Epic Real Estate Investing - Stage 1 of the Millionaire Real Estate Investor | Episode 155

Episode Date: April 27, 2015

There are 4 specific stages to becoming a Millionaire Real Estate Investor per Gary Keller, but stages 2 through 4 will never be your reality unless you master "Stage 1!" ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com. What interests you most? E ducation P roperties I ncome C oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Podcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Hello, and welcome. Welcome to the Epic Real Estate Investing podcast, the place where I show people how to escape the rat race using real estate. And all I got to do is shift your focus from making piles of money to making streams of money and just change that one thing, just one time, and you are on your way to financial freedom. Now, I warn you, it's not the most exciting path,

but it is the fastest. And once you get there, life then becomes exciting. And I almost always open up this show with this idea. You know, shifting your focus, and to maintain that focus really means shifting your thinking, your overall thoughts. And that being the first stage of, the millionaire real estate investor.

You know, the first stage of the four stages out of Gary Keller's book, The Millionaire Real Estate Investor, of which I've recommended more than once here on the show. And if you haven't read it, please do. You'd be doing yourself a great favor. And if you don't have the time to read it, it's available in audio format through audible.com. Now, the audio will have you actually rewinding it constantly thinking to yourself, wait, wait, what did you just say?

It's really full of that much great information. So anyway, the four stages of the millionaire real estate investor are one, think a million, two, buy a million, three, own a million, and four, receive a million. So it's think like a real estate investor, like a millionaire real estate investor, buy a million dollars worth of real estate, own a million dollars a worth of real estate, and then receive a million dollars a year from your real estate. And, you know, my academy members should be fairly familiar with the, these four stages, even if they haven't read the book, as I reference them regularly inside of

the academy. And inside the academy and here on this show, we spend the majority of our time on stages two through four, with probably most of the time on stage two, buying a million dollars worth of real estate, like how to buy a million dollars worth of real estate. So how to find the deal, that's where we talk about most, how to analyze the deal, how to secure the deal, and then how to find the money and then close that deal. That's all stage two, and that's what we spend most of our time on. Now, I can teach you until I'm blue in the face, and you can listen to podcasts, watch webinars, attend seminars, read books, and do all of that until you're blue in the face.

But until you get stage one down, think like a millionaire real estate investor, you're really going to struggle with stages two, three, and four. And if you're not getting the results you want, whether you've yet to start or your results are just coming really slowly for you. And if you're thinking to yourself, oh, no, here we go. This episode is going to be on my thoughts. It's going to be on my mindset. Maybe I'll wait till next week.

If that's your situation and that's what you are thinking, I can guarantee that you're not getting your results because of your mindset, because of your thoughts, because of specifically how you think about this business. You've totally underestimated the power of your thoughts of specifically thinking like a millionaire real estate investor. Now, we're not going to go into the secret. We're not going to go into the law of attraction, nothing like that.

But if that is you, it doesn't make you good or bad, by the way. It doesn't make you right or wrong. It actually makes you normal. It's not just you, not by any means. This is very prevalent in the real estate space of people getting started and learning how to do this and people that have started and are struggling. You know, you don't have to really look any further than online real estate communities to see this problem is a serious epidemic.

For example, as I was preparing for this show, I just clicked over to one of the more popular online forums and actually based off the many emails that I receive, I know many of you are members of this particular one. And right there on the first page, the Hot Topics page, says, does no money down work? Does no money down work? And that's a question. So does it work? The question right there already suggests that this person is, you know, thinking about what's not possible instead of thinking about what is possible.

But here are the comments to that question. It says, I'm not against, these are the comments to that, or the responses to the person that asked the question. So the first comment was, I'm not against no money down, but do not see it as investing in real estate. Investing in real estate is about wealth creation and preservation. When you invest with no money down, you generally have nothing to preserve. With no skin in the game, there is generally very little to no real cash flow if you're calculated correctly over the long term. What?

