If you're motivated to get started in real estate, these are the *5 best strategies* I've found for beginners! ► czcams.com/video/A0OX2ejmGTU/video.html
I started with two rental properties that where just my old house and my wife's old house after we got a house together. My first goal was to just pay them off, then realized how much it could help with early retirement. Then we decided let's just get one or two more to maximize that benefit. Then it became addicting and 3 years later, we're working on number 10 and early retirement.
I love your story! Thanks for sharing Brian. To me that shows the beauty of starting small. You can always choose to get bigger to 10, which can absolutely help you retire and more. Congrats!
So you didn’t get a bigger house for your forever home? How did you pull enough equity to get to rental number 3 after you got your forever home for you? I am in same situation. I am renting out my house and we are going to move out of her townhouse and buy a forever home once we are married next year or soon after
@@laubachm11 we did get a bigger "forever home". I didn't start using equity to buy more houses until I was at house 5 or 6. For the third rental (the first house actually bought for that purpose) I just saved up a while for a down payment. I spent months putting in offers getting nothing accepted, until one weekend, we unexpectedly got two accepted at the same time, so I did a 401k loan to get the second one. The next one I found a really good deal (REO) was able to get it really cheap, fixed it up with a HELOC on my wife's old house, then refinanced it to get my money back out and pay off the HELOC (BRRRR). I then saved some more, now being supplemented by my other rental income, got a good deal on a short sale, fixed it up myself for just some material costs. Then sold my wife's old house and used a 1031 to buy two other properties. Did some more saving, got a few more. The last one I actually used a HELOC on my personal residence for the entire down payment, just actually paid that off last week. The key to me being able to do it was living well below my means to be able to save up a lot. That was definitely easier after moving in with my wife and combining incomes. Then, I never touched the rental income and let that add to my savings. My debt to income was always super low, so never had problems getting good loans and socking away money for more down payments (always did 20%) and maintenance/repair costs.
It not easy but he’s telling you the truth. Hard to think 20+ years into the future but…. If you can, well it’ll happen. Did for me, 7 rentals 100k/year. 2.6mil nw. Took 22 years. Retired at 54. Live below your means, that’s probably the most important thing. Btw I bought at the market rate when I acquired them, went through the down turn and survived. It’s not for everyone, l can assure you that.
That is awesome! Congrats on your progress! I've sending out Deal Diploma's to celebrate people's deals with them. If you haven't done it already, you can get one free here: forms.gle/WU1xnetMCPpmzwF49
What I like about your video Coach, is when you pull out the small white board. You legit break it down with numbers that won’t make you scratch your head. The speech and content are valuable. Thank you Coach. Please keep on educating us.
In 2012 in Indianapolis, I bought one 3 bedroom for 35k, one 2 bedroom for 26k, another 2 bedroom with garage for 30k, and a year later a 3000 square feet craftsman Era 5 bedroom for 135k. Have cleared liens from 2 of the houses and am about to knock out a 3rd it has worked out well. My rents are way below market. I refuse to squeeze my blue-collar tenents.
I just ran the first scenario with today's rates (7/16/2024). Average 30 year mortgage rate currently at 6.92%, which makes the loan payment for the $112,500 loan $742 instead of the $550 with the 4.2%. Its crazy how much more expensive things are with higher rates.
I like the simple strategies like this. Just own 4 and pay them off. We started out in real estate sort of forced because a house was not selling after we moved. We've learned the benefits of real estate over time. We also learned the head aches and the more we faced and overcame the more comfortable we got with real estate. In fact if I hadn't been able to refinance my real estate just before the pandemic hit we would have really been in trouble trying to get through COVID. About the same time we watched people build massive real estate businesses with great success and thought maybe we should go BIG! But after much consideration we like the side hustle business model and being able to supplement early retirement but continue the careers we are passionate about
I bought a house las December for 100k now I’m doing cash out refinance to buy another property at $89,900 and I’m working on another deal for 125k with conventional loan. Exited hopefully I’m moving on the right direction. Thank you for all the tips🤞
I appreciate your book and your videos. Most podcasts and RE investors shun paying down mortgages on investment properties. It’s refreshing to be reminded that it’s more about your GOALS and not all about outward forces like interest rates, inflation, and economics. Nice to remember there are many, many paths to financial freedom. Thank you!
thank you Michael. That means a lot. If we don't achieve our personal goals, what's the point right? There is a lot of noise out there and things outside of our control. That's why I like techniques like debt paydown where we can influence the process more. It's motivating for sure!
Just started following, and I just got my 1st investment property. Most channels talk about a 30 year mortgage. My investment property is on a 30 year mortgage. My payment towards principal payment is only like 200 a month. My personal residence is on a 15 year mortgage and worth almost 3x yet My payment towards principal is almost 2000 plus I do bi weekly payments and an additional 50 a payment. Of course I put down a HUGE DP from the sell of previous house. My question is, why don't more investors do a 15 year mortgage instead of a 30 if difference between payment are 100-200 or even bi wkly payments?
Enjoyed your videos in three years I have purchased a 16 bedroom apartment complex and 7 homes. your training has been very helpful in decision making and running these properties.
I just keep coming back to this simply explained vdo. If 1/2 of it works out, then also we are good. My only gripe is how much is a million worth after 30 years 🤔🙄
Thank you for coming back and watching! Yes, million will be worth less for sure. My recommendation is to figure out what you think you need today - conservatively - and but enough properties that if they were free and clear you would be good. Chances are in good locations it will appreciate enough to still cover your expenses in future. No guarantee, but better chance than a lot of other investments.
The journey of a thousand miles begins with a single step, starting on my four! Great to hear the perspective of Grow bigger (more risk) or pay off (less risk). Definitely a personal question and decision but glad to see the options presented this way. As always thanks for the great info coach!
I have 4 properties in Central PA but only one is producing income. Selling off these 4 except one. Moving my business south where I actually enjoy being and have been since 1996. I do own one property in NC and in the process of buying another one now. I am going super slow because I buy a property and work on paying it off before getting something else. I did just borrow some money that I will use to buy at least one single. I invest primarily in lower income areas just because that is where I want to be. Low crime but not high income areas. Tracking my expenses for almost 3 years I average $2200 a month. So my goal right now is $4k USD a month in income from the rentals.
