7 Stock Market Investing Mistakes


investing in the stock market is really
not as complicated as it looks but I feel like a lot of the beginners out
there are making the exact same mistakes and these are mistakes that I’ve made
too when I was a beginner so I just want to clarify all of these mistakes so that
we can do a better job as beginners so in this video I’m going over the 7
biggest investing mistakes that beginners make in the stock market so
that you guys can avoid them and start off doing something a lot better now if
you just found this channel I’m Jason with honest finance and I make a lot of
videos on different topics that will give your life and your finances more
value so definitely subscribe if you’re into that type of content but for now
let’s just start talking about the beginner mistakes in the stock market
and before I get into everything I just want you guys to know that I am NOT a
professional trader by any means so just take this advice for entertainment
purposes only however it is my opinion and I do think it’ll help you if you’re
a beginner in the stock market okay so the first mistake that I see a lot of
beginner investors making is just the fact that they have got a lot of high
interest debt in their personal lives and then they’re investing on the side
and that is not something you want to do you do not want to have high interest
debt while you’re actually investing in the stock market I really have no
problem whatsoever if you want to invest like 200 bucks into the stock market
even if you have high interest at at home but the point is is that I don’t
want you investing more than that because if you’ve got a credit card that
has 18% interest you need to pay that sucker off before you start investing
any more money in the stock market and the reason this is a big mistake is
because if you look at the history of the S&P 500
it’s only averaged about 10 percent through all the years and then if your
credit card is 18 percent then that means that you’re just going to be
losing 8% more than what you can actually accomplish on the stock market
as an average so definitely don’t do that get your credit card paid off first
and then start investing your money in the stock market and also I know that
this contradicts itself but if you work for a company that offers a 401k match
then I would definitely take full advantage of it
because that is a 100 percent return on your money even if you have high
interest debt at home your retirement is so important for your future so please
make sure that you take care of your debts responsibly and if you do have a
401k match take full advantage of it because it is definitely worth doing so
so just remember to take care of all of your high interest debt first before you
start investing a lot of your money into the stock market that way the numbers
add up and you’re actually going to end up making money now the next big mistake
that I see a lot of beginner investors making is just the fact that they base
their moves on speculation news and then different forums and things that they
read on the internet and they base everything off a motion rather than
long-term strategy which is something that they’re just not doing you
definitely don’t want to be making a bunch of different moves emotionally
because of what someone else told you because if you have a strategy in place
you just need to stick with that stick with your gut and you’re gonna be a lot
better off and then a quick tip that I want to add is that you should always be
keeping long-term goals because you’re never gonna get that emotional if you’re
looking 5 to 10 years out versus what you’re seeing today tomorrow or next
week because those are all gonna be going up and down all the time
and if it’s 5 to 10 years out it’s just not that big of a deal when things
fluctuate quite a bit there’s also huge tax benefits for keeping your shares for
longer than a year because you’re gonna be taxed on what’s called long-term
capital gains so just keep that in mind I’m not gonna elaborate very much but if
you keep your shares longer than a year there are tax benefits for doing so
now the next mistake that I see a lot of us making is that a lot of the big
brokerages out there actually charge trading fees so if you’re gonna buy
shares or sell shares you have to pay a trading fee which is just a total waste
of money nowadays because there are a lot of brokerages that do not charge
trading fees I mean the free brokerages probably won’t have 24/7 call centers if
you ever run into an issue so as long as you’re ok with email and waiting a
couple days to get something solved then definitely go ahead and just stick with
the free brokerages because those free trades are definitely worth it all of
the free brokerages have their pros and cons but right now I definitely prefer
using weeble because they have the best signup bonus because if you sign up with
them you can get one free share just for signing up and that’s gonna be worth up
to 250 bucks and then if you deposit just a hundred bucks then you can get
another share that’s worth up to a thousand dollars so if you do that you
can actually get two free shares with them and that’s the best signup bonus
that I’ve seen for all of the 3 brokerage accounts now if you are
interested in signing up for Weibo I’ve got an affiliate link in the description
below which means I may be compensated if you
click through it but just keep in mind that this is definitely the best signup
bonus that I’ve found for all of the different three brokerages and I have
been using them for quite a while now and I really do like them and they have
a lot of robust features that the other apps don’t have and then also if you’re
the type of investor that wants to use a financial advisor that is totally fine
with me but just pay attention to the expense ratio because a lot of financial
advisors out there charge between about one and two percent which is a lot of
money if you have a lot of money in the stock market so just pay attention to
the expense ratio keep that as low as you possibly can and you’re gonna be a
lot better off with your financial advisor so just remember that there’s a
lot of brokerages out there that don’t charge any trading fees and then if you
are gonna use a financial advisor just make sure that the expense ratio is
super low now the next mistake that I see a lot of beginners making is that
they are not diversified which means that they just go big on just a few
different companies and then if anything goes wrong it seems like everything goes
wrong because they only have a few in their portfolio honestly it’s not that
bad of a strategy to just have a few companies that you’re invested with but
the problem is is when you’re a beginner you’re gonna be too emotional and so if
those stocks go up and down too much you’re just gonna make some moves that
you really don’t want to be making I’d recommend investing in ETF indexes like
the S&P 500 because that way you’re gonna have 500 different companies that
you can be looking after and if something goes wrong it’s probably not
gonna affect you that much and then once you have some ETFs then you can go ahead
and buy into some individual companies if you want to but at that point then
you’re gonna be diversified and if you guys have made it this far into the
video can you please comment down below and just say I got it that way I
actually know if I’m making sense about what I’m talking about
thank you very much now the next mistake I want to talk about is very simple and
that’s just the fact that you shouldn’t be investing in companies that you don’t
understand this is really important because I feel like the more you know
about a company the less likely you are to get super emotional if their shares
go up or down in the market and then that way you can actually stick to your
long term goals and it’s gonna be better for you in the long run and even if you
don’t understand a company very well it’s still a good idea to at least know
who they are because then you at least have a start of something that you
understand just a little bit I mean think of it like this without looking at
any data you could say that you know who Disney is and you could probably assume
that they’re a healthy company that’s only growing and so therefore just
because you know who they are that’s a much better start for something because
you at least know what they are what they’re about and probably where they’re
