If you want to get successful in the game of investing in real estate, there's specific
language you have to look for.
There's language to all things.
There's language to learning football.
There's language to learning an instrument.
There's language to business.
There's language to real estate.
If you don't know the language, you're going to struggle, you're going to fail and you're
not going to have confidence.
I'm going to share with you today the 11 terms that are ultimately going to give you a comfort
zone and ability to speak the language of real estate.
After you've watched this short video, those 11 terms will allow you to tell an entire
story of a property from start to finish.
And you're going to start and acting like a very successful investor.
So, if you want to be successful investing in real estate, there's some terminology you
have to know.
And you know, when I got started in the game of real estate, I was so intimidated by these
words that seems so big.
Or they were foreign or they were...
I don't know if I really knew exactly what they really meant.
And because I didn't have the confidence, it slowed me down.
What I want you to do today is I want to take you back to real estate school where we're
going to call it the school of the millionaires.
And it's what are the 11 things that you need to know.
The 11 terms that will really give you confidence in going out there and crushing it in real
estate.
So, I'm going to put these up on the board for you.
We're going to discuss these.
And basically these terms are going to tell the story of how you make a lot of money in
real estate.
The first one that you need to know.
Purchase price.
When you find a deal, you're going to hear people use this term.
What is the purchase price of the home?
What this is referencing is what are you getting the home for?
It might be...
It's listing price might be 200,000.
But I am purchasing it for $190,000.
Now, that might seem like a really basic term.
But you've got to know how to use that term with confidence.
So, you know, if I'm going to buy the house for $100,000.
They're asking 110,000.
I made an offer for 90,000 and in the end, we negotiated.
And I got it for 100 grand.
Hence my purchase price is $100,000.
The next thing you need to be familiar with is a downpayment.
When you purchase property, there's an amount of money that the banks are going to require
you to put down to feel like they can comfortably give you a mortgaging carry the rest of it.
They generally want you to have a job for 2 years.
They want you to have good credit.
And so, a downpayment on a primary residence can be 3%.
And that's assuming that it's a primary residence.
Meaning, I'm going to live there is what that means.
Primary residence, my residence.
Or it's an investment property in which case they typically traditionally want a 20% downpayment.
So, just practice using this language.
I'm putting 3% down on my primary residence.
Or I'm an investor and I'm putting 20% down with my purchase price of $100,000.
Do you see how good how you start sounding right now?
It's like a real estate investor?
Dope!
Pretty good!
Okay.
The 3rd thing that you need to become familiar with is then what is called a loan balance.
So, for example, let's actually say that I bought this house for 100,000.
And my downpayment was 20%.
What is 20% on 100 grand?
It's 20,000 dollars.
So, if I buy the house and I have a purchase price of 100 but I've put $20,000 or 20% down,
what's left?
Well, 100,000 minus 20,000 is $80,000.
This is now my loan balance.
This is the amount that I still owe before the house is paid off.
Is this making sense?
Listen.
This may sound really basic.
But having a comfort zone with these terms...
Listen.
If you're going to do deal.
I'm flipping a house right now, I'm going to make $100,000.
These are the terms that I use.
I'm purchasing the house for $338,000.
The asking price was much higher.
It's value is $545,000.
For downpayment, we're buying it cash.
So, the downpayment is the cost of the house.
$338,000.
My loan balance will be zero.
You see how that terminology helps create the story?
The 4th term that you then needs to know is what is called equity?
Equity is the opposite of you loan balance.
If the house is worth $100,000 and I have it paid down to 80,000, then my equity is
the difference between what I owe and what it's worth.
In this case, $20,000.
But it's not always what the downpayment was like in the scenario.
What if this house was worth $130,000?
And I was able to purchase it for $100,000.
And then I put 20% down and I have a balance of 80,000.
Well, it's worth 130 and then I owe 80,000.
The difference is, $50,000.
So, my equity in that example would be $50,000.
But let's say that I then put $10,000 or repairs in the home.
And then I bring up the value from 130 to 150 thousand dollars.
Now, the house is worth 150,000.
I owe $80,000 on it.
The difference is now, $70,000 of equity.
You see how important these terms?
You to know these?
You got to feel comfortable.
The next thing that I want to put here is mortgage.
Mortgage basically means, if you have a loan balance of $80,000, there's an interest rate.
We know it's owed.
And this amount of money owe to the bank add a 5% interest rate or 9% interest rate.
Or whatever percent interest rate is ultimately going to tell you, what is you mortgage?
In other words, what is paid every single month?
And so, you might say, "Well, my payment or my mortgage is..."
Let's say in this scenario that it is $600 a month.
There's a little bonus I want to put in here.
I'm going to put this little different colored.
And I want to call this PITI.
You're going to hear this from time to time.
It's stand for principal, interest, taxes and insurance.
Basically when you buy a house and the bank knows there's going to be a balance on it,
they want to make sure that the taxes are paid.
The interest is paid.
And so, the bank is charging you money for the principle and interest.
But most of the time, they will wrap in.
They'll take your annual taxes and cut it up to 12 payments for the whole year and say,
"We're going to tackle your taxes."
And we're going to tackle you insurance.
So, my actual principle and interest might be (in the scenario) $500 a month.
But let's say my taxes are $50 for my taxes.
And let's just say that my insurance is $50.
That's also really high.
But that's how I get to a total of $600.
So, your mortgage of $600 is often a reference that people also use with PITI.
Now, by the way, you're going to school right now with a millionaire who's shown you the
ropes on these important phrases.
Because when you know them and can use them comfortably, I literally I invite you to watch
these video, 3-4 times just to actually mirror exactly what I am saying.
Do examples and show that you can do this math.
Alright.
