Epic Real Estate Investing - 2 Simple Steps to Selecting the Best Place for You to Invest | Episode 86

Episode Date: January 27, 2014

Selecting the best place to get started investing in real estate can be one of the bigger stumbling blocks for people. As typically done in his own special way, Matt solves this common dilemma and breaks down the selection process into two simple steps. He knows "3 steps" might've sounded more appealing, but if there isn't a third step... why complicate it? Just 2 Steps! ---------------------- If you have a question you'd like Matt to answer live on the show, call the Epic Real Estate Hotline at 1-888-891-7203 Download Matt's free course How to Do Deals : No Money Required at FreeRealEstateInvestingCourse.com Don't have a buyers list yet? Borrow Matt's until you do at EpicWholesalers.com Get "done for me" income properties with "guarnateed cash flow" at CashFlowSavvy.com Hit the streets and join Matt in the field in one of his cash flow markets at EpicRealEstateTour.com Subscribe to Financial Freedom Fridays on Matt's YouTube channel by visiting EpicREI.tv Subscribe to this podcast and access all episodes at EpicRealEstateInvesting.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. What's up? Hello, everybody. Welcome to another episode of Epic Real Estate Investing. If this is your first time listening to the show, welcome. So glad that you're here. And if there's not your first time, welcome back. This is the place where I teach people how to escape the rat race by Involvember.

investing in real estate. And if you happen to have a question, comment, or concern that you'd like me to answer here or address here live on the show about doing just that, about escaping the rat race by investing in real estate, you can share those questions with me on the Epic Real Estate Investing Hotline at 1-888-891-7203. 1-888-8-9-1-7-203. Okie-doke. So if you missed Friday's episode, Friday's episode of Financial Freedom Friday, if you didn't know, that's a brand new show that we've added to the schedule here.

Financial Freedom Friday, just nice, quick little episodes to set you off right on the weekend. But this last Friday was a very special one as I loaded up six lessons for building a team, six of them. And through these lessons, I walk you through the process of exactly how I built my original team and how I maintained and, grew that team of which now spans across the nation in six different markets. So if you ever want your investing to hit that point where it is easy, building a team should be right there at the top, at the very top of your to-dos. It should happen, not like stop your investing to go build a team. What I'm saying is it should be at the top of your to-do's and you continually build,

maintain, and build and maintain that team while you're investing. I mean, there's just no, there's no way that I could be doing 15 to 20, 20 transactions a month without my team. And they don't just process the paperwork either. It's not just a bookkeeper. It's not just an attorney and a tax guy and a realtor. No, I'd say at least two-thirds of my deals come from my team. It's my lead generation.

And probably two-thirds of my buyers come from my team as well. My investors come from my team. So if you're tired of the postage experience, for your yellow letters. I get it. If you're tired of buying lists, I understand. If you're tired of ordering your ugly yellow signs and hitting the midnight runs and pounding them into the ground, I get that. Start building your team. Start building your team or else you'll be marketing like that forever. I mean, not that there's anything wrong with marketing for your leads. That's the fastest way to get into this business. It's how most people do it. And I still do it today. But if you ever want to get to the

place where you don't have to market for leads to a place where those leads are referred to you, start building your team. Go back and look at Friday's release. There are six separate audio files there to download and or if you want to watch the video versions of those lessons, you can go to epic real estate.com, epic real estate.com and just search for epic team builder. Search for epic team Team Builder. There's a little search box up there, and all six videos will be right there on that page with all the corresponding downloads and links mentioned in the lessons as well. Okay?

Great. So let's start with a question from the Epic Real Estate Investing Hotline. My question is, I'm new at real estate and I want them, but I don't have great credit and don't have much money. Is the buyer this really is what I really need. And I'll find properties by owners, but I can't find the end buyer. to purchase it. That's my question.

Okay, thanks for the call. And the issue here is, you're short on money, you're short on credit. I can definitely relate, as that's exactly how I did get started. But he also says he is finding deals, just not finding end buyers. Okay, so common concerns, common challenges, common roadblocks for many. And if you find yourself in a similar situation, you know what, I want to get straight with you, You've got to tell you, you're making mountains out of mole hills. It's all in your mind.

