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Multifamily Properties: Why They Are Ideal for Beginner Investors · Earn Your Leisure

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• 1:51
  Speaker 1: Real question, if you're a beginning investor you want to
• 1:54
  Speaker 1: invest in real estate, what's your framework for what to
• 1:57
  Speaker 1: look for in a property or multi family to invest
• 2:00
  Speaker 1: in a lot of this stuff is regional, so the
• 2:06
  Speaker 1: advice would be regional if you are serious, Like if
• 2:12
  Speaker 1: you are a real serious want to be real estate investor,
• 2:16
  Speaker 1: it's a few things that you have to You have
• 2:20
  Speaker 1: to first be in a mindset to be an investor,
• 2:24
  Speaker 1: So stay away from the cars. Like I see a
• 2:29
  Speaker 1: lot of people, we hear all the stuff about yo.
• 2:31
  Speaker 1: I had a seven eighty credit score and I made
• 2:34
  Speaker 1: one hundred and fifty thousand dollars and I couldn't secure
• 2:36
  Speaker 1: a mortgage. Yo, it's racism. And it's like, nah, it's
• 2:40
  Speaker 1: not racism. You spend too much money. You might make
• 2:43
  Speaker 1: two fifty, you might make three hundred, but your bills
• 2:46
  Speaker 1: are up here, you know what I'm saying. Like you
• 2:49
  Speaker 1: got two benzes, you got a g wagon, your wife
• 2:52
  Speaker 1: got a car, like all of those things when you
• 2:54
  Speaker 1: want to be a real investor. In my opinion, real
• 2:58
  Speaker 1: estate investing is not hard. The concepts are simple. You
• 3:03
  Speaker 1: know what a hard part is most of us are
• 3:05
  Speaker 1: not disciplined. When you really want to start saving money,
• 3:11
  Speaker 1: most of us can't. We can't stop going on vacation,
• 3:14
  Speaker 1: we can't stop buying frivolous things, we can't stop buying
• 3:17
  Speaker 1: depreciating assets, and so that it's a counterpro counterproductive thing
• 3:22
  Speaker 1: when you really want to be an investor, like we'll
• 3:25
  Speaker 1: go buy a car six months before you're trying to
• 3:27
  Speaker 1: buy a house. It doesn't make sense. It messes up
• 3:30
  Speaker 1: your ratios. It's just a bunch of things. But as
• 3:33
  Speaker 1: I was saying, it's regional. Real estate is regional. So
• 3:36
  Speaker 1: if I was a beginning real estate investor. If I
• 3:38
  Speaker 1: could advise somebody, I live in New Jersey. We all
• 3:41
  Speaker 1: are well shoddy and Troit, we're all from the trial state.
• 3:47
  Speaker 1: I would advise anybody to start in the multifamilies. The
• 3:50
  Speaker 1: multifamilies are great with leveraging expenses. So if you have
• 3:58
  Speaker 1: a four family, let's just hypothetic, give an example. You
• 4:01
  Speaker 1: can buy four family four million dollars, you get three rents.
• 4:08
  Speaker 1: You get what I'm saying. So, and what the mortgage
• 4:10
  Speaker 1: companies will do is they'll take those three rents that
• 4:13
  Speaker 1: you are gonna acquire once you purchase the property, they
• 4:16
  Speaker 1: add that to whatever your current salary is and they
• 4:19
  Speaker 1: combine them, and that is what they get to qualify you.
• 4:23
  Speaker 1: So if you have a million dollar property and you're
• 4:26
  Speaker 1: getting four thousand dollars a month, right, that's twelve grand,
• 4:31
  Speaker 1: they take eighty percent of that, They add that to
• 4:32
  Speaker 1: your salary and they use that to qualify you. But
• 4:35
  Speaker 1: in many instances, when you pick up that piece of property,
• 4:38
  Speaker 1: you can live in that fourth unit rent free. You
• 4:42
  Speaker 1: know what I'm saying, Like the contingent plum with the
• 4:43
  Speaker 1: rents already in real estate investor, you make I don't know,
• 4:49
  Speaker 1: eighty ninety grand, one hundred grand, Go find a multifamily.
• 4:52
  Speaker 1: What happens is our egos start to get into play.
• 4:55
  Speaker 1: Like I've had people say I don't want to live
• 4:57
  Speaker 1: with anybody, and it's like, you live with people. Now
• 5:01
  Speaker 1: you live in an apartment. Now it's somebody right next
• 5:04
  Speaker 1: door to you, it's somebody above you, it's somebody below you.
