Real Estate

How I Used Real Estate to Pay for My Newborn Daughter’s College Education

Two months ago, my wife and I welcomed Rosie into the world — our first child. Last week, I had her entire college education paid for without spending a single dollar of my own money. How? Through a single real estate investment.

The theoretical plan was simple, if not necessarily easy:

  1. Buy a piece of property.
  2. Let my tenant pay off the mortgage over the next 18 years.
  3. Sell or refinance the property after it has been paid off.
  4. Use the proceeds to pay for my daughter’s college tuition — or whatever future she wants.

In my case, I purchased a four-unit property in my local area. Fixed up, it should be worth around $160,000 in today’s market; and assuming an average increase in inflation of around 3 percent, I estimated the property to be worth around $275,000 in 18 years. This should be more than enough to cover four years of Rosie’s college education — or if she chooses not to go to college (which I would support wholeheartedly), provide the funds to start a business.

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The beauty is, I’m not the one paying for it — my tenants are. Each month, the mortgage is paid down lower and lower, but the funds are coming from the rental income on that property. At the same time, the value of the property will likely climb each month to keep pace with inflation — increasing my wealth (and Rosie’s college fund) each and every month.

What’s even better, I bought this property for no money out of my own pocket. Sure, I could have put down a large down payment, but real estate is so much more fun when you can put together a deal using only other people’s money. For this particular purchase, I used a private money lender to fund the entire purchase and a rehab of the property.

Related: At Age 26, I’m on the Brink of Financial Freedom: Here’s How I Did It

Once the property has been completely remodeled, I’ll refinance the loan into a long-term, fixed-rate mortgage with a local bank. I call this the “BRRRR Strategy” (buy-rehab-rent-refinance-repeat), a strategy I’m very fond of and discuss in more depth in The Book on Rental Property Investing.

Four Steps to Success

Of course, this strategy is not going to work for just anyone who buys a piece of real estate. Instead, it took several key steps.

First, I had to find the right property — perhaps the most important step in this process. So, I spent a good amount of time prospecting for potential deals in my local market. This property came from a direct mail letter I sent to the owner several months ago. I determined my maximum allowable offer based on a thorough analysis of the property and negotiated hard to get the deal I needed. In real estate, you make your money when you buy — so don’t underestimate the importance of doing a proper analysis on any real estate deal.

(Continue reading on BiggerPockets…)

The 5 Lead Sources I Used to Find My 5 Latest Deals

In the good ole days of real estate — like 2008, 2009, and 2010 — you could pretty much pick up a rock, throw it in any direction, and hit a good deal.

Cheap real estate was EVERYWHERE.

However, things have changed dramatically.

Finding a deal through a real estate agent is tough. So I had a couple choices: I could sit around and wait for the next real estate crash, or I could get creative and find some different ways to find properties.

So I shifted my lead acquisition strategy, and it worked. Today, I don’t rely on just one method for finding deals — I rely on several. And I recently discovered that my latest five deals all came from completely different sources. So today I wanted to share with you what those five sources were.

1. HUD / MLS

So the first deal I’ll talk about came from the MLS — the Multiple Listing Service, which is where real estate agents post all the properties for sale.

I know I just said that I don’t get a lot of deals from the MLS, but this one is a little different. In this case, I bought a single family home that was a HUD repo. In other words, it was a foreclosure being sold by the United States Department of Housing and Urban Development.

The house was a classic “BRRRR” deal — buy, rehab, rent, refinance, repeat. It needed some work, so I was able to buy it for $70,000, put in about $30,000 worth of work, refinance it to get all my money back out — and now I’m sitting on about $60,000 in equity in that one property. Plus, I own a great cash-flowing rental in a great neighborhood. Thank you, HUD!

Related: 4 Simple Tips for Finding Incredible Real Estate Deals

Be sure to check out the latest HUD deals in your area by going to www.HUDHomeStore.com or simply talking with a local real estate agent.

find-deals-CAD

2. Zillow

The next property I bought came from Zillow.com. Now, I know Zillow often just lists properties already available on the MLS, but sometimes people post properties for sale by owner there.

That was the case with Bert, who had recently inherited a single family home and needed to sell quickly. After a little negotiation, we put the property under contract, closed on the deal, and are in the middle of the fix and flip right now.

3. Lead Gen Website

I have a pretty basic “I want to buy your house” website, but it works. In this care, Florence searched Google for “local house buyers” and came across my site. She called us up, we looked at the property, and we bought it a few weeks later. This fix and flip will likely become the most profitable I’ve ever done.

If you don’t have a lead gen website, don’t worry. It’s easier than it sounds. You can get a basic one using a site like SquareSpace.com or Wix.com, or you can opt for extra fancy and get some really great features with a company like LeadPropeller. And FYI — if you are a BiggerPockets Pro member, head to BiggerPockets.com/perks for discounts on LeadPropeller and other great services.