You're making it seem so much like this is such a bigger challenge than it actually is. These two issues are not the roadblocks that they may appear to be that you are making them to be. And I've addressed these concerns multiple times on the show. So I'm not going to go into great detail on the subject, meaning, you know, I could literally make an entire episode or episodes based off this call. and I have several times, but no worries. Let's touch on it again. As I see these issues in my inbox frequently as well,

so I know what our caller has shared with us is very much a concern for many of you. So no money or credit, no problem there. Okay, no problem there. If you go to my free course at free real estate investing course.com and follow the lessons there, you'll see clearly how you don't need money to do deals. It's very clear.

I spell it out, step by step. I mean, you'll probably need a few bucks for marketing and lead generation, but you don't need money to transact the real estate side of things. You don't need the money there. You know, aside from your lead generation, and you know what, I also do show you how to generate leads for free there also. So you really don't need anything. But aside from your lead generation,

you don't need any money to talk to a seller. You don't need any money to negotiate with a seller. You don't need any money to write an offer. You don't even need any money to enter a contract with that seller. And you don't need any money to conduct your due diligence on the property. And you know what? You don't need any money to even find a buyer. You don't need any money for all of that.

You indeed can get all the way to the closing table without needing any money. And that's what I show you how to do in that free course. So what I'm going to do is I'm going to assume our cost. is getting that far in his deals. I'm going to assume that. And if you're not, that's the biggest part of your dilemma right there. Okay? I mean, in most cases, you really do have to travel that far in the transaction to know

whether you actually have a deal or not. So if you're not taking it that far, try taking it that far and then tell me if you're having a problem finding a buyer, okay? But if you are, and I'm going to assume that you are, the property is under contract and the due diligence has been conducted. I'm going to assume that you've gotten that far. And if you've gotten that far and you still can't find a buyer, well, there's only two reasons for that.

There's only two reasons. Either one, lack of exposure or lack of representation. It could be either or lack of exposure or representation. And or two, this is the tough one for a lot of people to swallow. It's not a deal. That's the second reason. and if it is indeed a deal, if you really do have a deal, a whole lot of exposure isn't necessary. And with regard to the representation part, and what I mean by that is you haven't clearly represented

what's in it for your end buyer, kind of counting on them to figure it out. I mean, this is where putting the property under contract comes in. This is where conducting your due diligence comes into play. You've got to have control of the property. and you have to have done your homework on the property so you can convey that your deal is indeed a deal. I mean, if you're out and about and you're finding deals and you're relying on your end buyer to do all the due diligence, you're relying on them to figure out how they're going to make

money on their deal, then you're going to have a tough time finding end buyers. Okay? That's the gist of it. The easier that you make it for your end buyer, the easier it will be to find an end buyer. the easier it will be to find an end buyer. And if you do indeed make it easy, you won't need to show it to too many people to find that end buyer.

It's really simple that way. And if you can't sell your deal, either you're lacking exposure or proper representation, or it's just not a deal. Just not a deal. And here's another side of this. If you're concerned about the one deal you can't sell, like I got this one deal that I just,

that no one. no one's buying. If you're concerned about that one deal, you're doing it wrong. You see, you need deals to sell, but you don't need any one deal. So the answer is to focus on your lead generation machine. You've got to keep the leads cranking.

You've got to set your appointments with your motivated sellers, and you've got to write those offers. If you're doing that, if that's your steady activity, the lack of money and or end buyers will never be more than a speed bump in the process. I hate to sound like a broken record with this, but travel as far as you can see. And when you get there, you'll see further.

Time and time again, we've had people on the show that put their faith in that philosophy and they're on the show because they did deals, right? So I hope that helps. If you need more clarification, feel free to give me another call, no problem, or make your way through the archives of the show as, you know, I've gone over this quite a bit and quite a bit in much greater detail. But thank you for the call.

Next caller. Hi, Matt. My name's Gary Payrow, and I've been listening for a couple of months, and I love your content and would like to work with your team. I live in the San Fernando Valley, West Hills, to be exact, and I'm wondering how you decide whether to go for the ideal real estate market, be it in Memphis, or an ideal, markets based on Memphis or some other criterion, or whether you start up in your local markets because there are definitely opportunities there.

