You're thinking it really big if you're trying to figure out how to become a
landlord of multiple properties. My name is Kris Krohn and today me and my
friends, Steven Michael Miller are going to lay out a roadmap of what
you need to do, to have one home turn into two, turn into many.
Alright friends, I got Steven Michael Miller joining me right here and we're
going have a super important conversation. In fact, this conversation
is so vital, that it can make the difference between whether you're a
hobbyist and a dabbler doing one or two homes, or honestly whether you become a
Titan of industry owning a real estate empire of hundreds of homes. and it all
comes down to whether you know how to do the Math, to just get that first property
done right, so that you can turn it into multiple guys we're talking about
becoming a landlord of multiple properties. Now you know, doing one that
one one home that's the start, but really once you get that first home under your
belt Kris, how do you start from there, to actually growing that out and become
that landlord of multiple properties. Three steps for you today, you're going to
want to take notes and write these down because we're running a clinic right now
that's going rock your life. So step number one is, you got to buy the home
right. Now this is the thing that a lot of people do wrong, because when they buy
real estate, they think, "oh, I just got to get in the game, so I should buy a home.
And the problem is, is that there's math that the banks are looking at. That
determines your ability to purchase repeat property and if you buy this
property wrong, then you're not going to have the math in your favor and you're
going to get have to get highly creative or even sell the home, to actually get back
in and do it again, right? So the secret Steven to buying that first house is, to
buy the house with a lot of what? A lot of equity. So equity is, really one of the
game changers and I just want to kind of do some basic math for you and I'll help
you understand why. When you... if you are using traditional banks, by the way,
Steven do you need to use banks to qualify for real estate? Absolutely not.
You absolutely do not need to, but it is low hanging fruit and if you're just a
beginner out the gate, and if you have good credit, it's a great easier way to
go, when you're just getting started. We got on our website all sorts of
alternatives that say, "hey don't ever let a bank tell you what you can or can't do
with your life or what you can qualify for." But when you buy this first house,
the reason why we want you to have some equity, is because generally, there's a
correlation between equity and cash flow. For example, if I bought a house with a
lot of equity, then that would mean that my payment is much lower, which means
that the spread from renting it out is going to be pretty significant. Like
let's just do a crazy example. I got a house worth a hundred thousand that I
get for fifty thousand. Somehow magically, I got it for fifty percent off. Well, it
I bought a house for $50,000 in my mortgage on it might be, three hundred and fifty
dollars a month. But if I pay a hundred thousand for it, my mortgage might be
seven hundred thousand a month. So let's just say I'm going to rent it for eight
hundred dollars. One gives me a one hundred dollar cash flow and one gives
me a four hundred and fifty dollar cash flow. That higher cash flow, is what the
bank's look at and they say, "ah... we can use that to allow you to qualify for
more real estate. So, if you didn't buy it with the ton of equity, like ten, fifteen,
twenty percent, there is another workaround to get that higher spread on
where your mortgage is and what it's rented for and it's a special device
that Steve and I call compassionate financing. Otherwise known as a lease
option. We got some recommended videos that you can watch to learn about that.
Because the lease option is usually going to pay you a couple hundred dollars
more a month on a standard property, below the medium. Okay, I want to jump in
here real quick, because this is really important as you're getting out there.
You're creating your power team, you're wanting to expand your portfolio beyond
just the first property. One thing that I get all the time from people, is "hey
Steven can I just go to my brother or my sister or my cousin? Twice removed who's
a loan officer and just have them work with me, right? Have them help me get
my loans or help me. I'll have them help me get into my next property?" And what
Kris is saying here is really important. There are some things that you
need to understand about the industry that will either allow you to be that
multiple landlord or not. And sometimes just getting the wrong loan, will... It'll
put a brake on everything you want to do, right? It'll put a brake on you being
able to get home number two or three or four or five. And and so understanding
that and working with a competent professional, who has been in the
industry for long enough. And I'm not talking about someone who just
got their license and you know you're you're their first loan. No, I'm talking
about someone who has been in the investment financing world for years. Who
knows what they're doing. They've been in there for five, ten, fifteen, twenty years.
That can be critical, because understanding how to create that
portfolio, how some banks may follow other banks and some banks not may not
like the way other banks, underwrite their loans. So they won't follow them
and that in that progression. That's really important when learning
or trying to become a multiple landlord. So Steven's got an absolutely right. So
step on, is you got to buy it right. You really got to be doing a lease option to
get a good cash flow on it or you got to buy it with equity to create a good cash
flow on it, because a good cash flow on step one with equity is going to need to
step two, which is debt to income ratio. Your DTI, listen, don't be afraid by big
words if you haven't heard them for. Because that's actually simple. There's a
finite amount of information. You learn it once you got it.
Debt to income ratio, is what the bank basically says they're like whoa, whoa
whoa,whoa you want another house, you already got one. Oh! you actually have a
positive income on this property, we'll totally let you do another. Here's a
general rule of thumb. The banks are usually going to count 70 or 75 percent of
the rental income against the mortgage. So, give you an example here. If I have a
thousand dollar mortgage and I have a lease option and my property is rented
for $1,500 a month, then roughly, there's between that fifteen hundred
dollar rent that I'm getting and the thousand dollar mortgage there's a five
hundred dollar spread. It just happens to be sixty six percent, that's below the
bank's seven years, seventy five percent. So the bank's going to look at that and say,
"Oh you bought a property and you got richer on paper, of course we'll end you
on another property." You start to see how important this property is. This is why
so many people actually contact us and say, "Kris and Steven, can I work with you
guys and your team because I don't want to mess it up because if I buy one
property wrong, it might preclude me from being able to buy more, in the easiest
fashion that's out there and available. So that second one is debt to income
ratio and Steven is right, you want to look for long enough sort of
experienced. And if you want to know what that means and how to do that here's the
simplest tip that Steven and I can give you right now on how to do that. Find out
how many deals a month your loan officer is doing. If they're doing between five
and ten a month, then they're doing a bare minimum basic amount, that means
that they've got good rapport with their lenders, good rapport with their banks.
The second tip is, work with a broker, so not just the bank, not a loan officer of a
bank, but a loan officer out of brokerage that works with multiple banks that
specialize in what Steven said investment lending. So if they're working
with multiple banks on the investment side and they're doing five to ten deals
a month, those are some bare minimums for you to actually sit down
then sound knowledgeable sit down be like, "so uh tell me about my DTI, my
debt-to-income ratio. Now you're the bomb okay? And that leads us to our third step
and obviously most fun step, Steven. Break it down for them. If you buy it right
with equity and then if you got your DTI lined up just right. What happens then?
Then you just buy again. I think one of the biggest problems that most people
have is not understanding that you can actually move forward and buy again. So
many of us, think that our credit is limited to buying the one or two cars
and buying the one home. And it's just not true. So if you're in that process,
you've purchased your property, don't be afraid to get out there and just do it
again. Like literally, just get in the mix again. Go out and find another home again.
Find a home that has great equity. Do the lease option or find another
option that allows you to get that DTI. Spread for yourself. And just get in
the mix and do it over and over and over again. It's just that simple. So friends,
buy right. Do it with the right debt to income ratio and then go back and do it
again. That my friends is how the cookie crumbles and that's how you get into a
pile of real estate. Friends join Steven and me live at one of our upcoming
events. Click the link. Spend four days, learn everything you can about wealth,
money, real estate. We're going to be sharing you, what the millionaire's,
what the billionaire's are doing and we're going to have an amazing time doing
it. So go ahead and check the calendar and we'll see you there.