BiggerPockets Real Estate Podcast - 120: How to Find, Analyze, and Finance an Incredible Real Estate Deal!

Episode Date: April 30, 2015

Today on the BiggerPockets Podcast, we’re changing things up and doing something we’ve never done before! Today we’re bringing you over an hour of actionable advice on exactly how to find real estate deals (even in a hot market,) how to analyze those deals (so you don’t lose money,) and how to finance those deals (even if you have very little cash!) Don’t miss this exciting and totally different show… a taste of our weekly webinar! In This Episode We Cover: A bit about Mr. Brandon Turner and what he does at BiggerPockets Brandon’s first property- bought when he was 21 years old How to find an incredible deal, even in a hot market Using direct mail to find deals Two methods of using Craigslist Using the BiggerPockets Marketplace Using eviction records to find deals How to Analyze Deals, including a demonstration of the BiggerPockets Calculators The top 10 mistakes investors make when analyzing deals How to Finance a Property The different types of loans you can use What is Seller Financing? Using partnerships to fund deals Hard money vs Private money Lenders And SO much more! Links from the Show: BiggerPockets Webinar BiggerPockets Webinar Replays (for Pro) Webinar Replay on the most recent show (only until Monday evening) Driving for Dollars Bible (blog post) BiggerPockets Marketplace LoopNet Costar #AskBP 008: Tragic Story BiggerPockets Analysis Tool BiggerPockets Keyword Alerts BiggerPockets Meet BiggerPockets Pro BP Podcast 052: Buying Apartment Complexes, Raising Millions, and Building a Profitable Business with Ken McElroy BP Podcast 076: Growing Your Real Estate Company Into a $30 Million Dollar Business with Brian Burke BP Podcast 014 : Cash Flow, Creative Finance, and Life with Ben Leybovich BiggerPockets Forums BiggerPockets #AskBP Podcast BiggerPockets Calculators Text to Join the Webinar Just text “bpwebinar” (without the quotations) to 33444 to join this week’s webinar Books Mentioned in this Show Brandon Turner’s The Book on Investing in Real Estate with No (and Low) Money Down The ABCs of Real Estate Investing with Ken McElroy Tweetable Topics: “The harder I work, the luckier I seem to get.” (Tweet This!) “The cake is cashflow.” (Tweet This!) “Do your math even better because having money makes you dangerous.” (Tweet This!) “It has nothing to do with intelligence or luck, it has to do with taking action and working hard.” (Tweet This!) Connect with Brandon Brandon’s BiggerPockets Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast. Show 120. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dork and hosts to the BiggerPocker. Pockets podcast here with my co-host, the man, the myth, the screw up himself, Mr. Brandon Turner. Now everyone knows about it.

Only like 11,000 people knew about it before I deleted that, but maybe we should, maybe we should tell them what we're talking about. We should. We should. Well, you see, last week, we launched a new podcast, which we're going to talk about in a minute, but in so doing, somebody broke the original Bigger Pockets podcast. I didn't break it. I just lost it. There's a difference. I lost. You know, lost, broke. Lost the podcast.

You know, there was, there was, what, show 119 and then that was it. That was it. Somehow was it. Yeah, there was a issue with the RSS feed and trying to all this techy stuff that was way over all of our heads. So speak for yourself. We spent hours trying to figure this thing out. And I think we finally figured it out. We did. We did. So the podcast is back and we are sorry to those of you who couldn't get to, your fix of the Bigger Pockets podcast over the past couple days. We apologize. I don't apologize. I apologize for Brandon. I've got to put up with him.

It was all just a big sham just to build up publicity, right? Like what is that phrase? All publicity is good publicity. Isn't that thing? Right? So yeah, everyone's like, why is the podcast broken? And I could be like, well, because of the new Ask BP podcast. Oh, there you go.

You're going to find out in 10 years that this was all just on purpose. It was brilliant. It was brilliant. Yeah, anyway. All right, guys, so check it out. We do have a new podcast. It is called the Ask BP podcast, otherwise known as hashtag Ask BP. So the Ask BP podcast is unlike this show. It's short, quick segments that answer a single question. And a lot of these shows are going to be hosted by Brandon, but we'll have me do some. We'll have other guests hosts of the Ask BP podcast. And basically, these questions come directly from. you. You guys can post your questions on Bigger Pockets in the Bigger Pockets forums, on Twitter, on Facebook, wherever you want, just use the hashtag Ask BP. Just to give you a quick, so what we're talking about here, I'll just read the list of what we've covered so far. So today we came out with, should I use a home equity loan slash line

of credit to invest in real estate? How do you submit a lowball offer without offending the sellers? How do you organize your real estate business? How setting goals can change your real estate investing life? When is the right time to quit your job? Should you get a real estate license? and then the first episode was what is the bigger pockets as BP podcast. So anyway, yeah, check it out. The good advice, hopefully you guys will like what I've had to say. And yeah, keep your questions coming. I'm excited.

It should be fun. For sure. And the cool thing is the show is off to a great start, despite, and I think it might have been Brandon's grand plan to have the main BP podcast down so this thing would do well. But now we're doing great. Keep the feedback coming. Keep the ratings and reviews coming on iTunes. at last check, we were ranked number five of all business podcasts. That puts us ahead of Mr. Dave

Ramsey. It does. Which is pretty exciting. If you go on the investing category, you'll see we made a bigger pockets Dave Ramsey sandwich surrounded by both our two podcasts. So kind of cool stuff. We did. Yeah, I already got, let's check out this. I got 42 ratings and reviews already. And every single on the SPP, every single one is a five star. So you guys rock. Thank you so much. Thank you guys. For example, I'm just going to read a couple here just because I like to. So Austin Graves said, amazing, just like the full show, these are great. Let's see, this one says from Robert 98.

Yeah, whatever that. Yeah, Robert 98 something. I enjoy Josh and Brandon on Bigger Pockets podcast. SBP seems to have a same personality in a more concise message. I like this format for a morning pick me up. Brandon, save your bear hug for someone else. I'm all good. Keep up the good work.

I said I'd give a bear hug to whoever left us a review. So that offer still stands. There you go. You guys. All right, guys. Well, let's keep moving here. Some other little announcements. Bigger Pockets is hiring.

We are. We are actually, we are hiring. We're looking for another content creator. We're looking for somebody who can pretty much be Brandon, do kind of what he does. Help us out on podcasts, create videos, write content, you name it. We're looking for somebody who has experience in real estate, who can write really well, who's got just great charisma, who can do fantastic job on videos, and who's smart and savvy and looking for a job.

This is a job. This is a real job. It's a nine to five quote unquote job. But yeah, if you're looking for a new job and love producing content and have lots of experience in real estate, we'd love to chat with you. and potentially bring you on the Bigger Pockets team. And here's the cool thing about it. That job, that person who comes on and ends up getting that position, think about it.

Your visibility to thousands and thousands of real estate investors around the world through the Bigger Pockets content machine will be massive. It'll be massive. So if you're interested, apply at jobs at BiggerPockets.com, submit a few pieces of content you've written, submit a piece of video content you've created, and we'd love to evaluate you, and we'll take it from there. Do you have to live in Denver? We would definitely prefer Denver. However, we will consider people outside of Denver for sure, but Denver is absolutely preferred. Cool. Awesome.

Next thing, let's see. By the way, today's show is a very different. You guys aren't like this, but we'll get to that in just a minute. But first of all, last week on the podcast, we did talk about there was a 10% off sale on the book on Invest in Real Estate with No and Lomoney down using the code gram g r a h a m that was our guest last week and at the very end of the show i said that not everyone listens to the end so i thought i'd repeat it here so if you did want to buy that if you have not bought it yet that's not on amazon that's only on bigger pockets so biggerpockets so biggerpockets dot com slash no money 10% off using gram and then today today we should talk about today's show uh yeah is is it's very different we decided that we would switch it up because

we want to introduce the listeners to the podcast to another format of content. And that format is the webinar. And I will tell you that I personally was not a fan. I was not a fan of webinars until I learned more and better understood what they were. And so we want to present a webinar through this podcast so you guys can see just how good our webinars actually are. And we are putting these webinars on weekly. It's tons of free content to help people. Yeah, it's a class, basically. It's a free class. People think of webinar and podcasts is the same. They're not the same. It's not an interview. It's not a, you know, it's basically me in front of a camera for an hour and a half teaching you something. So, I mean, everything from we've done a show on the five roadblocks

that new investors face. We did one on the 10 must follow steps that all real estate investors should follow. We did one on how to quit your job using real estate. We did one on how to buy multifamilies, did one on how to, man, how to wholesale, all of these different. Every week I try to do a brand, I try to do a brand new topic every week. And today we're actually going to play you a recording of one of the previous webinars I did just a month ago or so called How to Find, Analyze and Finance an incredible rental property deal. And this thing is packed with content.

Yeah. So if you're driving your car, you're probably going to want to take some notes. So, you know, drive with your knee, grab your pencil and paper. Just kidding. You cannot listen to Brandon. No, but there's a ton of just like how to tips in this website. on today's podcast. So anyway, hope you like it. Awesome.

