Don't Fall in Love with Real Estate

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So you're ready to become a real estate investor, and you're picturing it now: a cute little bungalow nestled into a picturesque neighborhood. You've started brainstorming paint colors, and picking out shrubbery. I'm going to have to stop you right there. This is the WRONG approach. 

It doesn't matter what the house looks like. It doesn't matter what the paint colors are. It doesn't matter what the hardware on the kitchen cabinets looks like. None of that is important. Why? It doesn't bring you closer to financial freedom, period. 

Here's a little secret that only effective real estate investors understand: don't fall in love with real estate, fall in love with ROI. It doesn’t matter what the house looks like. All rental homes are simply four walls and a roof.

Houses in the best rental markets in the US rent, regardless of if they're cute or not! Our goal is to create a safe, solid, and comfortable home for our tenants. We aren't shooting for something that's Pinterest-worthy. 

Real estate investing is a business, and as a business owner, you'll have to look out for your bottom line. ROI is the most important metric. Keep your focus on the numbers, and you'll be well on your way to financial freedom! 

Want to learn more about purchasing high ROI rental properties in the best rental markets? We're ready to help you reach your goals! Click here to book a free call with our team. 

 So you're ready to become a real estate investor, and you're picturing it now: a cute little bungalow nestled into a picturesque neighborhood. You've started brainstorming paint colors, and picking out shrubbery. I'm going to have to stop you right there. This is the WRONG approach. 

How to Evaluate a Real Estate Deal

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The ability to decide whether or not a real estate deal is profitable is crucial to your success as a real estate investor. If your investment breaks even (or worse, loses money) then you're not moving closer to your goal of financial freedom. There are a few different methods you can use to evaluate whether or not a deal makes sense financially. 

One commonly used method is the 1% Rule. The 1% Rule helps investors determine if a rental property will produce cash flow. Basically, when you purchase a piece of real estate, it should cash flow up to 1% of the purchase price every single month. 

To use round numbers, let’s say you purchased a real estate investment for $100k. Following the 1% Rule, that property would need to produce $1000 in rental income every month. This is a simple tactic used to ensure that your expenses will be covered.

Personally, my main focus is cash flow, so 1% isn't as sturdy as I'd like. That's why I use an incredibly conservative ROI formula. ROI is a formula used to evaluate the performance of an investment. ROI is the way you can measure how much profit a property is accumulating. Typically, ROI is calculated by dividing the net profit of investment by the amount of money invested.

But I like to take it one step further. I always subtract 40% of my annual rental income to account for vacancies, repairs, or expenses that could occur throughout the year. You might think that sounds like too large of a portion, but it gives me peace of mind. I don’t have to worry if something goes wrong at my properties. If a furnace goes out, I want to know that the money is there to replace it. Expenses are inevitable, so I like to prepared. 

Regardless of what method you choose to evaluate your real estate deal, make sure your focus remains on the end goal: financial freedom. 

 The ability to decide whether or not a real estate deal is profitable is crucial to your success as a real estate investor. Here's how to evaluate a real estate deal.

The Best Rental Properties Are Not in Your Backyard

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If you’re like most people, you probably think the best way to get into real estate investing is to purchase properties close to home. You might browse Zillow for properties in your city, or drive past local homes for sale. Before you give a local realtor a call, I’ve got news for you: the best real estate properties are NOT in your backyard.

The problem with purchasing properties in your own neighborhood is that the ROI is likely not optimal. Since I reside in New Jersey, you might assume that I run my real estate business out of my home state. However, I would never purchase properties in New Jersey!

The properties here are astronomically expensive. The property taxes are incredibly high, and it takes a lot of time and money to rehab an even remotely affordable home.

Additionally, these properties aren’t worthwhile as the return on investment is low. I can’t build a successful business without a certain ROI. After all, breaking even is not a good investment.

The best markets in the country are located in the Midwest. Sound scary? It’s not. It’s worth it to break outside of your comfort zone and start earning a passive income. This is how skilled investors become wealthy through real estate. 

If you want to start building a passive income, you have to go where you’ll earn the highest return on investment. You’ll have to leave your comfort zone, and look for properties in different markets.

Don’t want to do the work? Our Midwestern turnkey properties are $40-50k, with a minimum ROI of 10-12%! Click here to book a free call; we’d love to match you with a great property!

 You may think the best way to get into real estate investing is to purchase rental properties close to home. Before you give a local realtor a call, I’ve got news for you: the best real estate properties are NOT in your backyard.

Single-Family vs. Multi-Family Investments

How do you decide between single-family and multi-family investments? Most things in real estate come down to a personal preference. For example, some investors love mobile homes, commercial properties, or duplexes. There’s no right or wrong answer, but I typically suggest choosing one niche and sticking with it.

For me, single-family homes are my bread and butter! I do own a few duplexes, but there’s something about single-family homes that works for our business. I don’t have to deal with some of the issues that accompany hosting multiple tenants on the same property. There are bound to be issues when you have many people living in one space. In single-family homes, you don’t have your tenants complaining about each other.    

I also find that my single-family tenants love their rentals; they treat my properties like their own homes. It just feels good to come home to an actual house with a driveway and a yard. Their children have their own bedrooms; their pets can play in the fenced-in yard. They view the property as their home, and I love that. Not only do the tenants take care of the house, but they also tend to stay a long time! It’s not uncommon for me to sign a multi-year lease on a single-family home.

