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Episode 025 - Real Estate Investing: It All Depends

 

 

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[00:00] Over the last two centuries, nearly 90 percent of the world's millionaires have created their wealth through real estate. Here to tell you how you can ride this wave with less risk and less capital while creating greater income, is your host, best selling author and Speaker, Michelle Russell.

[00:21] Hi, this is Michelle the master money mindset and you are listening to this short term rental revenue podcast. And in today's podcast, our theme is "It all depends" and this isn't depends like you're going to have to wear some day. So the reason why I say it depends is we're getting a lot of emails, a lot of messages on facebook. I mean just a ton of feedback and it's so much fun. It really is. But I'm spending a bunch of time on these answers because the majority of the answers are. It depends. So somebody might say what location is best? It depends. It depends on what you like, you know, how much should I pay for this property? It depends how much are the other properties in the area. Here's how you decide, you know, everything. How much should I pay in rent? What's the ratio?

[01:12] It depends. It depends on how much you can rent it for. You can, if you can pay a lot more for a property that you can get a higher rent out of, so everything really, really depends and that's such a cop out answer it feels like, but it's really, really the truth when it comes to real estate. Real estate is such an individual type deal. So I wanted to talk to you more about real estate investing. Investing real estate investing is so great because it has layers and layers and layers of investing. I mean you can invest in anything that has to do with real estate. You can invest in rates which are real estate investment trust. That's where they get a bunch of people's money together, a bunch of investors and they go in and they buy properties. Usually they can buy big portfolios of property or one big apartment complex that doesn't really matter, but you can.

[02:05] You can do real estate investing inside mutual funds. You can do ETFs which are. It's basically like stocks. You can find all kinds of companies to buy into that. Do real estate or you can buy into just properties themselves, right? And then when you think of just properties themselves, just real estate itself, real estate can be land, just land, right? It can be commercial properties like stores and and strip malls. It can be anything like that. It could be single family homes, it can be mobile homes, it can be multi-units, you know, you can have duplexes and fourplexes all the way up to 150 units and more of major apartment buildings, you know, and then it can be vacation rentals. So that's what we've all decided who are listening to this podcast. You know, we've all decided we're going to invest in vacation rentals, right?

[03:02] So then you think about vacation rentals. What can you invest in? Well you can, you can just rent out a room, a room in your house or you can rent out part of your home so you can have people inside your house renting out, you know, different parts and sharing different areas. Or You can rent out a whole house, little bits at a time. So one person might rent one bedroom, but everybody shares a common area and you're not in there, or you can rent out an entire home and entire unit and entire house or guest house or Condo or apartment or boat or camper or tent or Yurt. I mean there's so many different things that you can rent out, right? I mean it's cool. What we do is super cool because you can pick the thing that you like to do best and you can make it your niche.

[03:54] That's going to be your specialty, what you specialize in, but that's what you really want to do. In order to make a lot of money doing something, you really need to focus on one small piece of it. You can't be all over the board, okay, you're not going to make a lot of money if you're dabbling inland investments and holding here and doing some commercial properties in strip malls over here and having some multiunit apartments that you're helping build and then, oh, by the way, you're fixing and flipping homes. You really want to set up your businesses so that you've got systems and processes and people that you you run and delegate to, and in order to do that, what you want to do to make the most money is really find your specialty, find what you like to do and do it. That's what you want to do.

[04:45] Find what you like and then just go Gung Ho and the only way to really know what you're doing is to dive in and do it. You can read about it all you want. You can go to courses all you want, but I'm going to tell you something. The majority of the stuff that are in these courses, you can learn with a book or you can learn online for free. You don't need to pay a lot of money and the more you pay, honestly, the less you get, the higher up you go in these things, and I've gone pretty high people. These big guys, they're not there. You know what they do? They hire private companies and sales people, professional salespeople, and when you walk into these places, it's like a money making machine. It's like an ATM to these guys. The first thing they do is they hand you a piece of paper and they asked you to fill out for them and I'm not even shitting you.

[05:36] They'll ask you to fill out for them where all your money is, how much money you have, and people do it. They will say, Oh, I've got this much in my retirement account. I've got this bunch of my Ira. I've got this much in my savings account. We've got this much socked away. We've got this in a money market account, so they will tell them every dime they have and what do they do? The more money you have, they're not going to tell you how to invest that money. No, no, no. That is you are now a target. You have just put this big red target on your forehead that says, this person can buy up to this level up to this level, up to this level, and the more money you have, the better salesperson they're going to put in charge of you to try to get your money.

[06:19] Now, it's not always like that. I've been in the seminar industry a long time and I can tell you that when we were working at Rich Dad seminars, we weren't like that. We didn't have any professional sales guy. We didn't ask you how much money you had. Nobody had you fill out those forms unless it was for yourself. It never went to anyone else, but you. You got to fill out your goals and how much you wanted to make and how much you can afford to put it in there, but nobody ever saw that. None of us in the team ever saw that, and when Rich Dad seminars disbanded in 2006, Rich Dad, he was doing his own education. Robert Kiyosaki was doing his own for a long time, but then he sold his name and his company all that out to somebody else. Now you've got an education system running it and the majority of these guys use the same companies.

[07:07] Believe it or not, they'll use the same guys to do the coaching programs. One company will have a script for each guy, each guru, and they'll all use the same companies and most of them are out of Utah. If you are with a guy who's somewhere in Utah, your coaches out of Utah, chances are you're using one of those big guys and they're all about the money. Those guys aren't making the investments. They might tell you they aren't. That's bullshit. Most of the time I would call and if I had a difficult question, they didn't know what to do. They will put me on hold. They would go talk to somebody else and then they would have to call me back as something happened and basically it was because they didn't know what the hell they were talking about. They did not know what they were talking about.