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worth more than you think. Find out how much at Airbnb.com slash host. And really quickly, you want to tell them. And you guys, we're sorry, this is such a big lead in here. But, you know, again, this is kind of a different show. We've got a bunch of announcements. And so we apologize. Talk about the replay room. Sure. Oh, yeah. You're right. So anyway, if the webinars, this is kind of how we structure the webinars. Every week we do a webinar, they're usually on Thursdays. They are live. If you show up live, you get in on the fun. If you don't make it, I usually try to record the webinars. I don't always record them. Sometimes things go wrong and sometimes we just don't. But I try to record them. And if I am able to record them, we take

them and we put them up for free for everyone to look at for the next five days. And after that, they go behind the pro wall. So any pro members can watch all the replays whenever they want. But free members, you got to watch it live or if I record it in the next few days. So anyway, if you're a pro member, check out biggerpockers.com slash pro replay. And we'll see all the previous ones. Cool. All right. So today's show, we're going to talk about we, of course, we being Brandon in this webinar. We cover the 10 best ways to find properties even in a hot market. The 10 biggest mistakes people make when analyzing properties and end up buying terrible deals because of those mistakes. If that's you, obviously you want to pay attention.

And 12 ways to finance an investment property, even if you have no money. Again, lots of great content. So we definitely recommend you take out a pen and take some notes. And then two more things, and then we'll get to it. Number one, there are slides that go with this. You don't need them to be able to listen to the webinar. But understand if you do show up to a webinar, there's actually some. slides and I'm actually there on video talking to you, but today you'll have to use your imagination.

And then lastly, I want to invite everybody to come to the next live webinar. We actually got this brand new system worked out today. So you can actually text us with your phone, text us to sign up for the next webinar. So to do that, all you have to do is get out your phone and send a text message to the number 3344. Again, send a text message to 33444 and include only one thing on that text message. Don't write anything else. Just write the word. Be P.P. webinar, one word, BP webinar, BP, W-P-W-E-B-I-N-A-R. And you'll just follow the steps that come after that. We'll text you back with instructions on how to actually join the webinar.

Perfect. All right. Let's get to it. Let's get to it. Take it away. All right. This is the webinar on how to find, analyze, and finance an incredible rental property deal. Here we go.

So, welcome, welcome everyone to the webinar on how to find, how to analyze, and how to finance an incredible real estate deal. Those are what we're going to, those three things we're going to talk about today. Let me give you a few quick webinar instructions, I guess, a few things. First of all, you don't need a microphone, even though go to webinar said you might. Don't worry about that. You don't need one. You're only, I'm only one talking, so we're not going to have like a million people talking all at once. If you can't stay for the whole thing, I would recommend we're going to get very, very close to capping this webinar out. Go to webinar caps us at a thousand people and I had 2,500 people sign up for the webinar. Now you're thinking I'm crazy,

but trust me, I know this, that only usually a third to a half of people ever show up to a webinar, usually somewhere around 40%. The rest of the people fall off and never actually watch it, which is kind of sad that these are the action takers. So first of all, high-fived everyone here for being an action taker and showing up. That said, I would caution you not to leave. You might lose your spot just in case we do hit that max. We very well might. So let's see, a couple more housekeeping things. I'm going to try to record this webinar. I can't guarantee that it's going to actually be recorded. GoToWebinar is a very finicky software that I've tried to record many times and it does not record. So if I can record it, I will send you out a replay or a replay tomorrow,

but if I can't, I apologize. So if you've been on a webinar with me before, sometimes I'm able to record, sometimes I'm not. It's just kind of a toss-up. Really annoying. So with that, I think we're pretty much ready to get started. Yeah, I don't know. Let's do this. thing. First of all, first slide I want to say is thank you for showing up tonight. Thank you for taking action for being somebody who showed up on time and, you know, present with us. I love this. You guys are action takers and I love it. So thank you for giving me your time. I know there's a lot of things you can be doing tonight, busy family life and all that. The fact that you're spending it with me is an honor. And hopefully I can deliver some amazing content,

amazing education and help you become a better, smarter, real estate investor through what I'm to talk about today. I mentioned this earlier too, but I'm going to cram a lot of information into what we're about to talk about. I mean, a lot of information. So I would highly recommend that you take some notes. Grab a piece of paper and a pencil and take some notes because seriously, I'm going to give you so much information. This is like a crash course in finding, analyzing, and financing property. So with that in mind, pay attention as close as you can. Try to avoid the evil cell phone, which distracts you in Facebook and all that. Close your browser windows. Trust me, I know how webinars work.

When I'm on a webinar and I have Facebook open, I tend to like, oh, I don't know what he just said for the last five minutes. So I want to encourage you, you're here. Give me your full attention and I will give you mine. So moving on, so first of all, thank you. So what are we going to cover today? We're going to cover three main things

that you already know about, because I talked about them before. We're going to cover how to find properties, even in a hot market. Because a lot of places all around the country, it is a hot market today. We're talking about how to analyze so you don't buy an absolutely terrible deal.

that would be bad. We're talking about how to analyze those properties, and we're going to talk about how to finance those properties, even if you don't have a lot of money. So a lot of people know that I wrote the book that's technically called The Book on Investing in Real Estate with No and Low Money Down. So we're going to talk about a lot of the strategies from that that you can use to invest in real estate, even if you don't have a lot of money. That is generally everyone's favorite part of this webinar.

I've done this one a couple times before, or at least similar. I actually changed a bunch of stuff up today just to make a little bit new information. But when I've done this sort of theme before, people love the financing part of it. Definitely the best kind of content people like. So stick around for that. I'm also going to be giving away at some point soon towards the end of the webinar, a free Bigger Pocket Pro Membership to somebody here, a pro annual membership, which is a $290 value.

I'm giving away to one of you on this webinar. So stick around for that too, and I will give that away later. I'm also going to tell you how you can get my book and you can get it for free later, but we're going to deal with all that later. Right now, we're going to talk about, I'm going to ask you a question. I got a poll. Go to webinar, let me ask polls.

So my poll question, just to get an idea of what everyone on here is doing, is going to be, what kind of investing are you interested in? That's the question. So I'm going to pop this up on your screen in about three, two, one. There we go. Go ahead and let me know what kind of investing are interested in. You can choose multiple options if you want or you can just choose one. But this will give me a good idea of kind of how I should cater my talk today.

What kind of real estate is this audience today? in. So go ahead and type it in. I'll give you guys about 30 seconds more and then we will move on. I wish you could play some music here. Do do do do do do do do do a few more seconds. If you have not voted yet, go ahead and vote real quick. I'm going to give you five, four, three, two, one. Somebody got really mad at me right there, didn't they? Like, wait, he towed it too fast. All right, the answers of the poll. I mean, let me give you the results. 22% of people here today are interested in rental properties.

That's great because I love rental properties. That's my bread and butter. 55% of people are interested in house flipping. I also love house flipping and I do, I did a lot more of it in the past, but I do a little bit of it now and I'm trying to do one right now. I'm going to talk about that later. I'm actually going to walk you guys through an actual deal I'm trying to put together right now.

I'm going to show you exactly how I'm putting it together. Kind of cool. Or at least kind of how I analyze that deal. You're going to analyze a real-life deal that I offered on yesterday. Oh, this morning. I offered this morning on it. I'm going to walk you guys through that time today. 28% of people are interested in wholesaling. Wholesaling, if you don't know what that is, we'll talk about it later probably, but

just finding a good deal for people, for finding good deals for house flippers and rental owners and then selling the deals to them quickly. Wholesound is a very cool strategy. 13% of people are interested in notes, mortgages, and paper and 6% are interested in something else other than that. So very cool. I'm at one more poll I'm going to launch real quick. just for, I want to get an idea of how many rental properties you currently own.

Because I like 92% of you interested in rental properties. I'm assuming a few people here are pretty experienced. So go ahead and just fill that out real quick. How many rental properties do you currently own? And I'll give you guys about eight more seconds. So eight, seven, six, five, four, three and two and one. Again, people are probably like, you tell it too fast. All right. What kind of investing, I mean, what kind of, how many rental properties do you own?

The answers or the results are, 65% of people here have no rental properties. So we're a little bit leaning heavy towards the newbie side. That's okay. I love that. I love talking to newbies. 18% of people have one rental property. That's a pretty big chunk. 15% of people here have 2 to 10. And 2% have 11 plus. So we've got a good mix today. Hopefully I can cover both the beginner aspects, keeping the cookies on the lower

shelf and hopefully I'll also be able to give you guys some new information for those who are more experienced some things you might learn. All right, moving on. One question before we get to the actual how to find properties. Some people want to know a little bit more about who we are. So let me just give you a 10 second description of what who Bigger Pockets is. That's who this entire webinar is being presented by. Bigger Pockets is a real estate investing social network, marketplace, and information hub. It's my assumption that everybody on this webinar is probably already a bigger pockets webinar, but if, I mean, member, but if not, basically we have our social network. We're like Facebook. We have a marketplace. You can buy and sell deals or whatever else

you might need. And people do deals all the time together. And information hub. We are a hub of the most information you'll ever find in the entire world on real estate investing stuff. Anything you want to know about, you can find a bigger pockets through forums, blogs, our podcast, webinars like this, articles, there's private messages. You can have conversations, build relationships with people, get information that way. So much information. It's crazy, a little overwhelming, but amazing. So we're going to talk about a little bit more, maybe about how to kind of process that stuff later.

