Time is running out for the housing market.
A price crash is coming and if you're positioned correctly,
then you could benefit hugely even if you have no money.
We need to talk about making money,
raising funds, and finding deals, but before we can do that,
let's first work out what kind of investor you want to be.
Hi guys, it's Mark.
So there are two different types of real estate investors,
cash flow kings and capital gains champions.
After prioritizing one of these investing styles
in my early twenties, I developed an exact blueprint
that allowed me to grow my wealth
from nothing to millionaire status
in quite a short amount of time.
But what does each type of investor do differently?
Well, when a cash flow king is buying a house,
they're mainly concerned with how much money
it will pay them back each year.
For example, this is one of my rental properties.
Let's say for simplicity that I bought it
for $100,000 and it pays me back $8,000 every year.
This means it's given me an 8% return on investment.
Now the savvy viewers out there will be able to calculate
that this strategy will actually take 12.5 years to gain
back the full investment from cash flow alone.
But after that property is paid off,
it goes straight into your pocket.
Now I understand this may sound like a long time
but this investment pays for the rest of your life.
I even own multiple warehouses such as this one
and every month businesses pay me rent
to occupy the premises.
Look, I'm not gonna sugarcoat here.
This is a slow way to generate healthy returns long term.
It's no get rich quick scheme, but it's proven to work.
Capital gains champions have one goal
and that's buy low and sell high.
Personally, I see these investors more
like real estate entrepreneurs
as they're effectively running a business
where the product is houses.
These investors are made up of two types of flippers.
Firstly, the people that analyze the market
to find a cheap deal in order to flip it later on.
Secondly, those that add value.
This can be high such as building new homes
or just small such as minor renovations.
Picking the type of investor you want to be
is very important, as it will help inform
your entire strategy moving forward.
To decide, just ask yourself three questions.
How fast do you want to get your money back?
Capital gains investing gives you the ability
of short term flipping,
whereas cash flow investing takes years.
Do you want this to be a passive income stream
or an active job?
Obviously, cash flow investing is best for passive income
but doesn't make as much money
as if you're actively putting your time
into flipping properties.
However, this will impede
on your available time to make money elsewhere.
What level of risk do you want to take?
This is the main reason I chose to be a cash flow investor
as it's more about looking at long term trends
and not being affected by short term market movements.
But why is it so important to nail
down your investing style now?
Well, the clock could be ticking down,
as a report by Black Knight read.
"If sales continue to fall at the rate they have
for the past four months and listings continue
to build at their current pace,
inventory would cross a six month threshold by December.
Typically, the point at which the landscape shifts
from a sellers to a buyer's market."
This means you may even be living
in a buyer's market right now, especially
if you're watching this video a couple of months
after it is uploaded, making it even more relevant.
Now, this is very exciting news for first time buyers.
However, it could be somewhat worrisome
for people that already own a house
as most people's net worth is heavily linked
to the value of their home.
I felt the sting of the housing crash myself
after struggling to buy my first apartment.
The housing market crashed and the apartment next door to me
went up for sale at half the price I paid for mine.
Honestly, I was beating myself up over my poor timing.
However, looking back, I should have been grabbing this
as an opportunity and bought the apartment next door
to not only half my losses but benefit long term.
This would've been a fantastic investment,
as a few years later, they're doubled in price.
I get that it's easier said than done
and I wasn't in the right position financially
to take that opportunity.
That's why I'm gonna break down the two areas
you need to focus on in order to be a lucky buyer.
Well, I say luck, but the luckiest people I've met
are usually the ones that work and prepare the hardest.
Think about this next part like preparing for a battle.
Real estate investing is player versus player.
So therefore, by focusing on these two areas,
you will have the biggest arsenal to deploy
when going toe to toe.
Area one is something that you can start implementing
right now for free and that's increasing your credit score.
This will give you access to loans
that are much better interest rate,
potentially saving you thousands
when you invest in your future properties.
Now, I could go really in depth on this topic,
however, the fundamentals never change.
What you need to do is get yourself a credit card,
spend as a little bit on it every month
such as essential purchases only.
For me that's my adult diapers and fuel.
Just make sure to pay this back in full at the end of each
and every month and these payments will be reported
to the credit bureau and you'll be seen
as a reliable borrower.
Of course, other factors are at play
such as your credit utilization rate and average credit age.
So just make sure you never extort your credit lines
for every last drop and don't close accounts randomly
as it will only hurt your average credit age.
But if you get it right, then it should open up a lot
of doors for you, including mortgages
and look a lot like this.
I'm gonna be really honest with you about the second area.
You've gotta have a war chest.
And what I mean by this is a stash of money
you've put away for the sole focus of real estate investing.
Now of course, if you don't use this stash,
all the better, and we'll talk about using
other people's money later on.
However, having some money behind you is never a negative.
Anything you can do to increase your income
and add to your war chest will only make you
a more powerful buyer.
Back in the day, I didn't live in the best area
and I vividly remember bringing pre-owned cars
that I bought and done up to this nicer housing estate
and meeting potential buyers here.
