What's up everybody, I am Jaspreet Singh, and welcome
to the Minority Mindset. If you've been watching our channel, you understand that
the best way to build your wealth is not by listening to your math teacher and just
saving 10% of your income in your savings account. Keep saving, Johnny, you'll be
wealthy one day, hopefully. The truth is, the real secret to building wealth is
investing. With investing, you're not buying things that lose you money and
make you poorer, like cars, and shoes, and clothes, you're using your money to buy
things like real estate, which will, one, pay you with cash, and they'll make you
wealthier. So today, I'm going to give you a crash course on real estate investing
because, I wish somebody would have told me these things when I was getting
started in real estate, but, before we get into it, make sure you hit that thumbs up
button below, and subscribe to the Minority Mindset YouTube channel, right
below the screen, and make sure you hit that little bell too, because if you don't,
then YouTube doesn't tell you when our new videos are released. First, so we're
all on the same page: how does real estate investing work? Real
estate investing is when you buy a property—not to live in yourself—but to
rent out to somebody else. You're buying property like a house, an office building,
a real estate building, a strip plaza, this way, you can let other people live
in, or use this property, and in exchange they're going to pay you rent every
single month. That's what real estate investing is, but let's talk really
briefly about what real estate investing is not. As much as your banker and all of
your friends want you to believe this, real estate investing is not going out
and buying a big beautiful fancy home for you to live in, because you think
you'll be able to sell it for a profit in a few years. That's buying a liability.
You're buying something where your money is going out, and your money's not coming
back. Real estate investing is also not buying a property, fixing it up, and then
they're trying to sell it three months later for a profit.
That's flipping. It's very active, and it's cool, and you can make money doing
it, but it's not real estate investing. Second, why should you be investing in
real estate? The simple answer is: so you can make money. The complex answer is: so
you can be financially free. Real estate is a tangible investment, and it is robot
proof, because people will always need a place to sleep,
people always need a place to eat, and people will always need a place to work.
When you are a real estate investor, you will be getting rent checks every single
month, even if you're sitting on the beach in Hawaii. Plus, real estate
investors get tax breaks. Now, while I am a licensed attorney,
I'm not your attorney, so if you have specific tax questions, talk to a tax
professional in your area, but, have you ever wondered why people like Donald
Trump can own a bunch of real estate, and they can make millions of dollars a year
in rental income, and then they can turn around and pay close to zero dollars in
taxes? It's because the tax code says that real estate investors get tax
breaks. And yes, it is legal. Let me show you what I mean with some numbers. If you
are a highly skilled, and highly educated, and highly talented heart doctor, you
might be able to make—my heart is lopsided, sorry—1 million dollars a year
from all the heart surgeries you do. Now, a million dollars a year is a lot of money,
but, because you are making this money from your job, you don't get to keep all
1 million dollars, because that's what the tax code says, you will get to keep
somewhere between 500,000, and 600,000 dollars after paying your taxes. Still a
lot of money, but you didn't get to keep all 1 million dollars. Now, on the other
hand, let's say you are a real estate investor, and you bought this property
for $100,000, and a few years later this property goes up in value to 1.1 million,
so you sell it. You have a profit of 1 million dollars, and now, you think that
you have to pay taxes on this 1 million dollars of profit, right? Well, the tax
code says: if you take this 1 million dollars and you reinvest it into a
bigger piece of property, you don't have to pay any money in taxes today. It's
called the 1031 exchange, and now you own a bigger piece of property, and you're
going to get bigger rent checks every single month, and now if you go back to
your beach in Hawaii, you're going to continue getting paid vs. if you were
this heart doctor, and you go to a beach in Hawaii, you won't be getting paid
anymore because, well, if you're on the beach,
you're not doing heart surgeries, and you're not getting paid. And in case you
were wondering, you also get a bunch of special tax breaks for the rental income
that you get, so if you make a million dollars a year in rent, you get a bunch of special
tax breaks for that too. Third, let's talk about some of the kinds of real estate
you can invest in. You have single-family homes, apartment complexes, shopping
plazas, land, mixed use properties, mobile home parks, office buildings, retail,
hotels... There's a lot, but, what you have to remember is that each piece of real
estate has two different businesses involved. You first have the business of
owning the real estate, and then you have the business inside of the real estate.
Look, you can own a CVS building without operating a drugstore, and you can own a
hospital without being a doctor, or you can own an apartment complex without
managing the tenants inside. When you own the building that CVS is renting, now you
own the property, and CVS is doing the work to find customers, and manage
inventory, and hire staff, and sell their stuff, your job is to collect the rent.
When you are a real estate investor, your job is to own the real estate, not run
the business inside. Now, this is easy to understand when we're talking about investing
in a CVS building, or investing in a hospital, but what about when you invest
in a house, or an apartment complex? Instead of being the person who gets the
phone calls when the tenant says: Hey, I didn't eat something too good last night
and I clogged the toilet. Can you come and fix this? You want to be the real estate
investor. You can hire a property manager who will get paid a percentage of your
rental income, and they will handle all the management work. So, they will pay
your bills, they'll make sure the tenant's paying on
time, and if they have to kick out a tenant, they will handle it for you,
this way you can focus on being the real estate investor. Number four, how do
you get in? If you want to invest in real estate,
you need money. Okay, you can buy properties with cash, you can go to the
bank and get a loan, or you can get a bunch of friends who have money, and you
can pool your money together to go and buy a bigger property. And then beyond
these three, you have this whole world of creative financing, but you need to
understand that the numbers have to make sense. You do not want to buy a property
where you're losing money every single month. Crunch the numbers, make sure that
the income that you're getting is enough to cover the expenses and put some money
in your pocket every single month. Once you've got your numbers down, make sure,
this is not a recommendation, this is a must, make sure you have a real estate
attorney, and you have property insurance for all of your real estate. You have to
do this, this is coming from somebody who's not just an attorney, but from
somebody who's a real estate investor who's been sued by a tenant because they
claimed that the bathtub got too slippery when it was wet. This is a true
story, so make sure you have an attorney and insurance. And number 5, you need to
understand the real estate market. Not only do you need to understand where
you're buying, which is the micro-level, but you have to understand the macro
level, which is that real estate has cycles. There are times when the real
estate market is booming, and then there's times when the real estate
market is coming down. Remember, when you're a real estate investor you're not
buying property so you can flip it in 6 months for a profit, you're buying it so
you can create a positive passive income, this way you can make money each and
every month, so when you're buying real estate, make sure the numbers make sense.
And second, you want to buy in a location where people are moving to. I have paid
premiums for real estate in locations, while still being profitable, because
people were moving into a location, and over the long run, this has proven to be
much more profitable. I've talked about this before and I'll link it in the
description below. The key here is to make smart money
decisions, and in order to do that, you have to understand what's happening in
the finance and business world, which is why we created the free Minority Mindset
newsletter. In our newsletter we break down the top finance and business news,
and then we show you how this news affects your wallet. This newsletter is
completely free, and you can subscribe to it by clicking the link up here or by
clicking the link in the description below. Thank you for watching, if you
enjoyed the video, hit that thumbs up button and share it with one friend, that
way you can help spread the word. Don't miss our new videos on entrepreneurship,
business, and money every single week at 7:30 a.m. Eastern
Standard Time, so, hit the subscribe button, and the notification bell below, that
way you actually find out when our new videos are released, and as always, KEEP
HUSTLIN' *