headed so just the fact that you already know who Disney is is a really good
start because you don’t want to just invest in some random gold mining
company out of Kansas just because it seems like a good investment
now the next mistake that I see a lot of beginners make is that they buy shares
of companies just because they feel cheap because they don’t cost very much
money but that doesn’t mean anything as far as whether it’s a good value or it’s
not a good value so for instance if you were looking into a company and their
shares were only $8 a piece that might sound like a good value because it’s
something that you can afford but the problem is is that there’s a lot of
different factors that go into the share price and it might actually be a
complete ripoff and you just don’t know it at that point because think of it
like this if you were gonna go buy a 20 ounce soda you generally know that those
cost about two to three dollars so if you went to Walmart and one of their
sodas was actually eight dollars you would instantly know that that was a
ripoff because you already knew that they’re supposed to be about two to
three dollars whenever you buy them so therefore in the stock market if you’re
buying an $8 share you need to understand what its true value is
supposed to be so that you can tell if it’s a ripoff or if it’s a good value
because the problem here is that all of us can afford an $8 soda but that
doesn’t mean that it’s actually a good value so just keep that in mind whenever
you’re shopping on the stock market so that you don’t buy something that’s
overvalued you actually want to buy it when it’s cheap and low and honestly the
easiest way that you can do this on different shares is just to check the
price history over like the last five to ten years and then that way you can see
if it’s high or if it’s low and that can give you a very basic idea of whether
you’re paying too much for the share or not and keep in mind that there’s a lot
of other factors that play into whether or not a share is a good value or not so
just keep in mind that there is a lot to do when it comes to researching a
company working on a very shallow point of view you can either check the p/e
ratio or their history like I just talked about so just keep in mind that
you want to buy low and sell high and that’s always something you can
definitely keep in mind and then the last mistake that I want to talk about
is the fact that a lot of investors will actually borrow money to invest in the
stock market with money the they don’t have so if you’re borrowing
money from your family or your friends to invest in the stock market that’s not
a good idea but I’m specifically talking about margin trading which is something
that you can do with brokerages where you can borrow money from them and then
you can pay them back at an interest rate to invest back into the stock
market there’s a lot of investors out there that use margin to their advantage
but the problem is is that if you’re a beginner you’re probably gonna be making
too many mistakes in the beginning and that is not something that you want to
be taking any risk for especially when you don’t have the money to lose and
then when it comes to your own budget I definitely want you only investing money
that you can afford to lose so when it comes to your family and things like
that make sure that you take care of your responsibilities first and then
invest after all of those are taken care of so just please understand that there
is risk when it comes to investing but I can promise you if you do it responsibly
and you stay away from a lot of these different types of mistakes you’re gonna
be better off in the long run and that’s the whole point of investing is that it
is long-term and that’s what you’re looking for you’re looking into the
future well hopefully you guys learn something from this video because once
again I’m Jason with honest finance and I make a lot of videos on different
topics that will give your life and your finances more value so definitely
subscribe if you guys are into that type of content but for now I’ll just leave
some more investing videos that you guys can watch or you can just move on with
your lives do whatever you want but thanks for watching

Dividend Investing Mistakes (Don't Fall For These Traps) 🛑



dividend investing can be quite a lucrative strategy over the long term providing you both capital appreciation and dividend income however when it comes to investing in these dividend stocks there are some very common mistakes I see especially with beginner investors but even with more advanced investors and I want to address those things today in this video hi guys this is a knowledge pact video so smash that like button sit back relax and let me know in the comment section down below if you have made any of these following mistakes I'm about to cover so the first dividend mistake that I've seen out there is that the starting yield is too low let me explain so like I said this is the most common mistake and it happens to the best of us out there when you're a brand intuitive investor you're looking through all these stars trying to pick one to invest in the first and probably the most important thing you're gonna be looking at is the starting yield on these stocks most investors from my experience wanna see a starting yield of around 3 percent or above to even consider investing in that stock for whatever reason that seems to be the sweet spot so that's we're gonna go with today what of ultimate is that if you find a stock and say the 1% ranging the high 1% typically investors will overlook that because the starting yield is just not good enough and this right here is a huge mistake because the starting yield is nowhere near as important as the compounded annual growth rate or CAGR for short the ceg are pretty much tells you how fast the company is growing their dividend year-over-year and this is extremely critical if you're planning to buy dividend stocks especially for the long term so now what I thought was we'll go through a real-world example here look at two real stocks that are creating right now in the stock market and we're going to compare them I'm gonna try to figure out which one is the better dividend stock so two companies that I'm gonna compare our Leggett and Platt on the left-hand side here and loads on the right hand side here Legum plot is currently at a starting yield of 4.1% with a CAGR of 4.1 4% lows on the other hand and starting yield of 1.8% and a cagr of 18 point 3 6 % clearly you can see that lowe's offers less than half the starting yield of like an implied so right away the first mistake a new dividend investor will make when looking at information is disregard low as a possible investment I mean who wants to have a dividend stock that pays less than two percent yield right well stick around because I'm going to show you right now exactly why you will want to invest in Lowe's in this situation versus Leggett and Platt keeping my from this information that Lowe's actually has a CAGR that is four times that of Leggett and Platt maybe they will grow their dividend much quicker on average so the best way to illustrate this is to compare a theoretical $10,000 investment and how it performs now after the first year no brainer here Leggett and Platt returns 415 dollars in dividends whereas Lowe's returns only 179 dollars in dividends so as you can see legged returns more than double the amount of dividends here then Lowe's now this is clearly a pretty drastic difference here when it comes to dividend yields but after only one year the chdr benefit hasn't kicked in yet so let's move on to the next metric here after three years like it yields you around for $68 vs. Lowe's $295 and now all of a sudden you can see has a gap is starting to close down like it isn't yielding double the returns anymore when compared to Lowe's after five years this gap has closed down even more with Leggett yielding 508 dollars and lower yielding four hundred thirteen dollars so we're getting very close to equal pay out here after just five years now after seven years this is where the magic of chg are in Leggett is now yielding us five hundred fifty one dollars and Louis is yielding us five hundred and seventy nine dollars so in this situation after seven years Lowe's is now yielding us more dividend income and from this point on it's pretty