This formed an illusion that I was doing better than I was,
which increased buyer confidence,
allowing me to squeeze as much money
from my side hustle as possible and fill my war chest.
A great way you can start filling your war chest
is by grabbing your free stock from public.com.
The link is in the description,
and it could be worth all the way up to $1000
so it's silly not to take advantage of it.
Right now, having extra income is more important than ever,
and that's because of the lasting effect
the pandemic has had on our financial system.
Let's say this briefcase full of cash is the bank
and this box is you.
Sure you have a bit of money
but nowhere near as much as the bank controls.
During the pandemic, interest rates hit rock bottom,
making money extremely cheap to borrow.
Thank you very much.
I'll have a bit of that, and on top of this,
many governments also gave away completely free money.
Yes, please.
Now, the smart people used this extra money to buy assets
like stocks and real estate, but as you can imagine,
this can only go on for so long.
And due to this excess of money supply,
we are seeing companies increase their prices,
leading to rampant global inflation
and the Fed hiking interest rates to combat this.
Put simply, money is now more expensive to get a hold of,
meaning less spending and less people buying assets.
Therefore, if you can fill your war chest
with as much cash as possible,
you'll be one of the few qualified buyers,
which is great because when there's deals to be picked up,
you'll be in the driving seat
but saving is just one way to get ahead.
Of course, I'm talking about using other people's money
to boost your buying power and reduce your risk levels.
So this is exactly how you can buy a house
for little or no money.
As I mentioned, lots of money has been flooding
into the economy, which is causing high inflation.
In order for them to beat the inflation rate,
they need to find a profitable place
to allocate their capital.
This is where you come in.
This means that people have money sitting
in their bank accounts, being eaten away by inflation.
Each year it can buy them less and less.
Raising money is the same no matter what industry you're in.
When I decided I wanted to start car racing,
I didn't want to pay for it myself.
It's an expensive hobby,
and my wife would've definitely killed me.
Therefore, I had to think to myself,
"What could I offer someone else
in terms of value in order to gain funding?"
This led me to create a variety of different
sponsorship packages, which gave their business exposure
on television as well as private hospitality days
for their employees to enjoy.
So whenever you are looking to gain money from someone else,
just bear in mind their needs and think,
"How can I add value to them?"
Because it's a two way street.
But back to real estate investing.
Of course, you could do rent to rent, which is when you take
out a long term lease on a property
and with the owner's permission, put it on a website
like Airbnb and rent it to short term guests
and profit the difference.
The value you are giving the landlord is the knowledge
that he will have a secure income
on that property for a guaranteed period of time.
I'm not a massive fan of this
because it's more like an extra job.
Of course, you can go down the more traditional route
of getting a mortgage from the bank.
However, there are more creative ways to raise finance.
That's why I'm more interested
in joint ventures and private loans.
Joint ventures are fantastic for people
that don't have the time to put into researching
the best deals available,
but do have the cash on the sidelines.
You can provide the knowledge, they can provide
some of the cash you're lacking,
and you can share the profits.
If you are very confident in your ability,
then a private loan could be the way to go.
As you can offer an investor a fixed return
allowing you to use the money to buy the property,
gain the cash flow, and also benefit
from the capital gains over the years.
Obviously, in order to do this,
you have to be able to pay the private loan back
on the agreed upon terms, but in order for this to apply
you need to know how to do one very important thing:
find deals.
Nowadays it's a lot easier to find deals
since we have the internet.
However, the internet is available to most people
and therefore there's a lot of competition
so you have to be smarter than the average Joe.
The main thing you really want to focus
on is speaking directly to the landlord
and that's easy to do on sites like Gumtree,
as they list their direct phone numbers
and they're pretty desperate to sell,
as Gumtree isn't exactly the first place
you'd go to sell your property.
This may sound like a bit of hassle,
but whenever there is a little bit of resistance in the way,
it forms a barrier to entry
and that's usually where the gems are uncovered.
I personally like to drive around
and have a look for badly maintained homes
such as those that have long grass or boarded up windows.
If there's one I particularly like the look of,
I'll knock on the door and speak to the owner
and see if they're interested in selling off market.
This means I'm drastically decreasing my competition
and increasing my chance of getting a good deal.
This is the perfect example
of a rundown house with potential.
I've actually had my eyes on this for a while
but I've been busy with other commitments
and I never follow through and it's very unfortunate now
because it's listed on the market.
It's clearly they wanted to sell,
but I'll keep my eye on it just in case anything changes.
There are tons of great ways to find deals
such as when a bank short sells a property
which is essentially when they sell a property
for less than what's owed, just to get it
off their balance sheet and call it quits.
If you are a cash buyer, auctions or share sales
can also be a way to find great deals.
The most important thing to remember is to have patience.
Don't jump into anything just because it looks exciting.
Make sure to run the numbers by a few different people
to make sure your excitement isn't clouding your judgment.
The same comes for skills,
which means you should always learn
and adapt when new technology comes along.
There are a lot of money traps
laying in wait for investors.
Therefore, I recommend watching this video next
but don't click on it just yet.
Make sure to subscribe if you want to grow your wealth.
Okay, I'll see you over there.