But real quickly about me, just so those people who don't know who I am, my name is Brandon. I am a real estate investor. First and foremost, I will always be a real estate investor. I love the game of real estate. I love this. And I'll talk about that in a second. I'm the VP of Growth at Bigger Pockets, which means I spend a lot of my day hours working on growing bigger pockets of the site and the members themselves, how to make people better investors.

I'm also the co-host of the Bigger Pockets podcast, which is the world's largest and most downloaded, most popular real estate podcast in the world, which is kind of awesome. I'm a musician a little bit. You can see my drum set behind me. I don't ever play that. That's what kind of musician I am. I do play guitar as well. I'm a blogger. I love to write. I love to write. I'm an author's too, so I wrote a book a while ago. I write another one right now that'll be out in July. and I'm a math nerd. And finally, I'm a cat and dog lover. Some of you earlier already saw my dog, Charlie, but if not, this is him.

Everybody, a collective. Ah, right? Isn't he cute? He's probably the cutest dog ever. I'm sorry, your dog is not this cute, but, you know, there can only be one cutest dog ever, and Charlie wins it. A little bit about my background with real estate. Let me show you something.

I've never shown anybody this on Bigger Pockets in my life. This is a very first time ever that I'm showing this picture. This is my very first investment property right here. That is not my car. I took this off of the county website. This is the first property I ever bought back when I was 21 years old. I bought this property for right around 83,000. Rehabed it for about 20,000 while I was living in it.

And then I sold it for about 139. So I basically flipped my own house. A live-in flip, a flip-in, house hacking, whatever you want to call it, that is what I did in this property. So it was really, really, really nasty before. You can see now it's at least kind of, kind of cute, but it still, it was a pretty cheap house. It was a pretty lower, lower middle class, lower income area. But again, I was 21 years old. What did I, you know, that's what I did. So I got

into this game, and I didn't even know what I was doing. I got lucky with this property. I'm not even going to say that it was anything's skill. I mean, I got lucky. And here's why. I bought it when the market was at the peak, and it was looking over the edge. And I sold it on Halloween of 2007. And like, the stock market was crashing all around and real estate was dying. And it was a disaster. time and I got out just in time. And I guess it taught me like, one, I was very lucky. I mean, thank goodness. I did not, you know, lose my shirt like a lot of people did. But it also taught me that, you know, to be more careful, you know, I saw how close I was to being burned. That house a year after I sold it or even six months after, it was worth about 110. And today it's,

you know, regained a little bit of value. But man, I got out at a good time. So that's my first property. It was a flip. It was living. I didn't know what I was doing. I got lucky. My second property, though, was this one. This one I bought right after that. And again, I didn't also know, I didn't really know what I was doing, but I purchased it for 74. It is actually two houses on one lot. So this is just the front house. There's another little house in the back. If you guys know about my story, this was a property that I bought. And then we later found out that when a bunch of people were taking pictures of it, that this was Kurt Cobain's actually very first childhood home. He actually lived in both houses in the back and the front. And, you know,

People come by and take pictures of it all the time now. I should put like a plaque and charge money or something, but I haven't. Anyway, we bought it for 74,000. We have it for 6,000. We rented outright today for about 1,00045. And our cash flow, after everything's sad and down, all the bills, all the expenses, comes out to about 300 bucks a month, which is pretty awesome to have that extra $300 a month. Now, when we were living there, we were living for almost for free.

We had the front unit rented out for $600 a month. We had the back unit we were living in ourselves. The mortgage was $600 a month. and we only had to pay all the expenses like utilities and water, sewer garbage. So that was an awesome way to kind of begin my investing career. And I learned about the power of rental properties in that situation. And I fell in love with rental properties. Later on, we flipped a bunch.

We bought a bunch of more rentals. We got a bunch of single families, a bunch of flips that we turned into rental properties. And then we bought some multifamilies and I fell in love with multifamilies. So let me show me my favorite multifamily, or at least my largest multifamily. This is my apartment complex that me and my wife bought. Yes, that is me in the same shirt that I'm wearing today, which is funny. I don't have a lot of shirts. You'll find me in that shirt a lot.

I've repurchased the apartment complex at 24 unit for $550,000 with almost no money down. I mean, really like my own time, which time is money, but I put a lot of work into this thing. But with almost no money down, rehab it with about $60,000 using other people's money. And then we produce this today around $3,000 a month in cash flow. So that goes up a little bit at sometimes of the year and goes down on sometimes of the year. But overall, average throughout the year, we're making about $3,000 a month in cash flow. It was when I bought this property that I quit my job and I was working at a bank and I said, okay, I'm done.

I've got all these other rental properties. I got this one. Combined, all the cash flow together was enough that I didn't have to work anymore. And that was amazing, right? Like, I was amazing. However, I quickly found out that being like retired-ish, you know, or you're not really retired, but like you're like managing rental properties was not all that was cracked up. to be. I was actually bored a lot, so I ended up starting to blog and coming on bigger pockets

to help grow this site because now I can do both at the same time. And I get to do my passion of teaching and my passion of rental properties all combined and the occasional flip tossed into that. So a couple things. One, can you get the same results as me? I don't know, can you? I'm not guaranteeing anything. So today is not about guaranteeing anything. I just want to give you a background of my story. Everything that I did is kind of unique to me and I figured things out as I went. That said, I'm not that successful compared to a whole lot of people out there. Especially people in bigger pockets that I talked to that have been doing this for a long time. They are very successful and it's really, really awesome.

So, yeah, very cool. Somebody said, Jeremiah said my dog looks a lot like a cat. Okay, yeah, he kind of does. It's actually smaller than a cat. All right, so can you get the same? Now, I want to ask you a question, based on my kind of story there, how would your life change? You don't have to actually answer this in the area.

I just want you to kind of think about this as we're going forward. But how would your life change if you no longer needed to work to pay the bills? Because that's what happened to me. There was a tipping point where all of a sudden I didn't need to work to pay the bills. The bills came, I mean, the bills were paid. I'm not saying I was set for life, you know, things happened, whatever. You know, there could be a natural disaster that destroys it all, right? I just, at that time, I didn't, I don't need to work for income anymore to pay the bills.

So my question is, how would your life change if you no longer needed to pay the bills? needed to work to pay the bills. So just go ahead and in your head, answer that question right now and just think about that for a second. How would your life change? And that's what we're going to talk about today. We're talking about how to buy rental properties the smart way, not just rentals, but just investments in general. How do you buy real estate the smart way to avoid all this? And that's what we're going to talk about. So moving on, let's get out of here. Just keep that in the back of your mind. How would your life change if you no longer needed to work to pay the bills? And that's what we're talking about. So first of all, let's talk about 11 ways to

find great rental. And I have rental in here because another time I did this webinar was on rental. Today we can talk about just any real estate deal. What's 11 ways to find great real estate deals. This could be rental or flip or wholesale. All right, let's go through the list real quickly. Again, if you're just joining us, please grab a pencil, paper, whatever, and jot these things down. This is very important. I'm going to give you a lot of information. I'm going to throw a ton of stuff at you. And it's very important that you write this stuff down because you will not remember. and as you can tell, I talk very quickly. So try to take some notes if you can,

and I'll try to keep this moving a little bit slower. We'll see. Number one, the MLS. Obviously, that's the best place to find, no, that is the easiest place to find deals because, not deals. That is the easiest place to find real estate listings. I want to separate that because a lot of the deals, maybe 99% of the deals on the MLS are not deals.

Now, what is the MLS? The MLS is a collection of all the properties that real estate agents are currently selling. It's like a list, but it's all online. So if you go to like zillow.com or realtor.com or trulia.com or redfin.com, those are all sites that kind of search the MLS. Now, if you're not a real estate agent, you will not have direct access to the MLS. Only agents can list and search the MLS with full power. You don't have that superpower if you're not a real estate agent.

But that's okay. You can get a real estate agent. They can help you find things on the MLS. The property that I'm going to show you guys in a little bit that I'm looking at to buy for myself was on the MLS. It was just sitting there. My agent called me and said, hey, Brandon, there's this property they keep dropping the price on. I thought you might be interested in looking at it. So we'll talk about that in a little bit. Number two, for sale by owner. These are properties that just have a sign in the yard. There's one like six blocks from my house over here. I saw it earlier and I'm going to call on it because it's just people who don't want to sell with a real estate agent will go and just stick a sign in their yard and say, you know, for sale by owner.