There are always ways to make real estate investing work. Check out this video I made with 5 ideas for making deals with high interest rate markets: czcams.com/video/-VW6BR3ONSI/video.html
I like Dave Ramsey advice, only buy paid for Real estate . A recent survey found that 100% of foreclosure happened to only real estate with a mortgage.
Just started watching this playlist, and I have 2 questions. 1)do you have any pictures or videos on the type of houses you would recommend if I wanted to house hack, I am in college, so this is something I am considering as a side hustle in addition to my main job after college. 2.)Do you have any video of what to do after you purchase, as far as how to get customers, where to post ads for your rental property , or how much to charge depending on the unit, basically questions for what to do AFTER
It's even better than this, all your mortgage interest is deductible for 30 years, and for 27.5 years you can take a depreciation writeoff on the property (but not the land).
Question , even 7 months ago you said closing cost $3,500 . I purchased a rental 170k my closing cost was around 9K . How do you get such a low closing cost ?
What type of financing did you get? I would say 3% of purchase price for closing costs is typical, so maybe $5,100 in your case. If it's more than that, it could be that it includes your upfront insurance and taxes (for an escrow) and/or other non-closing costs that the bank required you to pay up front. Some lenders also just charge more, so let me know how your $9,000 broke down.
Hey my friend I apologize for doubting your assumptions. After going over the calculations I think your assumption of $250 is a reasonable expectation. Good job with your real estate investing strategy. I can definitely appreciate your method for building steady wealth. Subscribed. Thumbs up 👍
Hey coach! I love that you give some realistic numbers here of what could be considered a good deal. I love Bigger Pockets but they always talk about home run deals on their podcasts and the numbers seem unattainable for me, especially in today's market. Their podcasts seem more motivational where yours feel more practical. I rarely hear anyone talk about deals that aren't meeting the 1% or 2% rule. Thank you for giving me some realistic hope that the current market has not ruined my chances of getting started in real estate! When you refer to the "full value" do you mean as is or after rehab? I'm assuming you mean as is since we did not talk about rehab costs.
Thank you for the feedback, Ryan! BiggerPockets has a big umbrella of content, so they definitely have to appeal to many different approaches. I'm definitely trying to focus as much as I can on what's practical for today, in this market, and you don't have to hit homeruns to make a lot of money over the LONG run. I was referring to as-is value when I said full value in this case. But many investors of course buy a property that needs work and has a different "ARV" (after repair value/full value) than what they paid.
Assuming $120, 000 loan at 4% on a 30 year fixed rate mortgage....average national annual property tax of 1.1% and $1000 year for insurance the monthly mortgage payment will be $766.23. Assuming the house rents for $1300 month and a property management company keeps %10 for an expense of $130 to be safe allocate another 10% for miscellaneous repairs and lost rent for vacancy. $766 mortgage $130 Property Management Fees $130 Miscellaneous Repairs, Maintenance, Lost Rent, Vacancy Total Monthly Expenses $1026 Total Monthly Rent $1300 Net Monthly Profit $274 Based on my calculations I think your numbers accurately reflect what one could reasonably expect....I think your other calculations were reasonable....if these numbers are correctt is this still a good investment?
Not mentioned, but definitely needs to be considered. Over the 30 yrs you are going to need new roofs, new heating systems, and other 'infrastructure. repairs, major appliance replacements ect. I don't see any contingency budget anywhere in the equation to account for this. The math is overly optimistic compared to my real life experience on this.
It depends on the property. Cap-ex reserves - which you're talking about could be included in the 38-40% expense ratio I used if it's newer, been totally remodeled, etc. For an older property, I've had higher than that in the 45-50% expense ratio so then there would be less cash flow. It's also possible I would've bought that property cheaper because of that, though. This is a video I made with all the real numbers from my first rental, including capex: czcams.com/video/9nYmlZfPF7Y/video.html
I love the video at first, but if you refi you're lucky if you make a monthly cash flow, especially in the beginning. 2) as you stated: you take on more risk, and more risk is great when things go up, but will break you if things go down. Not to mention the out-of-pocket expenses needed if you refi, unless you are rolling the cost of refi into the mortgage.
We started with our first in March of 2020 right when everything was shutting down! We were brand new investors and terrified. Almost backed out. So glad we didn’t since we just pulled $70k out of that property to buy more! In contract on #4 now :)
unfortunately in Canada we can't get 30 year loans....we can get 30 year amortization with max 5 year fixed loans....so that leaves a bit of uncertainty but I've got 2 rentals now plus a bsmt suite in my principal residence..... so hopefully on my way!
Thanks for the great video, Coach! I have three properties with seven doors. Working on #4 this summer if the stars align 🤣 so far everything has been owner occ, this summer may have to be a rental loan! Stoked to have come across your channel
You’re awesome Coach Carson! The way you explain step by step is simply amazing. ❤ You took burden off my shoulder that I can still do great by owing single family. Currently own 2. 3rd on the way. All in Dallas. I felt puzzled and perplexed by seeing stories of folks owing 100s of doors and was always concerned if I’m doing right thing by investing in SFRs. Your videos put that big question to rest that I’m on right path. Thank you so much Coach!
Do u think its better to use llc for 4 properties or personal route. Also any suggestions on insurance? Umbrella or regular insurance. It can be costly.
Amazing again . Bro you are just an amazing person to share this with people. Once I make my first half million You will receive a donation for your sharing of knowledge. Your strategies are simple and fool proof if followed properly. I feel I am stealing your info with your free tube vids. Count on that donation in 5 to 10 years bro . Incredible.
A good realtor can help you with the value. But I also recommend you learn how to do this yourself. You can check out this article I wrote (and I'll do a video on it in future): www.biggerpockets.com/blog/estimate-arv
thank you, thank you, and thank you! I love your videos. I'm buying some books from you. I can't wait to learn more. I just closed on my second property yesterday (duplex). So excited. I can't wait to close on my next property. Have a blessed day!