much low that's a clear winner here as you can imagine the growth plate just keeps snowballing and compounding ten years the difference is now about $340 in favor of Lowe's after 15 years it's a massive difference with Leggett at a measly seven hundred sixty two dollars and lows at two thousand two hundred and thirty two dollars and then if you hold this for even longer 20 years you see Lowe's yields you over five thousand dollars a year and 30 years it yields you almost 28,000 dollars in dividends every single year now of course this information is hypothetical I did use real-world examples of the prices the yield and the growth rate but when you're looking at a stock over 30 years to such a high dividend growth compounded rate is pretty unlikely that doesn't mean it is impossible for those to continue growing at 18 percent clip your over your for the next 20 years but what I'm saying is that it is unlikely it's always set my expectations with that in mind but what I didn't want to drill through in this video with this comparison here is that it's very important to consider the component annual growth rate the CH er when it comes to dividend investing after looking at information it's very clear the CAGR is more important than the starting yield however there is an exception if you do plan to hold a stock only for the short term say only for one or two years then clearly Leggett and Platt for this example would have been the better choice because they're not really taking advantage of that long-term compounding effect and that's completely fine because everyone has different incentives different strategies different goals and if this meets your goal if you want to hold me hold the stock for a couple of years clearly you want to look more at the starting yield as opposed to the growth rate but when it comes to dividend growth investing anyone invest over the long term it's clear here that the cagr is more important than restarting yield now moving on the second dividend investing mistake that I want to cover here is that investors look for high yields when it comes to dividends more specifically I see more often than not people looking for starting yields that are well over ten percent and the only investment stocks that pay out over at ten percent yield and as we saw in the previous example here is this kind of related to that but you can see that over the long term you can have your yield on cost to be over ten percent from your initial investment but to find a stock a proper blue chip company that's stable secure and growing the dividend year-over-year how we starting yield of over 10 percent to begin with is extremely rare and if it does happen there are some things to watch out for so REITs are actually a very common investing vehicle here where people go in and purchase these reads because they payout by law ninety percent of their income which typically means that these reads payout over a ten percent yield however during tough economic times these reads most likely will slash their dividend and as a result will most likely have a negative effect on your investment and what's worse is that these type of companies are also more likely to go bankrupt any recession if times get really tough so it's also something to consider because you could potentially lose your principal investment as well our pros are consider reads pretty high risk investments and I personally would not allocate a very large portion of my portfolio to them now that doesn't mean that you shouldn't invest in REITs at all I'm not a financial adviser I'm not telling you what you should and shouldn't do but it does make sense sometimes to diversify yourself a bit if you don't have any exposure to real estate now if you are investing in high dividend stocks that are not REITs you should definitely familiarize yourself with something called a payout ratio and all this does really is it tells you how much a company is paying out in dividends compared to their earnings ideally you want this number to be as low as possible because that does signify the dividend is a lot more sustainable and the dividend is safe from getting cut anytime soon if this number is high for me anything above 70% will be considered high then I would be cautious that this company could scale back their dividend or not grow their dividend in the near future until a payout ratio is closer to maybe a 60 or 50 percent you can typically find this payout ratio figure on most website that give you information on stocks for example here you can see seeking alpha if you look at the top there you can go to the dividends tab and you can see that the payout ratio is pretty much right here in the middle and it tells you exactly what percentage of companies paying out any dividends so regardless of your investment whether it's a high yield or a low yield this is always something to consider and always something to make note of so you don't fall into this mistake now the third mistake I want to talk about is something that I believe anyone can fall crop to and it doesn't matter if you're a seasoned investor or a brand new investor someone who's been in the markets for years it really comes down to valuations more specifically the mistake I see is that people ignore company fundamentals now although this mistake isn't quite as bad as the first two especially over the longer term it is still a mistake that I see happen and it will still impact your gains remember when you're buying a stock any stock a dividend stock non dividend stock doesn't matter you're buying into a company that sells something with about the service or a product to generate income and profits and we look compañía see if it's a good investment you want to look at something called a p/e ratio of price to earnings ratio and this figure will pretty much give you an idea of if this company is undervalued fairly valued or overvalued and like I said this goes for any investment and any stuff out there now at any given point in time in the stock market whether we're at stock market lows or stock market highs there are certain sectors and stocks that are typically on sale and that provide excellent value because when you look at the valuations take the time – and research the company you'll see that the company is fairly undervalued for example right now and I've created this video to companies that are undervalued in my opinion will be one from the industrial sector of 3m and one from the syn stock sector Altria I personally think if the market is under valuing these companies right now and when you combine it with the dividend history that these companies have with a different growth dividend payout sustainability and all the other metrics that I consider when looking at an investment these look like a very strong companies to hold over the long term to take advantage is not only up their dividend growth but also with capital appreciation but the mistake I see is that there's a lot of investors out there that just blindly buy companies just because of the name of the company because it's a popular stock right now and they don't really consider or care about the valuation of this company a good example would be Microsoft right now you can see if I looking at their metrics they look pretty good payout ratio is fairly low five-year compound annual growth rate is high and they've been growing dividend for 16 consecutive years all three things that he'll actually make me very interested in investing in this stock when you look closer in my opinion Microsoft is incredibly overvalued currently their PE and for PE are both above 830 where the sector average is closer to 20 so you're paying a pretty high premium here for this company so when I consider Microsoft a great dividend growth stock yes I would would I consider Microsoft stock on sale currently absolutely not and what I personally by Microsoft adds these current prices I don't think so just because it's a good business just because it has good growth ahead of it and just because growing their dividend does not necessarily mean I'm gonna go buy this company blindly I still have other metrics that I look at like I discussed in this video and right now I believe Microsoft is potentially overvalued now this is something that comes with time and research a lot of time and research and it's my personal way of investing in stocks not everyone is gonna agree with this but that's completely