Epic Real Estate Investing - How to Invest in Real Estate Like a Badass Genius | 355

Episode Date: March 12, 2018

Today, The Epic Real Estate Investing Show teaches you everything you need to invest in real estate like a badass genius. Matt shares his 5 hot principles for gaining confidence and success in your real estate investing. Learn the secret behind choosing an asset class, the best method to determine your minimum deal standard, the three separate exit strategies that will bring you the highest profits, and more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Yo, yeah, we got the cash flow. Cash flow. Yeah. Welcome to the epic real estate investing show. So glad that you found us. Epic Intensive, coming up, the cash flow conclave. Tickets are selling really fast.

I don't know what's in the air. I don't know why this event is different, but we have more people registered right now than we had attended the last event. So I'm very excited. We got plenty of room for you, though. We actually have just made some adjustments to our venue so we can accommodate you all, the more than merrier.

Well, I don't know if we can accommodate you all, but more than we were expecting just because the excitement around this one has been so great so quickly. And so what we're going to be doing there at this event, we'll be revealing the secrets of creating cash flow with real estate. the last intensive I had two of my students join me to share their rat race escape stories and their rat race escape strategies Josh and Corey and they just the crowd went nuts and it just you know so I want to duplicate that I want to recreate that for you if you're unable to attend the last one you've got another shot so this intensive I've got three different students joining me to do the exact same Parker Russell and Greg they will be there to share their rat race escape stories and share their rat race escape strategies. All righty. So tickets are available at the Epic Intensive, not the Epic Kids, it's Epicintensive.com.

Epicintensive. Hold on just a second. iTunes is jumping up and down trying to flag me to tell me something in the middle of my recording here. All right, so it's done. So another killer week inside of the Epic Pro Academy's private Facebook group, Anita, David, River. Back on track, Tim, Josiah, all great weeks. Lots of credit being doled out to the Daily Success Report.

It's amazing how that works. Russell reporting his score consistently doing remarkably well as he's recommitted to his business. Fantastic. Mora asked to actually have her marketing turned down inside of the RAAAA group. She says, turn it down. Too many calls. I've got six appointments coming up this week. I can't handle it all.

Parker Pearson's got. two new deals under contract, Phil's taking appointments, honing in his negotiating chops, Josh and Jack setting appointments and negotiating contracts, Brad Helmholtz in the mix. And we're seeing all of this activity when so many people outside of this community are complaining about shifting markets. They're complaining about the shrinking inventory. They're complaining about there's too much competition. They're complaining about my market doesn't work.

They're complaining about, you know, my marketing responses all falling. Listen, consistency always wins. And when you're consistent with the right activities, you will always get the results that you're looking for, regardless of competition. So nice work to you all. Keep doing it. Keep implementing. Keep asking for help and keep sharing those wins. It's the epic formula for success.

All righty. So today, I want to talk about how to invest in real estate like a badass. genius because I know it can be frustrating out there. You don't know which asset class to pursue. You don't know how to find the deals. You know how to find the discounted real estate. You don't know which strategy to execute once you found that deal. And that ultimate fear is just really, gosh, I'm never going to get started. You know, a confused mind does nothing. And it can be frustrating when you're confused and you just don't know which way to go. There seems to be so many different ways to choose. And you're just never going to

going to get started and you're afraid that if you don't get started, nothing's ever going to change. But when you get this part right, you've got a simple, clear, and easy asset class to pursue, a simple path to follow. When you do this right, you're finding discounted real estate, you're finding opportunity, you're creating opportunity, you're making it happen, and you know, and you're involved in the best strategy for you. And ultimately, you can get started today and move forward with the confidence. and never really have to look back knowing that you're down the right path.

When you get this part right, that's what's available to you. And what makes me kind of talk about this today is I think of a lot of our big success stories right now. We've got a lot of them. And I've talked about that. I've been sharing them with you. I've been sharing their stories and calling out their names and congratulating them. And I mean, I'm really proud. And I see what they all have kind of in common.

