Epic Real Estate Investing - The Best Use of $100,000 For Building My Real Estate Portfolio | 774

Episode Date: September 13, 2019

Last morning Matt received another email with the question on how to use $100,000 to build a real estate portfolio. Tune in and find out what Matt would do in this situation. Moreover, he shares the 5 places (plus bonus one) to find money to buy a property that’s not your $100,000! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit R-E-I-Aase.com.

Here's Matt. Hello, I'm Matt Terrio, CEO of Epic Real Estate. And I got another email that came in. It actually came in this morning. And here's the scenario with this email. Tristan recently started building his wealth in real estate. It's only been at it for about a year or so. And today he holds a few cash flowing rental properties.

And he has $100,000 liquid to invest. And Tristan emailed me. that specific question. How should I use my $100,000? And I think, you know, the big answer to that is always it depends. But I think one of the most important details here of this scenario is that Tristan is currently in the wealth building phase of his real estate career. Right. So in the building phase, you want to get control of as much real estate as possible. You want to get control of as much real estate as possible. and responsibly leverage as much as you can by using other people's money. And I know I'm going to get some pushback from people on that, but I don't care.

You do it your way. I'm going to do it my way. This is what I would do if I were interested in shoes. And here's why. See, you can get rich using your own money if you make enough money, but you can get wealthy using other people's money regardless of how. much you make. Does that make sense? You know, and other people's money, that can mean banks.

It can mean hard money. It can mean private money. It could be the existing financing on a property. Could be seller financing. Simply put, it's whatever is not coming out of your pocket. You see, just because you have money doesn't mean you have to use it to acquire property. Personally, if I were Tristan, I'd probably hold on to the property. or excuse me, I'd probably hold on to the majority of that $100,000 and use it to manage the properties that he does acquire.

But if you're not going to dip into your disposable cash, whose money are you going to use? Right. So I've got five different places to find the money to buy property. That's not your $100,000. Okay. So number one, banks. Right now, the cheapest money available is through the banks,

has been for a really long time. And from what I've been reading, it looks like it might be about to get even cheaper. I mean, it's pretty tough to beat the low rates that they're currently offering. So if I were you or Tristan, I'd take as much of their money right now as they'd give me. And I'd take it right away as fast I can

and deploy it and get it to work. So number one, that's banks. Number two, seller financing. So if banks aren't an option, and even if they are, at some point, the flow of that traditional bank money will slow down, I'd start looking for seller finance deals.

And where do you find seller finance deals? Well, you did, I don't know, maybe you didn't know this, but you can actually go to Craigslist and just start regularly searching seller financing or owner will carry or seller carryback, those types of keywords, and then just save that search and then just fire it off a few times a week. Or you could ask realtors. Ask every realtor that you come in contact with. And you can, you have the potential to come in contact with a lot of realtor. Just on the weekends, you've got all the open house signs.

That's a perfect opportunity to walk in there and talk to a realtor and ask them this specific question before you leave. Do you know of any listings where the seller is willing to carry back financing? I think that's one of the more powerful questions that a real estate investor can ask a realtor when they're looking to acquire. When you're looking to sell, different story, but when you're looking to acquire property through a realtor, that's a really good question to ask. Okay. Number three, friends and family. You know, another place to look is your friends. your family, your associates, but specifically those friends, family and associates that are

dissatisfied with the current return on their investments, that are dissatisfied or unhappy with what their money is currently doing for them. I mean, for example, don't you think Aunt Maggie, who has all of her money in a CD earning 0.7% maybe, don't you think she'd be very interested in an 8% return or even a 6% or a 4% return? I mean, if you gave Aunt Maggie a 3% return on her money, that's like four times the current effort or the current return that she's getting on her money. Right?

So, yeah, she'd be happy with that. And I think a big reason that people will avoid going to friends and family is because they have it in their mind that they are going to their friends and family asking for something. They're asking for a favor. Now, if you got a deal under contract and it's a good deal that where people can make money if they participate with you, flip that mindset around. You're doing them the favor. You really are.

So don't go with your hand out asking for something. Go with your both arms out giving them something. Okay? So the friends and family. Number four, assets, your existing assets. Let's not forget your own assets as a means of money, right? And what I'm particularly speaking of is not your $100,000 that you have liquid. I'm talking about the assets that you have that are underperforming, right?