fine because there's many investing strategies out there and you should stick to one that works for you like I said there are other great dividend growth stocks out there that are on sale right now in my opinion like 3m and Altria so those are stocks that I would prefer to put my money into right now as opposed to stocks like Microsoft just remember that the market is inefficient there are always deals out there and it's up to you to find those deals and not just blindly invest into the market because more often than not those massive stacks of wealth that you're after is typically done with a lot of work and a lot of research behind it I personally would not blindly invest in a dividend stock or any stock for that matter without first looking at their fundamentals okay this is actually one of my favorite videos to make because it gave me a chance to inform you better on dividend stocks and mistakes that I personally have gone through with dividend investing and that I see a lot of you going through dividend investing as well if you appreciate this content all you have to do is hit that like button and hit that subscribe button down below if you're brand new to the channel and also guys remember if you want to know what tools I use for example for stop researching kind of find out where company is valuations analyst all that kind of stuff my go-to choice is tip ranks that's temperance calm I have a link description below with a promo code if you want to sign up for it 20% off using positive 2019 sign up for that you have a 30 day money back guarantee if you don't like the service but in my opinion it's actually one of the better services out there when it comes to stock research so guys let me know a dividend investing mistakes you've made over the years comment it down below and I'll make sure to reply to every single comment down there thank you so much for watching don't forget your best positive ELC attacks

How to TRIPLE MONEY with The Wealth Effect – Real Estate Investing Made Simple



if you're going to gamble you better do it on a sure thing whether you're looking for the diamonds executive VIP or premiere experience hotel accommodations are limited so you better place your bets fast and get ready for what is truly going to be an extraordinary experience the 10x growth conference 2020 in Las Vegas reserve your seat spot welcome grant cardone here real estate investing made simple and I'm here today to share with you the simplicity of real estate and how you can actually create income passive income and create wealth today we're talking about the wealth effect the wealth effect not just making a little bit of money but how can you actually generate enormous and immense wealth ok protect yourself against dumb things not blow your money on stuff that will go down in value and how do you take advantage of what the wealthiest people on this planet from Jeff Bezos to jay-z to dr. Dre what do they know that have taken them in the case of jay-z from being a rapper selling out concerts and music even throwing around a little dust in the beginning selling that okay why is jay-z a billionaire today if he is a billionaire why is he is it because he sold out concerts no is it because he sold CDs no it's because of the wealth effect all right so today what I want to do is I want to show you how to compound wealth and how to use how to use real estate to do that unfortunately most of us that are watching this or not let me just fix this or not rappers and we're not dr. Dre debt invested in beats by the way dr. Dre did not make his money his wealth was not great his wealth effect was not because of his own art but the fact that he took on other artists and created a compound effect now today the compound effect was very very very popular back in the 70s and 80s when the Inc was paying 8 to 10 percent you would compound money there was a 72 factor and whereby if you could compound money if you earn 10% on your money money was compounding every 7 years it was doubling you don't have that today so you guys have to figure out a way how do I get how do I get one dollar without being a rapper to be three dollars or let me give you a better example let's say you have a million dollars right now in cash okay I know that every million dollars that I have in cash I can immediately turn into three million dollars wouldn't that be a nice little trick you got to know what a dollars worth ten thousands worth a hundred thousand okay you think a million dollars is a million dollars I don't think it's a million dollars I think it's worth three million dollars with upside this is called the wealth effect mean I need compound I need the opportunity to compound money I need the opportunity to leverage and I need the opportunity of appreciation and to pay down debt over long periods of time so I'm gonna give you the example of this scenario you see how it's slanted up it's awful okay but we're gonna deal with it okay $1,000,000 how can it become I share this with my friend Branden Dawson who's a partner with me Cardone ventures without me doing anything special Brandon I can take a million dollars I can buy three million dollars whether real estate with that if it's good real estate the bank will lend me 3 million for every million dollars I have and I immediately tripled my money this is how a person could literally create wealth in their life and guarantee they'd never go broke let's say it's a ball player that makes a lot of money ok makes a million dollars extra a year in endorsements I would take that million dollars in endorsements after taxes and say hey every million dollars is going about three million dollars for the real estate okay now the only way this game works he's making a lot of money playing baseball he's a sharp he's a shortstop he's one of the best in the world he's a pitcher he's one of the best in the world he knows his arms gonna go out we know that he will only last three to five six seven eight years maybe okay he'd take that 1 million dollars in endorsement money he bought three million dollars whether real estate but this is what has to happen okay that piece of real estate must take on leverage okay the leverage is one dollar I can borrow I can buy three dollars whether the real estate with one dollar it has to pay down the debt on the other two dollars okay the two dollars and number three it would have to cash flow so that I can keep it long enough for it to appreciate and actually have the ultimate wealth effect I'll give you a perfect example of the property behind me okay that property behind me is ninety two million dollars I'm gonna put that number up there I'm gonna also put up another number here 405 can you show can you show the fund that we we just filled up one of these properties in this image the one behind me is ninety two point five million dollars but I put four of the properties together can you show the image and it's four hundred and five billion dollars while they're setting up the image okay now check this out okay you see these four properties Delray Beach Sugar Land Texas Laguna Bay and Nexus back to me four hundred and five million dollars whether real estate I'm gonna give you two examples of the wealth effect on steroids okay we're injecting think into this concept right here this could be one dollar one ten dollars a thousand dollars a million dollars ten million dollars one hundred million dollars it could be a billion dollars how big can you think and can you multiply money magically so this is what we doing this property 92 million dollars I put thirty two point two thirty two point five million dollars down I financed sixty million dollars thirty two immediately became check it out Johnny boy three times the money so I know when I make this investment it's called the wealth effect thirty two million dollars about almost a hundred million dollars whether real estate now I'm not done here okay the sixty million dollars needs to earn about six percent a year for me to feel good about this investment I'm sorry the 32 million dollars needs to earn 6% a year that's one point let's let's just round that off that's two million dollars a year two million a year in income for this piece of property okay so in 15 years and 15 years what do i what what did I get my money back two million dollars cash flow 15 years I pay back this money I'm a hundred percent pay back now what do I own 15 years