To be helpful here, number 6 terminology is what is my rent rate?
So, if I rent this property for $900 a month...
Now, we have a story.
I'm renting it for 900 a month.
But my mortgage including my principle, interest, taxes, insurance is $600 a month.
So, that would also mean my free cashflow is the difference between the mount that I
charge in rent, what my mortgage is.
You see that 900 minus 600 is 300 left over?
You would basically say this home cashflows $300 a month.
That's a positive cashflow.
Now, by the way, if you bought a house that you put 20,000 in and you're getting 300 a
month...
Do the math.
300 a month for a year is $3,600.
That is a percentage.
That's over 10% return.
That's closer to 15 plus percent return from what you put down just on the cash on cash.
It's a good deal.
The next one that that I want you to understand is sales price . At some point you're going
to sell this house.
Let's say that you're actually selling this house for $140,000.
And so, it's like, "Well, I bought it for 100.
It was worth 110.
I put some repairs in to it.
Now, it's worth $140,000."
Number 9, realtor commission.
So that you're aware the most successful real estate is usually transacted through through
the MLS.
It's Multiple Listing Service.
You have to be a licensed realtor to have access to that information.
So, a licensed realtor, there's 2 of them involved on every purchase.
You have the buying agent and a selling agent.
If I won the house then selling it, I hire a realtor to put it on the MLS.
So,everyone looking for a house can see it through the realtors.
But someone that wants to buy my house, also has a realtor.
And he's the buying agent.
So, it's generally accepted in America (at least) that realtors are going to each get
%3.
Now, I didn't tell you this when you're buying the house.
Because guess what?
The seller pays the realtor fees.
But now, we're selling this house.
And so, I've got a factor.
And if I sell it for $140,000, 3% of this is what?
$140,000 times 3 is going to be somewhere right around 4 grand.
It's 4 grand to the buying agent and it's 4 grand to the selling agent.
I'm going to pay roughly $8,000 in realtor commissions to sell this home.
Now, sometimes people get greedy and say, "Well, I don't want that.
I want to save money."
You just need to make sure that you have the successful strategy for marketing this.
Because for most people buying default, the MLS is the most successful strategy.
Okay.
And then number 10, this is a fun one.
The word is concessions.
Everyone, say it.
Concessions is essentially means that you can put anything you want in contract.
So, if I'm going to sell a house and now, someone comes along and wants to buy it, they
can ask for whatever they want.
They will typically say, "Well, in addition to you paying the realtor fee which is already
your contractually obligated to do, I want you to pay $5,000 in closing costs."
And those will be called concessions.
So, this is the money they want in addition.
It could be a price of action.
It could be you paying the closing cost.
It could be you paying for repair on the house.
Like, "I'm all good to go in this house.
But guess what?
I don't like the kitchen.
If you'll update the kitchen, then I'll buy this thing."
That means new counter tops, new this or that.
So, they can stipulate those things.
So, concessions.
They might say, " I want up to $6,000 that I could put towards closing cost, repairs
or whatever.
And I want you to pay that if you're going to sell me this house."
The last terminology, and it's a bonus is I want to just show you real quick a simple
way of calculating profit.
Because look at what we have now.
We have a story.
The story starts with 1 bought a home for $100,000.
I'm not living in it.
So, it's an investment property.
And my downpayment is less 20%.
My buddy put up money for the downpayment since I found the deal.
And he put $20,000 down on his credit to buy it with the bank.
Which means we have a loan balance of $80,000.
Because the home is worth $130,000 and we only owe 80, there's $50,000 difference.
That's the equity in the home.
Because we owe 80,000 on the mortgage, then our payment is $600 a month.
It includes principle, interest, taxes and insurance.
Good news is we're renting this property for $900 a month.
We're excited about that.
Because it means that we have a cashflow from our lessee of $300 a month.
Well, we sold in on the lease option using Kris's amazing compassionate financing program.
And as a result, we decided to help the family renting the home actually buy it.
They're buying it for $140,000.
We we're going to have to pay 3% commission on this side.
But Kris showed how us how to negate that because we had the superior strategy than
the MLS.
So, we save ourselves roughly $8,000.
They did however ask for $6,000 in concessions for some repairs.
And now, it's time to calculate our profit.
Here's your definition of profit.
Cashflow plus the capital gain plus the tax benefit.
If you add all of 3 of those 3 together, you're going to get a rough idea of what your profit
is.
So, let's say that you held this home for 1 year.
Let's say that you lease it out in another 300-dollar a month cashflow.
So, your cashflow for the year totaled $3,600.
The house is worth 130 but you sold it for 140 minus your 6,000 concessions.
Means you're netting 134.
You only owed 80.
So, you have $54,000 in capital gains.
Tax benefits, we live it up to the CPA.
Let's keep it simple and not worry about that.
You basically say, "Well, Kris.
In this story, we basically made...
If we add those 2 thing up, we made $57,600 on this deal."
You can now successfully tell the story of a home because you're familiar with the terms.
It is so important to understand these.
Because real estate is it's own language.
And if you can't speak the language, you can't transact this.
So...
Today, I wanted to give you that language and hopes that it would help you really develop
more financial freedom.
Now, I did mention that a way to actually get a higher cashflow and save money and have
biggest profits is actually doing something here called lease option.
And if you're new to the game of real estate, it is the most successful backyard strategy
I will ever tell you to learn.
And if you want to learn more about it, I actually created a video all about lease options.
I think that you're going to love it.
It's coming up right over here.
And if you click on it, you're going to see all of this but at the next level.
The next level of terminology.
And it comes down to how do I make the most money in the game of real estate.
If you want to learn about that, go ahead and click here.
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Le'ts get you actually making money with these new terminology in real estate.