• 5:06
  Speaker 1: So you're already living in somebody else's property. Now, why
• 5:10
  Speaker 1: not living your own? Why not reap the tax benefits
• 5:13
  Speaker 1: from the depreciation in the rental real estate stuff that
• 5:16
  Speaker 1: you're going to acquire that you don't get. Now, Uncle
• 5:18
  Speaker 1: Sam is kicking your ass. You're an RN, You're doing
• 5:20
  Speaker 1: mad overtime. Uncle Sam is taking all your money. A
• 5:25
  Speaker 1: lot of that stuff is mental when it comes to
• 5:28
  Speaker 1: investing in real estate. You got to change your mindset
• 5:30
  Speaker 1: and say, hey, this is what I want to do.
• 5:32
  Speaker 1: I want to be an investor. I'm gonna get a
• 5:34
  Speaker 1: four family, I'll live in it for a year. I'll
• 5:36
  Speaker 1: take advantage of my FAHA benefits where I only got
• 5:39
  Speaker 1: to put three and a half percent down as opposed
• 5:42
  Speaker 1: to the twenty, and then next year I could use
• 5:45
  Speaker 1: my faha again and go maybe get a single family
• 5:49
  Speaker 1: or get a duplex. You know what I'm saying, Like,
• 5:51
  Speaker 1: there are things that you could take advantage of that
• 5:54
  Speaker 1: are just offered out here that most people don't know.
• 5:57
  Speaker 1: You got to learn to educate yourself too, But ask people.
• 5:59
  Speaker 1: I think that you know, especially with what you guys
• 6:02
  Speaker 1: are doing, what some of the other people are doing
• 6:05
  Speaker 1: in the space. Knowledge that I didn't have twenty years
• 6:08
  Speaker 1: ago is everywhere. Like when I started twenty years ago, Dog,
• 6:12
  Speaker 1: I was reading everything on Google, you know what I'm saying.
• 6:16
  Speaker 1: I was getting all my information from Google. And that's
• 6:19
  Speaker 1: how I started jumping off the bledge with no parachute,
• 6:22
  Speaker 1: just you know, learning on your way down.
• 6:25
  Speaker 3: So I've always heard that, you know, contractors use money
• 6:29
  Speaker 3: from new jobs to pay for old jobs, right, and
• 6:34
  Speaker 3: so I'm interested to hear from a contract that his
• 6:38
  Speaker 3: perspective on that, and then also what is recommended the
• 6:42
  Speaker 3: positive amounts that you should give to a car. I've
• 6:45
  Speaker 3: also been educated that you should never give a contract
• 6:48
  Speaker 3: a full amount. You're paying stages or is it like
• 6:51
  Speaker 3: you pay ten percent, you pay when it's completed. How
• 6:54
  Speaker 3: do you go about actually.
• 6:56
  Speaker 1: You know, doing that? It depends on the scale of
• 6:59
  Speaker 1: the job, right, or the scale I mean the scope
• 7:03
  Speaker 1: of the project. So New Jersey state laws, a contractor
• 7:08
  Speaker 1: cannot demand more than third by law. Now, if we
• 7:13
  Speaker 1: agree to hey, I need fifty percent down, and it's
• 7:16
  Speaker 1: okay with you, then that's fine. Like the terms are
• 7:18
  Speaker 1: the terms. Whatever we agree upon contractually are the terms.
• 7:22
  Speaker 1: But I recommend never giving anybody all of the money.
• 7:28
  Speaker 1: You need to have leverage. So if I'm going to
• 7:31
  Speaker 1: build a house for Shati and he gives me eighty
• 7:33
  Speaker 1: percent of the money, what leverage do you now have?
• 7:38
  Speaker 1: You get what I'm saying, Like I got eighty percent
• 7:40
  Speaker 1: of the bread, I could run off sue me. I
• 7:43
  Speaker 1: could pull a Donald Trump sue me. Okay, what I'm
• 7:51
  Speaker 1: saying you literally have no leverage. Once you give somebody
• 7:55
  Speaker 1: the lion's share of the money, what ensures that you're
• 7:59
  Speaker 1: going to get the work done.
• 8:01
  Speaker 3: But we have what we have a week with the
• 8:03
  Speaker 3: thing that we're doing is construction loan, and they have
• 8:05
  Speaker 3: a draw sheet, so it's like, Okay, the flooring is
• 8:10
  Speaker 3: twenty thousand, and then the inspector comes. They have to
• 8:13
  Speaker 3: make sure the flowing was done correctly. Then they get paid,
• 8:15
  Speaker 3: and then you know, the sink is ten thousand, they
• 8:18
  Speaker 3: have to make sure they sink. So it's like eighteen
• 8:20
  Speaker 3: different things that have to be put in place.
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  Speaker 1: Completion.
• 8:23
  Speaker 3: Yeah, so I mean that's done because the bank. But
• 8:26
  Speaker 3: that's probably good. Even if you're not using bank money,
• 8:29
  Speaker 3: you can still probably use that same thing, right, like
• 8:31
  Speaker 3: a schedule of things that have to be done, and
• 8:34
  Speaker 3: then as each one gets done, then you get paid.