Not all of them, but a good chunk of them. You know, they're past students from other programs. There are students from that have already made large investments into their education. You know, they've gone out and they went to the latest multifamily workshop and made an investment there and got a little frustrated with their results. Some have pursued the new trend in storage facilities and they made an investment there. you know, they made a large investment in this general education and the education was good and they feel smarter, but they still really don't have anything to show for it. And so when what we do a lot differently over here and the reason that this subject is kind of resonating with me

at the moment is I'm looking at all the success and, you know, the education, it's out there. It's abundant. It's everywhere. Whether you pay for it or you just kind of go and do your research through YouTube and just start Googling blogs and all the information is there that just shoot the large number of podcasts out there. I mean, we give everything away here for free. There's no shortage of information. It's just when it comes down to the implementation is where the difference is really made. So today, I'm going to share with you how to invest in real estate like a badass genius.

Got five key points, hot principles for you. One is any class will do. okay, they all require work. Just choose one. Point number two, know your definition of a deal. You got to know what a deal is, right? If you don't know what a deal is, you're not going to find it because you're not going to recognize it when it shows up.

Three, you got to focus on finding the deal. That's the focus, not the asset class, not the strategy. You got to find the deal first, right? Number four, once you've found the deal, you got to secure that deal before you put too much time and energy into your due diligence. Real estate out there is, I feel there is enough opportunity out there for everybody. It's still a game of speed. You got to move quickly. Okay, so secure that deal under contract. And once you got under contract, then go do your due diligence. Then take your time to do your investigating. And then point five, you want to analyze for multiple

exit strategies. If you are a one-trip pony and you consider yourself a wholesaler, or you consider yourself a lease optioner or you consider yourself a wholesaler of lease options, whatever that strategy is, don't do that to yourself. You're really cutting off your opportunity and cutting off your potential. And we'll talk about that, okay? But those are the five. So let's talk about one. Any class will do, right? Lots of different types of real estate. There are a multifamily, which is extremely hot right now. The storage facility is really appealing because now you don't have to deal with real tenants, doing notes, mobile home parks, single family like we do here a lot. Any class will do, understand, regardless of which one you just heard about, or what your

friend is doing, or what's the last workshop or guru that came to town. They all can, it can all sound really sexy and it can be really distracting. We talk about the shiny object syndrome, and you're like, oh, I'm going to try that. No, I'm going to try this. I'm going to try that. And what we find is you choose one that you really like that speaks to you, and you go out and you're like, wow, this is actually work. Right? So you're like, okay, well, let's go try this other one because that one seems to be more effective over there for that person.

So let me go try that. And you go over there and you dig into that and you get all excited about it. And once you dig into it a little bit, you're like, wow, this is work. and then the next workshop comes to town, the next free event comes to town. Let's go do that. And that guy's a really good, eloquent speaker, and he makes it sound super easy.

And boy, this guy's got a boat and he's got a big house and he takes giant long vacations with his family. I'm going to do that. And you dive into that and you're like, wow, this is work. They're all work, okay? Anything that's going to pay you, anything that you would aspire to

that has a high income potential, it's work. There's no shortcuts, okay? So just understand that they're all work. And so choose one. Choose one and get to work. All right. So when it comes to the asset class or what, yeah, what do you want to pursue,

whether it's multifamily, whether it's storage facilities or mobile home parks or single family, whatever it is, just choose one. And focus, go deep with it. Understand it's going to take work, so put in the work. All right. So that's number one. Number two, know your definition of a deal. And I was just communicating back and forth on Voxer with one of my clients. And she was a little

stuck because she's got these appointments set up for this weekend. You know, her partner's going out and they don't really know what their minimum deal standards should be. What is a deal to them? So what I shared with her, it's going to be different for everybody. The thing I like to suggest or have you look at is one make cash flow your intent look for the stream of cash okay make that always your intent doesn't mean every deal is going to be a buy and hold situation for you or some sort of cash flow situation for you but have that be your first intent that's going to be your fastest way that's the best deal for you because it's going to be the fastest way for you to reach your financial independence all right so understand that the cash flow is going to get you there much

faster than the pile of cash, really regardless to how big that pile of cash is going to be. That's another conversation for another episode. We've talked about that ad nauseum in the past. Just understand cash flow always, even if it's a small little cash flow compared to the big giant pile of cash that you could get, that small little stream of cash flow is going to get you to your financial independence the fastest. That's going to get you to your freedom the fastest. Even if it doesn't feel like it, always pursue the cash flow first.