Hey Coach, thanks for all your help. My question is: When you ran the numbers for the property example, you got a Coc ROI of around 7%. I’m in Northern CA and have been running the numbers for a few months now, the average Coc ROI is around 1-2% on a good deal, but a higher chance of appreciation. Is it okay to try for a lower ROI?
Sometimes, yes. In northern California the rent/price ratio will be worse than in lower priced markets. So it's normal to have a lower CoC. But you have to make sure you have a plan to make money with growth. For example, if you have a fixed mortgage and the rent grows over time, you'll make more cash flow. And if you buy at a discount you get to build in some equity Growth up front. Here's a video I made about buying in high price markets: czcams.com/video/F-bsP-InDLA/video.htmlsi=R9mluncQbSj2YsxU
You're welcome! I love the message you're delivering so happy to share. How about I have you on the podcast (which I've wanted to do anyway) and we'll giveaway the books that way. And it'd be easier if we send the winners to you and you can send out directly. Will that work? I'll DM you.
Has anyone invested in 55+ communities? Seems to me that some of the risk in finding the right tenant might be mitigated with these type properties. HOA would also be concern. If so, would investing in properties like this be beneficial using this strategy?
Thanks for the video. Last 10 years I have lived in North Virginia, Philly, and Austin. I have never seen a property with similar numbers, and that too percent wise, not absolute. 1300 per month for 150k property looks like a dream. Or may be I live in the wrong place.
Yes, all of those places are urban, higher-priced markets. The math is a little different. You likely won't make as much cash flow so you have to play more of the growth game. It can still work out if the area has long-term fundamentals. You just will capitalize on the appreciation and equity growth at some point instead of reinvesting cash flow like I emphasized in this video. You can also rent in those cities and buy out of state. I'll do another video soon on comparing these two approaches.
@@CoachChadCarson thanks. I am looking for real estate investing since some time but couldn't figure out where. For the first one I want to be close to where I live. Did you make any relevant video on that topic, if yes can you forward. Thanks.
Hi Coach Carson! I am a new subscriber. In today's market and economy Do you think it's good to buy my first rental house? Can we still find a good deal? or I just need to wait? I'm from California
Thanks for the sub! In some ways it's harder today (interest rates) and in other ways it's easier (less of a sellers market). But I think you should always be a buyer. Just be patient and make sure it's a good deal.
this video is already so out of date. It uses a 4.2 rate. Current rates are 8%! that means the monthly payment for 112k financed goes from 550 in this example to 821. theres actually a small nice remodeled 1940 built little house I'm looking at locally, theyre asking 175. I'm assuming I could talk them down to 150 (maybe). So the numbers are very similar to the ones in this video. but the issue is, with a 821/m payment, PLUS insurance (100?), PLUS property taxes (high in TX, 100?) PLUS maintenance set aside (100?) the property is going to cash flow little to none. I'm guessing the most rent it would conservatively get would be 1200/month. It might do a little better, but I kinda doubt it based on local comps (small new in town constuction can rent for as little as 1300-1400, so this being an old house in the country I think 1200 is reasonable). so bottom line yeah this works at 4.2. It doesnt work at 8. Bad time to be buying in the market.
The game now is to get *financing* at a discount. If it doesn't work at 8%+ interest with traditional financing then you have to find different financing (private, seller, subject-2, lease options, etc). It's never easy but it's always possible.
@@CoachChadCarson i dunno what any of that means but i'll google it lol. anyone giving you financing at 4% now seems like theyre leaving a lot of money on the table so i'm skeptical why anybody would do that. for me i just think its a case of dont buy now unless you can pay cash. it's just a bad time. i'm sure you have lots of money and contacts so you can probably keep going. just like kriss krohn and those guys can...
@@cryengine_xif you can pay cash I think that does make sense. But my point is you can use other people's cash or the seller's equity to make it work. If someone sells you a house at full price, that's a win for them. And if you get financing at 3 or 4% that let's you cash flow it, that could be a win for you. Just one example. It doesn't take money or contacts to do that. It takes learning, like anything else, and reps/practice. Won't work on every deal. Best of luck!
Great video. Not sure if I’m wrong, but future CF estimates didn’t seem to include the additional payment that you wouldn’t have been paying if mortgage was paid?
thanks for asking. Let me know if you're talking about something different, but here's what I have: - Scenario 1: $38,400 NOI to start --> $100,000 after 30 years (both are assuming no debt) - Scenario 2: $38,400 NOI to start --> $56,000 after 12 years (also no debt) - Scenario 3: $12,000 CASH FLOW to start --> $17,500 cash flow after 12 years (before refinance) The difference between NOI and net cash flow may have been the confusing part. I skipped over it quickly in video. Let me know if that was it or if I missed something else. Thanks!
Thank you for this scenario! Can 2 duplexes work for this or is more diversification better. Also do you suggest same geographical location for the 4 properties?
good question! There is definitely flexibility here with type of property. 2 duplexes work fine. I think the main point is just getting momentum and getting a small critical mass of property that you can either stick with or grow off of. Geographical diversification is nice to have. But when you're just doing 4, I don't personally think it's necessary. I'd rather use Warren Buffett's philosophy of "put all your eggs in one basket and watch them closely!!"
Hello Coach. Once again, such a powerful method and great video explained in simple language. Thanks. I also have a question for you - in your criteria, do you also consider the age of the property. Would you still buy the properties built-in 1950/the 1960s or do you look out for properties post 1980s or something? I would love to know your point of view.
Thanks for the feedback! I always prefer newer properties if possible because they tend to require less maintenance and capital expenses and avoid asbestos and lead paint issues. BUT ... a lot of my best deals have been older properties that I could remodel. This allowed me to buy them at a sufficient discount to make the numbers work. I would say just pay attention to what's available in your local market. If you can buy single family houses or small multis built in 1980s or later and still make the numbers work, prioritize those! But don't ignore the older if they present even better deals.
