Epic Real Estate Investing - How to Get Your Dream Exponentially Faster | Episode 90

Episode Date: February 24, 2014

Inject maximum efficiency into your business by understanding and implementing one crucial business concept. This concept makes all businesses better and stronger, but in real estate it accelerates wealth creation, too. Also, Matt shares with you how to identify the right investments for you and his technique for making quick confident decisions that land him the best deals on a regular basis.  Now is a great time to click the "subscribe button" so that you don't miss a single episode of the "Living the Dream" series. It's not too late, we're only on Episode 2. -------------------------   Download Matt's free real estate investing course "How to Do Deals | No Money Required" atFreeRealEstateInvestingCourse.com or text FreeCourse to 55678 "Click" what interests you most: Education Properties Income Coaching 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. And welcome to another episode of Epic Real Estate Investing. If this is your first time listening to the show, welcome. Super excited that you're here. And if this is not your first time, welcome back. And as you know, and if you don't know, this is the place where I show people how to escape the rat race by investing in real estate. and if I were to do it all over again, I'd do it exactly the same way.

And I'd do it exactly the same way whether I had money and credit to work with or not. And why would that be? You see, while I was finding my way, I stumbled upon 12 different strategies of investing in real estate with little to no money. And in hindsight, it made me a better investor. You know, being forced to invest with little to no money or credit, it just made me better. So I think it's an advantage if you're getting started with no money or credit. So if you have no money or credit, hey, rejoice. This is a great day for you.

And it made me a better investor and I want to make you a better investor. So what I did is I put the first two strategies, the two of which I believe are the easiest and fastest strategies to a paycheck. I've put them into a free course just for you. And you can access that free course at free real estate investing course.com. Or if you're listening on your smartphone, I've got something new for you. I just introduced this last episode.

You can download the course, the free course, right there on your phone by texting free course to 55678. Free course, text that to 55678 and you'll get the course right there on your phone. The two easiest and fastest strategies to a paycheck in real estate. And there's a bonus strategy. If you've been listening, there is a bonus strategy. And it's still in effect. Just one more week it'll be available.

And the bonus strategy to which I'm speaking can get you a paycheck within the next seven days. And here's how. I'm going to be rewarding $1,000 or awarding. Rewarding, awarding. I always get those two mixed up. I'll be awarding $1,000 on March 3rd. That's just seven days away if you're listening to this on the day that it was released. I'm going to be given that to the best video testimonial demonstrating how this podcast or the free course and or the Epic Pro Academy has helped.

you in your real estate investing. $1,000 paycheck for the best video. And for the top three video testimonials, I'm going to go ahead, I'm going to interview you on the show of where you'll have the opportunity to share your experiences, to ask me questions, to plug your business, whatever you want to talk about. So the video, it doesn't have to be fancy or anything. I mean, the video camera on your smartphone will be sufficient.

In fact, the video camera on your smartphone is probably far better than what was available in professional TV studios just a few years ago. So it's going to be great. Not to mention that it's a whole lot easier than that. So just shoot a quick video and share with me your epic story and email it to me at mat at epic real estate.com. And still, I can't believe it, but I only have a few video testimonials that have been submitted.

Only a few. And it's really surprised me with the amount of email that I get. And if I haven't gotten to your email, I will. I'm very backed up right now, get to it. And gosh, we're almost at 300 positive comments, five-star comments on iTunes. So there's lots of great things that you've all got to say about what you've learned here. So just shoot a quick video. Just turn one in and you've got a great shot at $1,000. There's hardly any competition right now. In fact, pause this recording, pick up your smartphone,

give me 30 seconds of how the Epic Pro Academy has positively impacted your life and then just hit send. And it's done with. Just send it to Matt at Epic Real Estate.com. Very simple. Okay, last episode, we started a series on how to live the dream of real estate. You know, that dream that real estate seems to promise everywhere you look. And the focus that you're going to need to create your dream is a focus on residual income. And the idea here, or at least how I did it, I focused on creating as much residual income as possible using as little. of my own money as possible. And one big reason for that is specifically a tax strategy.

