Epic Real Estate Investing - Coronavirus and YOUR Real Estate Investing | 975

Episode Date: April 1, 2020

How many times in your life have you heard that real estate is risky? Quite frankly, in the midst of the pandemic, it feels really risky IF you don’t know what you are doing! Therefore, Matt shares the key points that you want to pay attention to, right now, in order to do YOUR real estate investing right! Tune in and find out more!   Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit REI.

Here's Matt. Hey there, Epic Investor. It's Matt Terrio from Epic Real Estate, where we show people how to invest in real estate with an emphasis on retiring early. This is the Epic Real Estate Investing Show. If this is your first time here, really glad that you found us. If you like what you hear, make sure you hit the subscribe button before you go. And if this is not your first time here, welcome back. And thank you for sharing this with your friends and family.

Wouldn't be here without you doing that. So I'm very, very grateful. I'm going to take a break for a little while from way back Wednesdays. And I really want to focus on what's going on in the market right now and what there is for you to do. I initially had on my schedule here to talk about, well, actually it was going to be way back Wednesday, but tomorrow was going to be about risk, right, about the real estate being the lowest risk to highest return ratio of any investment available to the average person. And right now, risk is kind of taken on a whole.

whole new meaning, isn't it? You know, with the health crisis that's going on, I'm seeing people just flee, right? They're curling up into little balls in the corner and they're contracting and they're getting small and they're playing major games of defense. And, you know, if you've been struggling with your real estate, I'm telling you, if you do this right, that's all about to change for you right now. And, you know, if you've been thinking to, you're going to, you're like when should I get it in and you've just kind of hanging out and I really appreciate you for hanging out and listening. But if you're trying to figure out how to time the market, this is the time. You know, the crisis that we're all dealing with. And here we are on April

1st. And here as far as Nevada goes, well, I guess the president had announced it for the nation that we're on these social distancing measures for the next 30 days. So what is there to do? right because we've got people canceling contracts and and stopping their purchases and stopping the loan process and I want you to tell I tell you I just I closed on a house last weekend Mercedes signed docs this morning and then we had a house just come across our desk this morning that someone said you know what can you guys just buy this I'm freaking out can you just buy it and we got just in the last week we got three smoking deals really smoking deals and I'll share with you how we structured those and how those went. But, you know, how many times in your life have you heard that

real estate is risky? You've heard that a lot, right? It makes sense because right now it feels really risky if you don't know what you're doing. Okay. And that's what most people say, that's who says real estate is risky because they don't know what they're doing. Here's the truth. Real estate isn't risky. What could be risky about it if property is worth twice as much today as it was 10 years ago. How is that risky? Three times as much as it was 10 years before that, how could you lose? Some people have figured out how to lose, though, and they're doing it all over again. So you've got to be careful. I want to protect you from that. I'm going to give you five reasons as to why, why people lose in real estate. And one is they've got a bad strategy, investing versus

speculation. And we've all done really, really well with speculation over the last 10 years. It was really difficult to lose when properties just keep on appreciating. Bad timing. Like I said, right now is a great example. People are fleeing due to crisis. But where there's crisis, there's cash flow. That's where the opportunity is. And I'm not being cold-hearted here.

I feel for everybody and I want this thing over and passed us as badly as you do. I do. But nonetheless, opportunities are being created. The other two things that people lose money, places, and I talk about this all the bad contractors and bad property managers. But the one I want you to really be careful of right now, this is the one, even if you're aware, it could still bite you.

And that is bad evaluation. Lack of education, lack of experience. It can really burn you right now. And I want to warn you to really be careful who you're listening to. You know, I've been in our quarantine here, like just, what, two, three weeks now? And there's no shortage of emails in my inbox of everyone telling you what you should do and what you should be doing. And like the coronavirus and the opportunities and everybody's touting virtual this and virtual that because you can't leave, which I'm not against. And I don't think it's a bad idea.