I don't even understand this. No money down investing is not real estate investing. Acquiring an asset with no money. That's the ultimate investment. And then the next line, investing in real estate is about wealth creation and preservation. Okay? I agree with you there. But here's where this person's thinking is all of it.

out of whack. When you invest with no money down, you generally have nothing to preserve. What do you mean? You're on title, silly. What about you having an asset to preserve? And if you did it right, you have equity in that asset to preserve because you bought it low. You bought it right. And you have cash flow in that asset or that asset to preserve as well if you bought it right. This person's making the assumption that they can't even buy it right. That's why they think they don't have anything to preserve. You have everything to preserve. And then he writes, with no skin in the game, there is generally very little cash flow if you're calculating it correctly over the long term. This makes absolutely no sense at all. There is zero correlation between having skin in the game

and cash flow. And then he continues with if you're calculating it correctly over the long term. If you're calculating it correctly. If you're calculated it correctly, if you're calculated it correctly, You purchase the property with equity. If you're calculating it correctly, you purchase the property with cash flow. And you purchased it with no money down. This isn't an investment? There's nothing here to preserve? Come on.

Terrible. Here's the next comment. It wasn't just this one person. There was plenty here. And if you read this stuff, then you could throw your thinking out of whack. Again, here's the next one. Obviously, there are tons of ways to be successful in real estate. There are certainly people who become successful using No Money Down approach.

However, as with any investment, the amount of leverage greatly increases the amount of risk. While No Money Down can still be a viable approach, more No Money Down investors will inevitably fail in the long term than those who start with decent equity in their properties. What? The amount of leverage greatly increases the amount of risk? It's actually the opportunity. the amount of leverage greatly decreases the amount of risk to you. This person, actually both of these people, they have very much a consumer mindset.

They don't have an investor mindset. And this person doesn't know the difference between good debt and bad debt. He thinks all debt is bad and all debt is risky. One of the fundamental principles of real estate being, that makes it such a huge wealth creator is that you have the ability to leverage. And you can leverage that money from the bank, or you can leverage that money from the seller. You know, the less money you put down, the greater your leverage. And then he writes, while no money down can still be a viable approach, still be viable, more no money down investors will inevitably fail in the long term than those who start

with decent equity in their properties. Whether one fails or not in real estate has nothing to do with the amount of equity they have in a property. It has nothing to do with the amount of money they put down on a property. This is a savers mindset. This is someone with a scarcity mindset. This is not an investor mindset. And that's what I'm talking about the thinking.

The old antiquated slowboat to China thinking, that's what this person has. It's scarcity. It's a fearful thinking. You know, mitigating risk has nothing to do with eliminating leverage. I mean, maximizing equity.

will not alone minimize your risk. You can have all the equity in the world and still mess this thing up. No, learning to buy right mitigates risk. Buying for cash flow mitigates risk. Learning to manage your assets mitigates risk. And then doing all of this in volume

mitigates your risk. In a nutshell, education mitigates your risk. Equity does not mitigate your risk. this person is not thinking like an investor. They're thinking like a scared consumer. And again, there's nothing wrong with that. They're just not the right person to be doling out investor advice on one of the more popular investor communities online.

Here's one more because it goes deeper. I'm not just picking on two people. Here's another one. They write, I've seen too many non-money-down real estate investors go bankrupt during the bad times. I have simultaneously seen many people consistently put substantial money down and slowly build multi-million dollar portfolios over the course of three to four decades with little concern for whether times were good or bad.

What? You've got to be getting in the picture by now. I've seen too many of this or everyone is doing it or nobody is doing it or all the properties in my market are this or that strategy doesn't work in my market. That type of black or white thinking in this specific case, you have met enough no money down investors to form an opinion that most go bankrupt during the bad times? What?

Come on. This comment is narcissistic at best. They think they've met everybody, all the no money down investors, and they all went bankrupt. It's narcissistic to even say something like that, and it's likely someone who tried something once or twice, and it didn't work for them. And then they know another person or two just like him. So now all no money down investors go bankrupt during the bad times. therefore it should never be done.