[07:49] So save your money when you go to these courses. I would never spend more than a $2,500 level on any of those courses. I really wouldn't unless I was going to be in a room with that guru working one on one and even their one on one programs sometimes are not the one on one. You think they are. No one's gonna hold your hand and make you money. Why? Think about it guys. This is a freaking job for these guys. It is not their life's work to, Oh, I'm going to pay it forward. Bullshit. Pay It forward. They're still out there trying to make money. Believe it or not. Think about it. Why are they trying to teach you? Why are they selling their courses not to help you out. They're not trying to pay it forward. That's bullshit. When you want to pay it forward, you do what Stu Mclaren did and you open up a nonprofit.

[08:39] You do what Russell Brunson did and you give your a lot of your money away. You do what Tony Robbins does and you give them the majority of your money away that's paying it forward. These guys are all about the money and they're not about teaching you unless. They teach you in a way, which is why I got kicked out of one of their classes and, uh, in Vegas, in Las Vegas, I literally got kicked out of a $70,000 course that I paid to be in their inner circle. And you want to hear why? Because they were up there teaching all these old retired people right after the crash. They wanted all their money and they were teaching them how to buy properties, take them, fix them, and then put a renter inside them and then sell them back to the people and they could use their money, but they were going to do all this work and the people, we're going to give him $2,500, $2,500.

[09:37] Do you know what that's worth to an investor for you to find a property? Number one is amazing, right? So you find a property for a very low price. Then you go in and you fix the property up. That's like me as an investor of finding a whole team or a crew and paying them to go in and fix that property. That's what they do. And then you go out and you find a renter and you put a longterm renter in there. Somebody who's going to pay the rent month after month after month, and then I'm going to give you $2,500 for $2,500. I literally stood up in Las Vegas and I said, what he's telling you? Because they were telling them to. They were saying, oh, look at all the costs of holding these properties. You're going to be paying this and you're going to be paying that and you're gonna have all these expenses.

[10:25] And I said, what you're telling them is a bold faced lie. The best reason to invest in real estate is further tax write offs. You can write everything off and I've told you about the write offs that you have in previous episodes, right? You can write off everything from carpet to cabinets to light fixtures, to switches to your roof, right? You can write everything off because everything in real estate, as long as you're holding that property for more than two years, right? You could write it all off so you don't care. It's all expenses for your business. You're not going to pay any taxes on it and it's all you can write it up and you can even carry those losses across many, many years, but they're telling these guys how awful it was and that this $2,500 was a great deal for them because they don't want all those expenses every month and I was like, oh my God, that's crazy because especially somebody like me, my husband was a doctor and when you are, when you go to school and you get hundreds of thousands of dollars in debt, right?

[11:33] Because you got student loans coming out the Wazoo, you start practicing and you start making money. The government decides not only are you going to pay all this money back, right, but you're going to pay a really high taxes. You're going to be in a really high tax bracket. If you have one person in your family who's a doctor, your other spouse, the other spouse should be a real estate professional. That is. That is literally my opinion because here's why. Because they will bring your taxes down so low, so low. I'm not even kidding. There's times where you could go from a 33 percent tax bracket down to paying, you know, 13 percent or 10 percent. I've seen people with eight and six percent of their income being taxable because of all the write offs that they have in real estate. Real estate is amazing.

[12:23] It's an amazing ride off. You just want to make sure that you're a professional, that you're doing it the majority of your time, I believe he's like 80 percent of your time and you've. You're writing down all the time that you're driving around and all the times that you're looking at properties and all the Times that you're. They're fixing and flipping and managing all that stuff. You write it all down, you keep track of it. You keep written records and you keep them accurate and you can write that all off, but they are telling these people how bad that was. So I literally stood up there and told them they were lying, told them that was the best part about real estate and told them if they wanted to do a deal like that than any offer that that guy made them, I would pay them a thousand bucks more every single time.

[13:01] I didn't care how high they went because that to me was worth tens of thousands of dollars, not 2,500 and it just, it, it pisses me off so much and I apologize for getting passionate about it, but it pisses me off how these guys are out there. Just ripping people off. I understand that my knowledge and what I offer people is valuable. What they offer people. There is some value to that, but what they do to people to me should be illegal. And there are some really smart guys. There are some guys who are out there and they really want to teach you, but there's not too many of them. And you would be surprised. You'd be surprised. So I'm always sad when I see somebody who has a big heart who really, you know, had their heart and the good intention of helping people when I see somebody else get their hooks into them and use them.

[13:58] And the only reason why a big guru would go in with a little guy is to latch onto that money because they see that guys still making money and they're not making enough. And that is, that is the only reason because these guys, their intention is not to help people out. If it is, you'll know, look at what they do, look at the fruit that they bear and you can tell, you can tell if there are big guys going out there and they're doing great community work. Those are the people you want to hang onto. They really are because their heart is in the right place. They want to help people out and you know they're charging enough to make a living. But they're not asking you to tell them every penny you have and leaving you with little to none to invest with. Because you know, once those guys paid all the levels of that, if they paid $70,000, how much left would they have to invest in any properties?

[14:51] Little to none, right? So I mean i it just, it does irk me. So there's, there's a lot to learn about real estate investing, but the majority of what you're gonna learn is by doing, you are going to have to take these steps. Everything we tell you on this podcast, there's actionable steps that you can take. If you're not taking those steps, shame on you. You need to get your ass up and you need to start getting to work. Make a list and start going out there, find some properties and start making offers. Do it. That's you know, you can pay. If you want to pay me $50,000 to hold your hand and take you from door to door to door to talk to a landlord. By all means come over and I'll do it. But for the love of God, just take some action.

[15:37] Do it. Be responsible for you. Don't put your life and your family's future and your retirement in the hands of someone else, unless you know that person and even if you know that person, they're still not going to pay your mortgage. You know, I've seen people give money to family and friends and they thought these people were good. I have lent personally well over $200,000 to friends and family members with written contracts. You know, I've done written notes and they've borrowed money and I cannot tell you the amount of people who have screwed me and the majority of them were friends and family, good Christians that you know, it's, it's, it's ridiculous to me, people's intention is probably never to harm, but their first, you know, it's just like fight or flight. They're going to take your money and you're going to turn into the bad guy.