I didn't necessarily know that when I got started, but it turns out to be a very big one, a very big tax strategy. You know, we talked about this and we've talked about it several times, that, you know, taxes are going to consume up to 50%, maybe even more, 50% of your lifetime's income. Imagine what your life would be like if you got to keep it all. If it's already taking 50%, what would your life be like right now if you got to keep it all? That's essentially it would be doubling your income, right? What would life be like right now if your income has been doubled?

Boom, bam. Automatic, it's like magic, your income is now doubled. What could you do? Where could you go? Who could you take with you? Right? Taxes, it's a big deal. It's a really big deal.

And here's the simple truth about taxes. This is why this works. but you have to understand this part. The harder you work for money, the more you're going to pay in taxes. Doesn't sound fair, does it? It doesn't make sense, does it? But that's how the tax code is written. The harder you work for money, the more you're going to pay in taxes.

The harder your money works for you, the less you'll pay. Isn't that weird? The harder your money works for you, the less you're going to pay. But when other people's money works hard for you, then you really hit the jackpot. And you're taxed even less. Okay? have to understand that. So when you're using as little of your own money as possible, well, where is the rest of the money come from, right? Someone else. And we know when other people's

money works hard for you, then you're taxed even less. And using someone else's money, that's referred to as leveraging someone else's money. So that's one of my big reasons for using little to no money and none of my own money, preferably. in my deals. Not to mention that I didn't have any in the beginning, so I didn't really have a choice. But in hindsight, I've noticed that this was a huge tax savings benefit for me. And now that I have money,

I try even harder not to use my own money because of this huge tax savings benefit. And I want you to understand that. But the biggest reason, I mean, the tax strategy, that's a huge reason. But the biggest reason I use leverage is that it is what makes real estate such a quick wealth-creating vehicle. In my opinion, I believe it's why real estate has created more millionaires and billionaires than any other investment vehicle.

It's because of leverage. And leverage, it's a crucial concept in any business, really, and a concept that you'll need to become familiar with if you are seeking success in real estate investing. And maybe the easiest way to explain leverage is that it's a method for, maximizing efficiency. You know, just as a physical lever multiplies your effective power for, say, moving objects, big, heavy objects. You use a lever and you can move heavy objects. Business leverage can multiply your effective power for making money and expanding your business.

Multiply your power. I mean, just imagine what you've done on your own already. Now multiply that. That's what leverage can do. but with no extra effort on your part. That's what leverage does. You know, we all face the same basic limitations of time, space, and energy. I mean, how many times have you wished for more hours in the day, right?

Or the ability to be in two or more places at once. Or the ability to go without sleeping. We've all wanted to do that because we've had so much to do. It's common for people to get frustrated because of having too much to do and not enough money, help, or time to do it all. The art of leverage can help us multiply our resources so that we can accomplish more than we would ever have thought possible. That's what leverage does for us. So there are a few different ways in which you can use leverage in your business.

And I touched on one of them already, leveraging other people's money. So let's talk about that for a second. Most people are raised to work hard for their money. Right? And there's nothing wrong with that. There's nothing wrong with working hard. I work very hard. but very few are taught how to make their money work hard for them.

And there's something very wrong with that. And that's why I teach people how to make their money work for them. You know, real estate, it's one of the best ways to leverage your money. I mean, and one of the best ways to multiply its purchasing power and its equity building potential. You know, because of the way that mortgages are created, whether that's a private mortgage, or an institutional mortgage, you can leverage your money to purchase property, and then once you've created the equity,

you can borrow against that equity to purchase additional properties and or make other investments. And we're going to touch on that much more as we go, as this is where, how and why, it's a reality that one could essentially exit the rat race in just a few years. You know, I always say, you know,

anyone can do it in 10 years or less, but, you know, if you understand leverage, you can do it a lot quicker than that even. And again, we're going to come back to this. Now, another way to use leverage is people, the leveraging of people. That might sound kind of funny if you've never heard that before. I'm not talking about using people or manipulating people. What I mean is you are partnering with people.