But I don't think that's where the power is. I don't think that's where the real potential to lose or win is. I don't think the location of the real estate has a whole lot to do with whether you win or lose in the. market or whether you can or not leave your house. Right. So it really comes down to bad evaluation. You got to get your property values right. You know what most people don't realize even in a good market, a strong market like

what we've been in the last decade, you know, a certified appraisal on a property is technically only good on the day it was issued. And now with your investing and your efforts, I want you to start thinking like that. Like the value today is only good today. tomorrow might be totally different. So when a determining value, three things I really want you to focus on moving forward. One is only look at the solds. I've said that forever, but I mean, you can't look at the pendings.

You can't look at what's for sale. You've got to look at the solds. The one place you could look at for sales are the low prices that aren't selling. prices that are sitting. Because if the value is only good today in the appraisal world, and the reason is because everything could change tomorrow. So the banks are only banking on what's today when they send out an appraisal for them. But the news is changing by the day, right? The news is changing really, really quickly. And tomorrow, something totally different could come down and it could send it either up or down. We don't know. But it's only what we got today.

We have to look at a snapshot of today to determine the value today. Tomorrow you've got to look at a new snapshot. So really focus on the solds. And that's number one. Focus on the solds. And then when you do look at the for sales, look at those for sales, those low prices that are not selling.

And you've got to figure out why. Is it the property or is it the market? Okay. So value is huge. Number two, I don't want you looking at it solds any more than 30 days out right now. I mean, we've been in this quarantine thing for maybe three weeks.

maybe even 21 days, but nothing past 30 days for sure. And then the more recent sales inside of those 30 days, I want you to wait those. Give more weight to the more recent sales that they are. That's going to help you narrow in the value. And still, even with that, if you're just looking at the solds, you're looking at what's not selling, and you're giving weight to the most recent, like of a house closed yesterday, that's the value. That's the value. You've got to give that as if it was two or three comps.

All right? That's how you're going to protect yourself. Then, but even if you get all of that right, you can still get it wrong because the news could change tomorrow after you close today. All right. So the way that you can really protect yourself right now is purchase with terms. You got to practice your terms now. We've all made a really good living for just going for low ball, all cash offers for a really long time. And if you're that one trick pony, what that's all you got in your tool belt,

you're going to leave a lot of money on the table and you're going to miss out on a lot of opportunity. And with that said, and I started to say this and I think I got sidetracked earlier, there's no shortage of the emails and the gurus out there, people in your feed, giving you advice, I just want you to be really careful as to who you are listening to. I'm sure they all mean well. There's a bunch of great dudes out there, a bunch of great girls out there that are teaching and instructing and training and have been very successful in their own right and they probably deserve to teach. I think it's great when it happens for them and they can create

that additional stream of income based on what they've learned and what their experience. But be very, very careful with anyone, I would say, just rule of thumb. I'm sure there's some of an exception or two out there. But anyone under the age of 35, they haven't been through this. Okay. Unless they were investing when they were 21, 22, 23, they don't know. They haven't experienced it.

They don't know what this type of market holds. really know where the opportunities are. They don't know what landmines to avoid and what pitfalls to dodge. They don't have the experience. They might still have some good advice, but just understand it's, I could almost bet my life on it. It's coming secondhand. They're just regurgitating stuff that they've heard somewhere else. So that's number one, anyone under the age of 35, number two, anyone that's been investing for less than 10 years. And that's a lot of people. That's a lot of people that are out there giving advice. They're doing the training, they're doing the education. They haven't been doing this very long. They know one type of

market. They don't know how to thrive in a market where things shift like this. When that pendulum is swinging back now, it's been so strongly on the seller's side. Strongly, is that a word? It's been so strong on the seller's side. The power has been there. And it's coming back, though. It's coming back into the buyers. And even if it's just a little bit, the strategies change, the strategy shift. So even if you get the value right today, it can still burn you tomorrow and how you protect yourself are with terms. And that's how we did these three deals. So we paid almost full price. We had full market price for them today. We put small down payments down. I think we did 10% on two of them and 20% on the third one. And we pushed for the principal only payments. And we got it on two of

them. Okay. So we got the principal only payments on one for the lifespan of the loan. One is a 10-year term with a balloon payment after 10 years. The other one, we structured as they got, we got a little bit of pushback on the principal only, but we say, hey, you know what, there's a lot of uncertainty. Remember, you blame it on the market. We talk about that here all the time is with regard to, when you're negotiating with a seller, right? You make the market the bad guy. You align yourself with the seller, get on the seller's side. You're there with the solution. They got the problem. You're going to go ahead and work together to see if you can both solve each other's problem, right? I mean, you're going to give them peace of mind.