from now ona 92 million dollar piece of property also number two here okay number two this is the first thing if I hold it long enough and a cash flows I paid back this money that I put down number two 15 years from now we we will be in the Year 2034 is that right yeah something like that 2034 i will have paid the debt down on this this is our leverage is now being reduced over 15 years the first five years of this was interest only and the last ten years was debt pay down or you call principal reduction okay on an amortized loan it's about two percent per year for ten years so 20 percent of this twelve million dollars would have been paid down the second wealth effect the third one is in the Year 2034 would this piece of property if it was still filled with tenants if it had a good location if it was still cash flowing would it have a value of at least ninety two million dollars and is there a possibility that it would actually be worth more than 92 million dollars what do y'all think so in 2034 if the rents only increase by what 2% of your that's not even inflation okay I think I'm more realistic number will be like three but we're in threes today three times 15 is 45 percent more than the rents today those rents right there about 1750 now 1750 times 1750 this is a wealth effect 1750 times would output forty five percent fifteen times three times forty five that's seven hundred eighty seven dollars per month more in rent per unit okay look look I could keep going on and on about this wealth effect 787 that piece of property I mean I'm gonna put this whole thing on steroids here in a second when I bundle when I create a fund of four projects but 787 787 this is how you create wealth times this property's got four hundred four hundred and fifty six units times twelve times oops 787 rent rent got increased over time times what I say 346 346 times twelve is three million two hundred sixty seven thousand dollars new revenue because of rent increases or appreciation that naturally happens over time so let's see what happened here okay I'm gonna get rid of my big package here because I'm a freaky out here in a second then we're gonna move off into the land of billions of dollars not not millions okay number one ninety two thirty two million dollars was paid down thirty two million dollars who paid that the properties paid to thirty two million I put the thirty two million in I got my thirty two million dollars back from cash flow number one wealth effect number two what happened debt was paid down by twelve million dollars who paid that down renters paid it down the debt paid it down three I had a rent increase of three million two and $67,000 times times times the number of years that I had that now I don't know how many years I don't know when I finally got that somewhere in this 15-year cycle let's say it was just the last four years four years that's another 12 million dollars because I wouldn't have got it the whole 15 just to be fair with everybody right okay plus if I want to sell this and I wouldn't right now I wouldn't sell it I would refine answer but if I was gonna sell it that three million two hundred eighty seven thousand dollars divided by 0.05 is worth sixty five million dollars okay sixty five million dollars of increased value that a new investor could buy the property from me for okay and let's see what my total is Sarah I'm freaking you out right now I guarantee people at home watching this right now saying oh yeah what what just happened here we just got wealthy this is what they don't teach you in school okay two four six eight who do we appreciate caught on capital okay let's see what we got here seven nine eleven eleven seven eight nine 120 $1,500,000 that is just the money created from this asset and you can add 92 to that because that's what I paid for the property that is a lot of money ladies and gentlemen now big question for the callers we were loaded up with phone calls right now my name is Grant Cardone if you don't know who I am I wrote a little book how to create wealth investing in real estate I've written eight books on business all the way to books on real estate we have real estate programs that are tens of thousands of dollars people get coaching for me for both their businesses and real estate and we've raised over two hundred and thirteen million dollars for people to invest with me in real estate because I'm not doing one deal at a time anymore okay what I'm doing now is can you show that show the image I packaged four hundred and five million dollars worth of deals in a fund okay we're 86% funded on this we've got fourteen percent of that fun left to raise this thing is let me see how many units I have here 456 do they do they have the number how many units that is right there I've got 501 I got 501 I got four 351 351 plus 458 I think they're seventeen hundred seventeen hundred and sixty-six units here okay just imagine if I get the same lift 1766 times $450 was 450 my number no it's 45% let's say if I do the same thing 45 percent time 1750 1750 so it's 45 percent $787 see how that was the number 787 I'm about to freak myself out okay times 1766 that is 13 million $107,000 seventh okay this is the wealth effect right 15 years would you wait 15 years to make 3 6 280 million dollars that's what I'm gonna do with that fun okay now look with all investing obviously there are risk I can't promise you anything stops gonna happen but I believe this four hundred five million dollars we put two hundred and thirteen million dollars down in this fund I have to add I actually have to have more money than this in the fun but two hundred thirteen thousand I think that that's going to pay twelve million dollars oops twelve million dollars whoops twelve million dollars in cash flow a year for us to wait and make that happen right there that's 280 more than the 405 that I paid the wealth effect see this is what the ball player and the rapper this is what jay-z and dr. Dre knew that I can't just make money filling up concerts okay this is what Grant Cardone knows I can put 35,000 people in an event I can make 20 million on an event but you can't reach billionaire status just working okay you can hit as many home runs as you want you can be as much talent as you want there's been talented people that died broke in fact most of them do why because they didn't get involved in the wealth effect and the wealth effect always involves compound compound it involves leverage and it involves time to get to appreciation okay the Michael Jackson estate is worth more money today than whenever he was dancing let's talk to our callers so the Beatles by the way Beatles four of them going walking across Abbey Road they could walk the whole plant they were traveling all over the world dude the the wealth effect on the Beatles makes that worth more money yeah good Noah do you have a deal or do you have a question no uh kind of talk to me okay next well the real estate no uh north to go to how you doing bro you got a deal you got a question great great and hey real estate just happens to be the reason I talk about real estate guys is I'm not a rapper and I'm not a ballplayer okay real estate happens to be the way that people from all over the world can do this it's like everyday people can do this okay let's talk about your question and then the deal these cities are really driven by that's all I got the town's got a two to five cent fee right now you know I'm working here talking to waitresses at the gym people are telling me the rents are going up $200 at one bun yeah is this somewhere that you would put money in a place like this okay so here this is a great question he's asking okay for the wealth effect to work you must have number three number three is time okay now the I don't know how to answer that because I personally don't think the North Dakota Shale operations will five years from now or ten years from now we'll be there to to fund these apartments that are being built so that that's that's the issue I have I want to be in markets I have to build if you're investing in real estate you need to be able to predict or if you're investing in music you need to be able to predict the Beatles in nineteen seventy six are going to be more valuable in 2046 if you can't predict that so so jay-z's got to predict hey this guy that I'm just guy this kid this girl that I'm taking on is going to be more valuable in the next