And you're partnering with the intent and in the interest of a mutual benefit. When I'm talking about leverage, I'm talking about relationship. which is what this business is all about, right? It's a people business. And people have relationships with people. And you want to leverage those relationships to create a mutually beneficial outcome. You know, no one lives in a vacuum,

especially not business people. You know, even the smallest businesses require the cooperation of a team of people. And real estate is no different. In fact, it's probably even, I don't know, it's probably even more, relevant for real estate because there's a lot of moving parts and you need essentially a bigger team than most businesses.

You know, your business, it may involve a wide range of professionals and a wide range of clients, but there are a few type of key individuals. There's some key individuals who you will probably want to develop relationships with and develop those right away, including real estate agents, lenders, property managers, attorneys, and CPAs. There are others. Absolutely, that is not the end of it. But these are probably the key players that you want to get on your team right away.

You know, real estate agents. They're people that you need in your circle. Love them or hate them, but you need them. I love real estate agents, and I rag on them all the time, and I feel like I have the right to because I was once won. So I was on the receiving end before. But they do serve a purpose. The right ones do serve a purpose.

They're not all created equal. I'm going to start with that. They're not all going to be the right fit for you and in your investing goals. But they are the ones who are in the trenches. They are the ones who are constantly talking to the sellers. They are constantly examining the properties. They're constantly analyzing the patterns in the market trends. So find a realtor who is experienced with investment properties.

And find a realtor who is experienced working with investors. And if you can, find a realtor who is experienced working with investors. invest themselves. That might be a much harder find. But preferably, if you can find a realtor that owns investment property, even a better situation. You know, you want one that can communicate your situation and goals very clearly, one that can represent you appropriately.

And, you know, so once you develop a good relationship with the right real estate agent, you're going to have a valuable contact who can, you know, lead you to the right types of properties you're looking for, the right types of opportunities. So that's the first person that there's one and maybe multiple. It's not a bad idea to have multiple real estate agents and multiple relationships like that on your team. Now, lenders, other types of people that you can leverage. Obviously, it's a very important thing to do to build relationships with lenders. I mean, the right lender can make all the difference when you are looking for the capital you need to purchase your properties.

They are the access to you leveraging other people's money. So it's usually a good idea to develop multiple relationships with different lenders, both local and national, both private and institutional. You know, long-term relationships with local lenders can mean years of reliable help and support. But, you know, national lenders, they also provide many advantages. They have their place, too, including lower rates typically and greater access to capital. They can access more of it. So banks tend to have their little niches.

So you can research them and find out which ones specialize in real estate, which ones specialize in small business loans or other niches that could benefit you. Lenders can also, though, take the form and often do take the form of a family member or friend. A lender is not just a bank. I need to get you outside of the box a little bit. Family member or friend or where is another place you could borrow money from. The seller of the property, the seller of the property that you're purchasing. they could provide that money for you to acquire the property. Or maybe the bank that holds the existing mortgage that may be on the property you want to purchase.

So not having to get a new loan or not having to go find a new bank, use the one that's already there in play. Money can be borrowed from multiple types of people and places. Even credit cards. There's another place you can borrow money. That's a lender. Retirement plans. There's another lender. It doesn't always have to be your retirement plan either.

And say something like, IOUs. Yes, IOUs can be used as money. You can borrow money that way as well. And we'll get to, we'll get to how all that works also. In other relationship, you'll want to leverage attorneys. Okay. Real estate investing, like most businesses, it involves contracts. So it's a good idea to develop a relationship with an expert attorney, one who has significant training and experience with real estate law. In fact, you may want to get to know a few attorneys, just in case you're, primary real estate lawyer is not available when you need help or your primary real estate lawyer doesn't understand the area of which you are investing in or doesn't understand a certain area or

I get not area I already said area I meant area as far as location and and the second time I said area I was meaning a certain type of real estate or maybe a specific situation they don't understand so a good real estate attorney um or attorneys what they can do for you, they can help you drop your contracts, they can help you develop business entities like limited liability companies and your S-Corps. They can assess legal risk factors and they can handle all the other matters that might arise and other things might arise. You know, real estate is a litigious environment. So you want to make sure you've got good advice and you are protected. And that's what lawyers can do for you. And you should be able to find some good candidates by just speaking with

friends and business associates and and fellow real estate investors. Okay, they're not the most common type of lawyer, but you can find them. They're readily out there. And just choose carefully. Choose carefully among those who come recommended to you. And then once you've chosen that lawyer relationship, nurture that relationship. Okay. That's something that you really want to, you want to have a good relationship there.