No, I think it's still a good time to get started. Interest rates are still very low. If you can lock that in and have you house pay for the debt over time (while it goes up in value) you can make a lot of money. 20 years from now you will be saying you wish you bought in 2022 (or hopefully you'll say "I'm GLAD I bought in 2022)
What is the median price of properties where you live? And what type of financing are you using? The people I know who get into properties are often doing house hacks and using owner occupant loans with less money down. Either a 2,3, or 4-unit you can move into. Or a single family house that you live in as your home and later keep as a rental.
If I understand you right, Stephen, then I think you can. I was not familiar with this but it looks like from some quick research that there are 1031 exchange companies that say it's doable: peakexchange.com/multiple-property-exchanges-basics/#:~:text=IRC%20Section%201031%20allows%20for,one%20or%20more%20replacement%20properties.
Awesome info as always coach! I do have some questions. So we have a home and it's worth probably around 340k and we owe somewhere around 180k. We owe on our roof about 6k, solar on our roof, and 2 vehicles. So, we have been wanting to invest in real estate and don't want to waste any more time. What's in your opinion the best move for us?
Do you have cash other than your home equity that you could invest right now? And could you get a HELOC (home equity line of credit) on your house to have some extra funds?
I prefer 30-year mortgages. Get the lowest payment possible to increase your cash flow and reduce your risk in a worse case. You can always pay it off faster. I like the 4-house idea! Good luck.
Yes, they're included in the $500 operating expenses. But that said, property taxes can vary a LOT from state to state. Texas, for example, has much higher property taxes than other states in large part because they don't have state income tax and have to raise revenue in this way.
After a period of time many lenders will use the rent from the property to offset your mortgage payment so that it won't affect your DTI (debt to income ratio). That allows you to buy more. There are also lenders who only look at the income and debt from that property, and you can have as many loans as you need. These are sometimes called DSCR loans (debt service coverage ratio), and they're typically more expensive (higher interest) but can be a good option. I'm collecting a list of these type lenders here: www.coachcarson.com/investment-property-loans/ . There will be more in the future as I talk to more.
I would love to find a property for $150K in my area. Unfortunately all I can find for that price is land. Will still try to find something that makes sense.
It doesn't have to be a $150,000 price to be a good deal. The lower priced markets tend to cash flow better, but even $500-$600,000 properties can make good investments in some cases with growing rents and prices.
@@gaylahuerta2443 in the example rent was $1,300/mo - $500 operating expenses (includes taxes and insurance) - $550 mortgage payment (does not include taxes and insurance). That's $120,000 loan at 3.6% interest for 30 years.
Which taxes are you talking about? Property taxes can go up, and that was accounted for in the video as one of the expenses take out before the $12,000/yr cash flow or $56k cash flow per year paying off debt. And income taxes don't always go up. They have gone down in last few years. Depreciation will shelter a lot of this income from tax. But part of the $56,000 could be taxable.
@@CoachChadCarson I mean you went into the future for 30 years but I didn’t see property taxes go up for 30 years. Ohio - pretty constant I think. Texas - plan to get ransacked. But since you show 30 years of rent increasing, I didn’t see 30 years of prop taxes and insurance increasing.
@@HappyPenguin75034 I appreciate the feedback. I didn't explain it very well in the video (will next time) but in the example, I increased the NOI for 30 years - not the rent. That increasing NOI assumed the taxes and insurance also increased.
If you're motivated to get started in real estate, these are the *5 best strategies* I've found for beginners! ► czcams.com/video/A0OX2ejmGTU/video.html
I started with two rental properties that where just my old house and my wife's old house after we got a house together. My first goal was to just pay them off, then realized how much it could help with early retirement. Then we decided let's just get one or two more to maximize that benefit. Then it became addicting and 3 years later, we're working on number 10 and early retirement.
I love your story! Thanks for sharing Brian. To me that shows the beauty of starting small. You can always choose to get bigger to 10, which can absolutely help you retire and more. Congrats!
So you didn’t get a bigger house for your forever home? How did you pull enough equity to get to rental number 3 after you got your forever home for you? I am in same situation. I am renting out my house and we are going to move out of her townhouse and buy a forever home once we are married next year or soon after
@@laubachm11 we did get a bigger "forever home". I didn't start using equity to buy more houses until I was at house 5 or 6. For the third rental (the first house actually bought for that purpose) I just saved up a while for a down payment. I spent months putting in offers getting nothing accepted, until one weekend, we unexpectedly got two accepted at the same time, so I did a 401k loan to get the second one. The next one I found a really good deal (REO) was able to get it really cheap, fixed it up with a HELOC on my wife's old house, then refinanced it to get my money back out and pay off the HELOC (BRRRR). I then saved some more, now being supplemented by my other rental income, got a good deal on a short sale, fixed it up myself for just some material costs. Then sold my wife's old house and used a 1031 to buy two other properties. Did some more saving, got a few more. The last one I actually used a HELOC on my personal residence for the entire down payment, just actually paid that off last week.
The key to me being able to do it was living well below my means to be able to save up a lot. That was definitely easier after moving in with my wife and combining incomes. Then, I never touched the rental income and let that add to my savings. My debt to income was always super low, so never had problems getting good loans and socking away money for more down payments (always did 20%) and maintenance/repair costs.
It not easy but he’s telling you the truth. Hard to think 20+ years into the future but…. If you can, well it’ll happen. Did for me, 7 rentals 100k/year. 2.6mil nw. Took 22 years. Retired at 54. Live below your means, that’s probably the most important thing. Btw I bought at the market rate when I acquired them, went through the down turn and survived. It’s not for everyone, l can assure you that.
Sold our farm last year. Bought a duplex and moved into half. Closed on a second unit last month. Still working the plan. Thanks coach.
That is awesome! Congrats on your progress!
I've sending out Deal Diploma's to celebrate people's deals with them. If you haven't done it already, you can get one free here: forms.gle/WU1xnetMCPpmzwF49
What I like about your video Coach, is when you pull out the small white board. You legit break it down with numbers that won’t make you scratch your head. The speech and content are valuable. Thank you Coach. Please keep on educating us.
