EP222: Don't Fall in Love with Real Estate, Fall in Love with ROI

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One of the main pieces of advice I give people is to not fall in love with real estate, and instead focus on return on investment. The reason why I have to constantly repeat this mantra is because it’s really easy to fall into this trap! In fact, it just happened to me this weekend. I almost abandoned my entire real estate philosophy!

On this episode of Investing in Real Estate, I’m sharing my story of almost purchasing a vacation rental in Maine. I’ll discuss how I got an idyllic notion in my head, and how I came back down to reality. This is a tale that all investors need to be reminded of; don’t miss episode 222 of Investing in Real Estate!

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This weekend Natali and I celebrated our anniversary in Maine, and I fell in love with the beautiful homes in the harbor towns. I thought about purchasing a huge, expensive home and renting it out as a vacation rental. I imagined taking my family there on the weekends.

I even asked locals about the area, and got in contact with a realtor. But when Natali and I sat down and crunched the numbers, I realized how foolish I was being. A property like that, even if it was consistently rented throughout the year would only produce around 3% ROI.

At that rate, why even invest in real estate? I might as well be a stock market investor for those kinds of returns. Not to mention, with all the money I would use for just a down payment on a rental in Maine, I could scoop up multiple low cost properties in the Midwest.

At the end of the day, this was a stupid idea! I let the idea of sitting by a fire in Maine writing a novel, watching the lobster boats come into the harbor get the best of me. I was violating my core philosophy because the numbers didn’t make sense!

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.

 On this episode you’ll learn:

  • What kind of ROI should you shoot for on a real estate investment?
  • How can you set your emotions aside from the numbers?
  • What is a typical vacancy rate for a vacation home?
  • How do you calculate ROI?
  • And much more! 

Episode Resources
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel
Like Morris Invest on Facebook

 My story of almost purchasing a vacation rental in Maine. I’ll discuss how I got an idyllic notion in my head, and how I came back down to reality. This is a tale that all investors need to be reminded of...

EP195: Back to Basics: High Return Real Estate

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This episode of Investing in Real Estate is brought to you by SaneBox. SaneBox sorts through your email and moves all of the trivial stuff into a different folder, so the only messages in your inbox are the ones you actually want to see! Visit sanebox.com/investing today and they’ll throw in an extra $25 credit on top of the two-week free trial!

There are two kinds of investors: those who make a high return on investment, and those who make a low return on investment. It’s important that you realize the importance of making a high return, and identify exactly how to make a high return on your rental property.

On this episode of Investing in Real Estate, I’m sharing how you can become a high return investor. You’ll learn the three things you need to put in place in order to earn high ROI, and I’ll share some of the mistakes I, along with other investors have made. Don’t miss episode 195 to learn how to make consistent high return investments!

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I spend a lot of time talking to investors. Most people realize the value of investing in real estate, but they just don’t know where to begin. I’ve heard from so many people who are otherwise successful, but they’ve made a real estate investment that isn’t profitable! If you begin by calling up a realtor and investing in the city you live in, chances are you won’t receive a high return.

If you want to become a high return real estate investor, there’s a foolproof strategy you have to follow. It’s nothing fancy, just a very straightforward number of qualities you need to look for in an investment.

  1. Find wholesale properties. If you purchase a piece of real estate at market value, it will be increasingly hard to make a high return. When you stay below the market value, you’re going to receive high ROI. Buying rental real estate off market is key! 
  2. Find the right location. Purchasing properties in states like California or New York is going to come at a high price tag. Remember, the cutoff point for the rental value keeping up with the purchase price is about $125k. But to get the most bang for your buck, you still want to be below that amount. Don’t overpay for a property.
  3. Collect consistent rent. Whether you use my ROI formula or the 1% Rule, you need to run the numbers and make sure that everything makes sense before you purchase a property.

On today’s show, I’ll share more about what a high return looks like, and why it’s so important on your investing journey. I’ll share specific examples about what happens when you overpay for a property, and much more!

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.

On this episode you’ll learn:

  • What is the average return in the stock market?
  • Why shouldn't you consult a realtor about investment properties?
  • What is my personal ceiling for purchase price of a single-family home?
  • How do you include the renovation costs in your overall ROI calculation?
  • And much more!

Episode Resources
Sanebox
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel

Like Morris Invest on Facebook

 On this episode of Investing in Real Estate, I’m sharing how you can become a high return investor. You’ll learn the three things you need to put in place in order to earn high ROI, and I’ll share some of the mistakes I, along with other investors have made. Don’t miss episode 195 to learn how to make consistent high return investments!

EP186: The 1% Rule for Real Estate Investing

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There are many ways to evaluate a real estate deal, but one common method utilized by investors is the 1% Rule. This rule of thumb helps investors determine if their investment will be safe and profitable.

On today’s show, I’m discussing everything you need to know about the 1% Rule. I’ll give a straightforward definition, and share concrete examples. I’ll discuss my experience with this idea, and how you can use it in your real estate business!