Again, there's no correlation here between no money down, investing, and going bankrupt. No correlation whatsoever. This is the type of thinking that something didn't work out for you, so you look for evidence around you to prove that you're not crazy. Listen, those that are saying it can't be done are being passed up daily by those that are doing it. And then he finishes his comment with, I have simultaneously seen many people consistently put substantial money down and slowly build multi-million dollar portfolios over the course of three to four decades with little concerned

for whether times were good or bad. Okay, fine. All right. You've seen many people do it this way. I question how many, but you've seen many and what your definition of many is. All right, you've seen many. I'm going to give you that. But again, there's no correlation here between one success and how much money they put down.

You know, so you saw people put money down and they succeeded. Great. I'll introduce you to just as many that put no money down and succeeded as well. And if you want to take the path of three to four decades to create your multimillion dollar portfolio, go right ahead. But why invest in real estate at all if your plan is three to four decades? You know, over four decades, you can do that with just about anything if you set your mind to it, including a job. I don't know about you, but I got into real estate because it was. wouldn't take me four decades to create a multi-million dollar portfolio.

That's the whole point. Not four decades, more like four years. And you can do that because you leverage other people's experience. You can do that because you leverage other people's efforts. You can do that because you leverage other people's money and other people's expertise. Leverage is what makes real estate the big wealth creator that it is and allows it to move at the speed that it can. Again, it's this person's thinking that has them stopped. They think it's going to take four decades to build such a portfolio.

And so it will for them. Listen, if you're just getting started in real estate investing or you're not meeting the expectations you had when you originally began, you're likely going to have to drastically alter your thinking from how you currently think. You know, how you currently think about this particular subject will typically be greatly determined by how you were raised, by your upbringing. For example, you know, if you went or if you go and you look at an opportunity and you have a natural tendency to think, how much is this going to cost me? You remember my story a couple months back where I had someone in the room at one of our Grub and Grow Rich events. After I was all done, that was our first question. How much is this going to cost me?

No, that's not going to work for you. this is not the right place for you to be. If that's your mindset, uh-uh, it ain't going to work. You're going to need to transform your thinking to how much is this going to make me? And if you can determine that it's not going to make you anything, then walk away. But if you look at it how much is this going to cost you, it is definitely going to cost you. If you look at something you don't understand, something that's unfamiliar with you, that you've never seen before, heard before, that you've never experienced before, that you've never done before,

and you think this will never work, it ain't going to work. for you? An investor would think, how can this work? How can it work? Or if you're, if you're adverse to taking a calculated risk on a genuine opportunity, you'll need to understand that in today's fast-moving world, because it's moving fast and it's getting faster and it ain't going to slow down by any means. Avoiding that risk is actually the riskier thing to do. Not taking the risk is the bigger risk. That's the type of thinking that an investor has today. Or, If you have a natural tendency, say, to bucket prices and think something along the lines that I can't afford that, you're going to need to transform your thinking to how can I afford that? Your thinking needs to be open.

It needs to be open to what's possible as opposed to shutting off all possibility because you know someone who failed or you heard about someone who failed. Or you know a guy who knows a guy who heard about someone who failed. Or even if it was you that failed. so it doesn't work. What? Did you never get back on that bike again because you fell the first time? And then walk around the rest of your life thinking those bikes don't work. It's impossible to balance on just two wheels.

This doesn't work. That would be ridiculous. And here's the thing. You likely fell off of that bike the second time too. You likely fell off the third, the fourth, the fifth, the sixth, and the seventh time that you tried. and perhaps even more times than that. And here you are today, you can ride a bike without giving it a thought. You might have not even been on a bike in 10 years,

and you know you could get on the bike right now and ride it. Right? You've done it before. So guess what? I have hope for you. You see, when you are learning to ride a bike, you were thinking like a real estate investor. Somewhere it got all messed up.

But when you were learning to ride a bike, you were thinking like a real estate investor. investor. You were like, how can this work? How can this be done? You believed in what was possible and you kept trying until you figured it out until it worked for you. You believed in what was possible in a large part because you saw other kids in the neighborhood riding bikes. You were focused on success. They were succeeding and you wanted it too. And so you kept trying until it was success that you got. And there's a clue right there, a big one, to help you formulate your thinking, to transform

your thinking. Surround yourself with people that are successfully riding bikes, I mean, who are successfully investing in real estate. I really believe if I didn't share an office, if I didn't share this office six years ago with someone that was successfully wholesaling properties, I might not have ever even tried to wholesale. I mean, I was a real estate agent at the time. I was in real estate.