ten years then my music will be so you know that's why we only invest in towns where we look into the future mm what are we in nineteen twenty nine thirty nine forty nine hey well I want that piece of real estate you know this isn't on the ocean this is about fifteen miles inland so it doesn't go underwater if it rains here because you know what 15 years from now we might lose the coastline in Miami is going on so tell me about your deal love it love that love that love that model by the way for North Dakota just because you you you were concerned about time as well but bunch of jobs come in here there becomes a big boom town whatever booms dooms yeah Houston Texas yeah Houston Texas has been a boomtown for years up and down every 10 years you know so Calgary boomtown the Idaho like you you have these cycles where they boom and they bust right so I love this idea about this 200 bucks if he can pick up 200 bucks and rent flip it to somebody else this may be less knowledgeable and it's just going for the cash flow today 200 times how many units 32 I like the size of the deal as you know comes twelve seventy six thousand eight hundred dollars divided by 0.06 and a half I know what cap rate they're looking at over there oh my god see why why is it cap rate that high because they know there's no future get your cash flow now that's what they're actually saying you can get cash flow here for the next eight years you get all your money back that's the other way to look at the deal if you can get enough cash flow for shorter periods of time okay so if it's a 12 and a half cap it's going to pay him like 18 percent a year in four years five years what is it five years he's got his capital back he's got his original equity back but what does he have what does he care dude he's got all his money back he makes $1 in year five he's got his money back if you get a hundred percent of your money back here of your down payment back eighteen percent times five is 90 you got all but ten percent of your money back if you can raise the rents at all he would get in at five years he's got his money back and now he just sits there but you got a piece of property that you got to continue to manage the tenant you got to manage the debt you have to handle so again I would look like like clearly you know enough about real estate that you could start looking at some other areas where you could take this one issue off the table yeah so so the property behind me the funds show them the fun that funds going to do five to six percent a year every one of these properties will be 92 to 95 percent filled three years from now five years from now seven years from now nine years from now eleven years from now 15 years from now they're going to be filled because of their locations because the jobs the spinels by withers hospitals folks one more question yeah go ahead man that is it was that the question I'm glad I'm not a genie one more question so when these guys are giving you their cap rates like they're telling me they got a 5% vacancy so they got their growth income in 328 like how do you like what are they how do I know that a roll well that's that's how you do it but you go ahead and trust them now and verify trust them and verify pay paid them negotiate negotiate based on what they tell you renegotiate based on the truth okay okay thank you for calling I guarantee he's read the book next caller I do this every Monday for you guys by the way if you're watching the channel and you liked it please hit the little like give me some thumbs up if you don't like it give me a thumbs down man I'm in fact you know what let's just count down we're gonna count down to give me a thumbs up or a thumbs down or a finger one of the two give me something ok 5 4 3 2 1 I'm at um myself okay and then make sure you hit the subscribe button so you get notifications when I come on and do these shows let's talk let's talk James do you have a deal – do you have a question I actually have a question grant guy and you don't the main question I have for you is that I've been researching sales real estate and real estate the way that I'm gonna go I've been involved with a group out in Illinois and they work with a lot of foreclosures contractors don't support but the question that I have is a lot of them are trying to go the route of creating an LLC to create a real estate business and then with that business bill spread it through the corporation be able to get real estate investment and purchase properties I'm sorry has a neighbor somebody purchased some properties and make advance principle principle payments off of those properties so the goal is and eight years to have all these properties paid off taking everything from the other properties and paying off the first one so and so forth best read strategy how would you suggest that I go about building up corporate credit so you know the way to build corporate credit I don't know that it's the right question to ask I think you know particularly with real estate is the property itself like I never worry about whether I'm gonna have an LLC or a single entity LLC sole proprietor or a corporation what I look at what I look at is the business okay is the business valuable if the business is valuable to me that's good is the business now valuable to a lender to a bank but banks don't actually lend money to corporations it doesn't matter if it's corporation it matters whether the corporation has cash flow to fund the debt in the case of a like we get an LLC on our all properties only because the the bank requires us to get a single in to PLLC so here's the property and what happens is grant negotiates the property this is me over here I negotiate the property I say hey I'm gonna come by this property and it's gonna be in my name or someone else's name at which point we then insert an LLC 405 whatever right the LLC is Laguna Laguna bay laguna Bay Cardone capital we just put that name on it okay or 10x living it could be 10x living Laguna Bay and we change this to 10x that becomes the LLC it costs nothing to do this under a couple hundred bucks right and now now the property is now owned by this LLC that is controlled by this little happy dude down here so none of that really matters the organization of this flow chart is the last thing that you guys need to happen what you need to know is whether that property right there this property this is the senior thing whether do you want to own it do people want to live there well people want to pay you rent there do you need to spend money there to get it nicer can you change the location probably can't can you do something with the front gate can you make it more secure can you make it more comfortable can you do something so that people want to stay on that property longer and pay you cash flow because at the end of the day this entity is not going to pay the bills little happy man down here having to manage this piece of property it's not a replacement that this this can't replace this guy this is still work folks okay you're still work to do when you buy when I go out and buy 405 units I'm sorry when I go out and buy 1700 units when I put together can you tell me the picture seven to four hundred million dollars whether real estate my question on all these deals is do I want to be there do I want to put tenants there would I put my sister in that property would I put my brother over there would I rent there would I want my kids to rent there and if I don't what do I need to do to make it where I would be good and comfortable can I raise the rents there can that property or other people gonna find that property this is the wealth effect how do you create wealth you buy property ok you either buy property or you become a rapper like jay-z and Beyonce and how do they create wealth yeah they could go out and a pimp themselves out to every – or not pimp themselves out actually they could act sell their services – to every city in America and do their concerts how can Kevin Hart create wealth because Kevin Hart can do comedy that's one way that's income though that's not how he creates wealth you know what he does I'm gonna own the tour now he that is a limited amount of wealth he can create one is property – Kevin Hart can only charge so much before he's like I need to take on some other talent okay and that is where you get leverage it's not one person's work anymore it's jay-z has what's the name