You're going to get the equity in exchange. And the only thing that can get in the way is the market. The market is the bad guy. And that's always my position. And it's the best position to operate from because it builds trust. It builds rapport. It shows competence. It instills confidence in your competence from the seller.

But it's really tough to make the market the bad guy when the market just keeps going up. right? The market just keeps going up and it's tough to do that. Well, now the market really is the bad guy. The market has come to answer. And the market, you can blame the market on everything and negotiating. It's never been easier for you. So making the market the bad guy. So with the principal only terms, we give them full price. Hey, we'll lock in your full price and we'll give you a market today. But tomorrow is uncertain. So this is what we got to do. We're going to go ahead and do this. We're going to divide the balance, give you a little bit of money down now and divide the balance into, you know, 300 equal monthly payments. 200 equal monthly payments. So we got that through with one of them. Okay, we got it for 10 years in a balloon on the, on the, after 10. The second one, we got the pushback. We got it principal only for three years and then it kicks up to six percent after that. And then I think that's a seven

year. But what that principle only does, that's how, that's how you can really protect yourself is that you get that huge pay down. So you're really chopping away at the equity for those first three years. And in this house that we got, the payment's a thousand bucks. The rent is like $2,200. The payment is $1,000. So after those three years, right, what did I do? Two years. It's two or three. It doesn't matter. We'll say two. We'll keep a conservative. Two years. That's $24,000, right, of equity that we've chipped away on $140,000 property. So we've really protected ourselves. So if the price drops, at least the tenant that's paying us rent, is going to be, we're going to be chipping away at that equity really quickly.

So that's how you protect yourself that way. And then the third one was we got pushback. They wanted to note, I need 5% was the interest rate. They didn't want to do this principle only thing. So this is what we did is we negotiated. We got 1% loan for the first two years and we gave them 6%. So we gave them an extra point on years 3, 4, and 5 with a 5 year balloon. Okay, so we got the value.

We dialed that in based on the most current comps, and we gave them a small down payment, so not a lot of risk there. And then over the payments, over those first two and three years spread out over a few of those three different properties, we're just, we're grinding away at the equity, taking big chunks right out of the equity.

And so even if we overpaid, we're still getting a huge discount that the tenant over time, over those initial period, will be paying down for us. Because I don't know if you know, like if you got a 6% loan and you say you got a 30% amortized loan at 6%.

You don't really start shipping away at equity until about year 15. It's all interest right up front. So that's the big difference. The amortization is your big friend right now. That's your big safety net. So moving forward for the rest of the month, it's going to be all new episodes.

I'm still running the audios every once in a while from our YouTube channel. but I'm going to run all new episodes, and I'm going to focus a lot on what you have to do with regards to terms. Because remember, as an epic investor, you listen to this show, you're going to purchase property in one of two ways. It's going to be either your price and the seller's terms or the seller's price and your terms. As long as you can control one, you can always create a deal for yourself. We talk a lot about the price, right? Because no one has really had to go deep into the terms, and sellers haven't been too receptive of the terms because they haven't had to.

to be. So now it's time to really brush up on your creative acquisition strategies, your creative financing. Those are the terms. The other thing you can do to protect yourself, speaking of terms, I had this written down, I glazed right over it, is go for extended escrow periods. 30 days is a traditional escrow period. Nothing wrong with going for 45 days. Nothing wrong with going for 60-day terms on the escrow periods.