And how do you decide? How do you decide if Southern California with the appreciation you've seen recently and the concerns about that, how do you decide if you should put your energy locally where you can talk to people, meet people, or someplace long distance? So that's my question. I hope it's a good one, and I hope to hear it on the air. Take care. Bye-bye. Jerry, thank you, buddy. Thanks for the nice words. So Jerry wants to know how do you decide on the ideal market? How do you know whether to start in your own backyard or somewhere else? Basically, where's the best area to invest? And the quick answer is, wherever you'll actually do it. No, not really. Well, sort of. There's some truth into that, but not actually. Some places can be better to invest. than others. The real answer is, it depends. And that answer, as you probably come to know,

will fit just about every real estate investing question. You know, very few questions out there in real estate. Very few of them have a one-size-fits-all answer. So where's the best area to invest? Well, the answer is it depends. And it depends on what you expect to get out of your investing. What do you want from your real estate? What are what are your goals with regard to real estate investing? For example, I'm a cash flow investor, right? That's, I'm all about cash flow, residual income, cash flow, cash flow. So I'm in Memphis. I'm in St. Louis and Cleveland and Kansas City and Cincinnati and Columbus because I get good cash flow there. The best cash flow consistently that I've found thus far happens in those markets. And I'm always looking for.

others, but those are the best ones that I've found so far. And if I could get good cash flow in my own market right here in Los Angeles, you best believe I'd be getting it there too. You know, I've avoided most of the West Coast and the East Coast because the price point is just too high. Well, let me clarify, it's too high to generate strong and consistent cash flow to get a good return on my investment. However, my friend, my very good friend, Richard Haynes, who's been here right on the show a couple of times, he loves the West Coast.

He loves the beach cities. He loves the expensive markets as he does these high-end fix and flips where, you know, he makes sometimes six figures a flip. I think the one last deal he shared with us, he made a few hundred grand on the deal. But he couldn't do that in the Midwest, or at least not as abundantly as he does on the West Coast. and it just so happens to be the market that he lives in. So that's how he chose his market. So in choosing the best area to invest, you've got to ask yourself, what am I looking for?

Am I looking for a residual income from rental properties? And or am I looking for a high ROI on that residual income? Or am I looking to make a quick buck wholesaling properties? Or am I looking to make the big bucks flipping luxury properties? Or am I looking for stability in my investments? Or am I looking for equity growth or appreciation? You know, I don't know of a market where all those attributes are abundantly and equally available. Meaning, you can't have it all.

It's like in your mutual fund, you've got your slow growth and you got your aggressive growth. And I don't, I'm not well versed in that market. But I know that you have to choose from different types. of investments because those different types of investments provide you different things. And as you get older, you want to go into more of the stable investment. So they have you shift your money from the aggressive growth to the stable growth. And the real estate is just like that. Okay?

There's nothing. I mean, I wish there was something that, you know, the best of all worlds was in one place. But there isn't. You can't have it all. And that's where it gets most people is they sit around on the side. sidelines looking for the real estate utopia that grants all of their wishes doesn't exist and that's what you don't want to do you don't want to sit around and wait to get in the game i mean i believe the saying goes buy real estate then wait not wait then by real estate right or don't wait to buy real

estate buy real estate then wait something like that anyway you've got to first make a decision on what you want out of your investing that's where it starts be clear as to what it is that you want out of your investing. You've got to be clear about that. Now, after that, to really simplify it, and I could talk about this for a while, but I'll try and make it really simple. It's now just an issue of supply and demand, basic economics, the most basic of economics you can get. For example, I'll give you my example here. I'm in Memphis. I've talked about Memphis since the very beginning of this show, and I'm going to use that market as the example since you brought it up on the call. Okay, Jerry.

You brought it up, so I'll just, I'll give you an example of while I'm there. With regard to the supply, there haven't been a bunch of new housing developments over the years built in Memphis. The supply, relatively the same, relatively stable. But that could change, and it probably will, and I'll tell you why that's a good thing in just a minute. But with regard to the demand in Memphis, there are a lot of people there. 650,000 approximately, and approximately 50% of that population,

rents their residence. That's pretty good demand. More than a half a million people and a half of those people rent their property. Now, another factor to consider, aside from the supply and demand, is obviously the economy. How do the economics work there? Specifically, is there enough employment there for the tenants to pay their rent? So I looked at that. You know, I've got the headquarters of FedEx is there.