One, yeah, okay, so for sale by owner. So I'm not saying most sale by owners are actually, well, I am saying most for sale by owners are not very good deals. And here's why. A lot of times people are stingy and they don't want to pay a real estate agent. So they stick the sign up and say, well, we'll just see if anybody will buy it for my price. So 99% of the deals that are for sale by owner are also not going to be very good deals. However, you're not looking for the 99% when you're looking for an incredible deal. Now today, remember we talking about to go back, we're talking about how to find an incredible rental property deal. You want the great ones. So how do you find them? You have to search for that one in a hundred. You have to find that

really, really good deal. If you want to supercharge your investing, you've got to find a really, really good deal. So for sale by owner, you can definitely contact the owners and see if they're willing to give you a good deal. Number three, direct mail. This is the most popular method for wholesalers who have some money to spend on marketing. This is a really cool strategy. So if you don't know what direct mail is, let me try to explain real quick. You ever seen those junk mail things you get in the mail like, I don't know, from a credit card company. Or here's a good example. I got one, I get one all the time that says like, you've won. And it's got a key attached to it. And there's a big picture of a fancy convertible and it says that I've won and I read closely and it says,

well, I got to take this car down to the local car dealership and then test drive a car and then I'll find out if I won. And then I look even closer at the fine print and it says that my chance of winning the car is won in 400 million, but the chance of winning a coffee cup is like for 399 million to 4 million or whatever. Anyway, you get the idea, right? So I want a coffee cup. But why do they send those out? Why do the postcards go up? Here's why. Here's why they send that a pretty expensive piece of paper with a key attached to it because it's direct mail. They send out thousands and thousands of those letters hoping that a small percentage will respond to them and a small percentage of that will end up buying their product. Same thing with direct mail.

You send out, let's just, for example, a very common strategy, you're going to send out 5,000 mailers to absentee owners. What that means is owners who own property but don't live in the property. What does that tell us? It's probably a rental. It could be a inherited house. But for whatever reason, the owner doesn't live in the property. You can buy those lists from a company like list source.com, L-I-S-T-S-O-U-R-C-E, list source.com. You can buy those lists list of absentee owners, send out 5,000 of them. Now, let's just say you got 5% of people. Oh, you're going to make me do some math here. So 5,000 letters, and you got 5% of people to call you back.

All right. So on that, it just says, I would like to buy your house. Please call me back. You got 5% of 5,000, which would be, let's see, 10% of 5,000 would be 500. So we're like 250. You get 250 phone calls from people that are interested in hearing what you got to say. Now let's just say out of those 250 phone calls, you can close one in every 25. So in other words, you get 10, is that 10?

Yeah, that's 10. You get 10 deals out of that $5,000 mail. Now, those numbers might not be exactly the scale depending on your area. Some people get better numbers than that, some worse, but that is what direct mail is. That's the magic of direct mail. You don't need to get everyone. You don't need 99% of them. You just need the 1% or the small proportion.

So now, if you got 10 deals and you made $5,000 a piece on each of those, math nerds in here, what is $5,000 times 10? That's right, 50 grand. And how much did you spend on those mailers? I don't know. You sent to 5,000 people? what's that, $5,000 for stamps and paper. So you spent $5,000, you made $50,000.

That is a lottery machine that I would love to play. Cheching, right? That's direct mail. If you can crack that code, you can do amazing things. But you got to have a little bit of money to get started. So if you're completely broke, that's not always the best way. But everybody can save up a little bit of money in their budget to try to get some direct mail going.

All right, moving on. If you don't have a lot of money, here's a very, very inexpensive way to find real estate deals. That would be world famous Craigslist. We all use Craigslist or at least have used it at one point in our life. Craigslist is this online classified section which anybody can post anything basically for sale. So real estate deals are prolific on there. There's a lot of them.

Now they're not always good deals. Like I said, 99 compared to 1%. You got to try to find the good ones. Now, there's two cool ways to use Craigslist. Number one, you can use it to search for people that are selling properties on Craigslist. Actually, there's three ways to use Craigslist. Number one, you can search for people who are selling for sale by owner via Craigslist, right? They put an ad up that just says, I'm trying to sell my house or house for sale.

You can contact them and see if they want to sell. Maybe, maybe not. Number two, you can put an ad up there, right? I mean, what's to stop you tonight? Like, after this webinar, what is stopping you from going on Craigslist and writing an ad that says, I buy houses in this town or this county? Nothing. It's free.

It will take you like two minutes to do it. What's going to stop you from renewing that ad every couple days? So it always shows up at the top of the real estate area or section or whatever section you put it in. Nothing. Only your own motivation is going to stop you from doing that. It doesn't cost a penny to do that. So go ahead and do that.

The third avenue and the most creative of that is this. Go on to Craigslist. Go to the rental property area, the ones that people are renting their properties out, and go and look on there for mom and pop landlords. Now, how do you know their mom and pop? typically their listings are not very good. The property management companies, the really big property management companies, are going to do really nice looking ads that have color and they're pretty and they've

photos and you know, you don't want to deal with the property management companies. Though that is a strategy, we're not going to talk about that right now, but you could go talk to property management companies. But you want to find the mom and pop landlords that have four rent signs up on, up on Craigslist, and you call them. They put their phone number in the ad. How much easier could this get, right? You call them and say, hey, I'm a new investor.

I really want to get started investing real estate. And I saw you had a foot rental. And I'm not interested in renting, but are you interested in selling? Sure, 99% of the time they're going to say no, right? Or at least 50%. A lot of people want to sell. 99% of the time it's not going to be good enough deal. But if only 1 in 100 Craigslist numbers that you call is a good deal,

how many do you got a call then to get a good deal? Make 100 phone calls. How much time would that take? 10 a day for 10 days. Could you get a deal in 10 days from now because you make 100 phone calls? I don't know. I don't know what your numbers are, but just get your mind working that way. This is not an impossible game, especially if you don't have a lot of money.

There are ways to do this. A lot of landlords suck. I'm going to say that again. A lot of landlords suck at being a landlord. A lot of them do, right? So if you can contact them and say, hey, you know, I know you're trying to rent this property out by your interest in selling, a lot of them are like, oh, he might save me from bankruptcy or from losing this because they're crappy landlords and you might be a good one

or you might be a good to flip the property or you might be good at the wholesale deal. So anyway, Craigslist can be an awesome, awesome tool for finding good deals. Moving on. Driving for dollars. Driving for dollars is the idea of getting in your car, throwing your kids in the back seat, putting on the Barney video, and driving around looking for good deals. You just drive, right? Now, you don't want to just do it aimlessly.

There is kind of a method to the madness of driving for dollars and there's some really good blog posts on Bigger Pockets about it. So just search Google for bigger pockets, driving for dollars, and you'll find them. But you want to look for deals that look like there might be a motivation to sell. What does that mean? It might mean long grass that's like piled up real high. It might mean, maybe not this high. I mean, I'm a tall guy.

I'm six foot five. But, you know, longer grass. It might be boarded up windows. Huge sign of something going wrong. It might be a tarp on the roof. the property that I'm going to show you later has a big tarp on the side of the house because the siding one was bad. Things like that are signs of motivation. Notices taped to windows, legal notices on the doors.

There's a lot of motivated people out there that are desperate to sell and they don't know where to go. They don't know what to do. Their house is in shambles. They can't sell it through a real estate agent. What are they going to do? They're going to give it back to the bank. Not if you can come talk to them first. You never know what you might find.

So again, driving for dollars and another hustle way to find good deals. All right, another one cool way is the bigger pockets marketplace. So deals get bought and sold on the bigger pockets marketplace a lot. What is the bigger pockets marketplace? Well, you can get there by going to bigger pockets.com slash marketplace. And that is where people put deals on to buy and to sell dozens and dozens and dozens every day. We might even have over 100 now a day. I don't know.

A lot of stuff's going on there. A lot of people are buying and selling and trading and making deals happen on the bigger pockets marketplace. So if you're looking for a deal, why not go post it? an ad in the marketplace that says, I'm looking for a deal, right? I mean, there's thousands and thousands of people on the marketplace every day looking at it. Why not post your ad that says, I'm looking for something? Or why don't you post an ad say, hey, I'm looking to help an investor. They're an investor in my area that I could work for or I could intern for, I could volunteer for. It's a good way to get started. Marketplace is a powerful, powerful tool. You do have to be a

pro member to post in it, but you can be a free member just to scan it and read it. So, BiggerPockets.com slash Marketplace. All right. Here's a lot. a cool one, you guys are going to love this. Most people don't have never heard of this strategy. Do you remember earlier I talked about that I said it a couple times. Most landlords suck, right? Remember that? All right, so here's the strategy with eviction records. Eviction records are public records, which means every time a landlord files an eviction on a tenant, that is part of the public record, which means you can grab it and you can go and look at who's been evicted. Now, why is this important? Because generally speaking,

Every landlord goes through evictions, right? However, the bad landlords do a lot more evictions because they don't have good screening processes. They let in the wrong people. They get taken advantage of. And furthermore, evictions are the most stressful event a landlord can go through business-wise. So imagine this. You're a landlord. You're a sucky landlord.

You're terrible at landlording. And you rented to your cousin's friend who's a drug business. dealer and he didn't pay you rent for a year and a half. And now you're like, I'm so tired of this. I'm going to evict him and you give it to your attorney and your attorney goes to a victim. And then you get a phone call because you're a crappy landlord, but you get a phone call and somebody says, hey, my name is John. I'm trying to get into real estate and I really want to buy a rental property. And I just was wondering if you have anything that you'd like to sell. I know I saw in the newspaper that you were looking to sell or you were evicting a tenant.

Are you interested in selling? Is that not the easiest sale of a price? person could ever make. Landlords, like that are sucky landlords have been dealing with this for years and years and years and now all of a sudden somebody is saying, hey, can I just take that off your hands? I'll take care of the eviction. I got this. That's like the greatest sale ever for finding good deals. And it's 100% free.

