Epic Real Estate Investing - Identifying the Best Markets for Cash Flow in Real Estate Investing | 806

Episode Date: October 15, 2019

Over time, property values go up and down. Therefore, many think that investing in real estate is successful only if you accurately time the market. The truth is that timing has a little to do with determining the hot market. Hence, Mercedes shares the real factors that identify the best markets for cash flow across the country! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. So you want to be a real estate investor, but you don't want to do the work. If there were only a way where someone else could do it for you, now there is. Tune in here each and every Tuesday on the Epic Real Estate Investing Show for Turnkey Tuesdays with your host, Mercedes-Torres. Hello and welcome, welcome to Turnkey Tuesdays brought to you by Epic Real Estate Investing. My name is Mercedes Torres, your turnkey girl, and I am lucky enough to be partners in crime with Mr. Matt Terrio, the guy who created the epic real estate empire. This show is for busy people, busy people just like you, who understand the importance of real estate, just don't have the time or desire to do it all yourself.

So on this show, I share tips, ideas, strategies to help you guide through the turnkey world of real estate investing so that you two can start acquiring rental income. So over time, we know real estate values go up and they go down. They go up and down in different parts of the country. bubbles happen, bubbles burst, and it's from this common knowledge that people think real estate is risky, because they're always thinking about the bubble. They're always thinking about what they heard on the news last night or the terrible experience their friend Mike had with the only rental that they had. property values go up and property values go down. And that makes you feel like you can only make money in real estate if you can accurately time the market. You know, I suppose there's something to that.

I mean, if you can accurately and consistently time real estate markets, you pretty much have a license to print money, if you will. However, me, I don't have a crystal ball. Matt and I don't have crystal balls. I mean, I wish we did, but we don't. So market timing has very little to do with our decision in determining a hot market. Because I don't like, and I don't think, It's a smart strategy to base my investment on guesses. And let's face it, nobody has a crystal ball. So whenever we think a market is going to do something, it's pretty much a guess. You know, guess when and where the value is going to go up and down just doesn't work.

So that factors very little into our investment strategy. Having said that, I don't think my investment strategy is risky at all. And let me explain why. Well, I go with cash flow. First thing, I'm in markets that are heavily populated by people that need to rent properties. I purposely seek markets in Middle America where I know that, that there is a bigger demand for rentals than there is people owning properties. So I'm a cash flow investor with essentially no plan to sell the real estate that I buy.

I own. And unless I can trade up to a higher or more stable return, a more stable or higher ROI, I just pretty much buy a property and sit pretty. Now, I'm consistently evaluating how our properties are performing and how my portfolio is doing. And I will have to say that a careful evaluation on that means that you evaluate your portfolio only once a year because I generally seek one-year leases. so I know that a tenant is going to be locked in for that rental amount for one year. If an opportunity should come across my desk, that looks better than, say, something that's

not performing as well in my portfolio. And if the effort is worth the improvement in the ROI that I'm currently receiving, then I'll go ahead and give it serious consideration to sell the property that is underperforming or not performing as good as the property that I could potentially acquire. Now, in the interest of improving the performance of my portfolio, I will consider that. But other than that, since I buy for cash flow for a positive stream of income, I really don't care what market values do while I own my property. Whether the market goes up or down doesn't really matter to me. As long as the cash flow is coming in, the value of the property

means very little to me. Unless, there's a caveat, of course, unless it appreciates to the point that I can refinance some money out to acquire another property, then I just sit pretty. That would be the only exception to the rule, and that would be an upside. Because let's face it, I'll take the money out to buy another property to get more cash flow. That's just how I think, my friends. Now, the downside, well, I don't really see a downside. If the market crashes, I suppose, it doesn't really matter to me because my properties will still create positive cash flow while I wait for the market to recover. This is why it is critical, my friends, that when you

buy properties for the purpose of cash flowing, that you are very very, very, very, you are very, very keen on your numbers. It is critical, and I say this every week, my friends, do the numbers. The numbers do not lie. Math doesn't lie, and I tend to be a little bit more conservative when I do my numbers. And if the market is to crash, while everyone else is panicking and selling and running around franted, because the market values have plummeted, I just continue to accept my cash. I just continue to accept my cash flow, thank you very much. I just wait for the market to recover and I wait for the hysteria to subside. So that's the first thing, my friends. The second thing, when I do look at the timing of the market to create the potential for an upside of our investments, to use refinancing

as a strategy to build my cash flow portfolio, I look for post bubble burst. I don't have to time it. I just have to wait and watch. When it happens, then I can take some action and here's why. Because when a bubble burst, when it drops, the market bounces back every time, my friends, every time. I mean, just look at history. History repeats itself. And when the market just collapses, it bounces back. But the reality is, if you purchase correctly and you're cash flowing from the onset of your purchase, it doesn't really matter what the market is doing because you're still cash flowing. Now, let's merge on to the conversation about inflation.