The health care and biotech industries are very strong in Memphis. And that's an industry that's only going to get bigger as more. and more of the baby boomers age and retire. They're all going to need health care. So that's going to get bigger. And then the Memphis City government is doing a lot to develop and enhance the city. They're building to attract tourism. They're slowly ridding the city of the ugly government project buildings and putting single

family residences in the place. The city is definitely moving in the right direction. I've shared that with you before. And now back to my previous point about the supply, though. Here's another very exciting aspect of Memphis and all of my markets is, should they start building new housing? And I really think that they will at some point. I mean, currently everything I'm buying is somewhere between 40 to 60% of replacement costs,

meaning I'm buying houses at half the price it would cost to build new houses. So, as you know, on this show, I'm very much a cash flow investor. I'm strictly a cash flow investor. But I wouldn't mind some appreciation too. I'm not crazy. I mean, I'm not against appreciation. I want some appreciation. But also, as you know, I don't like to gamble.

I don't like to lose. I'm very conservative. So I'm just keeping my eye on the supply and demand. There's already enough people, the demand, walking the earth, that of which will cause the need for increased supply, more houses. But the big home builders, they're not going to start building houses until they can sell them for more than what it costs to build them. and when that happens, what does that mean for the value of all the properties that I bought at half the price it costs to build them?

Yeah, each and every one of them will at least double. Now, that might happen next year or that might happen 10 years from now. I don't really care. I don't really care because I'm cash flowing in the meantime. I'm cash flowing while I wait. So that's how I picked my market because all of those factors kind of meet

what I'm looking for out of my money. my real estate investing. And I think that's how to pick the right marker for anybody. It's going to be a different answer for all of us. That's a very, what we want out of our investing is, can be very personal, but it's definitely unique. So first, decide on what you want from your real estate investing. Got to decide there.

And second, conduct supply and demand analysis to find the areas that have the best supply and demand situation to give you what you want from your real estate investing. So those are my two steps is decide what you want. And second, just find the market with the supply and demand that's going to give you what you want. Now, if you can find that in your own backyard, God bless you. Do it in your own backyard. That's what I would do. I certainly would do that.

But if the ideal situation is not in your own backyard, hey, then you got to start looking elsewhere. No big deal. You know, it always gets me at the real estate. investor club meetings. I mean, you'll almost always hear someone say, or not, maybe not always, but you'll hear this often. Typically, as they're holding court around for all the newbie investors and in this one person is sharing their horror stories and at some point, they're going to say something like,

if you can't drive to it, don't buy it. You hear that advice all the time from people that claim to have been investing a long time. And some of them have, some of them haven't, I'm not sure. But I hear that, and I just think it's the silliest thing that I've ever heard, ever. That's, and there's a part of me that's like, well, you're not a successful investor then, if that's your advice, in most cases. I just think it's so silly because I guarantee anyone that has ever lost money in real estate, they haven't lost it because they couldn't drive to their property whenever they wanted.

That wasn't the reason that they lost money. People lose money in real estate for two specific reasons. either bad management or a bad rehab team. That's where most of it is lost. So if you can manage those two things, you eliminate a significant portion of the risk from real estate. And maybe there's a third reason. You misanalyze the property.

You didn't know the market very well. And maybe you cut some corners on your due diligence. Maybe that's a third reason. And, you know, if you really want to stretch it, maybe you come up with a few other minor reasons. But I guarantee you the distance that that property is from where you live is nowhere on the list of reasons that you lost money. Okay?

So that's silly advice. And so, Jerry, I hope that answers your question. You want to decide what you want from your real estate investing and then analyze the supply and demand factors that will give you what you want from your investing. Start in your own backyard and then move out until you, and gradually move further and further away until you find a good supply and demand situation that will help you the most in reaching your goals. But I kind of gathered and you know what, you can totally correct me if I'm wrong,

but it's just a hunch as you really don't have any goals written down for yourself. You're not really clear about it. You have an idea of what you want. I know you want to make money. I know you might even want to do this full time as a business. But I don't know if you really have real specific goals written down. I would recommend that you do that. And I'd recommend that to everyone listening to my voice right now.

if you don't know what you really want out of your investing, write it down because it's going to help you significantly in the decision process of all of your investments, not just the markets, but then the property specifically as well because those properties are going to fall under the same scrutiny or they should fall under the same scrutiny also. Got it? Super.

All right. If you happen to have a question, comment, or concern that you'd like me to answer or address here live on the show, please share them with me on the epic. Real Estate Investing hotline at 1-888-891-7203. 1-888-891-7203. Okay, do.

Now you know, but it will only work if you do. That's it for today. I'm Matt Terrio, Living the Dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.