It's free, people. This is awesome, right? I love this stuff. All right. So eviction records very cool. Let's go bigger. If you want to buy a big property, you're going to want to look at a site like LoopNet or Co-Star. Now, LoopNet and Co-Star are actually owned by the same company.

They're billion dollar companies, and they sell and broker big stuff, $10 million and above, generally. They mean, they have some smaller stuff too down to duplexes and fourplexes, but generally their bread and butter is big stuff. Now, here's a secret with LoopNet and CoStar, though. You generally do not use those sites to find deals. You use those sites to find brokers who find you deals. So you go on LoopNet and you can find out all the people who are listing these properties, all these commercial brokers. And you call them and say, hey, Mr. Johnson, I don't like the deal that you got on LoopNet.

But here's what I'm looking for. Can you let me know if you find that? You build relationships with these brokers. I hear this time and time again from people who are the big investors, like the guys that are doing like the big stuff. Like Ken McElroy and Grant Cardone and Brian Burke and those players, right? That's what they're doing. They're building relationships with brokers. It's a beautiful thing.

It's awesome. All right, moving on. Next one, online advertising. You could use Facebook or Google ads to draw traffic to your We Buy Houses website or whatever it is. So if you don't have a I buy houses kind of website, you can pick one up online very easily. If you're a bigger pockets pro member, you can actually get a discount on lead propeller, which is the absolute coolest software for building a,

a website. I use it for my We Buy Apartments website. So it's like a Turner Apartmentbuyers.com or something. So anyway, you can do that. Have an online ads at point there. There's a little bit of learning curve there. I'm not going to lie. So you probably want to hire like a kid who knows what he's doing with AdWords and whatever, like a 20 year old something who can actually kind of handle that for you. But it's not that complicated.

It can be done. I mean, Facebook ads are really easy, I think. You put up, we use Facebook ads to fill vacancies in our rental sometimes. We'll just go and put a Facebook post on and sponsor. and we'll get like 500 people in our area to see that we have a vacancy and it'll cost us like 15 bucks. Very cool stuff. Online advertising, very cool. All right. Next is wholesaling. You can find deals from wholesalers. I should have wrote wholesalers there, but whatever. You can find good deals from wholesalers actually.

Wholesalers like I talked about earlier are people who find good deals. They do all of the strategies we just talked about and they find a great deal. They lock it up under contract and then then they sell you the contract. I don't have time to go real in-depth in wholesaling. Two weeks ago, though, I did a long, in-depth webinar on how to be an expert wholesaler, like how to analyze wholesale deals and how to put a wholesale deal together. If you want to check that out, you can watch the replay if you're a pro member at BiggerPockets.com slash pro replay, P-R-O replay.

So, again, if you guys are pro members, you can go check that out in the replay room. And lastly, the thing I want to talk about, perhaps the most important of all, all of the ways to find a good real estate deal is passion. And what do I mean by passion? Passion is, let me tell you about my 24 unit apartment complex that I bought. I mentioned earlier, I saw a picture me and my wife in front of it. So we bought that 24 unit apartment complex from a couple from our church who we didn't even know owned real estate.

So I had read Ken McElroy's book, The ABCs of Real Estate investing, which I have sitting around here somewhere because I always have it within reach. So we have ABCs of Real Estate Investing by Ken McElroy. And I read that book. I was obsessed with it. It was so good. And it was all about buying apartment complexes. And I said, man, I'm going to do that.

That's what I'm going to do with my life. I flipped that switch in my head and I'm like, that is where I'm going. And then the next morning I was at church and I was talking to this old guy and super nice guy, but he was an older gentleman just retired. And I'm like, and when you're 24 years old, everyone's old. But I'm like, I'm like, oh, I just read this really good book on investing in apartment complexes. that's what I'm going to do with my life.

And he looks at me funny and he says, you know, that's interesting, Brandon, because I have an apartment complex that we're thinking about selling. And it was like, boom,

right? Like, now, did I get lucky? Maybe. But what's that famous quote that says, like,

the harder I work, the luckier I seem to get? I think it originally was attributed to Thomas Jefferson, but it wasn't him. Anyway, the harder I work, the luckier I seem to get,

right? And I attribute that the passion, right? I told 10 people that day about that book and about what I wanted to do. He wasn't the only person I told. I told everybody that I talked to about what I was looking for.

I was passionate about this. I mean, I still am, right? Can you tell? I love this game. And so, like, I told everybody I knew about what I wanted. I told them what my goals were. I was passionate about that. And they made it happen.

I mean, like, people put that deal together. So that is what passion is. That's a great way to find deals just by being passionate about it and letting people know what you want. And people like to help people succeed and reach their goals. So, all right, shifting gears now. we are spending way too much time on this. We're going to be here all night.

So I'm going to go a little bit quicker. I apologize. I'm talking already pretty fast. But I'm going to go even quicker. Next section of this thing, we broke it up into three, remember, how to find? Now we're going to talk about how to analyze deals. Because no matter what, let's say you go and find a property, how do you know it's a good deal? How do you know you want to buy it and that you're not wasting your money?

How do you know you're not going to go bankrupt and be one of those crappy landlords we talked about earlier? Because they're everywhere. There's a lot of crappy investors out there. So we're going to talk about how to analyze a run. property like that kid right there. He's a smart analyzer. All right. When we're talking about analyzing properties, we're talking about two things. Now, I'm kind of specifically at this point right now talking about rental properties. So if you're not caring about rental properties, you're in the 8% who didn't care about rentals. Just bear with me one moment. But when you're buying

rentals, you care about two things primarily. Cash flow, number one, and appreciation. Now, cash flow is how much money you have left in your pocket at the end of the month. They're left in your checking account. And appreciation is how much money you build over time by the property value is going up. So again, if cash flows, how much is left after all the bills are paid every month. And appreciation is how much it goes up in value. Now, appreciation is kind of a crystal ball thing, right? We don't know exactly how much appreciation something's going to get. We have no way of predicting that. Sometimes property values go down. So what I care about and what most investors care about is cash flow. That is the number we care about. Appreciation is the icing on the cake.

It is not the cake. The cake is cash flow. Say that with me. The cake is cash flow. This is weird talking to me. I can't hear you say it. I'm pretty sure a couple people out there are saying it, but I don't know. All right, moving on. So how to analyze the rental property. I'm going to talk about two different methods that people use. We're going to call this one the bankruptcy method, because this is how people go bankrupt investing in real estate. This is called the bankruptcy method. I just made that up last night, but I'm going to call that. Bankruptcy method looks like this. You've got income, you got expenses. All right, your rental income, minus your expenses. That's what cash flow is, right? So let's say you made $1,000 a month and from income, from the rent,

and the mortgage payment was 750. What did you just make? $250.50. All right, go to the casino. Sounds good. You got some good money to spend. No, that's not what you'd have, right? Because that's bankruptcy, the bankruptcy method. That's how you go bankrupt. And people do it all the time. They buy crappy properties. They pay way too much money for it because they're using the bankruptcy method. Some people are smarter than that, though, and they use the second part of the bankruptcy method, a little bit more, a little bit less bad, but still bad. And that is they add in the property taxes and insurance. Okay, that's good. So let's just say that 750 that we mentioned a minute ago included insurance and taxes. So we're at rental income of a thousand a month and the expenses

are 750, including the taxes and insurance. Great. So now you've got $250. You can go spend at the casino, right? That would be the bankruptcy method. We don't like the bankruptcy method, raise your hand if you want to go bankrupt. There's like six guys out there like, I do. No. All right. So let's talk about the bigger pockets method of analyzing rents. properties or the smart guy method. You want to include all of the income and all of the expenses. So under income, you want to make sure you include the things like laundry income, storage fees, late fees, and other fees and charges. Now, that's not usually a big deal. Most of the time, there aren't a lot of extra income things that you're not thinking about, especially when you're just

getting started. Usually it's just rent, right? Maybe a storage room or something like that, but you want to make sure you get it all. The expenses of where everyone messes this up, They forget about expenses, things like the flood insurance, if there is in flood zone, the vacancy factor, the repairs, the maintenance, the capital expenditures. We'll talk about that in a second. Water, sewer, septic garbage fees, permits, HOA fees. I didn't write that in here, but HOA and other things. Like every community might have different expenses.

So if you forget all those things, you're going to be in some trouble. There are two kinds of real estate investors, those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for. how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your

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These co-hosts are vetted locals who already have experience. hosting on Airbnb. A co-host can handle all the details like messaging guests, creating your host space, and managing reservations, so everything runs smoothly. It's a practical way to earn a little extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while you're off making memories somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals, across multiple properties and maybe a few HOAs,

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So don't make these mistakes. Write these down if you want or I'll try to put these like this slide show up on slide share later. All right. Number 10, relying too heavily on rules of thumb. I'm not going to go into what the rules of thumb are, but just try to try to. Trust me, there are some rules of thumb that you can use to quickly analyze a deal. I actually like using them occasionally. If you buy a property based on a rule of thumb, you're going to buy a bad deal potentially.

Because rules of thumb are meant to be quick. They're not meant to be ultimate decision makers. So if you want to know what those are, write this down. 2% rule, 50% rule, 70% rule. Again, it's the 2% rule, the 50% rule, and the 70% rule. Those are the three main rules of thumb that you'll hear about on bigger pockets. If you want to know about it, just go to bigger pockets up in the search bar and type in 2% rule, 50% rule and read about it. All right, number nine, underestimating repair costs.