As for multi-family homes, it does appear on paper to have higher ROI than single-family. However, multi-family properties tend to have a higher tenant turnover rate. Like I mentioned, the tenants simply don’t get attached like they would to a single-family home. It’s just not as comfortable and homey!

However, if you’re set on multi-family investments, there are a few ways to mitigate that tenant turnover. Make sure you find a larger duplex with a higher square footage. You want your tenants to stay put, as tenant turnover can be one of your highest expenses. Another thing to consider is qualifying your unit for Section 8 housing. That qualification can convince your tenant to stay longer, just because it can be difficult and time-consuming to find Section 8 housing.

Regardless of what you decide, it’s important that your rental property is a great home for your tenants. For me, real estate investing is not only about ROI, but also providing safe homes for my tenants and revitalizing neighborhoods.

Interested in picking up a totally done for you single family home in America’s best rental markets? Let’s talk! Pick a 30-minute time slot from our schedule, and we’ll talk about how turnkey real estate can help you reach your goals.

 How do you decide between single-family and multi-family investments? Here are some things to consider when investing in real estate.

Why I Love C Class Properties

C neighborhoods are older, and the properties are typically in need of extensive renovations. You might read stories on the internet claiming that C class neighborhoods are dangerous or unprofitable. You might be surprised to learn that I purchase all of my properties in C neighborhoods, especially if you’ve been reading internet forums.

I love purchasing in C neighborhoods. The properties can be acquired for cheaper than B neighborhoods, and the rents are comparable. Therefore, the return on investment is higher. Simply put, it’s a better value. Remember, that’s why we do what we do! It’s all about ROI.

A lot of people worry about the quality of tenant in a C neighborhood, but truthfully, I rarely have issues with my tenants. These are hardworking, blue-collar Americans. They are satisfied with the homes that my team renovates. The neighborhoods are quiet during the day, because the tenants are away at work.

Not to mention, I don’t communicate with my tenants anyway! All of my properties are in the hands of effective property management teams. Should a problem arise, the property management team handles it quickly and professionally.

It might seem counterintuitive, but A neighborhoods are typically the neighborhoods that have problem tenants. Those tenants have higher standards, and are more likely to complain about insignificant details.

It irritates me to hear uninformed investors spew condescending misinformation about C neighborhoods. I’ve had nothing but great experiences with my properties. To me, there’s nothing more exciting than revitalizing neighborhoods! My tenants love their homes; it’s a win-win situation.

Interested in picking up your very own C class property with high ROI? Let’s talk! Pick a 30-minute time slot that works with your schedule, and we’ll match you with a great property!

 Here's why it pays to invest in Class C rental properties. It might seem counterintuitive, but A neighborhoods typically are more likely to have problem tenants. Those tenants have higher standards, and are more likely to complain about insignificant details. On the other hand, I’ve had nothing but great experiences with my Class C properties.

Should You Purchase a Rental Property Near a Sex Offender?

Here’s a topic none of us want to think about: sex offenders. What should you do if you find a great rental property with high ROI, but a registered sex offender lives nearby? This is actually a common occurrence.

In fact, I guarantee if you look up the sex offender registry, you’ll find them close to home. There are a few down the street from my own house. Sex offenders are everywhere, every state, every city, and every neighborhood.

If you’ve found a great investment, don’t talk yourself out of it! If you look for reasons not to move forward, you will find them. There are always drawbacks in every situation, but the benefits of owning rental real estate are incredible.

Sex offenders can be registered for a wide variety of reasons. It’s not always the worst-case scenario you’ve envisioned. Not to mention, sex offenders rarely reoffend, and have strict boundaries and rules they must follow.

A great rental property is a great rental property, period. High ROI will bring you cash flow every single month. Don’t search high and low for reasons not to invest. Take the plunge.

You should expect your property to be rented out consistently, regardless of potential sex offenders in the neighborhood. Your property management team should be able to assure you that a sex offender in the area will not be an issue. 

 What should you do if you find a great rental property with high ROI, but a registered sex offender lives nearby? This is actually a common occurrence.

Should You Purchase Low Cost Rental Properties?

Some people say you can’t make money on low cost properties. They argue that affordable homes are in unsafe neighborhoods, with unstable tenants and high crime. But is this really true?

Absolutely not! Recently, my mentor Robert Shemin if it’s possible to make money purchasing low cost properties. His response? “It’s not possible, it’s probable!” Robert has made millions in real estate by purchasing the exact kinds of properties that I like to buy.

I’ve been able to attain financial freedom for my family by purchasing single-family homes in the $40-50k range. These homes are in America’s most affordable cities, in C neighborhoods where hard-working, blue collar Americans live.

I resent the fact that some people call this area “the ghetto.” My tenants are great, hard-working people. My tenants are nurses, principals, post office workers, and long-haul truckers.

If you were to walk down the streets of one of these neighborhoods, you would understand that it is not dangerous or scary. These are perfectly safe neighborhoods. In fact, here’s a video!

Why do these types of homes in these types of neighborhoods work as an investment? Cash flow! A typical home in the markets where I buy brings in $700 in rent every single month. Additionally, these neighborhoods are largely unaffected by economic downturn. Long-haul truckers and nurses don’t lose their jobs when the economy crashes.

If you spend enough time searching internet forums, you’ll find naysayers. You’ll encounter these people who think it’s unsafe to purchase low cost homes. But why would you listen to someone who has never actually tried it? Follow the action takers, and replicate their success! 

 Some people say you can’t make money on low cost properties. They argue that affordable homes are in unsafe neighborhoods, with unstable tenants and high crime. But is this really true?