Thanks for the feedback, Khalil. I'll bring the whiteboard out again soon!
I’m about to close on my first property 😭. Your video helped me reassure my predictions. Thanks for this video and the effort that was put into it!!
congrats on the closing of the first property, Dennis! Exciting! Happy to share and glad it was helpful.
Hey Dennis, how’s it going with your property man ?
In 2012 in Indianapolis, I bought one 3 bedroom for 35k, one 2 bedroom for 26k, another 2 bedroom with garage for 30k, and a year later a 3000 square feet craftsman Era 5 bedroom for 135k. Have cleared liens from 2 of the houses and am about to knock out a 3rd it has worked out well. My rents are way below market. I refuse to squeeze my blue-collar tenents.
May I ask what the value of all of them is now? I bet it’s almost triple if you sold
I just ran the first scenario with today's rates (7/16/2024). Average 30 year mortgage rate currently at 6.92%, which makes the loan payment for the $112,500 loan $742 instead of the $550 with the 4.2%. Its crazy how much more expensive things are with higher rates.
I like the simple strategies like this. Just own 4 and pay them off. We started out in real estate sort of forced because a house was not selling after we moved. We've learned the benefits of real estate over time. We also learned the head aches and the more we faced and overcame the more comfortable we got with real estate. In fact if I hadn't been able to refinance my real estate just before the pandemic hit we would have really been in trouble trying to get through COVID. About the same time we watched people build massive real estate businesses with great success and thought maybe we should go BIG! But after much consideration we like the side hustle business model and being able to supplement early retirement but continue the careers we are passionate about
I bought a house las December for 100k now I’m doing cash out refinance to buy another property at $89,900 and I’m working on another deal for 125k with conventional loan. Exited hopefully I’m moving on the right direction. Thank you for all the tips🤞
I appreciate your book and your videos. Most podcasts and RE investors shun paying down mortgages on investment properties. It’s refreshing to be reminded that it’s more about your GOALS and not all about outward forces like interest rates, inflation, and economics. Nice to remember there are many, many paths to financial freedom. Thank you!
thank you Michael. That means a lot. If we don't achieve our personal goals, what's the point right? There is a lot of noise out there and things outside of our control. That's why I like techniques like debt paydown where we can influence the process more. It's motivating for sure!
Just started following, and I just got my 1st investment property. Most channels talk about a 30 year mortgage. My investment property is on a 30 year mortgage. My payment towards principal payment is only like 200 a month. My personal residence is on a 15 year mortgage and worth almost 3x yet My payment towards principal is almost 2000 plus I do bi weekly payments and an additional 50 a payment. Of course I put down a HUGE DP from the sell of previous house. My question is, why don't more investors do a 15 year mortgage instead of a 30 if difference between payment are 100-200 or even bi wkly payments?
I love this! I think my wife and I are going to make a 12-16 year plan based on scenario 2. We got our first rental property in 2021, 3 more to go!
Sounds like a good plan, Jacob! Excited for you to get those next 3!
Enjoyed your videos in three years I have purchased a 16 bedroom apartment complex and 7 homes. your training has been very helpful in decision making and running these properties.
That's incredible! Congratulations!! 🙌 Thank you for sharing and for letting me be a small part of your journey
You have to be the best explainer of all explainers! Keep doing what you do:)
I just keep coming back to this simply explained vdo. If 1/2 of it works out, then also we are good.
My only gripe is how much is a million worth after 30 years 🤔🙄
Thank you for coming back and watching! Yes, million will be worth less for sure. My recommendation is to figure out what you think you need today - conservatively - and but enough properties that if they were free and clear you would be good. Chances are in good locations it will appreciate enough to still cover your expenses in future. No guarantee, but better chance than a lot of other investments.
The journey of a thousand miles begins with a single step, starting on my four! Great to hear the perspective of Grow bigger (more risk) or pay off (less risk). Definitely a personal question and decision but glad to see the options presented this way. As always thanks for the great info coach!
Well said! I'm trying to show multiple paths because there's not a one-size fits all approach. I appreciate you watching and your support!
I have 4 properties in Central PA but only one is producing income. Selling off these 4 except one. Moving my business south where I actually enjoy being and have been since 1996. I do own one property in NC and in the process of buying another one now. I am going super slow because I buy a property and work on paying it off before getting something else. I did just borrow some money that I will use to buy at least one single. I invest primarily in lower income areas just because that is where I want to be. Low crime but not high income areas. Tracking my expenses for almost 3 years I average $2200 a month. So my goal right now is $4k USD a month in income from the rentals.
we need updated version of this :) since then mortgage got up and value of the properties. I wonder if its still possible to make it nowadays
There are always ways to make real estate investing work. Check out this video I made with 5 ideas for making deals with high interest rate markets: czcams.com/video/-VW6BR3ONSI/video.html
@@CoachChadCarson Thanks! i am going through your videos :) super helpful stuff.
This is one of th ebest videos ive seen for real state investing. Literally the most detailed thing ever.
Thanks coach
I like Dave Ramsey advice, only buy paid for Real estate . A recent survey found that 100% of foreclosure happened to only real estate with a mortgage.
Yes, brother
Hey Coach, Appreciate the simplicity and approach senerios.
Thanks for watching Tomas! Glad it was helpful.
Keep Killin it Coach! My Clemson portfolio is netting me 2K+/ month now!
that's awesome Mik! Congrats and thanks for sharing!
Just started watching this playlist, and I have 2 questions. 1)do you have any pictures or videos on the type of houses you would recommend if I wanted to house hack, I am in college, so this is something I am considering as a side hustle in addition to my main job after college. 2.)Do you have any video of what to do after you purchase, as far as how to get customers, where to post ads for your rental property , or how much to charge depending on the unit, basically questions for what to do AFTER
This video gets me amped, love it!
I love to hear that! Thanks for watching, Kelly.
It's even better than this, all your mortgage interest is deductible for 30 years, and for 27.5 years you can take a depreciation writeoff on the property (but not the land).
