at most, maybe an hour.
I remember when I was first getting started, people were trying to sell me deals for $5,000
for an entire house and I was like, "That sounds like an amazing deal."
However, it was in Baltimore.
And there's certain neighborhoods in Baltimore where $5,000, you're completely over paying
for a property.
And I had no idea about neighborhoods and different areas and things like that.
So $5,000 to me just sounded like a steal of a deal.
However, upon doing some further research and realizing what the comps were and the
neighborhood trajectory, it wasn't a good deal.
And by sticking close in, when you're first getting started, you're going to have a much
better understanding of values.
It's going to be a much safer investment and you're going to be able to drive to it, to
see it and everything like that.
You don't want to start too far away when you're first getting started.
Okay.
Lesson number three for new real estate investors is to cut back on your expenses as much as
possible.
When you're building a business, you shouldn't be driving a BMW.
You shouldn't have a super nice apartment.
You should try to cut back as much as possible.
Get a cheaper apartment.
I mean, location is still important, you don't want to be so far away that you're going to
have to drive an hour just to save a few hundred bucks on rent.
But you should have a cheaper apartment, maybe a cheaper car.
Don't spend so much money on luxuries.
Instead of spending money on luxuries, you should reinvest that extra five hundred, that
extra thousand, an extra two or three thousand dollars per month into maybe getting additional
training.
Maybe you can put that towards marketing.
Anytime you're starting a business or doing real estate investment deals, you're going
to have to have extra cash and credit around because you never know what's going to come
up.
There's always unexpected expenses with any business and real estate investing is no different.
I like to think of it almost like the Rocky movie where he's got the cheap apartment in
Philadelphia and all he does is just train.
He just trains for the fight and then he comes back home and his little crappy apartment
and he just, you know, goes to sleep.
He drinks a beer, eat some food, and goes to sleep.
That's kind of how you should look at your business, cut back on everything and just
reinvest it.
Look, eventually, once you get the process down, you'll learn how to start doing deals.
You can eventually buy the Ferrari or whatever you want and the super nice penthouse with
the water views.
But when you're first getting started, you shouldn't be doing that.
Okay.
Lesson number four is that you need to network as much as possible.
So maybe make it a goal to meet a hundred different people in the real estate industry.
Whether they're newbie investors or more experienced investors or everyone in between.
Anytime you're building your network, it's going to help you with so many different areas.
For example, from my own experience, building a network, there's just more opportunities.
Every person you meet is a new opportunity for you know, hey, I met one person, he's
like, "Hey, you want basketball tickets?
I got court side basketball tickets."
It wasn't even real estate related.
Another time this guy had a coaching program and he was looking for students that had been
trained by him and he wanted testimonials.
So that's another good reason and not only that, but you're going to meet joint venture
partners.
I've met many people at different networking events that I've joint ventured on deals with.
I've met more experienced investors who have helped me along the way to become a savvier
and better investor and someone you know, different people that you can learn from.
So it's a huge advantage to be very well networked.
I know one investor, he basically knows everybody in the city and everybody knows that he buys
houses and that he closes on time and that he's respectable and easy to work with.
And as a result, they all send him deals.
When they hear of a property that needs to be bought quickly for cash, they're going
to call this guy, they're going to forward him the deal.
And so he gets a lot of opportunities just through his network.
Okay.
The next lesson is to educate yourself as much as possible.
I believe in educating yourself as much as possible, as well as taking as much action
as possible.
But if you're just taking a ton of action, that's actually really good and you probably
will eventually figure it out, but you need to have some general type of direction that
you're headed.
So I recommend reading as many books, watching as many YouTube videos like this, listening
to podcasts.
And ideally, just getting a mentor, whether you pay for one or whether you find one locally
that can kind of give you a little bit of direction.
You are going to save years off your learning curve as well as probably tens if not hundreds
of thousands of dollars by getting a mentor and learning from them.
Because a lot of times with these real estate deals, it might just be one little tweak here
or there that can make the difference between doing a $100,000 deal and just not getting
that deal whatsoever.
Ask me how I know.
So try to educate yourself as much as possible.
One thing you can do is just wake up at 6:00 A.M. for 30 days in a row.
And from maybe 6:00 A.M.
To 8:00 A.M., or maybe just one hour, maybe 6:00 to 7:00 A.M., you just study, you learn,
you come up with strategies.
Because what's going to happen, whether you have a mentor or whether you're learning by
yourself, you're going to hear these strategies that people are doing and then you're going
to adapt them to your own style and you're going to have your own real estate investing
style just based on proven strategies and then based on your own experiences.
You can even be like the guy that went to 50 events in one year.
Me, myself personally, I try to go to as many events as possible.
I try to learn as much as possible.
But I know a guy who went to 50 different events over the course of a year and my mind
was just blown.
I was like, "Wow."
I felt lazy, I felt like I wasn't doing anything.
Okay.
The next lesson is to be patient.
As a new real estate investor, every single deal can look like a good deal.
If it's just in bad condition, most new investors say, "Oh, that could be a great deal."
However, a lot of times properties in bad condition are still overpriced and sometimes
properties in great condition are under priced.
It's more up to the numbers.
So just because a property is in bad condition doesn't mean it's an amazing deal.
You still have to run your numbers and you have to be patient.
A lot of times before I make an offer on a deal, I would have gotten maybe 50 or 60 leads
that come in before I actually qualify them and find the two or three that I really want
to go after.
And Grant Cardone, I believe, talks about the rule of a hundred.
And this is especially true for new real estate investors.
You should evaluate a hundred different properties before you make an offer on one.
It's just going to give you a better sense of what's a good deal, what's a bad deal,
what's market price.