of his company Johnny Rockefeller Rockefeller oh he gets paid when Kanye dances yeah rock nation okay so what did he do he's compounding the effect of jay-z so when he does a concert guess what he brings his other artist there that's what I do everything for me is symbiotic I talk about this over here I'm moving my hand over here and all the other businesses move it's the octopus man it's the octopus I move one tentacle okay the other one's moved by the way you guys that are sending me octopus you need to send me a different kind of octopus I need ten arms not eight I don't want an eight-armed octopus I'm a freak of nature I need ten arms all right the wealth effect property is the great way if you ain't Beyonce you ain't Kanye and you ain't dr. Dre if you didn't buy beats if you're not connected to all the power players in Los Angeles to say hey you should invest in this because you're Shaq you don't have the inside on the inside and you're not a celebrity Shaq invested in that little smart button smart unbuttoned do somebody called him and said look doing add we're not gonna pay you we're gonna give you stock he hearing some genius investor come on man he's on the inside dog he's a celebrity okay you're let's bring everybody back to the real deal your name is Francisco and nobody calling you saying hey I got a deal for you how do you do it every day people the best way to create wealth for everyday people Johnny Natalie Francisco Grant Cardone property Y has built-in leverage has built an appreciation and it has cash flow and you can keep it for long periods it's not my name is grant cardone you've been watching real estate investor made simple tomorrow night I'm gonna be doing a breakdown on our 405 million dollar fund I'm gonna be doing the breakdown I'm gonna show you how you can get paid if you want to register for that free webinar called own capital dot-com four slash webinars spend about twenty five minutes going over how you can participate we're down to the last moments this will be closed in the next week or two thirteen million dollars came into that fund this weekend just so you guys know thirteen million came in Sunday so so this thing's gonna be wrapped up here if you've been thinking about investing you've already invested one guy when I showed him the wealth effect this weekend he says hey dude I was thinking about putting a million dollars in I'm putting three million dollars in so bro you're three million it's instantly worth ten million dollars all we got to do is wait now okay thank you for watching see you tomorrow night if you're going to gamble you better do it on a sure thing looking for the executive VIP or premier experience hotel accommodations are limited so you better place your bets fast and get ready for what is truly going to be an extraordinary experience the 10x growth conference 2020 in Las Vegas reserve your seats while they last if you're going to gamble you better do it on a sure thing whether you're looking for the Diamonds executive VIP or premiere experience hotel accommodations are limited so you better place your bets fast and get ready for what is truly going to be an extraordinary experience the 10x growth conference 2020 in Las Vegas reserve your seats while they last if you're going to gamble you better do it on a sure thing whether you're looking for the diamonds executive VIP or premiere experience hotel accommodations are limited so you better place your bets fast and get ready for what is truly going to be an extraordinary experience the 10x growth conference 2020 in Las

Investing: Expectations vs. Reality | Phil Town



hi you guys I'm Phil town from rule one investing and we're about to dive into one of my favorite topics which is investing expectations versus reality you know they're just very few people in the world that try to truly understand investing this means that there are a lot of misconceptions that have been perpetuated about investing for a long long time let's try to let's try to blow a couple those up right here the financial industry for example is highly incentivize if you think about it to just keep the average person feeling insecure and confused about how to invest after all they get to keep a percent of your money if you use them to help you manage your portfolio right so I'm here today because I was lucky enough that someone taught me like really taught me how investing works and how to be successful with it it was sort of like pulling back the curtain in Oz you know right the guy behind the curtain there working the machine and realizing there's just a man back there making things up as he goes that's really the truth about most of the investment advisors out there the truth is investing is something anyone can learn and it's something I love to share with people it's not about how smart you are there's a misconception it's really not it's it's about an ordinary person doing a few things right very very simple things doesn't mean it's easy let's talk about some of the reasons it's not the biggest kind of frustration I guess that most people have is that it truly does require patience to be a good investor there are lots of expectations that people have about investing that just aren't reality if you're not doing it the right way if you're trying to rush it you're gonna be in trouble now this doesn't mean you won't get wealthy quickly what it means is you can't just go do it now you've got to kind of look for the right kind of opportunities and take them when they show up so to you know kind of clear up some of the confusion we're gonna take a look at some of the most common misguided expectations about investing and how they compare with reality so first expectation is that investing will make you rich overnight I don't know how many people really think that but what I do know is that an awful lot of people try to get rich overnight and that's why these two a.m. in the morning infomercials are still on the air we all want to make it easy right I'm gonna tell you investing is simple really is but it isn't necessarily easy it can make you incredibly wealthy but it will most likely not happen overnight compounding interest is what makes us really rich and that just takes time to build up and stocks rarely skyrocket in the value over the short term by short term I mean in a few weeks stocks often skyrocket in a few months if you buy them right so while stories of people who invested in a goldmine of a company and became millionaires in a matter of months are kind of alluring they really sort of make for great stories because they're so rare most of us it took some time for me to go from starting with nothing much and getting to a million dollars took me five years I mean that's better than you know getting it done in 50 years I suppose but five years isn't overnight and there was a lot of work getting there so instead of trying to earn a fortune through investing in a matter of weeks or months or even a couple of years it's really essential to adopt a more long-term forward thinking approach effective investing may not make you a millionaire overnight okay but it can make you a millionaire by the time you're ready to retire and how great would it be to truly live free financially independent enjoying your time however you want and we do want to get there as quickly as possible so there's gonna be some things that we talk about in all of these videos that will help you do that for right now let's talk about another expectation when you purchase a stock on sale it will only go up no reality is finding a company that's on sale relative to its true value is the ultimate prize of investing that's what we're trying to do and it's the investing strategy that I Warren Buffett countless other investors have used to make a fortune however purchasing a company that's on sale does not guarantee that the company is just going to go up in price from that point forward in fact it usually isn't after all the company dropped to a price below its value at least that one time already or it wouldn't have been on sale in the first place so our expectation actually and the way we invest is to expect that that company is going to go down companies that are purchased at a discount may absolutely continue to drop for a period of time right I mean they may go up a little from where we bought them and then drop or they may indeed only go up I mean you don't really know