Epic Real Estate Investing - How To Invest In Real Estate on an AVERAGE Salary (is it even possible?) | 1303

Episode Date: May 16, 2024

Ready to unlock the door to financial freedom? Tune in to our latest podcast episode where we unveil the ultimate blueprint for real estate investment success, tailored specifically for those with average salaries. Picture this: You, too, can achieve remarkable profits from real estate investments. We kick off with a gripping success story that proves just how attainable it is. Then, we guide you through every step of the journey, from whipping your finances into shape to securing that all-important loan pre-approval and selecting the perfect property. But here's the kicker: You don't need a hefty bankroll to get started. We reveal insider secrets on how to break into the market with minimal cash down and unlock the door to lucrative opportunities. From ingenious financing strategies to clever tactics like house hacking, we lay out a roadmap that empowers you to build your real estate empire, no matter your salary. Don't miss out on this invaluable advice that could transform your financial future. Hit play now and embark on your journey to real estate riches! P.S. Whenever you're ready to go deeper and further with your real estate investing, looking into my partner program to help you get your first deal might be the move... take the first step here for free 👉 https://epicearnwhileyoulearn.com/ Sponsor: Baselane - Banking Built for Real Estate Investors Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-i-a's.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. By the end of this, you will know how to invest in real estate on an average salary, and it's totally possible. For example, I help Devin get his start with an $18,500 profit, and he sent me this via a Voxer. He just got his second deal under contract. And if you want to do the same, I'm going to walk you through the process. And what's better is I'll share some insider tips to minimize your risk and avoid potential headache so you can grow faster. Even with the housing market as unpredictable as it is, you can absolutely invest in real estate on an average salary. Step one, organize your finances. Your job pays a salary, which puts you in a great position already, even if your credit score isn't perfect. You've got options. And this is a good time to avoid new credit inquiries and dispute any inaccurate information on your credit report. You want to do that because false reporting, it's more common than most people think. But with that said, when I started investing in real estate 18 years ago, I barely had two nickels to rub together. And my credit score was unmentionable. So it is possible to start that way. Still, though,

it's much easier if you've got an average or above credit score and a few bucks to work with. To make your first investment, you don't need to be rich or have the typical 20% down payment that most people think of. Three percent down, it's all you need. So somewhere between $3,000, $10,000, that's going to get you in in just about anywhere in the country. You know, I put this together right here last month for my private clients, the zero down kit, which includes 10 different ways to get into your first investment with minimal money and a less than average credit score. It also includes a bunch of flexible funding options. some of which will even give you your down payment.

If you'd like a copy, you can grab it at zero downkit.com. And that would lead us to step two. Get pre-qualified for the right loan program for your situation. You want to contact mortgage lenders and brokers who specialize in government-backed loans. A quick Google search will give you multiple options in your area. Real estate agents who specialize in working with first-time homebuyers often know of available government programs and can direct you to the right resources too. I highly recommend doing some research on your own prior to meeting with one of these professionals, though.

Downloading the zero-down kit is a perfect starting point, and it shares information about the most popular loan programs out there, such as FHAs, VAs, USDAs, the Zero-Down not a program, and many others, along with resource links and the pros and cons for each program. It'll save you a bunch of web browsing in the beginning and get you prepped for your meeting. Ultimately, though, decide on a lender with government-backed loan experience who can guide you through the application and paperwork. This right here can significantly help you increase your chances of approval. Step three, shop for the right property. But before you do, know that this is not meant to be your dream home or even a long-term stay. It's a temporary situation, but it still needs to be the right property for an investment. This is what we call our springboard estate that will set you up for your next investment property.

But let's focus on this one for now because we don't want to take any unnecessary risks that could hurt or even slow down your progress. So let's estimate how much you can afford based on your salary and existing debts. A common rule of thumb for determining affordability is the 2836 rule, which suggests, one, your monthly mortgage payment, including principal interest, taxes, and insurance, should not exceed 28% of your gross monthly income. This helps ensure that your housing costs are manageable relative to your earnings. And two, all of your monthly debt payments, including car loans, student loans, and credit card payments should not exceed 36% of your gross monthly income. So if your gross monthly income is

$8,000, you want to target your mortgage payment at $2,240 or less. And you don't want your overall monthly debt payments to exceed $28. Using these percentages, it helps you gauge a safe amount to avoid financial strain. Any number of government-backed loan programs at a 7% interest rate would put you at a price point of $300,000 for your first property. If you're unable to find a property that meets your temporary needs at that price, then you've got some option. One, negotiate the price. I did say, shop for the right property. For example, when I bought my home here in Las Vegas,

I searched Zillow for 10 homes that I found acceptable as temporary living conditions, and then I advised my agent to present offers on all 10 of them, at the same time at 80% of the asking price. Long story short, one of them was eventually accepted. If one hadn't been, I would have picked 10 more properties and done it again, and then again until it worked. By doing this, you can push the top listing price in this example up to $375,000. If that doesn't work for your area, let's go to number two.