Now, having said that, not every deal is going to be something you're going to want in your cash flowing portfolio. So, how do we know what is a good deal? So I like to have kind of two numbers. One is, what's the minimum amount of cash that I am going to accept that would warrant me getting out of bed and doing all this work? Right. So that deal of I don't know, maybe it's five grand, 10 grand, 15 grand depending on what market you're in or how long you've been doing this, how good you are at what you're doing. How good you are at what you're doing right now. Have that number. Like I just, I'm not even going to process the paperwork for less than $10,000. A flip for $5,000, that's just, it's not worth it to me. That's not a deal to me. Now if it's your first deal, five grand, that might be more money. than you made in the last three months combined, that looks really good. And that's fine. It doesn't make one right or wrong, good or bad. Your definition of a deal is going to change

over time. But at least have that number in place. Like, I'm not going to do this deal unless I at least make $30,000. Not going to do this deal unless I make at least $30,000. So have your cash number. Then have your cash flow number. Okay, so what's a good cash on cash return for you? and we measure that in forms of percentage, or you could measure it in the forms of the actual cash amount. So do I want a 13% cash on cash return, or I could define my deal by I want at least $300 a month of cash flow. So you could define it either way, your choice.

So what's a good number? What's a good return? What I like to do first, the starting point, is what is your money currently doing for you at the moment? You know, for example, if you have a bunch of money in the stock market or in a mutual fund, what was your return there last year? What kind of return did you get? You know, a six or seven percent mutual fund?

That's not too shabby, right? So what would it be worth you liquidating that mutual fund to put it into the next deal because it would work harder for you somewhere else? So if you say you got 7% in your mutual fund last year or the last six months, then you probably don't want a deal less than 7%. right? You don't want it to work less. And then to go through all that hassle and liquidate and go buy, you probably, 8% probably isn't going to be worth all the trouble. So maybe it's 9 or 10%. That might be your minimum cash flow cash on cash return. Okay. And to calculate that really quickly,

it's your annual cash flow divided by how much money you put into the deal. Okay, your annual cash flow. So if you make 200 bucks a month, of cash flow. That's going to be $2,400, right? $2,400 for the year. And say you had to put $20,000 down. Okay. So that's, let me break out the calculator here real quick. We got $2,400. There's your cash flow for the year, divided by the $20,000 you put into the deal. That's going to give you a 12% cash on cash return. That's how I like to measure my deals. I like to go by that percentage rate. Okay. So, uh, that's, uh, that's, 12% that would be better than your 7% in the mutual fund. So that could be a really good deal for you.

The other, if you don't have any money out there working for you, you can go to just about any turnkey operation right now and use leverage and get somewhere between 7 to 8% on the low side to 10 to 11 on the higher side of cash of cash flow. So even if your mutual fund is doing 7% and you know there's deals out there readily available through a turnkey operation that could pay you 10%, then that could be your low mark right there. So if you're going to go out and find the deal on your own and you're going to negotiate those price in terms, you probably, you know, 12, 13% might be the low mark for you. All right.

So just I just kind of thought out loud and walked you through my thought process of how you calculate your minimum deal standards. Like what's your definition of a deal? Once you get a bunch of those under your belt and now you got, you know, five or six properties all doing 14, 15%. You know, the next time you go out, you don't really want a deal that's going to pay you less than that because you want to keep elevating the performance of your portfolio. So now your definition of a deal could change. And so now it's like, hey, it's 16 or 17%. That's what it's going to take for me to go ahead and do the work and acquire this and absorb this into my portfolio.

Got it? All right. So know your definition of a deal. And I just walked you through various ways of how you can define that for yourself. And it's for you. It's a personal question. Okay? So it's what's good to you.