I had intended on investing for myself, but this wholesale thing was kind of a mystery. And if I didn't share that office with that person and witness them wholesale successfully, I might not even have tried. So look for success. Look for evidence that it does work. There's too much testimonials that it doesn't work.

There's too much focus on how it doesn't work. Look for success. You're going to find what you're focused on. So be careful. what you focus on. Here's another funny thread I found on that real estate form, just under the last one. It says,

what is the point of hard money if you need a down payment for it? Okay, that was the name of the thread. Obviously, it's a newer investor, not understanding hard money, and they're looking for an answer. But at least he's asking the question. He's looking for the answer. That's not what makes this thread remarkable, though.

It's the millionaire real estate investor thinkers that chimed in with their answers. That's remarkable. First comment. Hard money will loan on properties that conventional loans would not. Most conventional investment loans are going to require 20% plus down, and so do hard money loans. Also, hard money can close faster than conventional loans. Okay. Decent answer.

That's good. Good answer. The next person writes, I understand the risk involved in a hard money loan, but it seems a business. bit one-sided when hard money lenders are charging three to five points and lending at a rate of 18% plus or minus what one-sided first of all if you don't like the person's rates don't use their money you have a choice you there's no gun to your head to use that person's money and besides it's their money they can do whatever they want with it so take it easy on the sense of entitlement until you

get your own money, you're going to have to deal with the money person's rules. But more so here, it's this person's thinking that's getting in the way. They're focused more on what the other person is making rather than what they're going to make. They're focused on how much money this is going to cost them, rather than how much money this hard money is going to make them. Granted, the rates this person posted are pretty steep for the current market based on the competition that hard money has. But that's not the point. I would take that deal all day long.

If I are going to make a profit with it, the rates aren't the primary focal point for a real estate investor. They're important. And you can shop around and go for the lowest, but that's not the primary focal point. They're the secondary point in the decision process. The millionaire real estate investor's primary focus is first on their deal. How much do they stand to make on their deal. Not how much is the hard money going to cost me. It's how much is my deal going to make me. And then, after they've determined how much their deal is going to make them, now they're

focused on the cost of the tools and the resources that they'll need to make it happen. You know, if five points down and 18% interest rate would still allow the investor to make their minimum desired profit, and this was the only money that was available to them, would they use it? You bet. A millionaire real estate investor thinking like a millionaire real estate investor would use it every day. Their job is to make a return. It's to produce a profit.

And if these terms allow the investor to produce that profit, they'd do it. That's their job. That's what they do. That's the definition of an investor is to make money. Next comment. It gets better. Just as real estate investors like to take advantage of those who have to sell fast, hard money. guys stick it to the real estate investor who aren't properly financed.

That was a comment on a real estate investor forum. Is that real estate investor thinking? This is poor thinking. This is poverty thinking. This is victim thinking. This is I have no say on how my life goes thinking. This is I am not responsible for my own results thinking. This is self-entitled thinking.

I actually don't even understand why. this person is even in a real estate investor forum. I mean, I can go on and on about this comment, but the point here is the person's thinking. They've got some serious transforming to do. And to bring this idea about hard money, let's bring this idea a little bit closer to home. You know, I've seen and heard similar comments

regarding epic fast funding, such as I read some reviews online, so I'm not going forward with it. Or they want $495 before they'll start the process. or they want $3,000 after they find me $50,000. Like, that's unfair. And then be careful because then they want another $3,000 later. So do your due diligence.

I'm not down for this. That's the sentiment of a lot of comments that I've heard. There are comments like this in the private Facebook group of the Academy, and most of these comments that I've heard, they actually come from the conversations my team has here in the office. And it's like every other phone call. Here in my team explaining to people the pros and cons of funds like these. But people are so focused on how much it's going to cost them.