So for the residual income-minded investor, I think, of the more important, if not the most important relationship you want to leverage is a property manager or property managers. You're starting to hear a theme here. You don't need just, you need more than one of all of these people. Okay. But property managers, I believe this is the secret to the whole thing. This is the key. If it's, if not the key, it's one of the two or three legs in the foundation. Okay. Good, good property managers can't. be, and they often are hard to find. You've heard my horror stories here, but they are worth every bit of the effort in finding the right one. If you find a trustworthy person who does property

management full time, you will find that that person can make your life so much easier and so much more profitable. And, you know, some property managers go well beyond merely collecting checks and doing repairs. They understand real estate investing and make it a point of pride to keep properties occupied by good tenants. And when you find a property manager who has your best interest at heart, your business is likely to take a quantum leap forward. That's how important they are. Keep in mind, though, you will likely have to work with many property managers before you

find the good ones. Or I should say the right ones, the right ones for you. It's just how it works. I don't understand why. It's almost as it's a right of passage that you have to deal with a couple crappy ones first. You know, every, every buy and hold investor I know has worked with their share of duds before they found their studs. But don't let that deter you, okay? It's going to take some effort, but it will be worth the effort.

Now, another relationship you want to leverage. This is another important one. I wish I would have gotten this one sooner. I didn't think I needed it in the beginning, but I wish I would have gotten it sooner because it's been a big mess to go backwards and clean up a bunch of stuff. Is that, say, a CPAs? You know, as with lawyers, there are many types of accountants with the, a variety of specialties. Some CPAs are very knowledgeable about real estate tax laws and some aren't.

So, but you want the ones that are. Those are the ones that you're going to want to investigate. And once again, take your time. Speak with potential candidates and ask for referrals and find out what's working or who's working for other people out there and other investors. And find a CPA who understands real estate investing and real estate business tax issues. You know, some investors choose to handle their taxes themselves. Don't do that.

You've got better things to do. You've got to make the money. They're going to help you save it. They're going to help you keep it. Your time is better served out there finding the deals. But there is really something to be said for bringing in a professional to avoid complications and keep things running smoothly, even if you want to handle the taxes yourself. Okay?

You need a professional. You want to avoid the complications. you want to run it smoothly, not to mention the creativity. Okay, a good real estate CPA can actually, you know, work magic. And it has been said that the difference between the rich and the poor has more to do with the understanding of the tax code than it does the money each group makes. Now, whether that's true or not, not sure. There's probably a lot of truth in there, but that's not 100%, I'm sure.

But what is for sure is, is the tax code works without, prejudice and you want it working for you. So find a good CPA. Okay? You know, each investment team member is, or I should say each investment team is likely to vary a bit. A lot of different personalities, a lot of different experiences and specialties out there. But it's all going to really depend on your specific goals, your specific needs,

and your circumstances. And one of the most important steps in setting up your group is to make sure. sure that every member is aware of your goals and supportive of them. There is no benefit in having the most brilliant people in the world on your team if they have no interest, confidence in, or understanding of your goals. If at all possible, every real estate investor should try to find a mentor as well, someone who has already gained success similar to what you desire. Look for and don't stop looking until you find a mentor who has done what you are trying to

do, one who knows the path and is willing to guide you with encouragement, wisdom, and brutal honesty. Sometimes our best allies are the ones who are willing to tell us things we don't really want to hear. A good mentor, they can shave decades off your journey to financial freedom. That's how important they are. So if you've got, I've already looked for one, Matt, I can't find one. Keep looking.