[16:30] Also have an article about that I wrote, so I want you to be really, really careful where your money goes. You need to really be careful because it's your money. You worked hard for it. It's not easy to get when you're making less than 100,000, making less than $200,000, right? They always say the first million is the hardest to make. Once you hit that first million whoosh, everything else comes easily like an avalanche, because finally you've broken through all your money, beliefs, all the things that were blocking you and you can finally allow that money to flow. You finally feel you deserve it, but the thing is when you're working through all the stuff that you have to work through, it is really tough. It's really tough. You'll know when you hit the ease point because the money starts flowing in like water. It's so easy once you get there and you'll know you got there because you'll turn around and go, wow, this is it. This is what I was looking for, but until you get there, then you're going to be hitting each of those different. I remember the first time we hit 100,000 and I was like, oh my God, we made 100,000 this year and we had for years. You know, when we make our first hundred thousand, you've got to remember I'm kind of old, so 100,000 was a really big deal back then when we made 100,000 our first year, I remember looking at my husband and going, no, that's not enough.

[17:53] That is not enough. We're going to need more. It's like, you know, like we're going to need a bigger boat kind of deal because everybody has this deal where they just keep raising the level at which they live and they're not willing to make those sacrifices. They're not willing to set a budget and stay within a budget and then start putting money away for the future or anything else. So you, my friend, have to be diligent. You have to set goals, right? You have to set that success path that we talked about and then you have to create all those little inbetween milestones and then you have to set daily rituals that you do every single day that move you towards those goals. If you don't do that, you're running in circles like a hamster on a wheel. That's exactly what you're doing. You need to know what activities that you need to do in order to make money, and that is the.

[18:50] That is where you put your focus and that is what you do every single day. Do you have that? And I'm not saying this to hurt your feelings or whatever. I just. You need to know this. No one cares more about you and your family, you and your money than you do. No one's going to take care of you. Don't wait for the government to do stuff. It's not their job. It's your job. You are the one who needs to take responsibility for every single thing that's going on in your life. Stop blaming other people. Stop blaming the government. Stop blaming the gurus that you paid all this money for and you didn't get what you wanted. Hello? You know you have the responsibility and you need to take the action. Don't wait for somebody else to do it or motivate you to do it. Motivate yourself.

[19:43] Get up your damn self. Look in the mirror every morning and go, okay, let's put on your big boy Pants or your big girl panties and let's get it moving. Come on, saddle up. I love that song. You know the just the beginning of the song that saddle up your horses because it just. Every time I hear the beginning of that song where the guys go, saddle up your horses. I hear that and I'm like, damn, straight, saddle up those horses. Let's get going. We got, you know, we've got a job to do. Let's do it. Let's do this job. Okay, so we're going to get back onto the real estate track as I got way off track with this one. But you need to decide. You need to pick your area of specialty and that's because it's going to be so much easier when you do.

[20:25] You won't have to do so much work and the less work you have to do, the more time and effort you can place into making more money, right? Duplicating, setting up systems, setting up all the different things that you need to do in order to make more money so that you can create a legacy for your family so you can pay your bills. And then finally, once you reach that goal, the goal that you decided, whether it's a $100,000 to $200,000 a year, whatever that goal is, and you'll be putting a little bit away, right? We'll be putting probably 10 percent away, 10 percent to charity, 10 percent to your savings, you know, and your future. But once you hit a certain amount, you should slow your butt down and start packing it away for your retirement. And then you should start your retirement funds working for you, creating businesses and LLCs inside your IRAs, inside your retirement packages that they're going to be making money and set those up.

[21:22] Get those on autopilot, get those working for you. And then you can increase your income, right? But here's the deal, you've got to set your own boundaries. Nobody's going to do this for you. You've got to do it. So make it yours. Find that, that area of expertise, and if it's short term rental, boats, houseboats, so be it. Whatever it is, take it, grab hold of it, and rock it, rock the shit out of it, right? And you will learn by doing. Don't be afraid to make mistakes. Oh my God. If you knew how many mistakes I've made, if you knew, the tens of thousands of dollars that I lost in real estate, you probably wouldn't listen to this podcast because you think, what a loser this person is, but no, those mistakes made me grow so that I could make more money later on. They were very necessary mistakes and I do not regret one of them.

[22:17] Each one of those mistakes I made taught me a huge lesson and taught me how to be a better person, a better investor, and not make those same mistakes again. So you learn by mistakes. They're not really. You know, we always think mistakes are such a bad thing. Here's a big red pen and put a big F on it. Bullshit F that for real, because you know what? Mistakes are good. You're either getting the result you wanted or the lesson you needed. That is what a mistake is. It is the lesson you needed and sometimes we can't learn by others. Sometimes we have to learn ourselves. Right? Okay, so now when you're buying or renting real estate, everything has to be in writing. Okay. Real estate contracts must be in writing. It's literally, it's a thing, so it's one of those things about contracts. Contracts,

[23:11] you're going to want your own contract if you can have it, and if if a landlord, if you're renting and the landlord has his own contract or if you're buying and a realtor has their own contract, you want an addendum, I don't care what anybody says. Addendums are the savior of every investor and if you're renting, your addendum is going to say it's going to state specifically what you are using that property for. Okay? It's going to say, I am going to take this property from you. I'm going to furnish it. I'm going to rent it out. I'm to have it professionally cleaned. It's going to have everything in there that you intend to do so that that landlord can't come to you later on and say, Hey, no, I didn't know you were doing this because that does happen. You want the addendums and I'm going to have to create one for you guys, but honestly you need to create your own.

[24:04] Go get yourself a real estate attorney and create your own addendum that goes with stuff. I can put an example one on the site for you guys, but you need to always have a real estate attorney. What is it like 500 bucks to get an attorney to look over a contract that 500 bucks, we'll save you sometimes $50,000. Best investment you'll ever make. Honestly, don't be a cheap ass when it comes to your business, now. Right? Okay, so real estate contracts, when you're doing a contract, if you're buying a property that you want to rent out, there are going to be a few things that you are going to have to check over. I'm going to go into that in one second, but first I just want to tell you what a contract is. A contract has seven parts. It has an offer, the acceptance, the consideration, mutuality of obligation, competency, capacity in writing has to be in writing.