Everyone always talks to me about inflation. Everybody always ask me about my thoughts about inflation. So here are my thoughts. Inflation will save the day. Why does it have to bounce back? One word? Inflation. Real estate will always bounce back, my friends, to at least what it costs to build the house.

And if you don't believe me, again, just look at history. and it will bounce back because of population growth. Think of this, my friends, and this is an actual fact. There were more babies born in 2007 than in any other time in history, by the way. And there's no sign of a decline of reproduction. So we're still maintaining our run of each generation. being a bit bigger than the previous generation we've experienced. As long as we, we the people, continue to make babies, real estate will have to bounce back

to the price of what it costs to build a house because the growing population will continue to force the need for new houses to be built. and new home builders aren't going to build houses unless they can make a profit. And they can't make a profit unless they can sell the property for more than what it costs to build it. So inflation is always going to cause those bubble bursts to bounce back. Now, zeroing in on the heart markets, well, that's important. my friends, pay attention to the dynamic of how I find the hottest markets, because I look at those markets that could produce a cash-on-cash return between an 8-and-10 percent that is acceptable

to me. Now, that is a 8-to-10 percent cash-on-cash return that is after you've factored in your taxes, your insurance, your management fee, your vacancy, your maintenance fee. 8 to 10% is acceptable to me. Some people are looking for a 12%. If you don't rely on a turnkey company to help you acquire your investment, a 12% is very doable. Some people go for higher-end properties where a 4% to 5% is acceptable. For me, my friends, and for my clients,

I generally look for an 8 to 10 cash on cash return. I can achieve this without leverage in today's market. But the market is shifting. So you may not be able to take advantage of this too much longer. And then take those cash flow markets and to reduce the field, I will look at all the markets that I could get good return-ins. And then I'll reduce that by extracting those that I can purchase below. low replacement cost.

For example, where I can purchase properly for lower than what it costs to make it is an area where I would absolutely look into. When you find the markets that meet both of these criteria that produce the cash flow and where you can purchase below replacement cost, you can participate in the best of both worlds. I will say my friends, those markets are getting a little bit more difficult to find, but they are out there, especially if you want to do all the work yourself. If you're depending on a turnkey to help you achieve your financial freedom, then chances are you're going to get one of both. But I will have to say, it's best that you get one than none. In the world of

income investing and in the world of capital gains or equity growth investing, you are going to be able to create cash flow if you jump on the bandwagon now. When you have these two dynamics working for you simultaneously, your journey to financial freedom, my friends, will really speed up. So this is why I want you to focus on cash flow. Because if you buy a property that makes financial sense up front that allows you to focus on cash flow and not focus on whether the market is going to appreciate and you're not worried about the trends. It really doesn't matter what the market does, my friends. What matters is that you purchase a property that is cash flowing at closing.

I hope that got your wheels to spin, my friends. That is often why I do this show. I want you to think about what the market is doing and how it could impact your life. And the reality is that if you're purchasing for cash flow and you purchase right from the beginning, meaning if you purchase an asset that is cash flowing at closing, there is very little that can go wrong. That's all for today, my friends. If you want to connect with me and discuss the markets that are best at cash flowing for your particular situation, reach out to me or my team.

We are more than happy to share our thoughts, our secrets, what we do and how we create cash flow in my world. feel free to reach out to me directly, Mercedes at Epicrealestate.com, or go to our website at cashflow savvy.com. That is savvy with two Vs. Download the frustrated investors guide to passive income and feel free to reach out to one of us. Until next week, on the next episode of Turnkey Tuesday, this is Mercedes-Torres, Cash Flying. Have an epic. day. Is Wall Street failing to meet your expectations? Has your 401k tragically turned into a 201K or worse? Don't panic. You don't have a money problem. You have an idea problem. We're cashflow savvy.com. And we'd like to share with you a new idea how one small shift can transform your financial future and accelerate its arrival.

Go to cashflow savvy.com to get this new idea that Wall Street doesn't want you to know about. Cashflow savvy.com. More control, less risk. Cashflowsavvy.com. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.