What is happening, BiggerPockets? It's Matt Faircloth. A lot of you guys want to get involved
in real estate investing, but you're like, how do I do it? We're in the middle of this
crazy world where it's hard to get a loan. There's corona crazy going on, maybe issues
with tenants and things like that. How do I get started in real estate investing? Now,
before I even get started on how to do it, let me outline in a little more detail the
challenges that real estate investors are facing right now.
Here's challenge number one. Challenge number one real estate investors are facing is it's
very hard to get a loan. It's very difficult to get a loan. Banks are not lending unless
you're buying really, really big real estate that's backed by Fannie Mae, Freddie Mac.
They're still lending, but not on very good terms. But they're still lending. If you guys
want to hear more about why you can't get a loan, check out the article I did for BiggerPockets.
It's a smash, it's blowing up. A lot of people are commenting on it. I'll put a link to that
article on BiggerPockets here in the notes. There's also a video attached with that that
you guys can watch, as well. But that's the why.
So you can't get a loan. That's one of the challenges real estate investors have. A lot
of tenants are having issues with income. People are struggling. People are going to
have a problem getting their bills paid and things like that. So finding good tenants
may be a problem. Finding good deals may be a problem, as well. Those are problems, deals,
money, issues with making sure your tenants can pay. And by the way, addressing issues
on why tenants can pay, can't pay, or that problem, really flows back to loans. It really
flows back to why banks aren't lending, is because they don't believe they can rely on
income. More on that in the video that I mentioned.
Now let's get to talking about what to do. So if you guys are just getting started in
real estate investing, this video is for you. If you guys are fully established real estate
investors, watch this, as well, because there's some good ideas here, but this is more for
folks that are just getting started, maybe don't own any rental properties or maybe own
one and want to get going, want to scale up, want to get into the game. This is for you
guys. This is a special one for you new investors that want to grow into the space of real estate
investing. So let's get going.
The first thing that new real estate investors should do, and this was pre-COVID that new
real estate investors should do this, but it's more important now, is do a house hack.
A house hack is something you could read more about through Craig Curelop's book on biggerpockets.com.
I believe it's called House Hack. So go to biggerpockets.com and check out that book,
biggerpockets.com/store to pick up a copy of that book, Craig's book on house hacking.
Phenomenal book. Now, let me write that down. House Hack. House Hack. The reason why house
hacking is a good move for new investors is, number one, the banks that lend on house hacks,
FHA, primary mortgage banks, those guys are still working. The video that I shot with
you guys and the article I wrote on BiggerPockets is really more about why you can't get an
investment property loan.
I know I've got a bunch of friends that are refinancing their primary residence. Primary
residence banks are lending a lot right now, because rates are super low. They're backed
by different entities. Their equations, their algorithms work differently than investment
grade properties do. And so as long as you've got a W-2 income or some means to show that
you have a job and something coming in, income coming in for yourself, and you qualify for
the mortgage and everything like that, you can get a primary mortgage on your home. So
even if you guys are watching this and you already like where you live, you should be
looking at refinancing because rates are crazy low right now.
If you are renting and you want to get into real estate, a house hack is what you want
to do. In a nutshell, and you guys, you have to promise me, you're going to read the House
Hack book, but here's what house hacking is in a nutshell. This is where you live in a
rental property that tenants also live in there with you in, right? So that was my first
rental property when I first got started, 15 years ago, was a house hack. I bought a
three bedroom, two bath, lived in one bedroom, rented out the other two bedrooms to two friends
of mine. My mortgage payment was 940 a month. Both of them were each paying me 500 bucks
a person to live in that house, so I was making 60 bucks a month and I was living there for
free. Awesome, right?
You don't have to live and share living space with people like that. You can buy a duplex,
a duplex, a triplex, or a quadruplex in a house hack, okay? Those all qualify for the
homeowner grade mortgages that I'm talking about. So for Fannie Mae, Freddie Mac, FHA
backed mortgages, and just conventional, straight conventional mortgages, you guys can buy a
single family home, a duplex, a triplex, or a quadruplex. You can buy those and you can
get just 20% on mortgages, if you want to lay that kind of money down. But you'd also
get, I think it's a 5% down mortgage. Great, easy way to lay a little bit of money down.
You can rent out the other units. If you run the math, you'll either cashflow or you'll
drastically reduce your living expenses.
And some people, I'm not saying, well you can or can't do this. You should read Craig's
book. But some people will live in the rental property for a little while and then eventually
move out. And what's great about that is you've got a 30 year fixed mortgage where the rate's
not going to change, and rates are crazy low right now. All reasons why house hacking are
a great way that you guys can invest now. Now, now, now, now, now. You guys, if you're
renting and you want to get involved in real estate investing, a house hack should be your
first move. That's number one.