That's how important they are. Because once you find one, they too will be absolutely worth the effort, okay? They're out there. So you can leverage money. You can leverage people. And another area you can leverage is time. You know, many people claim that time is the most precious commodity in the world. And this assertion makes sense when you think about it, right?

I mean, if you can learn to leverage time, you can multiply your efforts exponentially. In terms of making money, leveraging time means taking advantage of compound interest, taking advantage of appreciation, and various types of resources. residual income as well. We all have only 24 hours in the day, but our investments can work for us around the clock. They can be working all the time. Your time, it's effectively leveraged when you set mechanisms in place to make cash flow and to create profit from appreciation and compound interest. Once these are in place, you are making money all the time around the clock, while you're sleeping, while you're on vacation, no matter what you're,

doing. I mean, whether you're sleeping or whether you're fishing or reading your favorite book, you are making money. Not a bad way to go, right? That's what we're after. It's the closest thing to duplicating yourself or tripling or quadrupling yourself without extending any additional effort, making more by doing less. And that's exactly what leverage allows you to do. Always keep your eyes and ears open for opportunities of leverage. Got it? So I really want you to understand leverage because that's what, that's the real aspect that makes real estate such this, this wealth creating vehicle, this wealth creating wonder,

if you will. So now that your leverage antenna is up, you'll, you'll, you want to first develop your investment criteria. That's what's next. And, and you want to do this before really anything else. Because you must know what you're looking for. For if you don't, you'll never know what to purchase. You won't know which purchases will move you closer to your goals

or move you further away. You won't know the difference. You see, there are many, many, many ways to make money investing in real estate. And trying to embrace them all is the slowest and most frustrating path to make that money. You got that? There's so many different ways to make money investing in real estate. And if you try to do them all, that's the slowest path to making the money that real estate offers. Further, the game of real estate is often a game of speedy, decisive action.

And the more clear that you are in what you're looking for, the quicker you can move and the more deals you'll win, the best deals you'll win. So let's go ahead and develop your investment criteria. this is really important. I want you to pay attention to this part because a lot of the questions that I get through email and what I really see a lot, there's a few different real estate forms that I visit regularly. And a lot of people are asking, is this a good deal? What do you think of this? Should I do it? Should I not? What should I do here? What should I do next? What do you think of my deal? That's the common question. Well, if you knew your investing criteria, you wouldn't have to ask that question.

Okay, that's how important the criteria is. You know, in order to get what we want, we must first know what we want. It's a simple principle that, you know, many people fail to recognize that and one of the primary reasons why people failed to achieve their dreams. You know, in order to accomplish your real estate investing goals,

you'll need to become absolutely clear about why you are investing and what you want your results to be. Only then can you decide on the specific criteria for the properties you will acquire and that we've done. We've gone over the why you want to invest and what you want out of your investing. We did that all back in the previous episode, last episode.

And to take that a little deeper, it's important to understand that there are many factors that are going to influence your decision regarding how you go about investing in real estate, your age, your ambitions, your career, how much time you have, your financial goals, your retirement plans, and other factors. You know, for instance, your criteria may be influenced significantly by how close you are to retirement right now. I mean, your criteria might be very different if you're 25 years old and if you're 55 years old.

Or it might be significantly influenced by how much free time your career is providing right now. Are you working nine to five or you work in, you know, seven to seven? Or are you not working at all? So that's going to be a very different criteria for you. And it's going to depend on the financial needs of your dependence, your personal finances, your contacts, your resources, it's going to depend on all of that. Everyone's answer is going to be different.

So as you start to plan your real estate investing career, you can record and take into account these many factors. It's usually a good idea to consult the members of your investing team to give you insights and perspective. And once you've done that, now that you've established your individualized investment criteria, you're going to want to establish or identify your property criteria. And this is a biggie, okay?

because this is where that shiny object syndrome comes into play and steals people's attention and drags them off course. So we don't want that. So you've got to develop a clear property criteria. And I guess what that means is there's just so many different types of properties to choose from. You've got single family. You got duplexes.