And once you define that deal, now stick to your standards and measure every deal that you come across up against your standards. And now you know whether it's a deal or not. You know your definition of a deal. All right. Next. Point three. Focus on finding the deal first.

Don't worry about who's my buyer going to be. Am I going to wholesale this? or am I going to fix it before I flip it, or am I going to just acquire it and clean it up and put it on the MLS, or am I going to hold this, or am I going to sell it to a buy and hold investor? Don't think about that part. Don't think about that part before you're finding the actual deal.

Finding the deal is probably the hardest part of the whole equation. Focus all your energy there. Once you've found the deal, boy, you've got so many other options after that. Don't worry about where you're going to get the money. Don't worry about who's going to be the buyer. Don't worry about who's going to manage your property if you decide to hold on to it. Find the deal first and boom. Next point.

Secure the deal. Get it under contract. Don't do too much due diligence. Don't do too much investigating prior to getting that deal under contract. Because if you investigated too much, someone's going to come along and someone's going to take it from you. and now you've done all of that work up front for nothing. Okay? Now you've got to go find another deal.

So get the deal under contract. Once you know you're a minimum deal standards, the definition of a deal, get it under contract as close as you can to that deal, those deal standards of your own. And once you've got under contract, now you can go and confirm all those numbers. Now you can go and confirm,

is it how, what's the physical inspection going to look like? is the foundation in place, is the plumbing, is the electricity, how's the roof, right? Let me go in and analyze the expenses of the property. What's property management going to look like? What is everything else like this deal selling for? Is this something I might want to sell and take this cash to go so I could go buy a better cash flowing property that I'd rather have in my portfolio, something like that. You can answer all those questions with time on your side.

not necessarily time on your side, but the urgency has been removed because now you know no one can come in and steal it from you. Okay, so get the deal, know your definition of a deal. Go find that a property that fits that definition and boom, get it under contract as close as you can to that price in terms of your definition of a deal. Got it? Now, once you've got it under contract, you're going to go ahead and you're going to run your title search, make sure title is clean. You want to see if there's, you want to check the physical inspection of the property. And then you want to go ahead and maybe you're going to look at the crime in the area, what kind of school system we're in, what is the potential of the area?

Is it growing? Like you can do all of that kind of investigating for yourself. And that's your right to do that. And you should do that before you actually close. But the other thing that I want you to look at is I want you to analyze for multiple excess strategies. multiple exit strategies. This is where I talk about being the one-trick pony can really hurt you. Like if you're only wholesaling, if that's your only exit,

you're going to be doing this business for a really long time and you're likely going to burn out. Because there's not any end in sight if you're constantly just wholesaling. You've got to position yourself in a way that you can create cash flow or cash and cash flow with every deal. So I want you to analyze for three different strategies. one is a flip. Can I flip the contract or flip the property?

How much am I going to get there? How quickly is it going to take me? Or how quickly can I do that? How long will it take me to actually actualize that profit? Okay. Always factor the time into your flips. A $10,000 flip is good. If it takes me a week or 30 days or less, a $10,000 flip that takes me six months to get that money, not good.

Okay? So always think about the time and the effort. it's going to take for you to actualize your profit there. Second is analyze for hold. How can I hold this? Ask yourself that actual question. How could I hold it? What are the different scenarios?

And if I do hold it, what is my return going to be? And then the third thing would be, how can I potentially finance it? Could I increase my cash flow? Could I increase the amount of cash? Can I get the best of both worlds if I were to sell, to find the finances, to hold on to the property, acquire it, and then resell it with seller financing. Okay? And analyze every single deal for those three scenarios.

And it's which path you actually choose. It's going to be dependent on two things. One, your actual situation at the moment. Okay. You might need some cash right now. Like you've got, I got to pay rent, I got to eat, or I have to fire up my next marketing campaign or I got payroll or I yeah it could be anything that you need to cash for but then there's going to be other situations where I'm cool I got cash I got some money in the bank my expenses are

covered for the next few months I really need to start building up my cash flow because I know that's going to be my fastest path so your situation might be different at that point and how can I hold this property or you've got some cash you've got some cash flow things are going well for you and you're like, okay, how can I really accelerate this? Well, maybe actually becoming the bank in this particular situation is going to give me a higher return on my cash and it's going to create a higher cash flow and it's going to create less headache and management issues for me as well. You need all three of them to be working for you, to have a complete engine running, to be

a total genius. This is how a genius is going to invest in real estate. They're going to be an investor. They're not going to be a flipper. their job is to go out and find the deal to find that opportunity to secure that opportunity and then exit in the best way that's going to get them to where they want to go the fastest. And I'm just going to assume for most of you, you would love to have some passive income coming in each month that at least covered your expenses.

