1. You Need to be in the Real Estate Game
The best real estate investment theory is owning multiple doors – two-units, four-units, eight-units, twelve-units, sixteen-units. We’re not talking about single family homes here. We’re not talking about renting your house out. That is not what I’m talking about. I’m talking about scaling out. Scaling out multifamily. I made the mistake when I started out investing and bought a single-family residence and trying to rent it out.
We all start in this same place where you go out and you buy a single-family house and you think you’re going to make a lot of money. The problem is the economies of scale. They just don’t work because you have only one house and then want to buy 20 houses and you won’t be able to. And on top of that, you need to deal with the renters and any problems they have as well as vacancy. Most people calculate their income based on collecting rent twelve months in a row. Doesn’t happen.
2. Don’t Worry About the Price
If you got $400,000 you are now in a position to buy multifamily real estate. $400,000 will buy you $1.6 million. A $100,000 will buy you a $400,000 deal. This is called the rule of four. For every dollar you have, you could probably buy four dollars of real estate. $100,000 buys $400,000 and $400,000 buys $1.6 million. That’s where I’d like to see you start. If it was a perfect situation, your first deal would take $400,000.
You should be able to pay the price they’re asking in the deal for it to work. If you got to get the price down for the deal to work, that deal doesn’t work. You the want the deal or not. At some point over the next 30 years the deal is going to be overpriced. Right? And if you look at economies, they can go down and fluctuate. Things happen. Something’s gonna happen for some period of time, whether it’s two weeks, two months, or two years, the property is going to probably go down in value, but not over 30 years.
Thirty years from now, and this is the first thing you’ve have to know about real estate– is that the rent on the deal in the year 2048 is going to be more than it is today.
3. Don’t Worry About the Loan and Don’t Worry About the Legal Until You Get the Deal
I use an incredibly simple LOI (Letter Of Intent) This is not a Purchase Sales Agreement. That comes later. All a LOI says is I want to buy your property and here is my offer. I’m not worried about the bank right now. I am not worried about the lawyer. Not Worried about operating agreements LLC. A bunch of people will tell you to worry about that. They’ll say you gotta get your lawyer involved. No, you don’t. You got to do a title search. No, you don’t. There’s going to be a bank involved in this deal unless you pay for all of it yourself and the bank is going to protect their asset and be doing a lot of this.
4. Get Rid of Your Money Because It’s Going Down in Value
Once you get a little money, what do you do? Learn to keep it. Then learn to multiply it. Most people don’t know how to make it. Fewer people know how to keep it and almost nobody knows how to multiply. You don’t multiply that by just doing your business over and over. You need to invest.
You got to figure out sooner or later how to reach, how to manage something passively. Maybe you’re running a company, and it’s producing a lot of money after taxes, you’ve got money leftover and it’s sitting in the bank. That money is dying. That money’s done. It’s done.
There are apartments in every city in the United States and they are going to be the single best investment you can make over the next 25 years.
I do not invest in anything other than in multifamily because I don’t know anything else. I don’t understand anything else. I don’t. I don’t put my money in mutual funds because it’s like me putting my money out into space. I’m going to put my money in something until I know it’s out there somewhere. I can’t touch it. I can’t feel it and I can’t get money from it every month.
If you want to be part of the expansion we are doing right now, maybe you don’t have the time but you have the money. You might not have the knowhow but you want to invest in a real asset. Look at Cardone Capital for more information on what funds you can invest in.
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