[25:01] Real estate contracts have to be in writing and the contract formation, so that's under the UCC, which is the uniform commercial code. You're going to hear a lot of stuff, so if you don't know what, Oh, I should tell you really quick. Let's tell you real quick what those are an offer that's kind of, you know, it goes without saying. You made an offer, let's say on a property for $100,000, but your offer can be anything you want. Really, it can be anything you want and you can say, um, I'm going to give you this painting that I have that's worth this much and I'm or I'll give you this much per month, every single month for the next eight years, whatever the amount is, all that is the offer I'm offering you this for this piece of real estate. Okay? That's your offer. Their acceptance is obviously them signing it and saying yes.

[25:56] Right? And that's going to be in your contract to that. Their acceptance is, you know, it will be shown by them signing the papers by this date, you know, at this place or whatever. Right? By this time, the mutuality of obligation means that it has to be. There's got to be a given, a take something from both sides. Okay. So. Oh, you remember that movie with Richard Pryor? We got all that money wasn't at Brewster's Millions or something and he had to spend all this money by such and such a date and then he got millions of dollars, but the agreements said he couldn't talk about it and he couldn't do this. Actually that's a legal agreement. That's a legal contract. If he signed that, then that was a legal contract because he was doing something and they were doing something. They were promising him. His uncle was promising him his inheritance and he was promising to spend all this money by this time or not get the inheritance.

[26:56] Right. So there was some kind of, you know, there was some kind of obligation on both part. So you want to have that, they're going to do something, you're going to do something. Competency and capacity just means that you're not drunk, you're not, you know, crazy. Whatever. That you were able to do it and that also you're of legal age because in some, uh, some capacities, some contracts are legal at 18 and some are 21. You need to know that, so you can't make a legal contract. My son, until he was 18, he couldn't start flipping houses until he was 18, but now he can flip houses, he can do whatever he wants. He's 18 and now he can sign a legal contract. Do you want to make sure that you see people's Id and that those ideas are real if you're doing something with somebody really young, right?

[27:47] Well, let's hope you are. Oh my gosh, that could go. You know what I'm talking about. I'm talking about legal contracts with real estate and nothing else. Don't go there. And then you want it in writing because it's real estate and the contract formation. Okay. So I've heard this a bunch of times when I did real estate and this one. I've got to tell you because this just recently happened. We had a guy who asked us to do something illegal and it just blows my mind how ignorant of things people are, and when I say ignorant, I don't mean these people are stupid. There's a difference between stupid and ignorant. Ignorant means they just don't know. Okay, when you make an offer on a property, you can make it any old way that you want, and I wanted to do an exchange of equity.

[28:37] I wanted to give these people a big chunk of real estate that I own that's fenced in, backed up to a national forest. Right, and I wanted to have that piece of real estate appraised and imports appraised value. I wanted it taken off the price of the real estate that I was buying and that was part of my offer. Well, what was really crazy was The, the sellers of real estate agents said, yeah, that's illegal. What do you mean it's illegal? Or we can't do that. That's not legal. And I'm like, the hell it's not legal. We do it all the time. We've done it several times. As a matter of fact, that's how we picked up that piece of property and we want to do it again. It's not illegal, so they put me in touch with like their mortgage guys, so he wanted to do this letter on the side and it's actually illegal to do a side contract where you're bringing down the price of the real estate because that reduces the tax space on the property, so you can't have a side deal that says, let's say you're a property for a million dollars and you've got a piece of real estate that's worth, you know, $400,000.

[29:48] You can't say, well, the price of the property now is not no longer a million. It's now 600,000 and you know we're just going to do it for that and then have a side contract that the bank doesn't know about. That's worth $400,000. That's illegal because you're bringing down the price of that property and the value of that property and the tax base of that property, Side deals are pretty much almost always illegal in real estate. You never want to do something on the side. People do it all the time. It's almost always illegal because it almost always has to do with the price of tea in China. You just can't change the price or the value of the house. That's illegal and so they wanted me to do this illegal thing for something that I wanted to do that was very legal because what mine would have done would have said, legally this property is worth a million.

[30:39] This, the value of this property will use the same scenarios worth 400,000 and you know what I'm going to give them. Cash is 600,000. So that kept the value of everything kept the value of the land that they just picked up, kept the value of the property that I was buying and kept the value of the of the money I would be paying to them. So that makes it very legal. These guys didn't want to do illegal. They wanted to do it illegally, which is ridiculous because these are supposedly professionals, so I want you to also know that you don't have to go through a real estate agent. You can buy properties without an agent. I have a really great agent here in Arizona and if you're in the Valley of Phoenix and you need an agent. My real estate agent is Jack Burns. He's amazing. He is analytical as all get out.

[31:33] He knows the ins and outs of the business. He's an ex-ballplayer and I just love him to death and his kids and his wife, so like he is one of my favorite, favorite people because he talks real estate and he knows what the hell he is talking about, which is really, really rare. It's like sadly, that's a rare commodity. When I go to other states, when I go back to Florida, I very rarely use a real estate agent and when I'm in Florida, unless it's to sell. When I'm selling a property, yes, obviously I'll put it up on the MLS because it's way better for me. When I sell a property, it's almost always because it's fixed up and ready to go and I'm always looking for a certain buyer, so the majority of my properties, we're looking for first time home owners and that was my target market and it's best to find them using our real estate agent and so I'll find somebody who knows what they're doing in that market there, but you don't need that.

[32:26] If you're buying properties and picking up properties, you don't need a real estate agent and you don't need one of their contracts. They're going to tell you you do. You don't. You can write your own contract. As a matter of fact, those are the best contracts. Why? Because when you take it into like a title company or an attorney, it's usually in very plain English and that's why if I use an agent, I always have an addendum. The addendum, what it does is takes any of the weirdness out of the contracts that they use. You know those, those form contracts that real estate agents use. It takes all the weirdness out of it because there's a bunch of weirdness in there. Like a bunch disclaimers of promises, all kinds of stuff. Right. But what I do is anything we talked about, you know, whether it was keeping the refrigerator or you know, anything you they were going to fix something or not.