You have an old 401k that you forgot about from an old job or an IRA. It's amazing how many people that we come across at Cashflow Savvy that have these old 401k sitting around from a job. They left eight years ago and it's doing nothing. So do you have anything like that? Or how about some gold or some silver laying around? Maybe you have a couple jet skis in the garage that don't get used anymore. Anything you have a value that's no longer serving you or not serving you as well as. as it should be. Consider using that. I remember doing the math last year. It was at the river.

Maybe it was two years ago now. I was doing the math on renting the jet ski versus owning the jet ski because I really love to do that. I don't get out there very often. But I saw that the rent was like $600 a day for the good ones. And I really probably only go once a year. I don't even think I went last year. So it's been two years since I've gone. But if I just went for a few days once a year, that would be like $1,800 versus the $7,500 would cost to buy. Not to mention, so you've got to store the darn thing. And what I deem is probably even worse than the worst part of it is, is hauling them in and out of the river, especially at the end of the day, right?

You got to clean it up. You got to refuel it. Then you got to lock it up. And it's my least favorite part of the river trip. Because while I'm doing all of that, all the friends and everybody that came with, they're all ready at the bar. They're already eating or having dinner. they're having a good time and I'm still working.

So just a thought. If it's not jet skis for you, it might be something else. So consider it. Do the math. And if it makes sense, go ahead and just pull the trigger and dump it in order to redeploy into your wealth creation. And if you do it right and you end up really missing that thing that you just sold, you can buy it back later with all the money that your money is making for you.

All right. So that's number four assets, your existing assets. Number five. And this one's rather overlooked frequently. And it's sadly that it is. because it's so powerful, and that's negotiating. Always be negotiating. Most people don't realize that you're negotiating skill.

It has actual monetary value. You have to turn your intellectual currency into actual currency. I mean, if you ask a seller, a very simple question like this, like Mr. Seller, what's your bottom line? And they respond back with $10,000 less than they originally asked for. That's $10,000 that you no longer have to go find. You don't have to leverage it. You don't have to come up with it.

That's an actual currency value to just asking that question. And I've got a bonus one for you. I've got six of these. But before I go there, if you'd like some help with your real real estate investing, some real one-on-one help, I just put a new training video up showing how it is that we help people successfully invest in real estate. You can head over to rea-a-a-com and check that out. All righty.

So number six, the bonus one. And this is where it gets really fun. It's combining all of the abundance. Because here's where it gets, where the creativity comes in. There's no limit to how creatively you can put these types of deals together and how fun it can actually be. So let's say, for example, Tristan goes out and finds a single family home with an owner who's willing to seller finance 60%. The seller says in their advertisement, seller will carry 60%, owner willing to carry back 60%. And so if Tristan goes in and he negotiates that up to 70%, just to,

10% more. And then he sells those jet skis for an additional 10% to cover the cost. And then Maggie, she decides to step in and finance the remaining 20%. Because she's going to get a really good return. It's going to triple what her money is doing for already. Tristan's now got 100% financing and control of another cash flowing property in his portfolio. It doesn't he? Yeah.

And he still has his $100,000 in the bank. And what's the ROI on that if it's 100%? financing. It's infinite. He's got nothing in it, except it's just his time, his effort, his experience, and his ability to go out and find these types of deals. Now, he might use a couple hundred grand or so, excuse me, he might use a couple grand of that money to improve the place a little bit.

And then he might put another, say, $3,000 or so into a separate bank account for incidentals. But that just put him, that's only like $5,000 out of his pocket. He's sleeping very well at night, knowing that everything's taken care of. and he's got ownership of another property. Then tomorrow, he can wake up and he can do it all over again. So right now, this is what you really want to focus on here. Right now, if you're building your wealth,

you want to get your hands on as much property as possible using as little of your own money as possible. And then just keep a good chunk of cash in the bank to back up the properties that you do acquire. Then you'll rest easy knowing that your assets, they're covered, and you'll continue to build your wealth until it's time for phase two, which is the preservation of the wealth that you have created. And that's a subject for another time.

All right? So that's it for today. God bless to your success. I'm Matt Terrio. Live in the Dream. Take it. 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 boy, we got the cash flow. This podcast is a part of the C-Swift. Sweet Radio Network. For more top business podcasts, visit c-sweetradio.com.