(Continue reading on BiggerPockets…)

4 Questions That Separate ‘Want’-repreneurs From Entrepreneurs

Michael Jordan once said, “Some people want it to happen. Some wish it would happen. Others make it happen.” Which kind are you? Do you take action to achieve your goals, or are you just waiting for what you want to materialize?

In other words, are you an entrepreneur or a “want”-repreneur?

Perhaps that’s an unfair question. After all, most of us can be a little of both at times. Some days, I’m an action-taker, and other times I realize that I’m dreaming but not taking steps to get there. So, how can you make sure you lean toward the “entrepreneur” side as often as possible? Easy — ask yourself these four questions.

1. Are you asking ‘if’ — or ‘how?’

There are few things in today’s world that simply cannot be accomplished. Everything else is on a sliding scale of difficulty. In other words, in today’s connected world, it’s rarely a question of “if” but “how.”

Therefore, if you want to move from want-repreneur” to entrepreneur, you must become someone who continually asks, “How?” rather than “If.” Because, asking the latter gets you nowhere: It allows your brain to simply say no.” It signals your return to evenings of Netflix and popcorn.

Related: Want to Be a Bona Fide Entrepreneur? Avoid These “Wantrepreneur” Habits!

Asking “how,” in contrast, gets your creative juices flowing and allows for solutions:

  • How can this business be built?
  • How can I raise capital?
  • How can I buy that commercial building?
  • How can I write a book?

By assuming that something can be done, you’re just a matter of time away from figuring out how to make it happen. For example, when I invest in real estate, I don’t ask if I can afford to buy a property; I ask, “How can I afford to buy?” That question has allowed me to acquire more than 50 rental property units, and I’m just 30 years old.

So, how are you going to reach your goals?

habits-hold-back-success

2. Whom are you learning from?

Three times a week, I play racquetball at my local YMCA against my good friend Robert. Robert has played, on and off, for almost as long as I’ve been alive; naturally, he kicks my butt every game. So, why do I keep playing him?

Because I’m getting better. Sure, I could play someone with less skill, but I’ve had to ask myself: Do I want to win games, or do I want to get better? If I wanted the former, I’d play against my 4-year-old niece, Jada.

The same principle applies to entrepreneurship. While it seems silly to take advice from someone less successful, want-repreneurs do it all the time. They take money advice from broke friends and entrepreneurship advice from family members who have only ever worked a day job. Half of the advice is bad, and the other half is far too kind.

On the other hand, entrepreneurs look for those who are wildly more successful than themselves. They want their butt kicked because it means they’re growing. They want to suffer because they know suffering produces endurance, and endurance produces character.

(Continue reading on BiggerPockets…)

7 Reasons NOW Is a Great Time to Invest in Real Estate

 

You work hard for your money, but does your money work hard for you? When you store your cash under your mattress (or in a bank if you aren’t a weirdo), it will produce next to nothing. However, when you put money into an investment, your dollars go to work for you.

Plain and simple: Investing is how you become wealthy.

But what is the best “job” for your dollars? How can your money earn the most and offer the least risk? In my opinion, one investment stands head and shoulders above the rest: real estate.

Yes, real estate is subject to timing; and there are times when real estate is not the wisest investment. However, I believe that right now might be the greatest time to buy real estate that we’ll see for another decade or longer. Here are seven reasons why.

1. Interest rates are incredibly low.

Although the “Brexit” scandal that just rocked the world and caused financial markets to tumble, there is one segment of investors who will benefit from the news: those with money tied up in real estate. Why? Two words: Interest rates. Low interest rates lead to low monthly payments, which is great for real estate investors looking to maximize their profits.

Interest rates, which have been at historically low levels for the past decade, have been slowly climbing over the past year, and until recently, most analysts believed that a series of rate hikes from the U.S. Federal Reserve was coming soon. But, with the shaky markets, the opposite has happened: Interest rates have dropped. According to a recent article, “The probability of a federal funds rate hike at the Fed’s next three monthly meetings has collapsed to 0 percent, and traders are assigning a less than 8 percent chance of a rate increase at all this year.”

Related: Even if You’re an Expert Investor, Catastrophe Can STILL Happen: This Story Proves It

Several years from now, we’ll look back and say, “Remember back in 2016 when you could get a mortgage under 4 percent? Those were the days!”

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2. Banks are lending once again.

In the collapse of the real estate market in 2007 and 2008, many banks tightened their lending standards to such a degree that obtaining a mortgage became next to impossible for many Americans. However, gradually over the past several years, banks have once again begun opening their vaults and relaxing their standards.

No, this doesn’t mean you’ll be able to obtain a 125 percent loan-to-value mortgage with no money down based only on “your signature,” as you may have done during the mid-2000s, but if you have a job and decent credit, obtaining a fixed-rate loan shouldn’t be impossible.