Question , even 7 months ago you said closing cost $3,500 . I purchased a rental 170k my closing cost was around 9K . How do you get such a low closing cost ?
What type of financing did you get? I would say 3% of purchase price for closing costs is typical, so maybe $5,100 in your case. If it's more than that, it could be that it includes your upfront insurance and taxes (for an escrow) and/or other non-closing costs that the bank required you to pay up front. Some lenders also just charge more, so let me know how your $9,000 broke down.
Hey my friend I apologize for doubting your assumptions. After going over the calculations I think your assumption of $250 is a reasonable expectation. Good job with your real estate investing strategy. I can definitely appreciate your method for building steady wealth. Subscribed. Thumbs up 👍
Hey coach! I love that you give some realistic numbers here of what could be considered a good deal. I love Bigger Pockets but they always talk about home run deals on their podcasts and the numbers seem unattainable for me, especially in today's market. Their podcasts seem more motivational where yours feel more practical. I rarely hear anyone talk about deals that aren't meeting the 1% or 2% rule. Thank you for giving me some realistic hope that the current market has not ruined my chances of getting started in real estate!
When you refer to the "full value" do you mean as is or after rehab? I'm assuming you mean as is since we did not talk about rehab costs.
Thank you for the feedback, Ryan! BiggerPockets has a big umbrella of content, so they definitely have to appeal to many different approaches. I'm definitely trying to focus as much as I can on what's practical for today, in this market, and you don't have to hit homeruns to make a lot of money over the LONG run.
I was referring to as-is value when I said full value in this case. But many investors of course buy a property that needs work and has a different "ARV" (after repair value/full value) than what they paid.
@@CoachChadCarson thank you!
Assuming $120, 000 loan at 4% on a 30 year fixed rate mortgage....average national annual property tax of 1.1% and $1000 year for insurance the monthly mortgage payment will be $766.23. Assuming the house rents for $1300 month and a property management company keeps %10 for an expense of $130 to be safe allocate another 10% for miscellaneous repairs and lost rent for vacancy.
$766 mortgage
$130 Property Management Fees
$130 Miscellaneous Repairs, Maintenance, Lost Rent, Vacancy
Total Monthly Expenses $1026
Total Monthly Rent $1300
Net Monthly Profit $274
Based on my calculations I think your numbers accurately reflect what one could reasonably expect....I think your other calculations were reasonable....if these numbers are correctt is this still a good investment?
You might want to factor equity into the equation as well. 8-10% per month seems reasonable these days.
$9600yr./$800month to $12,000yr./$1000 month
Not mentioned, but definitely needs to be considered. Over the 30 yrs you are going to need new roofs, new heating systems, and other 'infrastructure. repairs, major appliance replacements ect. I don't see any contingency budget anywhere in the equation to account for this. The math is overly optimistic compared to my real life experience on this.
It depends on the property. Cap-ex reserves - which you're talking about could be included in the 38-40% expense ratio I used if it's newer, been totally remodeled, etc. For an older property, I've had higher than that in the 45-50% expense ratio so then there would be less cash flow. It's also possible I would've bought that property cheaper because of that, though.
This is a video I made with all the real numbers from my first rental, including capex: czcams.com/video/9nYmlZfPF7Y/video.html
I love the video at first, but if you refi you're lucky if you make a monthly cash flow, especially in the beginning. 2) as you stated: you take on more risk, and more risk is great when things go up, but will break you if things go down. Not to mention the out-of-pocket expenses needed if you refi, unless you are rolling the cost of refi into the mortgage.
Right. I'm not as big of a fan of the refinance scenario as the others because of the added risk. But I wanted to present multiple options!
5 rental properties that are paid off with $1400 cash flow. Is enough for me plus it will net me $84,000 per year
Sounds good to me!!🙌🏻
We started with our first in March of 2020 right when everything was shutting down! We were brand new investors and terrified. Almost backed out. So glad we didn’t since we just pulled $70k out of that property to buy more! In contract on #4 now :)
"Be greedy when others are fearful." Seems like you did exactly what Buffett recommends! Thanks for sharing and good luck with #4!
unfortunately in Canada we can't get 30 year loans....we can get 30 year amortization with max 5 year fixed loans....so that leaves a bit of uncertainty but I've got 2 rentals now plus a bsmt suite in my principal residence..... so hopefully on my way!
Thanks for the great video, Coach! I have three properties with seven doors. Working on #4 this summer if the stars align 🤣 so far everything has been owner occ, this summer may have to be a rental loan! Stoked to have come across your channel
Excellent video Chad. Thanks for putting it out!
you're welcome! Thanks for watching, Lucas.
You’re awesome Coach Carson! The way you explain step by step is simply amazing. ❤ You took burden off my shoulder that I can still do great by owing single family. Currently own 2. 3rd on the way. All in Dallas. I felt puzzled and perplexed by seeing stories of folks owing 100s of doors and was always concerned if I’m doing right thing by investing in SFRs. Your videos put that big question to rest that I’m on right path. Thank you so much Coach!
Thanks so much for your feedback! I'm very happy it was helpful. And great job so far! You've got this. Keep up great work.
@@CoachChadCarson thanks Coach!
Do u think its better to use llc for 4 properties or personal route. Also any suggestions on insurance? Umbrella or regular insurance. It can be costly.
Amazing again . Bro you are just an amazing person to share this with people. Once I make my first half million You will receive a donation for your sharing of knowledge. Your strategies are simple and fool proof if followed properly. I feel I am stealing your info with your free tube vids. Count on that donation in 5 to 10 years bro . Incredible.
Excellent video. Thanks for making it a number the average person can understand.
my pleasure! Thanks for the feedback, Chris.
Hey coach ! Do you offer personal consultation ?
how do you know what the actual value of the house is so you know if you're getting a discount on it? who do you trust with that number? the relator?
A good realtor can help you with the value. But I also recommend you learn how to do this yourself. You can check out this article I wrote (and I'll do a video on it in future): www.biggerpockets.com/blog/estimate-arv
Thanks for the break-down of this. Very good starting point!