You got fourplexes. You got multiflexes. You got multifamily. You got commercial property. You got vacant land. You got farmland. You got luxury homes. You got lower income homes.

there's all kinds of properties to choose from. However, of all these properties to choose from, not all of them are going to get you where you want to go. They're not all right for you, and they're not going to get you to where you want to go, and in the speed of what you want to get there. There are many criteria to consider before going to the trouble and expense of purchasing an investment property,

including location, including price, including the type of building, the condition of the building, the local economy, all of that needs to be taken into consideration. You know, before you can begin generating leads and looking for properties, you can't see, you can't even generate leads yet because you don't know what you're looking for. So before you can even start talking to motivated sellers, and you're going to need to figure out what you are looking for, which motivated sellers do you want to even talk to. And, you know, there can be a little bit of wiggle room, but you should generally just stick

to your guns in terms of your criteria. Don't get in too big of a hurry and don't bite off more than you can chew either. You know, for new investors, here's a little bit of. what I recommend. I recommend three-bedroom, two-bath, single-family houses right at or just below the median price range within a few-mile radius of their primary residence. That's the basics. And you do have to take into consideration condition and year-built and in the economy of the area that you're investing in. But for the most part, for the property criteria, I recommend three-bed, two-bath, single-family houses right at or just below the median price range within a few mile radius

of your primary residence. Now, the reason for the three-bedroom two-bath is that they are typically in the greatest demand by tenants, the people that will be renting your properties from you. And should you ever need to sell the property, the three-bed two-bath, typically have the greatest demand there as well amongst buyers. Now, depending on the area and the year the homes were built, you know, maybe two bath is not always practical, but definitely go for the three bedrooms as often as you can. Now, when I recommend right at or just below the median price range, it's because this is typically,

and I say typically, there's no hard and solid one-size-fits-all answer. Typically, this is where the purchase price to rent ratio offers the best cash flow opportunities without venturing into, you know, distressed areas. And when I recommend an area within a few mile radius of your primary residence, or specifically where you spend most of your time, I do so because in the beginning you'll likely be meeting with sellers face-to-face as this type of scenario when you're meeting face-to-face that lends itself best to creative investing.

When you can, when you, there's a lot of flexibility in the negotiation. And so that's what I want you to experience it every time possible. So that's what I recommend. However, an abundance of three-bedroom, two-bath homes right at or just below the median price range oftentimes isn't available within a few mile radius of your primary residence. So if that's the case, what do you do? Do you pack up the kids and move? Do you just not invest because that doesn't exist in your area? No, of course not.

You simply may just have to venture further away from your home, maybe even into another state. state and you'll have to leverage other people a little bit more as well. The distance shouldn't scare you. And I understand that that may go against seemingly sound advice that you've heard in the past. And you might have heard it many times by many different people in many different contexts. But I assure you, the quality of a real estate investment has nothing to do with the distance it lies from your home. The quality of a real estate investment has everything to do.

with your own personal education and the strength of your team. You got that? And I share this with you because a lot of people can't invest in their own backyard. So they don't invest at all. So there they are. They're stuck. No financial freedom for them. Maybe no financial freedom for you if that's your situation.

So I want you to really get that. Okay? Because you hear that everywhere. and you hear it by people who seem like they're experienced and people who know what they're talking about. But I assure you, and I'll say this one more time, the quality of a real estate investment has nothing to do with the distance that lies from your home, not one thing. The quality of a real estate investment has everything to do with your own personal education

and the strength of your team. So if you're fortunate enough to live in an area that's replete with. with properties that fit your criteria? Super. Go for it. Go for as much as you can. But if not, like most people, go find a place that is replete

with properties that fit your criteria. And then just build a great team. Everything else will be the same. Just build a great team. You should build a great team, whether it's locally or from a distance. But, you know, if it's from a distance and you want to get started,

you want to have a little bit more faith in that team. You want the relationships to be a little stronger. and you want to, you know, make sure that you're working with the best. Okay, so that's the distinction there. Now, when you know what you're looking for, it's time to go out and find it. Now that we know what we're looking for, we've got our individual investment criteria established. We've got our property criteria established. Now you've got to go out and find it.