3. Prices are reasonable.

Yes, real estate prices have climbed significantly from their 2011 and 2012 lows. However, for those willing to hustle to find great deals, great deals can be found. This is especially true for investors who buy bank foreclosures. According to RealtyTrac, there were over 100,000 foreclosure filings in May of 2016, showing only a mild decrease over the past year.

For more on buying foreclosures, check out my article “How to Buy a Foreclosure: The Comprehensive Guide to Buying a Foreclosed Home.”

4. Technology has made investing significantly easier.

In the “olden days,” investing in real estate took a significant amount of driving around, talking to people, waiting, looking at hundreds of pages of documents and other difficult, time-consuming tasks. Today, technology has made investing in real estate significantly easier. For example:

(Continue reading on BiggerPockets…)

BRRR Calculator

Let me ask you a question:

How would you like to spend tens of thousands of dollars fixing up a property, get it rented out, and then realize that it doesn’t actually make you any money?

Doesn’t sound too fun, does it?

My name is Brandon, author of The Book on Rental Property Investing, and today I’m excited to give you a tour of the brand-new BRRRR Calculator from BiggerPockets. This incredible tool will allow you to analyze a fixer-upper rental property — including cash flow, cash on cash return, total investment, and more — in under five minutes.

Sound too good to be true? Well, stay tuned, and I’ll show you how easy it can be.

(Watch the video below or read the transcript that follows. Or both. The choice is yours!)

What is BRRRR Investing, Anyway?

So before I show you the calculator, let’s all get on the same page on exactly what it means to “BRRRR” a property.

No, I’m not talking about buying a house in the middle of winter. I’m talking about:

  • Buying a property (usually with short-term funds like cash, private money, hard money, or a partnership),
  • Rehabbing that property,
  • Renting that property out,
  • Refinancing the property to pay off the original loan, and then
  • Repeating the process over and over.

If you want to learn more about this fantastic BRRRR strategy, read our free eBook on the subject at www.BiggerPockets.com/BRRRR.

OK, so let’s get to the tour.

First, you need to access the calculator, which you can get to by going to www.BiggerPockets.com/analysis. Once you click on the “start an analysis” button, you’ll have the choice of several different calculators. Choose the BRRRR calculator.

Real_Estate_Investment_Calculator

Related: How to Calculate Cash-on-Cash Return

Page One of the BRRRR Calculator

The BRRRR calculator is similar to the BiggerPockets Rental Property Calculator, the Flipping Calculator, and the Wholesaling Calculator in that it contains three pages, followed by a final results page.

(Continue reading on BiggerPockets…)

 

real-estate-quit-job

In the summer between my junior and senior year of high school, I spent a few hours working at a local strip club.

But don’t worry, Mom. I was just helping my plumber boss fix a leak. And it was closed that day.

I’ve also worked on a congressional campaign, run a handyman business, and spent time as a banker.

I was on a streak of pretty terrible jobs.

That is, until I discovered real estate.

Real estate has some tremendous superpowers — not the least of which is its ability to get you out of a terrible job. Today I want to share with you five ways real estate can make that happen.

Here we go.

1. House Flipping

I know you’ve seen the TV shows. The annoying guy and attractive woman walk into the dirty house, the man takes the sledge hammer, pounds a hole in the wall, and 25 minutes later, they are touring the completed property and counting their profit.

Although house flipping might be a wee bit different than what you see on TV, you get the idea: buy nasty houses, fix them up, sell them for more, and make it rain.

house-flipping

2. Cash Flowing Rentals

Obviously, being a landlord isn’t the most glamorous job in the world, but behind male modeling, it’s a close second.

OK maybe not. But owning rental properties can be a great way to get you out of a job.

Think about it: If you made $200 per month in cash flow per unit after all the bills have been paid, how many units would you need to quit your job?

Twenty? Fifty?

Whatever the number is, that’s your goal. So go out and start collecting rentals.

Related: 5 Ways to Make Enough Side Money to Eventually Quit Your Job

3. Wholesaling

Imagine a scenario with me: Your neighbor tells you he wants to sell his go-kart for $500. You know that your cousin Jim-Bob has been looking everywhere for a go-kart. So you get the go-kart for $500, and then you charge JimBob $800 and make a cool $300 for just facilitating the deal.

Makes sense, right?

Well, wholesaling is pretty much the same thing. You find great deals, you find people who want great deals, and you put them together and make some cash on the spread.

Of course, there are a lot of rules and laws that govern this practice — and it’s easy to get yourself into trouble with wholesaling because you don’t want to break the law of “practicing real estate without a license.”

But if you do it right, you can wholesale just one or two deals a month and make enough to quit your job.

4. BRRRR Investing

BRRRR stands for “Buy-Rehab-Rent-Refinance-Repeat.”

(Click to read on BiggerPockets…)

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