So people are like, hey, this property, you know, whether it's a rental or whether it's a flip, I think it'll take about $5,000 worth the paint and carpet to fix it up. Then they actually get in there and start working or getting the contract. contractor in there and it's like $10,000 or $15,000 or $20,000. And all of a sudden their great investment is now a crappy investment, maybe an upside down investment. Number eight, people who don't include closing costs. When you buy a property and when you sell a property, you pay several thousand dollars in closing

costs. That can be pretty hefty and if you don't include that, your return on investment. What you think you're going to make might be pretty crappy. Number seven, overestimating the ARV or the rental income. So ARV or after repair value is how much it's worth when it's done or the rental income is how much money it's going to bring every month. So flippers and landlords both screw this up and that is the future idea. What's it going to rent for?

We get emotion involved and we're like, oh, you know, I think this will rent for $1,000 a month. No, it won't. They'll rent for $800. All the other ones rent for $800,000 is not going to be any different. Or I think this will be worth $170,000. No, it won't. It'll be worth $125,000.

Right? This is a truth. Okay, well, I'm not going to go into that story. Basically, there was one time I flipped a house and I thought it was going to sell for 170 and I didn't do the numbers very good and it sold for like 125 and I lost two years of my life fixing this thing up and selling it. That's a tragic story. I'll tell you some other time. Number six, counting on appreciation to bail you out. Remember appreciation is the price going up in time? So if you buy a crappy deal, hoping that the appreciation is going to bail you out, it may never.

bail you out or maybe take you 20 or 30 years to bail you out. So never buy a bad deal, just hoping that the appreciation will bail you out. That is called gambling. And the only time you should do that is if you have a lot of money to lose and to win. I mean, obviously gamblers sometimes win big. A lot of people have made money on appreciation, but if you're buying bad deals, especially at the start, hoping appreciation will help you, you're in trouble. Number five, relying only on the pro forma from the broker. So if you're a pro forma is like the sales document. If those of the numbers you're looking at when you're analyzing a deal and you're not doing your own numbers and your own number crunching, you got a problem. Never rely on the numbers given to you by a

sales document or by a real estate agent. Real estate agents do not know what they're talking about when they're trying to sell a rental property. They do not know. Very few of them do, maybe 1%. So you can't rely on having your agent help you do the math. Okay? Number four, not planning for property management. Now, I'm not saying you can't manage on your own. I manage on my own. My wife manages our properties for us. I'm not saying you can't do that. But if you don't plan on property management, and what I mean by that is if you don't budget for property management, you are going to be in serious trouble because someday you're going to be so successful and then you're going to realize that you bought yourself a job. You can't go and give it to property management now because

you don't have any money for it. You can't afford it. So now you're stuck managing properties for the rest of your life until you give up and you go bankrupt and you cry, right? Maybe not. But you know, that's the problem. People buy it. My properties are like, oh, I can handle this. This was what I did. When I was starting, everything looked good because I can handle it myself. Now, today, all that cash flow you saw earlier, yeah, it's great. But if we suddenly gave it all over to property management, a good chunk of that would be gone.

And I wouldn't have the financial freedom that I have today. And so that is a mistake that I've corrected since then, since I kind of figured this out. And now whenever I analyze deals, I always include property management in the numbers. All right, number three, forgetting to include vacancy costs or holding costs. So whether you're flipping or whether you're a rental, there's these two things called vacancy or holding costs. In other words, vacancy is how much time before it gets rented, you know, like in between rentals. So like, let's say a person leaves and it's vacant for a month, that's one-twelfth of your year.

That's a good portion of your year you need to make sure you account for. I mean, 8% is a huge number, 8.33 or whatever it does. Holding costs, same thing on a flip. Holding it can be several thousand dollars a month that if it takes you six months to sell it, there goes most of your profit potentially. So you got to make sure you calculate those numbers. Number two, forgetting to plan for CAPX. This is on a rental side.

So CAPX is those big ticket items that happen every 10 or 20 years. New roof, new driveway, new siding, new appliances. They don't happen all the time, but they do happen. And you've got to save up for them and plan on that. So I always budget at least like 3 to 5, 6% for CAPX, depending on the age of the building and how old it is. And finally, the number one mistake that people make when analyzing properties is, drum roll please, not doing an analysis at all.

So this is a huge mistake, a huge mistake that people make all the time. They don't do an analysis and as a result, they end up buying bad deals. They spend more time picking out their wardrobe than they do picking out their rental or their next flip. It's a terrible mistake, but most people don't do a good analysis. or they pull out a napkin and they do it on a napkin. Or they do it in their head. They're like, oh, I'm smart. I can do it in my head.

No, you can't. Trust me. Like, there's too many variables that you can't just sit down. You need like a spreadsheet. You need a big piece of paper. You need to take your time. And it can be done by hand. You can sit there and get out a big eight and a half by 11 sheet of paper or 14 feet of paper

and write down all this stuff and hope that you remembered all these expenses. That is very possible and that is how you do it. So let me ask you this. Here's what would happen to you? Just answer this question in your head. You don't have to type it. What would happen to your financial goals of your financial freedom? Remember before in the beginning of this webinar?

I asked people why they want to invest in real estate. And financial freedom was like the number one reason given. What would happen to your financial goals if you made just one of these mistakes? In other words, if you totally forgot about CAPEX and all of this thing got a $10,000 bill on the roof five years later, what happens if you didn't plan for property management and now you want to go on vacation, you can't afford it. What happens if you didn't plan on the vacancy factor? And all of a sudden, now 10% of your income is gone every year because of vacancy because you didn't plan for it and you bought a deal that now you thought was cashful and you didn't. What if just one of those numbers

wasn't in there? What would happen to your financial goals? And I think that's an important question to ask because people make these mistakes. I mean, when you're getting started, especially you make a lot of mistakes. So what Bigger Pockets does and one of the ways that Bigger Pockers tries to help people become a better investor is by helping them analyze property. So we're going to actually walk through an analysis together to hopefully help you not make one of these mistakes. And so to do that, I'm going to be using the BiggerPockets property analysis software. If you guys want to follow along, you can just watch on my screen. But BiggerPockets.com slash analysis is where you go to actually access that area of the site.

So if you want to use that, again, you can do this by hand if you want to do it the slow way, but you can also do it with the calculator online. So let me kind of walk you through that. Now, I'm not exactly sure how to make a go-to-webinar look at it. both screens here. Hold on. I got to figure this one out real quick. Screen sharing. We're going to go, first of all. All right, how are we doing? Oh, good. There we go. That really scared me for a second there. Right when I clicked that button, uh, screen two, when I click the button, uh, it said end webinar. And I was like, ah, no, I thought for sure I ended this entire webinar. So if you saw my face go like this

for like half a second, that is why. I thought I just closed the webinar out. So apparently you can't hit the escape button when you're on GoToWebinar or when you're hosting because it'll close. So, all right. Calm down, Brandon. I got this. All right. Let me guys show you guys.

Now, hopefully nobody goes and tries to steal this deal for me because this is like real live actually going on right now. I'm trying to buy this property. So, 511 Bender Lane and Montessano. If you want an offer on this property, it's fine. Let me just show you. Bender Lane, my agent calls me the other day and says, hey, this property has been dropping in price. Started at like 120. They're down to 97. It's a HUD property. It's owned by the housing and urban development of the United States government. 97,000. It looks actually kind of nice. If I click through a few pictures here, you can see a little bit more about it. You know what? Let me close my face so you can see a little bit bigger. There I think I'll see. Yeah, there we go.

So you can kind of see the inside. It actually looks halfway decent. I was pretty impressed with it. It's got a little fire stove there. It's got a nice little backyard, big garage, or big-ish garage. It was a pretty decent house. It looks like it would be pretty decent. Now, I can do a flip or rental with this. It looks kind of interesting for both those things. So here's what I'm going to do.

BiggerPockets.com slash analysis looks like this. There might be a different couple there. We have a few different pictures rotating. But I'm going to click to start an analysis, and I already did. So it's because I want to make this to go faster. So I'm going to show you what I did. What I'm actually doing is I'm using the wholesaling calculator. Now, there's a reason why I'm using the wholesaling calculator is because with the wholesaling

calculator, I can actually just put in zero for a wholesale fee. Don't get confused by this. Just follow along for a second, but it's not a big deal. But basically, I use a wholesale one so that I can find out how much I should pay. So you could take the wholesaling calculator and replace it with the words, how much should I pay calculator? So that's what I did. So I put in the address, I put in the information, I put in a picture of the property,

I put in the description. And then I chose rental. I could use rental or flip. This time I wanted to run it as a rental. I'd enter in all the steps of the process, 139 after repair value. I want to get a 12% cash on cash return on my investment. I want a $90,000 loan at 5% amortized for 30 years.

And again, if you don't know any of these numbers, it's not a big deal as you walk through the calculator. All you do is hover over these question marks and it tells you. Next step, estimate a repair cost, I think about 15 grand. Purchase closing cost $2,500, total gross rent $9.50. I think that might be short, but I want to estimate conservatively. Property taxes, I looked that up on the county record, and you can, again, if you don't know what it is,

you can learn a little bit that way. Put in the expenses that the landlord would have to pay. I put in the variable expenses, at least some of them. And then I calculate results. So when I'm looking at this property here, this is kind of the page four of the calculator, as you'd say. Like, this is the result page. You can see here that these four numbers are the most important.