And to find it, you're going to have to look in the places where it most likely exists. No, duh, right? Seems like simple enough advice, but you'd be surprised to learn how many people I interact with that consistently bang their heads against the wall hunting polar bears in the desert. Make sure you don't do that. So now you know what you're looking for.

You obviously can't just go and buy everything that matches the property type you're looking for. No, you have to look for the best properties that match the property type you're looking for. You have to look for opportunities. and these opportunities, this is what we call leads. So that's the next step. You got to generate leads.

You know, every investment begins with leads. It begins with possibilities. It begins with options. It just is an overall you're looking for an opportunity to get a good deal. And what's a good deal? A good deal is a property that meets your investment criteria and moves you closer to your goals. That's a good deal. Okay.

Now, there's different variations of good, but that's a good deal. and it all starts with leads. Leads are the bits of information that direct you to properties that may or may not meet your criteria. Hopefully they're the ones that may meet your criteria. Some leads work out, some leads don't. In fact, most leads don't. But you'll need to develop a thick skin

and generate as many leads as possible or to get as many good leads as possible. Having said that, you'll never know which ones are the good ones until you check them out. Just as salespeople look for leads for prospective clients and detectives, look for leads for prospective clues. Real estate investors look for leads for prospective deals and properties. In all of these cases, leads are a numbers game.

Understand that. It's a numbers game. I know you'd like to find the silver bullet and knock your target down every single time, but it's a numbers game. Most leads will not turn out to be great. They won't even turn out to be good. But that's to be expected. Setting your expectations appropriately right now.

It's a numbers game. And this is how you need to look at that. If only 10% of your leads end up with a sale, then 10 leads would usually end up into turning into one deal. 20 leads? What would that mean? Two deals, right? And so on.

This means that the more leads you have, have, the more successful you'll be. The more deals you'll do. The more sources of residual income. We could compare it to fishing. The more lines you have in different parts of the water, the more chances you have to reel something in. The quality of your leads lies in the quantity of your leads.

The quantity. That creates the quality. And discovering leads for cash flowing properties, it's done in the exact same way I show you how to find leads in the free real estate investing course. So I'm not going to go into how to find deals right now. We've done that a lot. And I've created a whole course around how to do just that.

Just know you need leads and you need a lot of them. Got it? Now, as you come across good leads, you're going to want to keep your eyes and ears open for two types of opportunities. There are two types of opportunities that will deliver you to the front door of financial independence. The first is cash flow opportunities. No duh, right? We've talked about this quite a bit. And it's obvious probably at this point, but it is the first two opportunities you should be looking for, investing for cash flow, those types of opportunities. As I mentioned previously,

cash flow, it's the key to financial freedom, right? Cash flow from an investment property begins when the money you make from the property each month, the rent, exceeds your monthly expenses for the property, the expenses being the mortgage, the taxes, the insurance, maintenance, vacancy. And as long as you have positive cash flow, you are making money. You are in the black. You are moving forward. You are getting closer to your financial freedom to living the dream.

I personally don't believe you should buy any property, whether you're going to hold onto it or flip it, unless it's cash flows. When you do that, you're always getting closer to your financial freedom to living that dream. Now, there are several ways to increase the margin between the money you make on a property and the money you spend. And these methods include very inexpensive properties. You can buy inexpensive properties like foreclosures. That's going to help you increase your cash flow.