Hack the house, meaning look for a property where you could rent out a bedroom or the basement. Better yet, look for a two-to-four unit property where the income would increase your gross annual income, thereby increasing your loan amount without exceeding your affordability. For example, if you found a two-bedroom home where you could rent one of the rooms for $1,000, that would increase your top price to $425,000. Now, if that doesn't work for your area, consider number three. Change the market. Yeah, move.

I mean, maybe you have to make a temporary sacrifice and move away from Miami, Manhattan, or Los Angeles to launch your real estate portfolio. It's not the end of the world. But it is your financial freedom we're talking about. You get to choose, though, which one is more important to you? And there is no wrong answer. It's your choice. But it's almost impossible to get both in most. markets. Again, commuting an extra 30 to 60 minutes for a couple of years in exchange for

launching your real estate empire, that's a small price to pay for your financial independence. Step four, finance the purchase. Once you've got your property under contract, return to your lender that pre-qualified you and just let them do the rest. Every first-time home buyer program listed in the zero-down kit has a maximum of three and a half percent down payments and a credit score qualification as low as 500. In our previous example, we're talking no more than $15,000 is required for you to get into your first property. But if the down payment is still too much for you, embrace the gift exemptions, the government grants, down payment assistant programs, and seller concessions. I explain them all inside of the zero down kit. Where there's a will,

there's a way. And when it comes to buying your first property, you don't have to try that hard, but you do have to try. Stick with 30-year fixed rate options for loan terms. This is going to keep your payment lower, and there's no risk of it rising regardless of what the market does. Step five, generate income and build your portfolio. If you purchased a single-family home or a condominium, strongly consider renting out one of your extra rooms. That extra income can significantly accelerate the process of building your portfolio. If you bought a two to four unit property, you know what to do. Get tenants in those extra units ASAP, and your stay may be much shorter than you think.

Now, while you're managing your property and cashing rent checks, watch the appreciation of your property closely. You see, the value of your property will likely increase over time. And I say likely, but there's never been a time where it hasn't. So technically it is a gamble, but in the world of investments, your property's appreciation is as close to a sure thing as you're going to find. The increase in value can be influenced by various factors, including market demand and supply, the economy itself, inflation, improvements and upgrades, and location and development. And it's your property's appreciation that will play a critical role in real estate portfolio building. via equity growth, refinancing, selling for profit, and rent increases.

Understanding and leveraging appreciation effectively can significantly enhance the value and income generating capability of your property. I mean, so much so that you may never have to buy another income property again because done correctly, your springboard estate can buy the rest of them for you. For example, let's go to step six, scaling up. And to show you how this works, I'll use the scenario that I laid out in step three. This is more of a model, though, than exactly. numbers, but this is indeed how the rich scale up. Here, we found this property with a value of

$300,000. We got our offer of 80% of that value accepted, so our purchase price was $240,000. We used a standard FHA loan and put down just 3.5% 80,400 bucks. We now own this property for just $8,400 of our own money because we borrowed $231,600 at 7% interest for 30 years, which gives us $68,400 of equity. Let's say we decided to rent out a room for $3,300,000. thousand dollars, which helps offset the mortgage payment of 1,923. Now, there's nothing to do, except just go on about your life and wait for the market to do its thing. Now, let's say the worst case scenario is you live in the property for five years. The average annual appreciation for real estate is 3.5%, meaning the property's value five years later appreciated to $356,305. And during

that time, you've paid down $13,323 of principal, which gives you a total of $13,000, $23,000. of equity. With either a refinance or a HELOC, that's a home equity line of credit, you've now got enough to purchase something that's closer to your dream home. And if you choose to go that route, you just wait a few more years, repeat the process, use the equity from both properties to purchase another, and keep repeating the process until you're satisfied. But let's say you've gotten used to living in your Springboard Estate property, and it's not that bad. Or you just don't feel like moving. I hate moving. It's my least favorite thing to do in the world. So you could use the equity from your Springboard estate to purchase three more similar properties and then rent them out.

You wait another five years and do it again. By this time, you likely replaced your average salary altogether and now have the option to retire if you want. Or wait just five more years and do it again, giving you a sizable multimillion dollar portfolio. For the statistics from the Department of Health and Human Services, you will have accomplished more in 15 years than 99% of the population does in 50 years. Again, this is just a model, but the point was to show you how purchasing just one property, that springboard estate, plus a little bit of patience, that can scale your entire real estate portfolio and your average salary is hardly a factor. There are many ways to approach real estate investing, but you can realistically invest in real estate on an average salary by just

starting small and leveraging smart strategies. The journey, it may seem daunting, but with the right approach, anyone can build a real estate portfolio regardless of salary, even if you're not even earning a salary. I'll see you next time. Take care. Stop spending countless hours on busy work and focus on growing your real estate business and maximizing your return. Baseline is a comprehensive property management platform that caters to the needs of landlords and real estate investors by offering a suite of financial tools designed to simplify the management of rental properties. The platform provides features like dedicated banking services, automated bookkeeping, rent collection,

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That's B-A-S-E-L-A-N-E. Dot com slash M-A-T-T. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them.

And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you. and so do I, health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know, home for us, we got the cash flow.

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