Let's let this shake out. Let's see what happens. lock it up, get under contract, and if something turns south, you know what? You can always renegotiate. You've got it locked up. They can't sell it to anybody else. You can renegotiate. And when it comes to that and you're renegotiating, the market's to blame. The market's at fault. It's not me, Mr. Seller. I could give this house back to you, but, you know, the next person that comes along is going to see the exact same thing and say the exact same thing. We've gotten this far. Let's go ahead and just get this resolved. You can always reneuxel it.

negotiate. And if they don't want to renegotiate, you can always cancel. Okay. There's no real estate jail for canceling a contract. So keep your contingencies in place and your terms. And what made me think of that just now and what I forgot about earlier is your escrow period. That's part of the terms. That is a term. If you want full market value, it's going to be a 60 day close or it's going to be a 45 day close. You want it to close faster, then the price comes down a little bit, right? That price and terms go back and forth just like a C-Soft. The price goes up. The terms get longer.

If the terms get shorter, then the price gets lower. That's how those work together. So this month, I'm going to focus almost exclusively on this, on the terms. And I'm going to give you all kinds of stuff that's really going to empower you. It is my goal to make you love me and fall in love with this show all over again. All right? I'm going to be your best friend. I'm going to be your source.

And you know why? Because I've been through this. This is how I built my empire. Quote unquote. I got air quotes with empire. It's not an empire. But I got a lot of rentals. And my whole personal livelihood is supported by my rentals.

And I didn't get a bank loan. My first bank loan was just last year. So I did it all with seller financing, all with creative financing, all with creative terms in a really depressed market. Now, I don't know if we're going there. If we're going to go that deeper, that far. but I do know that the pendulum is swinging back to the buyer, and those opportunities are going to be more abundant than they've ever been in the last decade.

There's going to be more real estate exchanging hands in the next couple years than we've seen in a very, very long time. And you want to be in the middle of that, okay? There's a lot of opportunity if you know how to get in the middle of that. And I'm going to show you. I'm going to share that with you. I'm not holding back. And so I'm going to see you.

Let's see. Tomorrow is, I think it's already on the schedule, but I think starting Friday will be all be a brand new recorded episodes. Okay. And those are just for you. So stick with me for the month of April. We'll call it Creative Acquisition April. That sounds good, right? Creative Acquisition April.

All righty. So that's it for today. God loves you. So do I. Peace, blessings, success. Be healthy. follow our leaders, do what they say so we can get past this dumb virus thing and get out on with our lives. I went to play catch with my son today at the park and we got kicked off.

State orders, sorry you got to go. That really sucked, right? We were playing catch and yeah, because this whole baseball season has been canceled, so he's bummed about that. And so I said, let's just go play catch. Let's just blow off the day and let's go play catch. And we did. And we got about 20 minutes in, and then Mr. Security Guard came and he kicked everybody off out of the park. That was really depressing.

It was really kind of sad. So be safe. Let's do what our leaders are telling us to do so we can make this thing go away and get back to our regular lives. But with that said, we've got no real control over it right now, but we do have control over how we act and how we respond. and in a very, very short period of time. I mean, this thing just hit, what, two or three weeks ago, where it became real for most people. Like, oh, my God, this is serious, I guess.

Three deals, boom, boom, boom, just like that. Enrique in Los Angeles. Just made an offer over the phone. He just offered a realtor, half price for a listing. And they said, yes, just like that. Okay, so they're out there. I saw, if you look inside of the private Facebook group with the epic community, if you're a member, if you're not, just go ahead and join or go request

that and we'll let you in. It's a good place to be right now. And with that said, we do our follow-through Fridays where we post our wins. Whether small, big, no win is too small or too big to share. The point being is people are still reporting wins every single Friday in the last three weeks in a row. People are still doing deals. They're finding the great opportunities. Parker had posted a deal. A buyer canceled on him. He found a new buyer at like a $10,000 price reduction. So he went back to the seller and blamed to the market. And then the seller dropped the price $10,000. So he still made his money. Okay. So it's still there. Don't retract. This is the time to get in the game. If you've been waiting, get in now. If you've been struggling, it's about

to change for you. Stay tuned here. And I won't steer you wrong. All righty. So that's it for today. Did I say God loves you? He does. He really does. And so do I. And peace and tranquility and blessings and good health and success. To you and your family, I'm Matt Terrio. Yo.

Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home world, we got the cash flow. This podcast is a part of the C-suite radio network. For more top business podcasts, Visit c-sweetradio.com.