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In real estate investing, 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, I like to go higher than 1%. My main focus in real estate is cash flow. However, 1% works for many investors that I know. It’s important to remember that the 1% rule is simply a jumping off point; it is not the end all, be all!

If you’re analyzing a property, you’ll want to be more thorough than just evaluating the 1% Rule. You’ll also want to take a good look at all the numbers involved, including ROI and cash flow. On today’s show, I’ll share more about the 1% Rule, including accounting for expenses and using 1% as a buffer. Don’t miss episode 186 of Investing in Real Estate!

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.

On this episode you’ll learn:

  • Under what circumstances would it be more appropriate to bump the 1% Rule to 2%?
  • Why are previous residences typically bad investments?
  • What expenses should you account for in your investment property?
  • How can you use the 1% Rule on a basic level?
  • And much more!

Episode Resources
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel

Like Morris Invest on Facebook

 

 There are many ways to evaluate a real estate deal, but one common method utilized by investors is the 1% Rule. This rule of thumb helps investors determine if their investment will be safe and profitable.

EP175: Things Your Realtor Doesn't Know About Investing

Book a call with our team: https://goo.gl/dezwHT

Naturally, many people think that the best way to initiate real estate investing is to connect with a real estate agent. However, more often than not, realtors know very little about things like seller financing and purchasing distressed properties. Don’t get me wrong: I love realtors. I know they work very hard, but they simply are not always well versed in the world of investing.

On this episode of Investing in Real Estate, Natali and I are sitting down to discuss the role of realtors, and why they often know very little about investing. We’ll also elaborate on finding the right realtors to help you in your endeavors, and more. Please join us for episode 175 of Investing in Real Estate!

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This episode is not intended as a slight against realtors. In fact, we know and love many realtors. Natali also has her real estate license. The issue is, the main role of a realtor is to help individuals and families purchase their primary residences.

That’s a whole different ball game than real estate investing! Most realtors simply do not know about investing, including turnkey investing, seller financing, and buying distressed properties. Investing is an entirely different business. 

Unfortunately, most novice investors have no idea about this disconnect. It seems like if you want to purchase a property, the natural place to start is with a realtor. But a realtor most likely is not going to be able to help you find a property under market value; their job is to help their clients get the most for their property!

You can, however, find realtors who can help. It becomes a longer process, and distinct communication is required. On today’s show, we’ll share exactly how to vet and interview realtors, and how you can use them in your business.

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.

On this episode you’ll learn:

  • How can you interview a realtor?
  • Why would a seller decide not to sell on the open market?
  • What is a pocket listing, and how does it work?
  • How many realtors should you have on your team?
  • And much more!

Episode Resources
EP151: What Is Seller Financing?
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel

Like Morris Invest on Facebook

 

 The issue is, the main role of a realtor is to help individuals and families purchase their primary residences. That’s a whole different ball game than real estate investing! Most realtors simply do not know about investing, including turnkey investing, seller financing, and buying distressed properties. Investing is an entirely different business.

EP169: How to Set up Profit First for Real Estate Investing - Interview with Mike Michalowicz (encore episode)

Book a call with our team: https://goo.gl/dezwHT

Finances are an integral part of running any business, and real estate investing is no different. Figuring out how to properly and effectively structure your finances can be confusing, but I’ve discovered a method that has totally changed our business!

On today’s show, my wife Natali and I are sitting down with Mike Michalowicz, the author of Profit First. Profit First is a simple and effective formula aimed to transform your business in order to earn more profit! Mike is a business guru—you don't want to miss episode 169 of Investing in Real Estate! 

More About This Show
Mike came up with the idea for Profit First when he heard a staggering statistic—83% of small businesses that make under $25 million in revenue are non-profitable. This blew Mike away; he couldn’t comprehend why so many intelligent, successful entrepreneurs were living paycheck to paycheck. 

Mike posits that the reason so many small business are not profitable is because the system we’ve been told to use is flawed. Most businesses use the following formula: Sales – Expenses = Profit. Logically, that makes sense. Mike explains that it defies human nature. 

Profit First is based off the principle that when something is put last, we disregard it’s significance. In order to make a profit, you have to take your profit first. Profit First is Sales – Profit = Expenses. The concept is simple—pay yourself first. 

In the current formula, sales and expenses come first, so profit never comes. By taking your profit first, you're prioritizing what's important. It's about thinking of your finances as a business. It's human nature to be drawn to the familiar; we are creatures of habit. But the current system doesn't work!

Profit First is so effective because it's a behavioral system. It works within your natural default behavior! Once you get the system in place, it runs smoothly and effortlessly, and your business becomes more profitable. 

On today's show, Mike goes in depth about Profit First, why it works, and exactly how to put the system into motion. We also talk about changing the way you think of your business, loss aversion, and why relying on willpower doesn't work! 

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family. 