[33:21] All of that is in the contract. All of it has a time. All of it usually has a price and all of it has a consequence if it doesn't get done. Okay. So my addendums cover everything and it covers it in very plain English. That's why I love addendums. If I don't write my own contracts for something, which I usually do, then I always use an addendum because I want another written contract that goes along with that one that states very clearly that anything that could have been seesaw, wishy washy in that first contract. Here it is black and white. Everybody signed it and it's on the up and up and that's what I want. I want it in plain English and that way there's no going back on it. Nobody can say they did. I didn't understand that. And that happens a lot when it comes to real estate.

[34:11] I've had that happen quite a few times, quite a few times, and I'm going to tell you a quick story. I was investing in real estate when I first started out. I wasn't really, let's just say real savvy on contracts and I had bought two houses from one seller and I was going to buy another and he wanted to sell it to me quickly and I said, look, I need a little bit of time in between these because I got to find a renter. I gotta put a renter in there. I got to get, you know, my income rolling on the, the last house I bought from you, so I need time. And he said, tell you what, if you can't get a renter in there within the first 30 days of getting this house, I will pay the rent for you for up to six months.

[34:55] And I was like, dude, that I could totally handle that. Right. But it wasn't in the contract. I thought it was, but it was in an email not in the contract. So I bought the house. That was the third house I bought from him. I got somebody in the first house, I got somebody in the second and I started just, you know, putting ads in the paper and everything and it was a dead time of year because it was like July or something in Arizona and July is a hot time. Who wants to move when it's 115, 118 outside, you don't want to rent a truck, so it's really hard to find a renter. Especially the specific type of renter I was looking for so I couldn't find the renter. I called him up and I asked for the money and he wouldn't answer my calls.

[35:38] Like after a while I kept. I kept calling and then I was emailing him and then he emailed me back and he said, I'm not going to do this with you. I know you said that or he said something, but he was pretending that he didn't say it and guess what? I had all the emails. I had everything going back and forth and I just said I completely understand and left it at that. I went down to the courthouse and I filed a claim against him and when he got it, you know, he, he came to court and he had all this stuff, but so did I. and I was like, he had an email from me that said I completely understand and what my, you know, when the judge asked me what I meant, I said, I completely understand that the guy was going to screw me.

[36:24] I understood and so that very same day as the day that I headed out and filed this claim and he started laughing and I said, yes, I did understand. I understood what he did, but I have these emails. So the I was right about the judge was going in my favor through this whole thing because I had everything documented all through it. And the guy, when he realized he was gonna lose, he said, judge, may I interrupt you right now. I'm just going to write her a check right now. He said, because I can see which way this is going. And he said that and I don't want to have a judgment against me. And the judge said, by all means, feel free and you know, throw it out. The guy wrote me a check and boom, we were done and he didn't have the judgment against him, which I kind of wish I had let him get because I understand that he kind of did it to other people too.

[37:14] But here was the deal. I was, I was really new at it. I had only invested in a couple of other properties and I really trusted people and I no longer do that. I no longer trust anyone. Trust no one, you know, like the x files thing. You get it all in writing. People get everything in writing, have it all written down. Keep every correspondence you have going back and forth. If you say something to somebody you know and you're speaking about it, then write them a follow up email as per our conversation, this, this, this and this. And then you want them to reply to that and confirm it. Please confirm that you received this email and that you agree to those terms. You know, and we'll put it in an addendum. I put everything in the addendum, everything I want it in an addendum and I want it written down and I want it signed and I want you to be that way too.

[38:11] Not that everybody is dishonest. Okay? But everybody is out there to make a living and a lot of people have a belief system that the only way to get ahead is to take from somebody else or screw somebody else out of money. That's literally part of their belief. You know, they believe that every wealthy rich person out there got there from stealing from some little old lady. And that's not the truth. That is not how most people make money. But that's how a lot of people believe that that's the only way they're going to make money. And if that's part of their belief system and your standing in their way, they will walk all over you and take your money. So don't be that guy getting it writing everything in writing. Okay, addendums. So now like I said, you don't have to go through an agent or you know, or whatever to buy a property.

[39:03] You don't have to use their contracts, but if somebody is selling a property or a house, they may have a contract with an agent or if they're renting a house, they may have a contract with a management company and if they have a contract, they have to use that person, so that person's number one thing is going to be what guys getting paid. Okay, so if you're ever making a deal with somebody and you want to do it without an agent representation, don't fall for the bullshit that they're going to double represent you. That's bullshit. They never represent the buyer. They always represent the seller. They may say it's dual representation. It's a lie. They're out to sell the house, sell the property and get the money. That's all they want and a lot of times they leave a lot of stuff out and they'll just pretend that they didn't know.

[39:53] So it's always up to you to do your due diligence, but this is also a really good reason that I want to touch on too is you never want to get your real estate license if you have a real estate license. Now great, I mean you can't go back and not have it right and it's good to have somebody on your team who has a real estate license in case you're in a place that in order to show the property, it has to be shown by licensed real estate person, so it is nice to have somebody on your team, but it doesn't necessarily have to be you and I always recommend that you don't, and Kiysaki recommended this to us when we first started investing and the reason is when you have a real estate license, you are considered a real estate professional and so if there's ever any kind of argument within a contract and somebody has a real estate license, they're the ones that you know, they're gonna say, well, the cards were stacked against this person because that guy is a professional and they clearly took advantage of this poor person who's not.

[40:53] So you don't want to license. You really, really don't, and you don't need one. You don't need one to invest in real estate. You see, the majority of people out here don't have real estate licenses. It's nuts. Kiyosaki, no real estate license, Dean Graziosi no real estate license. You know, Cody Sperber, Cody did have a real estate license, but that brings up another thing. If you do, Cody on all of his, any kind of advertisement, any kind of letters that he puts out, any kind of marketing than he does, then he has to disclose that he is a licensed realtor. And when you do that, what is. What is the number one thing that comes to mind when you get a letter from a licensed realtor? These people want to make money off of me. That's what your first thought is. So it gives you an advantage to just be an investor and you want to let people know that you are just a little guy, okay?