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  Speaker 3: The problem is that a lot of contractors want to
• 8:40
  Speaker 3: get paid before they do the work, not after the
• 8:44
  Speaker 3: work is completed.
• 8:45
  Speaker 1: So again, let's say hypothetically, I'll come out and I'll
• 8:50
  Speaker 1: do your project. Right, it's electrical, it's plumbing, it's framing,
• 8:55
  Speaker 1: its roofing, it's sidings, it's many different moving parts all
• 8:59
  Speaker 1: at one time. So I might ask let's say the
• 9:02
  Speaker 1: project is three hundred grand, just for round numbers, I
• 9:06
  Speaker 1: might ask you for especially if I'm responsible for buying material.
• 9:10
  Speaker 1: That's the thing too. You'll be responsible for buying material.
• 9:13
  Speaker 1: Then the contractor has to also maintain a certain level
• 9:17
  Speaker 1: of leveraging protection for himself. I'm not gonna just go
• 9:21
  Speaker 1: out and buy twenty thousand dollars worth of material start
• 9:25
  Speaker 1: this work. Out of my pocket, because there's just as
• 9:28
  Speaker 1: many contractors are still money, there's as many homeowners that's
• 9:31
  Speaker 1: still money. You get what I'm saying, Like, people owe
• 9:34
  Speaker 1: me money to this day that I doubt I'll ever get.
• 9:38
  Speaker 1: So it just has to be a rapport. If I'm
• 9:40
  Speaker 1: doing a job for you in this three hundred grand,
• 9:42
  Speaker 1: I'm not gonna ask you for three hundred grand. I
• 9:44
  Speaker 1: just think that's asinine. But I might ask you for sixty, right,
• 9:48
  Speaker 1: I might ask you for seventy grand, And then you'll
• 9:51
  Speaker 1: see me working. You'll see me working. And then also,
• 9:54
  Speaker 1: if you're building a house, or if you own a
• 9:56
  Speaker 1: house and you're renovating a house, start familiarizing yourself with
• 10:00
  Speaker 1: some of the terms, start familiarizing yourself with some of
• 10:03
  Speaker 1: the materials. Designing the house is fun, it's dope. So
• 10:08
  Speaker 1: you and your wife might stay at home depot picking
• 10:10
  Speaker 1: out this, picking out that, picking out this. You start
• 10:13
  Speaker 1: to see, Okay, this tile right here is three dollars
• 10:15
  Speaker 1: a square it's seventeen dollars a square foot. You get
• 10:22
  Speaker 1: what I'm saying. So a lot of times homeowners might
• 10:24
  Speaker 1: want the best stuff that's not in your budget, that's
• 10:29
  Speaker 1: not in your budget. So, and like when I write
• 10:33
  Speaker 1: out of contract, my contracts is are fives is six
• 10:35
  Speaker 1: pages long. A lot of contractors I see might be
• 10:38
  Speaker 1: for three hundred grand, it'll say floring twenty seven thousand dollars.
• 10:43
  Speaker 1: You haven't described what type of flooring is? Three quarter hardwood?
• 10:47
  Speaker 1: Is it? Luxury? Vinyl? Toiel is it? You get what
• 10:50
  Speaker 1: I'm saying. So all of those things are needed in
• 10:53
  Speaker 1: a contract, like because somebody can say flooring, you signed here,
• 10:58
  Speaker 1: flooring twenty seven grand. They didn't specify what type of florin.
• 11:03
  Speaker 1: They didn't say this, They didn't save that. You know
• 11:05
  Speaker 1: what I'm saying. So I put a cap on a
• 11:07
  Speaker 1: tile amounts, I put a cat on certain stuff. Anything
• 11:11
  Speaker 1: that is over seven dollars a square foot you got
• 11:14
  Speaker 1: to pay out of pocket. I'm not gonna buy twenty
• 11:17
  Speaker 1: dollars a square foot tile for you, and then I
• 11:19
  Speaker 1: don't make any money off your bats. That's not gonna happen.
• 11:22
  Speaker 1: You get what I'm saying. So the particulars need to
• 11:24
  Speaker 1: be kind of ironed out. And if you're new to this,
• 11:26
  Speaker 1: you may not have much experience in ironing out the particulars,
• 11:30
  Speaker 1: but you gotta start reading. You gotta start asking questions.
• 11:33
  Speaker 1: A lot of this stuff is scary, so I think
• 11:35
  Speaker 1: educating yourself is paramount because you may not know what
• 11:38
  Speaker 1: you're doing. But get as much education from Google, get
• 11:41
  Speaker 1: as much education now from these websites as possible. It'll
• 11:44
  Speaker 1: walk you through some of the unanswered questions.
• 11:47
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