You would at least like to have the option of getting up in the morning or not, right? I don't feel like working today. No worries. I'm not going to because I know my essentials are covered. I think that's what most people want. I'm going to assume that's what you want. That's what we talk about here because once you hit that position, you've really got options in life.

And you can really call the shots and your negotiations and your conversations. They go a lot differently because now you're not operating from a place of scarcity. You're not operating from a place of fear or need, right? You might want stuff still, but you're not in a place where I need stuff. now and I have to do this deal. And all of a sudden you start compromising your own standards. You compromise your own just your own morals and values because you need something and your fear of losing something.

So my whole point being analyze for cash flow on every single deal. Okay. Analyze for cash flow. Make it your intent to hold every single deal. You don't have to. That's just the initial intent. How can I hold this? Because the more that you hold, the faster that you hold,

the quicker you're going to escape the rat race. And I don't care how big that flip is. It's not going to get you there faster. Okay? We've talked about that math before. And I'm sure we'll talk about it again. Just trust me on this episode. But I just want to talk about how you can do this like a real badass genius.

And a badass genius escapes the rat race. Right? They get up and go to work and do their real estate because they want to, not because they have to. And that's what I want for you. Okay? So get started. The information, like I said, is free.

Go back and listen to all the episodes that we've had here. We'll just start our ninth year. Very grateful for you. There's plenty of information right here on this podcast for you to get the results that you want. Anita has proved it. Ryan Bagley has proved it. Joe has proved it. Larry has proved it.

Cynthia has proved it. People that have never given me a dime but have shared their amazing success stories with me just because of the information they've learned here on the podcast. The information is free. Now you just got to apply it. If that's the sticking point, you applying and implementing, if you'd like for us to do the work for you so you can get up and going, so you're like Mora, who says, please turn down my marketing.

It's too much right now. And, you know, she had her business set up within 48 hours. And from seven days of her leaving the office, she's doing deals. She's setting appointments. Or like Parker, Pearson, they're doing deals almost immediately or Josh. And Adam, if you'd like that, and just because you want to accelerate the process, you don't have the time to go out and do it and you just want to get to work right away, you can go to R-E-I-A-A-S dot com.

I can't take everybody, but you can apply there. And if it's a good fit, and if we feel like we can get you the results, then we can have that conversation. All right, so it's up to you. Okay, let's do a little recap. One, understand any class will do. They all require work. So just choose one and get going.

Number two, know your definition of a deal. Get really clear on that. The best investors are shoppers of deals, and you can't shop unless you know what you're shopping for. Don't be a buyer of real estate. Be a shopper of deals. And you can only do that if you know your definition. Number three, focus on finding the deal. That's where all of your energy should be.

Okay. That is the most valuable skill of a real estate investor is finding the discount. Finding the discount of real estate. Once you've found it, get under contract. Secure it. Control. Block out your competition. secure the deal before you do a bunch of due diligence.

Okay? You can have plenty of time to do that after you secured the deal. Don't waste time and miss out an opportunity by doing all your due diligence and investigating before you've got the deal under contract. And last one number five is analyze for multiple exit strategies. You are an investor and you are in search of the highest and best profit for you in your specific situation at that moment. And that's going to change from day to day.

Okay, so analyze for multiple extra strategies, make sure you're always moving forward every time you get paid from a deal. Okay, you don't want to be standing still, you don't want to be moving backwards. You want to always be moving forward. Got it? Alrighty, so now you know, time to do. That's it for today. God bless to your success. I'm Matt Terrio, living in the dream.

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 for us. 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.