Or pay more upfront. That'll increase your cash flow. Or you can amortize your mortgages over 30 years so you have low monthly payments. Or you can buy multi-unit properties for higher monthly income streams. All of those things will create more cash flow for yourself. Generally speaking, cash flow comes down to three simple options. Either you reduce expenses or you increase money streams or you do both. And once cash flow is established and managed, it's like a renewable energy resource,

a virtually inexhaustible supply of financial power. Once your cash flow streams are greater than all of your monthly expenses, including your investment property expenses, personal residence, utilities, credit card payments, food, car payments, school loans, recreation and medical bills and all the other expenses, once your cash flow exceeds all of that, you have become financially free. And, you know, some people think of wealth in terms of net worth,

while others think of wealth in terms of time. I think of them as in both, actually, but I like to think of it a little bit more in time, meaning how long could you live the life you want if you were to stop working today. Once you have enough cash flow to cover your expenses, you can quit working for other people forever. You would then be financially free.

Now, the second opportunity you want to keep your eyes and ears open for is the net worth play or the equity play. You know, equity, it's being the difference between what is owed on a property and what it is worth, and that difference, you know, factors into your net worth. Now, investing for net worth. it's a different measure of financial success net worth is the total value of one's assets and liabilities the equation is very simple just subtract your liabilities from your assets and whatever

is left over that's your net worth you know rental properties they contribute to your net worth in terms of cash accumulation equity development and expense reduction when your tenants pay rent They pay your mortgage on that property, thereby increasing your equity, reducing your long-term expenses, and if the rental payments add up to more than the expenses, provides you with reliable cash flow. Those are the basics, but real progress can be significantly sped up when seizing opportunities with either existing equity or the potential to create equity. You got that?

So I want you to look for cash flow first. but boy, keep your eyes and ears open for those deals that have got a lot of equity or have the potential to create equity. And this is where the saying, you make your money when you buy real estate comes from, from buying properties with equity in them or potential equity in them. That's how you make your money in real estate. But Matt, equity, that doesn't create cash flow. You can't pay your bills with equity.

You said that yourself. Well, you're right. Technically, you can't. But indirectly, you can. You see, I like to track the net worth side of things as well as the cash flow side because the net worth, the equity, that can be leveraged to purchase more property, to purchase more cash flowing property. It's a strategy when done correctly can enable your property to buy more property for you. So when you're sorting your leads, keep your eyes and ears open for both cash flow and equity. Always cash flow. Always got a cash flow. But keep in mind when you see a large chunk of equity, you might want to sacrifice a little bit of cash flow.

I didn't say go negative. Didn't say that. I said you might want to sacrifice a little bit of cash flow in exchange for a large chunk of equity, all with the intent of turning that equity into more cash flow. flow. Got it? And yes, I mean, there's always good old-fashioned appreciation that you can depend on with considerable confidence. And that's where Mark Twain's famous saying, don't wait to buy real estate, buy real estate, and weight comes from. But I'd like to modify that just a bit.

Don't wait to buy real estate. Buy cash flowing real estate and wait. Okay? Cash flow is king. and equity is queen as when treated right and with respect your queen will produce more cash flow for you little baby cash flows all over the place running around I got one of those at home about to go home to him right now so two things I wanted you to get out of today's episode first the wealth accelerating power of leverage

and the understanding of what can be leveraged we can leverage money we can leverage people and we can leverage time. The second thing I want you to get out today is know your investment criteria. In clarity comes efficiency, comes speed, comes power, comes strength.

In clarity comes certainty. Know your investment criteria and stick to it. You know, it's easy to get caught up in the excitement of a potential deal, especially if it's your first or second. If this is the beginning of your career, it's exciting. It's still exciting to me.

I've been doing this for several years. It's still very exciting to me. And there may be times when you are tempted to make exceptions to your own criteria. For any number of reasons, it happens all the time. But don't. The grass is not greener over there. Okay? Well, maybe it is greener.

Maybe it is greener. But it's only greener because they are focused more on their investment criteria than you are on yours. So stick to your criteria. stick to it like glue and you will have the greenest lawn in the neighborhood. You will have the dream lawn. Got it? That's it for today. I'm Matt Terrio, living the dream.

And stay with me and you will be too. 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. Simons is here to make your holiday season magic. We've got thousands of gift ideas and festive decorations to help you turn your home into a winter wonderland with green boxes piled under the tree. So slip on a cozy pair of Christmas pajamas and hang up some new ornaments.

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