Glad it's helpful! Thanks Rick.
thank you, thank you, and thank you! I love your videos. I'm buying some books from you. I can't wait to learn more. I just closed on my second property yesterday (duplex). So excited. I can't wait to close on my next property. Have a blessed day!
Congrats on your duplex! That is fantastic! Thank you for watching my channel. I hope you find it helpful.
What is your cash on cash return in your duplex ? I can’t find any good deal down here in Florida.
Great content! An excellent reminder to not buy a m3 and get another rental instead. !
Ha, Ha. There's always an opportunity cost! Get that rental that will later BUY you the M3 with rent:)
Hey Coach, thanks for all your help. My question is:
When you ran the numbers for the property example, you got a Coc ROI of around 7%.
I’m in Northern CA and have been running the numbers for a few months now, the average Coc ROI is around 1-2% on a good deal, but a higher chance of appreciation. Is it okay to try for a lower ROI?
Sometimes, yes. In northern California the rent/price ratio will be worse than in lower priced markets. So it's normal to have a lower CoC. But you have to make sure you have a plan to make money with growth. For example, if you have a fixed mortgage and the rent grows over time, you'll make more cash flow. And if you buy at a discount you get to build in some equity Growth up front.
Here's a video I made about buying in high price markets: czcams.com/video/F-bsP-InDLA/video.htmlsi=R9mluncQbSj2YsxU
@@CoachChadCarson Thank you!! Been watching your videos for awhile now, means a lot.
Thank you so much Coach!!! If I sent you 10 books to give away would that be fun or too much of a hassle???
You're welcome! I love the message you're delivering so happy to share.
How about I have you on the podcast (which I've wanted to do anyway) and we'll giveaway the books that way. And it'd be easier if we send the winners to you and you can send out directly.
Will that work? I'll DM you.
Has anyone invested in 55+ communities? Seems to me that some of the risk in finding the right tenant might be mitigated with these type properties. HOA would also be concern. If so, would investing in properties like this be beneficial using this strategy?
I have not invested in 55+ communities, Stephen. I'd be interested to hear others' experience.
Thanks for the video.
Last 10 years I have lived in North Virginia, Philly, and Austin. I have never seen a property with similar numbers, and that too percent wise, not absolute. 1300 per month for 150k property looks like a dream. Or may be I live in the wrong place.
Yes, all of those places are urban, higher-priced markets. The math is a little different. You likely won't make as much cash flow so you have to play more of the growth game. It can still work out if the area has long-term fundamentals. You just will capitalize on the appreciation and equity growth at some point instead of reinvesting cash flow like I emphasized in this video. You can also rent in those cities and buy out of state.
I'll do another video soon on comparing these two approaches.
@@CoachChadCarson thanks. I am looking for real estate investing since some time but couldn't figure out where. For the first one I want to be close to where I live. Did you make any relevant video on that topic, if yes can you forward. Thanks.
Hi Coach Carson! I am a new subscriber. In today's market and economy Do you think it's good to buy my first rental house? Can we still find a good deal? or I just need to wait? I'm from California
Thanks for the sub! In some ways it's harder today (interest rates) and in other ways it's easier (less of a sellers market). But I think you should always be a buyer. Just be patient and make sure it's a good deal.
How much should I at least have to get a mortgage going? I want to have 10k to put down, but is that too little?
this video is already so out of date. It uses a 4.2 rate. Current rates are 8%! that means the monthly payment for 112k financed goes from 550 in this example to 821.
theres actually a small nice remodeled 1940 built little house I'm looking at locally, theyre asking 175. I'm assuming I could talk them down to 150 (maybe). So the numbers are very similar to the ones in this video. but the issue is, with a 821/m payment, PLUS insurance (100?), PLUS property taxes (high in TX, 100?) PLUS maintenance set aside (100?) the property is going to cash flow little to none. I'm guessing the most rent it would conservatively get would be 1200/month. It might do a little better, but I kinda doubt it based on local comps (small new in town constuction can rent for as little as 1300-1400, so this being an old house in the country I think 1200 is reasonable).
so bottom line yeah this works at 4.2. It doesnt work at 8. Bad time to be buying in the market.
The game now is to get *financing* at a discount. If it doesn't work at 8%+ interest with traditional financing then you have to find different financing (private, seller, subject-2, lease options, etc). It's never easy but it's always possible.
@@CoachChadCarson i dunno what any of that means but i'll google it lol. anyone giving you financing at 4% now seems like theyre leaving a lot of money on the table so i'm skeptical why anybody would do that. for me i just think its a case of dont buy now unless you can pay cash. it's just a bad time. i'm sure you have lots of money and contacts so you can probably keep going. just like kriss krohn and those guys can...
@@cryengine_xif you can pay cash I think that does make sense. But my point is you can use other people's cash or the seller's equity to make it work. If someone sells you a house at full price, that's a win for them. And if you get financing at 3 or 4% that let's you cash flow it, that could be a win for you. Just one example.
It doesn't take money or contacts to do that. It takes learning, like anything else, and reps/practice. Won't work on every deal.
Best of luck!
Hi Coach, one question- at min 11, isn’t the cash flow $12k instead of $38K? Could you please confirm?
Great video. Not sure if I’m wrong, but future CF estimates didn’t seem to include the additional payment that you wouldn’t have been paying if mortgage was paid?
thanks for asking. Let me know if you're talking about something different, but here's what I have:
- Scenario 1: $38,400 NOI to start --> $100,000 after 30 years (both are assuming no debt)
- Scenario 2: $38,400 NOI to start --> $56,000 after 12 years (also no debt)
- Scenario 3: $12,000 CASH FLOW to start --> $17,500 cash flow after 12 years (before refinance)
The difference between NOI and net cash flow may have been the confusing part. I skipped over it quickly in video. Let me know if that was it or if I missed something else. Thanks!
Your videos are very informative.
Keep up.
Thank you for watching!