Let's get going to number two. The second way that you guys can get involved in real
estate investing, not now, not tomorrow, not next week, not next Thursday, not wait till
corona is over, not wait until the recession is over, now. The way that you can get investing
now is to work with other investors. You can work with other investors. You can do things
like ... I'll just put that down. Work with others. Now, what work with others means is
collaborate with other investors. That's okay. Real estate investing is a team sport. Work
with other investors may look like find someone in your marketplace that you've already decided
you want to invest in and work with them on deals they already have. So, "Hey, can I help
keep an eye on your property manager for you? Can I walk your site? Can I go and meet contractors
and inspect their work?" You know, obviously respecting social distancing and COVID and
all that stuff, can you do those things for an existing real estate investor in the market
that you're in? You could do that.
You could be a wholesaler, nothing wrong with that. A lot of money in wholesaling. You could
go and find deals for distressed owners that need to get out, either because of COVID or
because of something else that they're looking to sell, and find other people that want to
buy right now. Okay. That's number two. You could wholesale.
You could build a real estate team. That's going to be hard for you to do when you're
just getting started, so I don't recommend you doing that, but you could go find people
that are good at finding deals, and people that have financing lined up, and people that
have all these things, and you could be the assembler of a real estate team. I don't recommend
it, but you could. You could try that. I highly recommend you guys joining a real estate team,
either as like a wheel on their bus. Brandon Turner talks a ton about that, and he's built
a phenomenal real estate team around him of people that are helping him buy mobile home
parks all across the country. So learn from Brandon. Do that, too.
There's other things you guys could be doing, too, for real estate teams, but just in general,
if you just find a way to find someone who's just a few steps down the road from you, or
maybe a bunch of steps down the road from you, and help them get where they want to
go. In general guys, if you guys want to join a real estate team or build a real estate
team, remember, it's a team sport, real estate investing. So you can find people that have
resources you don't have, whether that's track record, experience, whatever it is, that they
bring to the table, and you can build or join a real estate team and get involved in investing
now. Now, now, now.
Because the [inaudible 00:07:28] we get involved in investing, because remember, as I said
before, the biggest problem that investors have is they can't get financing. So if you
can't get financing for your deal, what do you do? And I'm talking about bank financing.
Banks don't want to do deals and stuff like that. Well, hey, guess what? I wrote a phenomenal
book you guys should check out. So that's raising your own money. So the third solution
is work with investors. Work with investors on your deals. Read my book, Raising Private
Capital. I'm not just self promoting, but I put a lot of what I know about raising money
from investors. I've raised millions of dollars from investors in private loans and private
equity. I took everything I've learned about raising money for deals and put it in that
book. So read my book, Raising Private Capital. You can go start working with investors.
So work with investors to do this. The investors, if you present the right deal to them, and
my book talks about how to do this, they can loan you money for your deal. And you can
put a mortgage on the property, and they can loan you money on a small rental, like a single
family home, whatever it is, a fixer upper, a BRRRR strategy, whatever you want to do,
the lender, they can lend you money on those things. If you want to do a bigger deal, and
maybe you take the team model, work with others to find a big deal, and you get some investors
together. Maybe you can take that property down without a bank loan. Just saying, maybe
you could put that together. There are different equity and lending positions you can put investors
in and just cut banks out of the deal. You don't have to work with banks right now. Banks
aren't lending, as I said before, in a prior article. Then cut the bank out for now. They'll
get back into the game. Don't you worry. Banks will get back into this thing once things
stabilize a little bit.
But if you want to get involved now, while banks are still figuring things out, then
you may have to bring some investors in. They're going to be short term bridges to get you
back to a position where banks are going to get into your deal or into the market in general.
Let's summarize real quick. If you are renting and you want to get involved in real estate
investing, you must house hack. If you want to do larger deals or do deals with people
that know what they're doing, and you can kind of watch their [inaudible 00:09:25] and
everything like that, you either need to work with others, build yourself a team. And consider
wholesaling. I consider it to be a team sport, as well, because you're really helping good
wholesalers have you as team players, because they're trying to find people that want to
do deals, and they'll go out and find those deals for them. Make a fee. It's okay. It's
a free country. They're allowed to make a fee for doing this. It's not a hobby. So it's
okay that you make money as a wholesaler in markups and stuff like that. So that's number
two, work on a team.
The third way you can do it is call it work with investors, alternative financing. And
I didn't mention this, because I haven't done that much of it, so it's not fresh in my head.
But seller financing is another way that work with investors. Seller financing, I view to
be really working with an investor, because who's the investor, the seller. They're really
like, "Hey, listen, instead of selling me the property and walking away, how about you
sell me the deal and you hold a mortgage, and we keep you in the deal a little bit longer,
either as an equity investor or as a lender?" So seller financing plays in this, too.
Now, for those of you guys that have other ideas, we need to use this article to help
each other. We need to use this article for ideas that we can help people get involved
now, because we want to build our wealth. We want to keep going. We want to participate
in this market. So if you guys have other ideas besides these three, I want to hear
them. I want to hear them either on the YouTube channel, in the YouTube comments, or on BiggerPockets
in the article, on the BiggerPockets comments, as well. Either way you guys want to leave
them, let's get in a great conversation. You guys have been phenomenal in conversations
we've had before, so let's help each other grow and collaborate and put some ideas out
there.
I appreciate you guys watching. Thank you. You guys stay safe and keep going, and have
a great and profitable week. Hey guys, thank you so much for watching this video. Here's
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