And nowhere in their mind are they looking at how much it's going to make them. They can't get past the fees. They can't get past the cost. And that right there, their thinking stops them from accessing very simple, stated income, non-recourse financing. What? Where else can you get today, stated income, non-recourse financing? I don't know anywhere else.

If you do, let me know. I'd love to compare the rates, and I'm going to use the cheapest one. It's their thinking that's getting in the way of this opportunity that hasn't existed since before 2007. Now, I will say, if you don't believe you can use funds like these

to advance your real estate investing business, then do not apply. Do not use them. If you don't think these funds are going to make you money, then don't use them. Now, if you happen to have read some reviews from some disgruntled people and that's enough to stop you, you got to be tougher than that. Please confirm with yourself that you're not just looking for a reason as to why it won't work. A millionaire real estate investor thinks of the reasons of how it can work or why it will work. because what you think about comes about the brain.

It's a pretty amazing thing, as it will find the answer to whatever question you ask of it. So you've got to be careful what you ask yourself. You will find whatever it is that you are looking for. That goes all the way back to Einstein. He proved that. Because if you were looking for reasons as to why it will work, you'll find just as many reviews pointing to why it will.

not to mention an A plus rating by the Better Business Bureau, but you might not have been looking for that. Now, I'm not a fan of the Better Business Bureau, by the way, but if you were looking for why this might be a good idea, an A plus rating at the Better Business Bureau, you will find. You know, in less than two months, Epicfastfunding.com has funded more than $2 million to you, more than $2 million to you in less than two months,

to the Epic community. and this is changing people's businesses. It's changing their lives. This is such a gift. Stated income, non-recourse financing for your business. Even with the fees, it's a gift. Listen, all tools, all resources are accompanied by a cost. There's a price.

If the tool or resource in question is going to advance your business and advance your business to the point where it's better off having had access to that tool or resource, then don't let the cost get in the way of your progress. Don't trip over the dollars to pick up the nickels. For example, earlier, one of the comments on the forum that I'd shared was complaining about hard money rates of three to five points and a rate of 18%. Now, again, that's pretty steep by today's standards.

By today's standards. But it's all relative. But by today's standards, it is pretty steep. And I think you could find hard money right now at, I don't know, about three points in 10 to 12% interest. That's kind of what I'm saying around most frequently. But either way, both scenarios could be considered a big fee for use of this type of money. It is a big fee if what you're using it for isn't going to pay you more than what it costs.

That's one way to think about it. The other way to think about it is that's it. three points 12% that's jump change the deal I'm going to use it for is going to create a 30% profit sign me up where do I sign how do I get this

and people do sign up for this type of financing daily this is what hard money looks like this is standard operating procedure for the most successful investors in the country and here's why less risk they don't have to deplete their own cash

they can close quickly. And because they can close quickly, they can often use that speed of close as a negotiating tool. And they get to keep all of the profit rather than splitting it with a partner. So they got fees, but they don't have a partner to split it with. They stay in control too, rather than having to answer to a partner

or take a vote amongst a bunch of partners. So they're in control. And they can do more deals than they could by using their own money alone. The reasons people use hard money is because they're thinking like a millionaire real estate investor. Less risk, more control, flexibility, mobility, volume. It's just a tool that allows them to leverage the resources and capitalize on all the opportunities that real estate investing provides.

It's just a tool, the leverage of someone else's resource, a resource that empowers investors to do better business and more of it. It's not about how much it's costing them. It's about how much it is making them. That's where their thinking is. That's millionaire real estate investor thinking. Now, hard money, hey, it's not the solution to every financing problem. But as an investor, you need to understand the proper uses for hard money.

And then it becomes just a simple analysis of your particular situation. You know, in the ideal situation would be a short-term loan. typically, not always, but typically 12 months or less. And if that's your situation, your need for funding, it becomes a simple math equation as to whether or not access to that type of funding will advance your business. And when you apply that same exact math equation to what's available to you through, say, epicfastfunding.com, you start to gain some clarity around the opportunity that's available to you. First, it's half the price of hard money. It's half, much less than half, actually. You know, the typical Epic Fast Funding client is getting approved for right around $120,000

at zero percent interest for the first 12 months, sometimes 18, but almost always for the first 12 months, 0%. And if you opt in for their corporate credit consulting, your fees will amount to about all around up to $7,000, of which can actually be paid by your line of credit. Nothing up front required. If you took that same $120,000, loan from a hard money lender, you'd have at least three points to pay up front. That's $3,600 right there to get the same $120,000 from a hard money lender. You better come up with $3,600. And then on top of that, you'd have 12% interest to pay on that money over the year.