Thank you for this scenario! Can 2 duplexes work for this or is more diversification better. Also do you suggest same geographical location for the 4 properties?
good question! There is definitely flexibility here with type of property. 2 duplexes work fine. I think the main point is just getting momentum and getting a small critical mass of property that you can either stick with or grow off of.
Geographical diversification is nice to have. But when you're just doing 4, I don't personally think it's necessary. I'd rather use Warren Buffett's philosophy of "put all your eggs in one basket and watch them closely!!"
Hello Coach. Once again, such a powerful method and great video explained in simple language. Thanks. I also have a question for you - in your criteria, do you also consider the age of the property. Would you still buy the properties built-in 1950/the 1960s or do you look out for properties post 1980s or something? I would love to know your point of view.
Thanks for the feedback!
I always prefer newer properties if possible because they tend to require less maintenance and capital expenses and avoid asbestos and lead paint issues. BUT ... a lot of my best deals have been older properties that I could remodel. This allowed me to buy them at a sufficient discount to make the numbers work. I would say just pay attention to what's available in your local market. If you can buy single family houses or small multis built in 1980s or later and still make the numbers work, prioritize those! But don't ignore the older if they present even better deals.
@@CoachChadCarson Thanks for your reply. I got some suggestions for your podcast and some other questions. How should I communicate with you
@@amag15amit coachcarson.com/contact is the best place. thank you!
@@CoachChadCarson watched the whole video again...Great Video. Thanks
Do you think it's a bad time to get started? It seems we're in a bubble and most areas are unaffordable.
No, I think it's still a good time to get started. Interest rates are still very low. If you can lock that in and have you house pay for the debt over time (while it goes up in value) you can make a lot of money. 20 years from now you will be saying you wish you bought in 2022 (or hopefully you'll say "I'm GLAD I bought in 2022)
Hello coach, what do you suggest for people living California, the down payments here are impossible.
What is the median price of properties where you live? And what type of financing are you using?
The people I know who get into properties are often doing house hacks and using owner occupant loans with less money down. Either a 2,3, or 4-unit you can move into. Or a single family house that you live in as your home and later keep as a rental.
Coach, if I sold all four at the same time could i use four 1031 exchanges for one new property?
If I understand you right, Stephen, then I think you can. I was not familiar with this but it looks like from some quick research that there are 1031 exchange companies that say it's doable: peakexchange.com/multiple-property-exchanges-basics/#:~:text=IRC%20Section%201031%20allows%20for,one%20or%20more%20replacement%20properties.
Do the areas where you can purchase properties so cheap historically appreciate that much?
Yes. About 3% on average. But the better locations in town are even more.
Awesome info as always coach! I do have some questions. So we have a home and it's worth probably around 340k and we owe somewhere around 180k. We owe on our roof about 6k, solar on our roof, and 2 vehicles. So, we have been wanting to invest in real estate and don't want to waste any more time. What's in your opinion the best move for us?
Do you have cash other than your home equity that you could invest right now? And could you get a HELOC (home equity line of credit) on your house to have some extra funds?
@@CoachChadCarson I do not have extra cash to put down, but I have heard of getting the HELOC.
What you think about 15 year with 20% down.... considering selling my first house 500k. Idea to buy 4 houses with 100k cash each.
I prefer 30-year mortgages. Get the lowest payment possible to increase your cash flow and reduce your risk in a worse case. You can always pay it off faster.
I like the 4-house idea! Good luck.
great stuff!
Thanks Chris!
The only problem is there is no way to find this propertys with this numbers. I would 4 right now
They are out there. Just have to look in different locations. And the market won't always be the same as today.
I wonder if property taxes are included?
Yes, they're included in the $500 operating expenses. But that said, property taxes can vary a LOT from state to state. Texas, for example, has much higher property taxes than other states in large part because they don't have state income tax and have to raise revenue in this way.
Now do it again with today's interest rates!
How about this? czcams.com/video/wcMK-n02MFY/video.html
great great video
thanks for watching, Jimmy!
how do you qulify for more than 1 loan
After a period of time many lenders will use the rent from the property to offset your mortgage payment so that it won't affect your DTI (debt to income ratio). That allows you to buy more.
There are also lenders who only look at the income and debt from that property, and you can have as many loans as you need. These are sometimes called DSCR loans (debt service coverage ratio), and they're typically more expensive (higher interest) but can be a good option. I'm collecting a list of these type lenders here: www.coachcarson.com/investment-property-loans/ . There will be more in the future as I talk to more.
I would love to find a property for $150K in my area. Unfortunately all I can find for that price is land. Will still try to find something that makes sense.
It doesn't have to be a $150,000 price to be a good deal. The lower priced markets tend to cash flow better, but even $500-$600,000 properties can make good investments in some cases with growing rents and prices.
What about taxes and insurance??
It's included in the $500/mo operating expenses.
112500 at 4.2% for 30 years is $550 and does not include taxes and insurance.
@@gaylahuerta2443 in the example rent was $1,300/mo - $500 operating expenses (includes taxes and insurance) - $550 mortgage payment (does not include taxes and insurance). That's $120,000 loan at 3.6% interest for 30 years.
This video is crazy. You forgot taxes go up too every year. And your profit gets taxed.
Which taxes are you talking about? Property taxes can go up, and that was accounted for in the video as one of the expenses take out before the $12,000/yr cash flow or $56k cash flow per year paying off debt.
And income taxes don't always go up. They have gone down in last few years. Depreciation will shelter a lot of this income from tax. But part of the $56,000 could be taxable.
@@CoachChadCarson I mean you went into the future for 30 years but I didn’t see property taxes go up for 30 years. Ohio - pretty constant I think. Texas - plan to get ransacked. But since you show 30 years of rent increasing, I didn’t see 30 years of prop taxes and insurance increasing.
@@HappyPenguin75034 I appreciate the feedback. I didn't explain it very well in the video (will next time) but in the example, I increased the NOI for 30 years - not the rent. That increasing NOI assumed the taxes and insurance also increased.
@@CoachChadCarson thank you for e planning. That’s wonderful - I know it takes time to do it.
You should sell every rental. Are you kidding?
That's not my plan.