[41:46] You are a little fish in a big pond with big fish because if people think that you're out to take advantage of them, you are not going to make any deals. You want to be on their side. You want it to be a win, win scenario and you don't want them. You know you're not going to show your whole hand to everybody, but you're also. I want you to be good people. You can always make a real estate deal, a win, win, win, and remember that it's not always about money. A lot of times, the property that I bought in Hawaii recently that we were buying the 10 acres of land for a campground that we're building out there, so we're doing all this really fun stuff, right? Well, the property, the guy we were buying it from, we were making them some really great deal.

[42:30] We said, you know what, we'll even buy it for a little bit above value because we had it appraised and we're like, okay, it's worth this much more so we're not going to screw him out of it. We can definitely. We can definitely pay the fair price, but we literally got him to carry it for us, which is way better than us going and having to get any kind of loan on it so we can make it win, win we can give him the price he wants, we get him to carry. But as we were talking to him during the negotiations, he was talking about moving back to Wisconsin, being with his parents and he needed a certain amount of money every month to qualify for a big house that it was buying out there. And we said, well, how much do you need? And he said, oh, I can't remember.

[43:15] It was like $3,500 a month and I said, done. Will make the mortgage payments to you. $3,500 even every month. And he was like, what? And I said, yeah, it doesn't matter. We'll just make the payments $3,500 a month and we'll just take it from there. We'll just, here's the amount we're paying you divided by 3,500. That's how many payments will make to you. And included all, the extra amount that we had bought it for and everything. But when he said yes to it, he got exactly what he wanted. He got way more than he would get for carrying it. And he had bought it cash anyways. But what did we get? Think about it. We got that property at a little bit of a higher price then he was asking, but it was totally worth it and we also got it for zero percent interest.

[44:01] None, no interest, not at all. So you can make deals like this all the time. You just have to listen to people and listen and hear what they want, what do they need, give them what they need. He got a great price for his property and we got a great deal because we got a loan. We were paying a shitload of money on the loan, way more than the property's value, but it was going to be paid off quickly and it was going to be paid off with no interest. Then the then the volcano hit, right before we closed on it, which is like a Godsend, which, but at the same time it was so sad because we had this really amazing deal. So if all you guys keep going, I want to go to your property in Hawaii. Well, it was under about 15 feet of lava right now, but it was going to be amazing and beautiful and don't worry because we've got other negotiations and that are just as good right now.

[44:55] But you know, God always, if you take something away, he always gives you something better afterwards so it's like this or better lord this or better. So when something goes to the wayside I'm like, okay, I'm waiting for something better. Like I'm waiting. You can write anything into a contract. You can write a contract any way you decide and you just take it in. Both of you sign it, you go to a title company, you go through your attorney, everybody gets the checks and balances, but you do your due diligence first. Okay, so before you rent or buy, what are you going to do? Remember the seller knows things about that property that you don't know, right? He might know if it needs a new roof or if maybe his HOA fees are being raised or if there's going to be changes in zoning, there might be a reason he's selling that he doesn't want you to know about.

[45:47] So all of those things are going to be things you're going to have to check out. And what is that called? Due Diligence. You're going to have to check things out and check them out with a fine tooth comb and trust. No one again, trust no one because shit happens. People lie to you. People fake reports. I mean, I've had pest inspectors have fake reports. I've had, um, what with the septic tanks. I've had fake reports on septic inspections and you know, when you look at it, you're like, this doesn't look right. Where is this from? They'll say, oh, this seller said that they just had an inspection done. And I'm like, dude, I never accept any reports that come from the seller because even if it's true, I don't care. I want my own inspections. And so do you. Don't trust anyone. Okay? Trust no one.

[46:43] All right, but the number one thing that you're always going to have to check when you're talking about short term rentals is what people. You're going to have to check your zoning and your HOAs. You have to make sure that where you are buying, you can have your short term rentals and that they are legal, right, and not only are you going to check if they're legal. Now you want to make sure that, that they're not changing the legality. Go to the, you know, the zoning, the city's zoning the subdivision, zoning, the county zoning, check it out, you know, search that area for short term rentals and you'll see maybe there's something up for a vote or maybe something just passed and that ordinance hasn't gone into effect yet and there's a reason they're selling. So you want to check on all those things. You've got to check on the zoning and if you're buying a property and you think to yourself, okay, I can fix this, I can do an addition, or it can change something.

[47:37] You're zoning is going to be important there too because you need to know what you can change and what you cannot change. Maybe you can't touch the footprint of the house or maybe you can't build a second story like you thought or put a pool in or maybe you know the easement is weird or different. You've got to check on all of those things. You know, like I said, the pending changes to those things just in case all those things are changes and that's a really great reason to to stay in one area because if you're doing all your real estate investing in a certain town in a certain area, you know that area, you'll get to be better and better and better at it. You'll know the prices right away. You'll go, this rent is pretty high for this area. You'll walk in because you'll become an expert in that area.

[48:29] You'll know what things are worth, so stay in one area. Find your niche and stay there and then learn it and get better at it. You'll make a couple mistakes. So what those are lessons, lessons you needed to learn and you won't make them again and the majority of time you know you always have different exit strategies, right? If this doesn't work out, I can do this or if this doesn't work out, I can do this. You always want multiple, multiple exit strategies, right? But remember to what I said before, addendums are a must. They will be clear and concise if you're using a form contract of any kind. If you're using the landlords, you know if you're renting, you're using his rental agreement, you still want an addendum, you want it clear exactly what you intend to do and he gets to sign that for you, right?