That's $14,400. So right there, you've got $18,000 for the same amount of hard money compared to $7,000 at Epic Fast funding. And not to mention, with the hard money loan, you'd have to put some skin in the game too, likely somewhere around 20%. So there's another $24,000 you'd have to come up with to access that same $120,000. So when I say do the math, that's all I'm talking about is do the math. Compare them side by side. Just to put something in perspective, that's as much of an apples to apples comparison of epic fast funding and conservative hard money that I can provide.

So that's first. It's half the price to use epic fast funding money. Second, there's less risk. Epic fast funding is non-recourse money. Third, ease. It's easy. You'll pull a credit report and state your income. That's it.

No need to produce the pile of documents you need with conventional money and with hard money loans. Fourth, speed. There's only the initial underwriting process, which is just seven to ten days. Then it really gets speedy. Because once you've got your funds, you've got them. You don't need permission to use.

them. You don't have, and after you do use them, you don't have to go back and file for them again. And this means you can act quickly. You can be nimble in your business. And you can use that speed as a negotiating tool for even deeper discounted property. No need to fill out an application or deal sheet every time you need to access your funds. Fifth, no limits. You don't have to use your funds on property only. You can use it for any business expense. Listen, I know that particular example might have turned out to sound a lot like a commercial for epic fastfunding.com, but it's not. That wasn't my intention. I will never try to impose my will or ideas on you. I'll never suggest to do anything that I wouldn't do myself or haven't done myself. My goal here is always to provide you

with the facts and my experience so that you can formulate your own thoughts and make educated decisions on your own behalf. This episode, it's about your thinking. If we're not conscious about our thinking it can take over and it can lead us to places we might not have wanted to go. I want you to get into the habit of looking at what's possible. Look at how something can work rather than why it won't work. And I want you to do the math on your decisions. I want you to weigh the pros and cons. I want you to look for solutions.

I want you to take calculated risks, educated risks, and achieve your goals. For example, do the math on all of your money sources. Make a list of all the money that you have access to and do the math there. I mean, you very well may be thinking that I can get money cheaper than I can at Epic Fast funding. And if you can, then do it. That's what you should do. Look at your options and choose the best one. Use your cheapest money first and use as much of it as you can.

Responsibly, of course. Don't abandon everything else you've learned up to this point. You still have to buy, right? You still have to manage your assets. But leveraging other people's money, other people's experience, other people's efforts is what makes real estate the wealth creator that it is. You need all of these things to succeed in real estate. You need time. You need money.

You need credit. And you need knowledge. You need all of them to succeed in real estate. But they don't necessarily all have to belong to you. as long as you're finding good deals, all of these resources are readily available to you. What you may find difficult, other find easy. You can leverage other people's knowledge, other people's time, other people's credit or credibility, and you can leverage other people's money.

This is how millionaire real estate investors think. They are resourceful. And if you aspire to become a millionaire real estate investor, these types of thoughts need to become yours as without them. Everything else, the other stages, buying a million, owning a million, and receiving a million will be essentially impossible. All three of those stages come much easier to those that get stage one down, thinking like a millionaire real estate investor. Attention, attention, shocking website reveals that shocking websites aren't really that shocking. All kidding aside, go to find motivated sellers, ASA,

To get the inside scoop on how the nation's most successful real estate investors really find their deeply discounted properties. Go to find motivated sellers ASAP.com. Deeper discounts. Less secrets. Find motivated sellers ASAP.com. That's it for today. What you think about comes about. See you next week or catch me tomorrow on turnkey real estate investing. I'm Matt Terrio.

Living the dream. You've been listening to Epic Real Estate Investing, the world's fourth. 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. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.