First of all, I'm allowed to offer, I could offer them $86,000 for this property. So they're asking $97, and my numbers came out to 86. So I'm pretty close to what actually would make sense. So I would get a 12% ROI. And remember, because I did the wholesaling calculator, there's that it says wholesaling profit is $0. I entered that in just for zero. But I can also see some more things like the income. How did all that break down?

What kind of cash flow would I get? 135 bucks a month. Not a lot, but I need about 13 grand to buy this property. I can scroll down and find out what it looks like in year one, two, three, four, 10, 20, 2030. I look at the value on the graph. I can learn all sorts of cool stuff about this property, including like the 50% rule. I can do all this stuff using this calculator. So I think it's kind of neat way to do it. I can also download a PDF. It looks like this. So now let me ask you, let me explain this. Why is this PDF important? One very, very good reason. If you are trying to convince a lender to lend on a property, they want you to be organized.

If you're trying to convince a partner to go in on a deal with you, they want you to be organized and know your numbers. The better organized you are, the better you can explain why it deals a good deal, the more chance you have of getting it funded. How about a spouse? Does anybody ever have difficulty trying to convince their spouse about your hairbrained ideas? I know I do sometimes.

Trying to explain this, if you can present it in a nice, like put together formula like this, I can go a long ways in helping to convince somebody of why this is a good deal. And for no other reason, it helps you figure it out. Just being able to look at this, whenever I go look at a property, I do an analysis first. I printed it out like I did like this thing. I printed this out last night. And I went and walked by the house and walked around it, looked in all the windows because it was vacant. And, you know, I had this with me so I could look at the property, look at the numbers.

I could also just take out my phone and just do it on there. But it's not quite mobile friendly yet, but that should be done. the next couple of weeks, but it still works on your phone. It's just you gotta zoom in a little bit. All right, so that is the Bigger Pockets calculator. You do have to be a pro member to use it full time though. You do get like five free uses if you're a free member. So for those people who are pros, let me just kind of explain a couple things real quick.

And if you're not a pro, I'll explain kind of what you can do to become a pro. Basically, by being a bigger pockets pro member, you get unlimited use of the Bigger Pockets property analysis software. And that is the rental property calculator, the house flipping calculator and the wholesaling calculator, which I find incredibly valuable for both reasons. So like I almost use the wholesaling one almost exclusively, even though the other two exist, just because wholesale one can do almost everything the other ones can, but more. So anyway, you can get unlimited access to that. A bigger pocket pro member, ship has all other cool things too. Like you can get

ads. You can post them in the marketplace. Remember we talked about earlier, finding good deals. If you're looking for a good deal, you can post it in the marketplace. And whatever you need, do you need lending? Do you need funding? I mean, ask yourself that question right now. What do you need. And pro members, I'm talking to you right now. If you're not a pro member, plug your ears. Just kidding. But pro members, like, what do you need in your business right now? Is it a lender? Is it a lender? Is it a partner? Is it a deal? Is it a mentor? What do you need? So if you're a pro member, tonight, go and post that in the forums. I want to encourage you. You get unlimited access to it. Technically, it's one, the same ad. You can't spam it with the same ad.

But you can unlimited access to the marketplace if you're a pro member. So take advantage of that pro members. Next, you can help your profile on Bigger Pocket stand out with an enhanced forum signature. You can add a profile video to your profile, which is huge. It builds an incredible amount of trust and credibility. And you can get that little pro badge would also build a bunch of credibility. So let's say somebody on the site goes and asks me and says, hey, Brandon, can I work with you on a deal? I love to learn from you and I want to work with you and partner with you on a deal.

What's the first thing I look for? I go to their profile and look to see if they have a good picture because I want to know that they're a real person. But anybody could throw up a picture. So I look for a video. If they have a video, I'm instantly a hundred times more likely to trust them and to work with them. It's just a simple fact of human nature. Video just communicates trust so much better. Same with a pro bet.

If they're a pro bet, if they're a pro member, that means that they're paying money, which means they're serious about their business. If somebody wants to work with me and they're not a pro member, I seriously wonder. I'm like, well, are they serious about real estate or are they just another of the people who come to BiggerPockets,

flashing the pan, and then they leave. So BiggerPockets Pro member lets people know you are serious and you kind of stand out as somebody who is taking action. You also get more keyword alerts to be notified of things that matter to you, BiggerPockets.com slash alerts.

So if you put up like, I have Seattle and multifamily an alert set for both those terms, dual terms. So if somebody makes a forum post that has the word Seattle and multifamily, I'm going to get notified about it via my phone. I have it set up so it text messages me, and pros can do that. So you get more keyword alerts and you get the SMS, the text message thing about being a pro member. So pro members do that. If you're looking for a deal, put down the name of the town that you're looking for deals in. That way, when somebody posts a

deal in the marketplace in your town, you'll be notified about it. It's just simple to find good deals that way. I'll also get increased networking abilities through biggerpockets.com slash meet. That's M-E-E-E-E-A-T. And so you can find, I mean, you can essentially just find people all across bigger pockets who do a variety of things. Let's say you wanted to find a lender in Georgia or let's say you wanted to find a house flipper to sell your deal to who's in, I don't know, in New York City, right? Like there, you can go on biggerpockets.com slash meet. You can search for members specifically in any zip code in America and vicinity around that. It's like the coolest tool ever.

I use it all the time. I love this thing. You can find people all across the country and in your area in like a hundred mile radius or whatever. You can form meetups. Tonight actually, I have a local meetup in my area. My very first Graze Harbor, which is my county, Graz Harbor BiggerPockets Meetup tonight.

So I'm pretty excited about that. And, you know, I organize stuff like that through BiggerPockets.com. So as meet. A good way for me to exchange ideas with people and do deals together. together and work together. So anyway, a few more out, just to lay on you. And then we're going to move on to the how to finance. But you can download limited files and forms in the file place by being a pro.

You had expanded private message abilities by being a pro. You get extra keyword alerts when you're pro. And you get to see who's checking out your profile. Hugely valuable. Who's looking at your profile? If you're a pro member, you can find out. Just kind of cool. And then finally, you might be a pro member.

You might want to be a pro member to help support the site that has changed how people build wealth in America. I mean, really, like a lot of people just support. Bigger Pockets by being a pro member so we can continue to develop more and more tools that help people make more money. So you might want to become a Bigger Pockets Pro member for four or five reasons I got here. Number one, if you're worried about buying a bad deal, run the numbers through the analysis calculator. You can do them by hand if you want to do the slow way. You might forget something. If you don't want to forget something, just run it through

the analysis calculator and you can find if you're worried about buying a bad deal. If you need lenders, partners, or properties, you can use the Bigger Pockets marketplace to find that. You can also use the video to upload a video of yourself to try to attract trust and instill trust in yourself. If you need to connect with investors who can help you, whatever you need, the same with the video that can help you connect, but also slash meet can help you connect with people. If you're looking to get noticed by the community as somebody who takes action, somebody who is serious about this game, you can get noticed by the community by having a pro membership. And if you want to support Bigger Pocket. So those are kind of like the five reasons why you may want to be a Bigger Pockets Pro. And let's move on and talk about how to finance a rental property, even if you don't have a lot of money.

Let's talk about that. All right, number one way to finance rental property. Now, you do have to have money for this one. Cash. That's the obvious one, right? That's what everyone talks about. I mean, that's what most people think that real estate investors do. They don't even realize that there's these other 11 things we're going to talk about.

They think that cash is the only way people do it. So, first of all, cash, if you have it, nothing wrong with that. I do caution people, though, if you're going to use all. cash to invest in a rental property, make sure or any kind of real estate, make sure you do your math even better because having money makes you dangerous. It makes you like you're walking around with a loaded shotgun without training on how to use it. It's very dangerous. So do the math right, spend even more time educating yourself and don't waste that money. Number two, conventional loans. This is the idea of going to a bank and getting a normal loan, 20% down, 25% down. You get like,

you find a $100,000 property, you put $25,000 down. They give you a $75,000 mortgage. Very typical. Now, why isn't, normally that works fairly well in the beginning. If you have a good income and a good job. However, it can be tough, the more properties you get. It can be harder and harder to get conventional financing. There's a whole slew of reasons why that is, but just trust me, you can't usually

have more than three or four. That's usually where people start to max out their debt to income and other issues. So what do we do? I mean, I hit my income or my max. What do I do next? Portfolio loans are one of my favorite. Portfolio loans are loans from banks that are smaller banks. And essentially what they are is they are in-house loan.

So they don't sell them to the government, Fannie Mae, Freddie Mac, pseudo-government organizations. They keep them in-house, which means they have less rules they have to fit you in. When you go conventional, you have to fit into a square peg into a square hole. You have to fit. Otherwise, the government won't let you do it. But a portfolio loan is kept in-house. So I use those a lot. Now, how do you find a portfolio lender?