[49:23] Because he could say, I had no idea that this is what they were doing and he will have also remember about the insurance that we taught last week. He will probably have the wrong type of insurance. So you make sure that you have the correct type of insurance for him. Okay? Because he's going to have the wrong type of insurance and that'll be a good good selling or renting point for you. You'll you, you can get them on that. Nobody's going to walk up to a landlord and say, how about I pay your insurance for you? He has no idea that the insurance, he would have rent, who he would have gotten for rent, would not be the right kind of insurance anyway, so it's a really good selling point for you. But remember there's all kinds of things in contracts and like I had mentioned before, the disclaimer of promises, those things tend to negate a bunch of different stuff.

[50:12] So your addendum become more and more important about things that are clearly written when you're buying. Still want an addendum, Okay, and then remember, trust, no one do your due diligence. So where invest, we get this question a lot. Hey, it's up to you. I would always start with properties closest to my house. If you can't then don't. If you've got a better place in mind, go for it. Just stick to one location though. When you first start renting. I would buy my first three or four properties bare minimum and that way too. You can get deals on cleaning companies and stuff because you've got a lot more to give them a lot more to offer. If you're. If you're doing more hands off and you're going to have a property management company and you've got four properties, you can get deals always asked for deals, always ask for discounts, always negotiate prices.

[51:04] Every single thing is always negotiable. It really, really is. Okay, but locations crucial. So if you're, you know, in Jacksonville you want to be close to the beach, right? If you're in, let's see, In Oklahoma City. You might want to be close to a park or close to a venue there. If you're in Austin, there's some really great areas that are very touristy, so you might want to pick a place where people going to south by southwest will find easy or really close to the barbecue places and all the really great restaurants, right? If you're in LA, I don't know where you want to go. I'm kidding. I am always telling people and my friends from LA, but anything is expensive there, but the thing is you want to be close to if there's any kind of attractions, if there's anything nearby, you want to be close to it as close as you possibly can.

[52:00] You also want to be in a quiet place. You don't want to be next to a freeway or backed up to a major road that just causes problems. There's a lot of things that are negative and actually I'll put a little article in the short term rental revenue for you guys about the seven places not to buy or rent. Okay, but this will help you a lot because you know these things are important for everyone and it's going to be important for you renting out your property and it's going to be important for the people who are, you know, renting your property from you. The location is crucial and if you're renting or buying, you might have a little bit of a difference, right? You, you might be able to get away with a little bit of a nicer property if you're renting it than if you're buying.

[52:45] It might be way too expensive, so just you know, buy the best you possibly can and know your comps. Again, if you're in one area and just doing one area and specializing in that one area, you know the value of the homes. You know the value of the prices of the houses that have sold. Remember, never look at the prices that are selling, but the prices that have sold recently, you know what the rents are in the area. You're going to know what the hotel rooms go for. You're going to know what the BnBS in that area go for. You're going to know all that stuff, okay, and you're going to know the value of it and you're. You're going to know the peak seasons and the low seasons of it too. Those are all the things that you're going to have to investigate before you go in and you buy and you can look that stuff up.

[53:30] It's super easy. There's a lot of websites out there that can help you get those prices and they'll be able to tell you this property here, you could probably rent for this much and this is how much you will make. Boom. It's, it's literally that easy, that easy to do. And then the last thing is, you know, what is your place look like? It is getting more and more competitive out there. People there are nicer and nicer properties all the time. So if you're in an area you want to before you go by, you want to look around at the area and the B and bs in your area and what they look like because a lot of times people are like, Oh yeah, I'm getting, you know, a thousand bucks a night or 1500 bucks a night. And you look at the property like, no shit.

[54:16] You are. Damn, that looks good. My place looks like, you know, like the cabin, you know that the beverly hillbillies had before they struck oil compared to your place. Right? So you want to be comparing apples to apples and you want to be making sure that you're not thinking to yourself, well I can get this much at night because my friend said they are, but then you look at their place and it's really, really amazing. So you've got to know the comps, you've got to know what you can do and you got to do the best you can possibly afford. But don't go overboard. You want that leeway. You want to give yourself that cushion, right? And when you're investing in real estate, I want you to think about this. It's going to be the same thing whether you are investing, buying properties with you, whether you are hosting properties, everything has to do with your time and money.

[55:10] Okay? So if you were to write a little, like a little chart out, you could put on one end of the chart more money and then you could go way out less money, right? And then you would have going up and down on the chart, maybe less work in time and then at the top of the chart, more work and time. So the less work you have to put into a business and the last time that you can put into it, the more money you're going to need, okay? And the more work and the more time you can put into it, the less money you're going to need. So when it comes to short term rentals, there are ways to do it without investing a lot of money or a lot of time. And actually there are people who do it with no money and no money.

[56:00] People are co hosting, they're not making a lot of money, but they're doing a lot of work and I don't recommend that because I don't want you trading one job for another, but it's definitely an option. Okay? So if you have no money in your pocket, you can invest anything. You're not going to be able to put the first and last down or put deposits on the utilities or buy the furniture. Or you can find somebody who wants you to cohost the their property. And that's going to be somebody who says, I am sick and tired of getting these phone calls from everybody. You take the reservations, you make sure that that you know they get enough towels, you do all that work and I'll give you a small percentage and most of the time that percentage is between 10 and 25 percent, but it can go all the way up.

[56:45] I've heard it 50 percent for some people and that's going to be off the gross profits or the net profits. You decide you again, what did I say? Everything is negotiable, right? People do it with really, really big places. No money out of their own pocket. It's the furniture that they have and you can do that really easily. If you've got some money, you're going to be renting from a landlord. You're going to be putting the furniture in there and you're going to be hosting it, right? But your ultimate deal is going to be having a portfolio full of properties that you don't manage, that you either have a management team running or you have guests or you have somebody. You have a bunch of people working for you. They're doing all the work, right? Your job as an investor is going to be making the money, finding more properties, building that portfolio, doing the work that makes the money and allowing the other people to do those minimum wage activities, the activities that have to be done, but not necessarily by you.