Because if you look at a hundred deals, there's going to be some that are wildly overpriced
and there's going to be some that are probably wildly under priced.
But you need to get that practice, that repetition so that you know for sure if it's a good deal
or not.
And a quick way of evaluating deals so that you don't spend a hundred hours evaluating
a hundred deals is use the MAO formula, maximum allowable offer formula.
And I'll put that in the section below.
But basically, it's the after renovated value times 0.7 minus the cost of repairs.
And that's the most that you should pay for a property.
However, it's a pretty conservative number.
So if you find properties that are even kind of in that ballpark, chances are it could
be a very good deal.
And you'd want to use a deal analyzer and really narrow down the amount of profit that
you're going to make on it.
And I actually have a deal analyzer on my website with the link below.
So if you want to go check that out, you can.
But just be sure your patient when evaluating deals.
Don't jump on the first opportunity.
Make sure it's really qualified and it's really a good deal.
And as an example, Warren Buffett one time went six years without purchasing any stocks
whatsoever because he thought they were all overvalued.
So I don't think you need to be that selective, but at least look at 25, 30, 50 deals before
you make an offer and be sure to use a deal analyzer as well as the MAO formula.
Okay.
The next lesson is to have different strategies going on and only needing one of them to work.
So when you're getting started, and this goes for any type of business including real estate,
you should have different marketing strategies for finding deals.
So myself personally, I love direct mail.
I think it's the best strategy for finding deals.
But yours might be different.
Maybe you're a great networker and you can just build great relationships with wholesalers,
real estate agents, other real estate developers who might have additional properties that
they don't want to fix up and they can sell them to you.
Maybe that could be your thing or maybe it's direct mail.
Maybe you're a great online marketer and you can do a lot of online lead generation and
get motivated sellers that way.
But overall, you want to have at least three different strategies going on because one
of them is going to work a lot better than the other two and you never know which one
is going to take off.
You should always be trying new strategies and I would start with three.
And three that you can start, like I mentioned, networking is one.
I'd consider that marketing.
You can do some online marketing, you can do direct mail, there's bandit signs, there's
many other strategies available out there.
I mean, even just looking on the MLS and being very strategic about searching the MLS for
properties.
Maybe you just type in, you have a search set up where you just have keywords like as
is, investor special, estate sale, different things like that.
And then maybe you'll look at the MLS for an hour every single day.
And if you're strategic with that and you're patient with that, I guarantee you can find
some good deals that way.
Okay.
The next lesson is that you need to be aware that most people are going to tell you it's
not going to work.
That real estate investing doesn't work.
That you had to get in five years ago for it to work.
I've been hearing this pretty much, I want ... monthly, weekly, daily over the last decade.
And it's always said by people that are not real estate investors.
So you need to keep in mind where you're getting your advice from.
Because people that are not real estate investors will give you all types of crazy advice that
oftentimes is just demonstratively not true.
So be sure to just ignore people that try to discourage you.
You're going to have a lot of that.
Just be prepared.
Surround yourself with some Tony Robbins or, you know, you don't even need to really engage
or argue with these people.
Just listen to people that are actually doing real estate investing and don't take anything
that someone that's not a real estate investor is saying as a fact.
Okay.
The next lesson I give you is to not quit your job just yet.
The tricky thing about real estate investing is you can make a ton of money sometimes even
on your very first deal.
I've seen some new real estate investors that you know, if you're out there marketing, looking
for deals, networking, you can come across amazing deals as your first deal and you'll
make way more than you made in your job and you'll just want to drop everything.
However, I'd warn you to try to get at least three, maybe five deals under your belt before
you just, you quit everything.
Because real estate investing, especially when you're first getting started, is not
just like a steady two week paycheck.
Now, you can definitely make it that way once you build some consistency and some experience.
But when you're first getting started, you can make a ton one month and you go three
months without getting paid.
There's a lot of ups and downs your first year.
So be sure to keep your job just as a security blanket as consistent income.
And then after you've done three deals, four deals, five deals, that's when you should
start to consider quitting your job.
I mean, I know one investor did like 20 deals while working full time.
So you can definitely do both.
Real estate investing, believe it or not, it doesn't take up as much time as some people
think.
If you're buying a fixer upper, you do have to manage the project, but you should start
small.
So theoretically you're not rebuilding the entire house.
But just be sure before you quit your job that you have at least six months of income
saved up.
That you have experienced doing deals.
That you know where your next leads are coming from.
And maybe even just keep working in a part time capacity until you're 110% sure that
you can do real estate investing full time.
Okay.
To wrap this up, I would say focus mostly on just getting deals to the finish line when
you're first getting started.
Don't be so concerned about making a hundred thousand, two hundred thousand or crazy profits
on your first couple of deals.
Focus just more on getting deals under your belt, getting that experience.
When I was getting started, I joint ventured with a lot of more experienced investors where
I didn't make as much as I could have.
However, I saw how an experienced investor evaluates the deal, how they work with contractors,
how they sell the property, and then I modeled a lot of the best qualities of those more
experienced investors in my later deals.
So I think Robert Kiyosaki says, "You should work to learn before you work to earn."
And I think that's applicable here.
Don't be so concerned about making a million every single deal for your first couple.
Just be happy that you get a deal done.
Whether you make 5,000 or 50,000, you should just be happy that you've done another successful
real estate deal.
Hey, I did three successful real estate deals, five successful real estate deals.
Once you gain the experience, then you can kind of focus more on maximizing the profit
on every single deal.
Okay, so thanks for watching this video on real estate investing for beginners.
And if you're a new real estate investor and you have any questions, just drop them in
the comment section below and I'll be sure to answer them.
Additionally, please like, please share, please subscribe and I will see you in the next video.