You pick up the phone and call. They're usually the small banks, small branches, not like size-wise, but they have less than a dozen branches. They're community banks. They're usually in the suburbs. They're not your Bank of America, Wells Fargo, things like that. They're smaller. So portfolio loans are a good way.

You can also find them. Really good way to find portfolio lenders is talk to other investors in your area. in your state, in your county, where are you getting your loans from? Again, I talked about earlier, if you're a pro member, use BiggerPockets.com slash meet. Reach out to some people that are in your area and be like, hey, Bill,

I see you're a landlord in this area. I'm wondering if you have any good ideas on where I can get a mortgage. What a powerful way to get a loan, right? So cool, so cool. All right, FHA loans. If you wanna live in the property and invest in it, like maybe by a duplex, a triplex, a fourplex,

or a live and flip, you can get an FHA loan, which is three and a half percent down. That's a phenomenally good deal, right? Three and a half percent down FHA loan. If you want more information about that, it's in my book or you can find a bunch of information on bigger pockets about it. But very cool loan. Again, you have to live in there for at least a year. The same would apply for a 203K loan. 203 loan is a loan in which the repairs are built into it. I mean, the repairs are factored into the loan. So you can borrow the entire amount of the property

except for three and a, well, you take the entire loan amount plus all the repairs and you only have to pay three and a half percent of that total. Okay, so let's just say it was a hundred thousand dollar property and it needed $50,000 worth of work. Normally a person would have to come up with $50,000 of cash to buy that property and then get the loan on the rest. But you can actually finance the money in there and you pay three and a half percent of the total $150. Hopefully that makes sense. If not, write that down $203K loan and research it. All right, next, VA or USDA loans. These are also 203K loan and FHA and VA USDA are all owner-occupied loans.

You have to live in the property for at least a year. VA, you have to be a veteran. It's from the Veterans Administration. USDA is the same organization that certifies your ground beef that is the U.S. Department of Agriculture, do loans. And the cool thing about the VA and USDA, zero percent down loans. They still do. 0% down.

Now VA, you have to be a veteran or family member. member of one or USDA, you have to live in a rural area, rural area. So if you live in the middle of a city or in Chicago, Denver, LA, whatever, you probably can't use USDA. But anyway, those are some cool choices. Next seller financing. That's how I bought my apartment complex. That older couple, they financed it, the apartment for me because they wanted to retire and

they wanted to get a monthly income. So instead of me going to a bank, I just pay them every month for the property. month, I give them $3,700 and that funds their retirement. Someday I'll sell the apartment complex, probably with seller financing because then I want my retirement to be paid for that way. So that's a cool way to do it. Roughly a third of all houses in America are own free and clear, which means that they're prime for seller financing. All right, next one will be partnerships. Partnerships are fantastic. I love them because you can work with people who have the things you don't have. If you don't have good enough credit, work with someone who's got good credit. If you don't have enough cash, work with someone

who's got cash. So I got a triplex that I bought. I found some partners wanted to go on in a deal with me. So I found a really good deal and I said, hey, look, if you guys put the down payment down for the property, all manage the property myself, and I found it, I'm not going to put any money into it, but I'll manage it, you put the down payment down. We'll get a mortgage on the rest and we'll go 50-50 on it. That's one of my best properties. It's an amazingly good little triplex of my town that I love and I got it with nothing down because I worked with somebody who had something that I didn't have, and that was the cash, and I had something that they didn't have, and that's the motivation and the deal and the experience. So find somebody who can work

with you and make that happen. That's partnership to love them. Next one, hard money. If you're flipping, you can just go get hard money loan on your flip. Now, it's expensive. A hard money loan is a very high interest short-term loan, like 10, 12, 15% interest with a lot of big fees on top of that, but if you're flipping, just include those numbers in your analysis. We talked about earlier the flipping and out, the flipping calculator, just plug that number in there, how many points, how many fees, and you can factor that in there. Now, if you're a landlord, you're trying to buy a rental property, you can also use hard money if you're careful. You can buy a property with hard money and then refinance it with a bank. So there's a few, I mean, that's a little

more complicated strategy, but I do that one a lot. I love that strategy. All right, next you can do private money. Private money is kind of like hard money, but less professional. It's like individuals you might know and have relationships with want to earn more money than they're getting out of the stock market or out of the CD. You know, great aunt Betty is making two and a half percent on her bank CD. And you could be like, hey, Betty, why don't I give you 8 percent? You just fund this rental property for me. Okay, I can do that. And then she's happy.

She's making, you know, four times or three times the income she was before. You're happy because you don't have to go to a bank. Everybody wins. Private money. That's the future where most real estate investors eventually end up is using private money. eventually down the road. That's the cheapest, best way to get money eventually. Next, syndication, if you want to do a big deal, you got syndication. Syndication's idea of putting together multiple people, you know, you're going to throw in $100,000,

you're going to put in $100,000, you're going to put in $100,000, and we're going to buy this $8 million apartment complex together. That's syndication. Now, that gets way more complex and we have time to talk about today, but that is an avenue that a lot of people like Brian Burke and Ken McElroy, you is a lot, big guys like that. You can learn about more of that on the podcast, just look for the the podcast with Ken Nakarroy or Brian Burke, even Ben Labovich. We talked with him a lot about syndication as well. So check those out. Finally, the last option I want to talk about today for financing, then we'll go to question-answer time, is the creative combinations. Now, what do I mean by creative combinations? Here's what I mean. Creative combinations is idea of pulling together a lot of

different strategies into one. And almost every deal I've ever done has been that way. Think of the apartment complex that I got. So here's what I did with my apartment complex. So I got this good deal from this couple of my church. They agreed to do a lease option, a triple net lease option, which I didn't even cover in this list, but that's another thing I talk about in the book, uninvested it with no and loominy down. So I agreed to fund, or they agreed to do a triple net lease option for the first year or so, whatever, how much time I needed. In the meantime, I would be able to save the cash flow from the property to use for a small down payment. So I didn't have to come up with it myself. They agreed to let me finance that in there using

the cash flow. Then I went and contacted a partner, my dad, and I said, hey, dad, you want 50-50 on a deal? I just need all the repair money for this property. So he then didn't, he's like, well, I don't have the money. I'm like, well, you have a line of credit on your house. So we used a home equity line of credit, also which I didn't cover on this list, which I talk about in the book on investing in real estate with no and no money down. He used a home equity line of credit to fund the repairs on this. Then we went and refinanced it with a portfolio lender. No, no, no, no. We are in process of doing a portfolio lender. But before that, we use seller financing. We converted the triple net lease into seller financing. So this I know is really overwhelming. If you're brand new to real estate, your mind is exploding right now and you have no idea what I'm talking about. It's okay. Just trust me, I used four different methods and I'm working on my fifth to put together a $550,000 apartment complex purchase using none of my own money. And it's not because I'm like super smart and super talented is because I'm creative because I had to be, right? Like I didn't have money when I was 25 years old. I had no

money to buy an apartment complex so I could do one of two things. I could sit out. I could do nothing. I could grow up, wait and save my money until I'm 50, 60, 7 years old or I could choose to be creative. I could choose to take action to be a person of action and to take that action and that's what I did. So again, it has nothing to do with intelligence or or luck. It has to do with taking action and just working hard and working my butt off, which I did for years on that property. And now it's a great, really nice property for us. So anyway, that is kind of the 12 ways to finance rental property. We're going to move on to do just some question answer time. All right, we're actually going to end the webinar right there. Normally, we're going to about a half

hour of question answer time where people can ask any question they want about anything about the webinar or about just real estate in general. And I just kind of leave it open for questions. So, but I'm going to leave it right there because I want to encourage you, if you want to take part in that question answer time, to show up and come to the next Bigger Pockets webinar. I hope you can come to one. As we talked about earlier, you can sign up at biggerpockets.com slash webinar or you can just text on your phone, text the number 33444. You want to send a message to that number, 33444. And then the only word you want to include in there is BP webinar, one word, BP, like bigger pockets, BP webinar. And then just follow the instructions that you get back. And that's pretty much it. So I hope to

see you on a future webinar. And again, we try to do them every Thursday. The date might be changing a little bit. Don't worry about that. Just go ahead and text that number and you'll find out when the next one is. So with that, I'm going to hand this back over to Josh. All right, guys, hopefully you enjoyed that webinar. Lots and lots of great information, as we promised. Again, apologies for the long lead-up, but we hope it was worth it. Definitely one of our more popular webinars. And again, if you are interested in hearing more webinars like this, you can go to biggerpockets.com slash webinar to sign up, or you could text BP webinar to 33444.

And that's it. Again, this is the BiggerPockets podcast, show 120. You could check out the show notes at biggerpockets.com slash show 120. You know, if you're not already actively engaged on the Bigger Pockets community, please jump in, check us out. Go on the forums, biggerpockets.com slash forums, create an account at biggerpockets.com and get involved, network, and make things happen. There you go.

That's pretty much all we got. So we'll see you guys on the next podcast and hopefully on the next webinar. And if you haven't already signed up to subscribe to the Ask BP podcast, please go ahead and check it out at Biggerpockets.com slash Ask BP. All right, guys, I'm Josh Doran. I can't even say my name. I'm Josh Dorkin, signing off. You're listening to Bigger Pockets Radio. simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the height,

you're in the right place. Be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday. Wednesday and Friday.

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