[57:44] Remember, that's your job, so no money, cohost some money, rent from a landlord, furnish it yourself, you know, and host it, and if you have more money, go ahead and think about buying or doing subject tos or something or even still you can run from more places, but those are going to be where you start to use other people a little bit more in their services and the service industry. Having management companies, having people like guesty, you're going to use those people to do the work that you no longer have time to do because you're looking for more properties. You're building those portfolios. You're making more money inside your Iras. That's what your going to be doing. So whether you are buying a short term rental property or property used for your short term rentals or you are renting a property to use for your short term rentals, you're going to do about the same thing.

[58:38] Okay? You're going to have above the same due diligence with a lot of the work. Obviously if you're buying the property, you're going to have inspections and things done that you wouldn't, but you're still going to have a den Dms, right? You're still going to make sure that all your contracts are checked and you know that they're protecting you and all your assets and what you were doing, that it's all out there in the open that you're leaving. Nothing. You know that somebody can come back on you and say, I had no idea they were going to do this and you want to make sure that it's legal for you to do before you sign anything and that nobody's going to be changing these rules in the near future and ruin your best laid plans about having a short term rental business. Right? So I just really quick want to tell you too, I am doing my best right now to create a really cool community and what I want to do is have us grow as hosts, have us grow as investors, build our retirement together, have resources that we need and the knowledge at our fingertips that we need to create and be the best host that we can be in.

[59:49] Build the best businesses that we can build and be surrounded with positive, likeminded people. I think that's a really, really important to have. I have a mentor that I use all the time and I think mentors and coaches are really important in this life. I had one for years and years and they keep me on task. They keep me focused. They keep me moving in a positive direction. You know, sometimes you need people to kind of keep you on task. Even when my, my dad passed away, um, I remember my friends going, come on, you need to invest again. And I was like, no, I just don't want to do this now without my dad. But they're the ones who encouraged me to move into writing, which moved me into platforms, which moved me into the prosperity process, which moved me, you know, when he, when my husband started having his challenges, I knew right away like my favorite and best way to create an income is with real estate.

[01:00:47] And so I just said, you know, I have to step back into real estate for awhile. And then when I did I was like, you know what, people need to know about this and that's what got me here. So like all these domino effects effect you in your life there, you know, one thing leads to another, leads to another. You're introduced to a person. Maybe it might be for just a short time or sometimes it's a longterm relationship. But the whole thing is, do you notice that your life moves so much better, so much smoother, so much faster when you are around people who you aspire to be? Like my friends, I love my friends and like all of them in some way, shape or form, I put them above me like almost on a pedestal that they're super smart. They're really giving, they have kind hearts, they're generous.

[01:01:38] I mean when you go out with them, you feel good about hanging around them and I want you to have that too. And I want to create this community about that. So I'm actually building a membership site and I'm looking for a few good people. So I'm looking for a few good men. But actually I'm looking for women too. So, but I'm looking for some people to help me build the ultimate community that people can come to, to do that, to build their businesses, become better people. Just be around people who are going to lift them up and support them when they need a little help. Give them encouragement, you know, sometimes have partners who are, you know, pushing you a little bit. So holding you accountable so that you're learning and, and share successes with them. I want to build that for you. So if you're interested in being a part of my Beta program, I'm super excited about this Beta program, but if you're interested in being a part of it, do me a favor, shoot me a private message on facebook or send me an [email protected]

[01:02:51] Actually, you know what, don't send it to support. Send it right to me. Send it to [email protected] and let me know that you're interested in it. If you do become a Beta member, um, I need you to say, you know, really have a say like really be out there and say, you know what, I need more of this or I don't like this, but we want more of this. I need people who are really going to be interactive and not just kind of taking whatever we give you. We've got, we've got it all set up, we've got everything ready to go, but we really want to tweak it because we want to make it the best. So if you are one of our founding Beta members, we're going to lock your price in forever. We're gonna lock, a $19 a month price in and that's going to be amazing because what we've got in store for you is going to knock your socks off and you will get so much value out of it.

[01:03:46] So if you were interested in this, do me a favor pop online and give us a shout out and let me know because we're going to be launching this Beta membership very, very soon. And if you want to be a part of it, you're gonna have to be on a very short list. Okay? A very small list of people and like I said, if you are, we'll lock that price in will grandfather you in forever. But I really want to create something amazing that's so powerful and that we have this amazing group of people who work together and I want to give back to. And that's why anyone who joins our Beta group, you guys, you get to know that at least 10 percent of what you give is going to go to my friend Amy's nonprofit and that is village impact. And what she does is she builds.

[01:04:36] She and her husbands do, they build these wonderful schools in Kenya. They go over there every year and they've been building schools and providing school books and school supplies to all these children and it's just an amazing, amazing thing when you watch her videos. I mean, you can't help watch and just cry watching these kids as they work together. I mean there's some amazing, amazing, you know, just your education level of your students and your females in any country. The education level actually ups the gross national product of that country. So the more educated women educated young girls that you have in a country, the more money that country makes and so what they are wanting to do. I mean it's just, it's incredible and to be a part of that, I think that we're here on earth for a reason and we need to give back and I looked all over for a charity.

[01:05:33] At one time I wanted to start a charity for my mom and I was thinking about doing housing and stuff, but there are some big people giving to those groups and stu and amy, what they're doing just moved me so much that I was like, you know what? This is a perfect place. This is a perfect place for me to give and I'm hoping that it is for you to. When you do join, we're going to have a link there. We're going to have some of the videos on the site so you'll be able to see where it's going and where your money is doing and how you will be personally helping all these kids. So anyway, if you're interested in that, please do me a favor. Email me [email protected] or you can facebook message me and inside the short term rental revenue site, you'll be able to get ahold of me or Karen.

[01:06:23] Somebody will get back to you and we want to make sure that, you know, it's a group of people who really want to help and empower themselves and empower others and lift them up. We really want positive people in this group and we really want people who are determined to make the best of their business the best of their future and they're committed. They're really committed to doing the work for themselves. You know, not for us definitely for themselves, but for us in the fact that we can make it a better site and we can't do that unless we have people who are going to give us feedback and say, I want more of this. I need more of this, but less of this. So we really need you to be one of those kinds of people if you get back to us. Anyways, thank you for listening. Have a great week. God bless you. Go and grow.

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