On this episode you’ll learn:

  • How often you should do profit distribution.
  • How many checking accounts should your business have?
  • The importance of rewarding yourself.
  • How can you incorporate Profit First if you have debt?
  • How to use Profit First to maximize tax benefits in your business.
  • And more!

Episode Resources
The Pumpkin Plan by Mike Michalowicz
Tax-Free Wealth by Tom Wheelwright
Find a Profit First Professional in your area
Find Your Financial Freedom Number
Like Morris Invest on Facebook

Connect with Mike Michalowicz
Website
Facebook
Twitter
LinkedIn

 Profit First is a simple and effective formula aimed to transform your business in order to earn more profit - here's how we set it up for real estate investing. | Podcast interview with Mike Michalowicz

EP165: Case Study: Start Up Costs for Buying Your First Rental Property

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This episode of Investing in Real Estate is brought to you by ZipRecruiter. With ZipRecruiter, you can post your job to 100+ job sites with just one click. Visit ZipRecruiter.com/investing to post your jobs for free!

We’ve discussed the regular expenses you should account for as a real estate investor, but what should you expect when you’re just getting started? On today’s show, I’m sharing five start up costs that are associated with real estate investing.

On this episode, I’ll discuss exactly what costs you should expect to incur when you’re starting your real estate business. I’ll talk about setting up your business entity, closing on your investment property, and more! It’s all here on episode 165 of Investing in Real Estate!

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The types of properties that we provide at Morris Invest are single-family homes in the Midwest. These properties are typically in the $40-50k range. For this kind of investment, there are a few costs you should expect when you’re getting started.

  1. Setting up your business entity. Typically, this will be an LLC. There are a few ways to do this, but I typically recommend going right to the source—the department of state website where your property is located. In some states, you may need to use an attorney. To set up an LLC, you should expect to pay anywhere from $100-300.
  2. Insurance on your rental property. This amount can vary, as it depends on your location and coverage. Typically, I pay anywhere from $400-600 per year for rental coverage and liability insurance.
  3. Setting up a business checking account. You’ll need to have a business checking account to collect rent every month. Some banks charge a monthly service fee as well as minimum opening deposit. Local banks may have free accounts, so shop around.
  4. Closing costs. When you purchase your rental property, the title company will charge fees. A good rule of thumb is anywhere from $300-500. This amount accounts for running a title search and recording the deed.
  5. Landlord license. This cost is not applicable in every state, but some states do require a landlord license. If your property is located in a state that requires a landlord license, you can expect to pay $100-150 on a yearly basis.

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family. 

On this episode you’ll learn:

  • Which states are the most expensive for setting up business entities?
  • What information do you need to set up a business checking account?
  • Where can you get your EIN number?
  • How do you acquire a landlord license, if necessary?
  • And much more! 

Episode Resources
ZipRecruiter
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel

Like Morris Invest on Facebook

 Case study: Five start up costs that are associated with real estate investing.

EP162: How to Mitigate Risk in Real Estate Investing

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Any new venture can be intimidating, and that’s often the case with real estate investing. I hear questions constantly from new or prospective investors who are worried about the risks. Sure, there are horror stories about investors who lost it all, but if you play your cards right and put a few safeguards in place, you will be very unlikely to encounter issues.

On this episode of Investing in Real Estate, I’m sharing five things you can do to mitigate risk in real estate. I’ll discuss the importance of surrounding yourself with the right people, investing in the appropriate markets, and more. Don’t miss episode 162!

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  1. In order to mitigate risk in real estate investing, you should know that you can’t do it alone. It’s important to build a strong team that is well versed in the areas that you are not. Without the right team in place, you’re likely to make some mistakes.
  2. It’s also incredibly important to not overspend. Don’t overspend on the purchase of the property. Don’t go overboard with upgrades either. When you pour too much into your properties, you’re decreasing your overall return.
  3. Invest in the right areas. Personally, I like to invest in C class neighborhoods. The tenants are hardworking blue-collar Americans. If your tenants are stable, you’re more likely to have consistent rental income year-round.
  4. Work with an experienced property management team. Find a company that will thoroughly assess the applicants in order to find reliable tenants. Work with a team that is local to your property and knowledgeable about the market. This will ensure great tenants and fewer vacancies.
  5. Purchase your property in landlord friendly states. If you have to go through an eviction, you’ll want to be in states where the legislation is on your side. In states that favor tenants, it can be extremely difficult to remove a tenant who isn’t paying their rent.

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.

On this episode you’ll learn:

  • Why is real estate less risky than investing in the stock market?
  • How can you assemble a team to help you on your investing journey?
  • How should you handle appliances in your rental properties?
  • How does a property management team affect vacancies?
  • And much more!

Episode Resources
How to Renovate a Rental Property to Minimize Repairs
What Are A, B, and C Neighborhoods?
EP108: The Five Most Landlord Friendly States
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel

Like Morris Invest on Facebook

 

 Sure, there are horror stories about real estate investors who lost it all, but if you play your cards right and put a few safeguards in place, you will be very unlikely to encounter issues.