the reality is that short-term fluctuations in price are both common and unpredictable we don't know where they're gonna go over the long run however a good company that's purchased on sale will almost always reach back to its true value if you bought a great company and you bought it half off it is gonna go back ultimately to its real value some time it just may take a little rollercoaster of a ride to get there and by the way just in terms of the kind of time that that's involved when you're buying really good companies at a really good value what you're gonna be expecting to see is that over about maybe a three year period that company will go back to where it was in other words back up 100% gain in in its price over what you paid that is huge if you think about it a 100 percent gain in price over what you paid over a three-year period is a twenty six percent per year compounded rate of return and that's what our target is so that's kind of what our expectation is what actually happens it can often be much faster than that so the key is being patient waiting finding that opportunity and jumping in but don't expect it to be just perfectly straight up overnight expectation investing means you won't have to work anymore okay well depending on how much you're starting with right so reality is that this expectation kind of goes hand-in-hand with the expectation that investing is going to make you rich overnight kind of in the same way that investment isn't likely to make you a millionaire in a matter of days it is also pretty unlikely to earn you enough money to retire in a matter of days either so let's get our feet on the ground with the right approach investing can make you able to retire younger and wealthier than your nine-to-five job ever would have but you don't want to quit your day job the day you start investing stick with it and keep feeding that investment capital and you'll be way better off in fact some of my favorite investors never quit their day job at all and they made millions and millions of dollars so don't don't worry about the day job investing isn't something that's going to take up a ton of your time when you're doing it right and keep that day job to you know keep the cash flow going and also keep putting money into the investment portfolio okay another expectation that the market is guaranteed to go up so you should push it indexes just jump in there by the index that's gonna go up hello over the course of its entire history the US stock market has indeed grown at a rate of about 7% a year and this means that if you spend your money across the entire market by purchasing stock indexes or ETFs that Marron index and keep it there for a lifetime you can reasonably expect an average rate of about 7% maybe a little more however average is a key word here there are absolutely going to be years where you will lose half of your investment capital you're not going to gain any sometimes you lose a lot and that loss can continue for years there's one point in time in the market from 1929 until 1955 would have taken you 26 years to break-even and there are multiple times when you invested for example in 1965 and and and just left your money in there you would have the same amount of money in 1981 sorry excuse me 1983 so there was a huge period of time almost 20 years where it just went sideways I think we're gonna see that in the future by the way there are a number of times where the market goes sideways and your rate of return in that stock market over a 20-year period in the index is anywhere from 0 to 5% so another important point to note is that the rate of inflation right over this period of time about 3% a year so when it's all said and done if the market is up 7 you're gonna see about a 4% return in actual real cash that you can spend that's more money than you would have spent already so purchasing an index not exactly a terrible investing strategy I mean if you don't know how to invest it's really the only thing you can do but it does leave you open to the risk of a stock market crash and a long period of time where you're gonna wonder if being in the stock market is a stupid idea so keeping an eye on the market and purchasing individual companies that are on sale and built to survive these kinds of crashes is a much much better strategy being able to buy companies that are on sale means when you buy them they've already had their crash and they're unlikely to really go down a ton more and if they do you buy some more all right especially for those of you're nearing kind of into retirement and you can't afford to weather another Big Bear market this is really important that you think seriously right now about whether you want to be in this market at all okay expectation investing is like gambling well a lot of people think so surely especially people who believe in efficient market theory because they believe you can't beat the market therefore it's just kind of a mode of gambling to try the reality is many methods of investing that far too many investors rely on are no doubt exactly like gambling if you select the stock at random with no research no real decision making process you're gambling the stock might go up it might go down in the end it's no different than just kind of spinning a roulette wheel however not all methods of investing are like that the world's most successful investors are certainly not gambling their money away I don't think what I do is gambling at all when I'm putting money into a position that I'm gonna hold a long time rather I feel like I'm buying a business I'm investing my money carefully I'm choosing companies that have a very high probability of delivering really good returns over the long run now it's true there's no such thing as a sure thing in the stock market right I mean we think the sun's gonna come up tomorrow we think America would be great tomorrow but there are investing strategies that can absolutely massively lower your risk of putting money in the stock market in my opinion far below the risk that you take putting your money into an index if you're willing to learn and those methods and those strategies will increase your chances for high returns on top of that which is really what we're basically saying is when you do this the way the best investors in the world do it you're lowering your risk relative to mutual funds and exchange-traded funds and you're raising the potential for a very high return now who wouldn't want to do that and at that point investing not gambling at all we're buying an asset at a very low price that we know is worth much more and much more in the future now I'd like to hear from you guys that I bust your investing bubble with some of these expectations or you know not so much what do you expect out of investing so leave a comment below with your answer and I'll be sure to follow up with you and thanks for watching now go play if you enjoyed this video and you feel it was valuable in teaching you more about investing myths and expectations just hit the like button and please share this video with your friends if you want more investing content I've got a great channel out there subscribe to it and just keeps coming and don't forget to click on the button on the screen and you'll get a free gift thanks again for watching see you

The 5 Mistakes New Real Estate Investors Make



Oh tonight today we're gonna talk about the five worst mistakes that real estate investors make I hope you're doing great tonight so we're gonna start the show just in a few minutes I want to get a bunch of people on on the line I hope you're doing great so we're gonna be doing a lot more live shows I'm really excited about this so if you're new to the investing in real estate channel we produce a number of videos every week in helping you you know in an effort to try to help you become a real estate investor we teach you everything from you know setting up your LLC's to tax benefits to how to find the best deals how to structure your your entities your your your checking accounts and all of those pieces in order to make sure that you have the best legal structure the best bank account structure and all of those different pieces I want to make sure that you guys have so so thanks everyone we're gonna get we're gonna start the show just in a few moments tonight we're gonna be talking about the five worst mistakes that real estate investors make Jonathan welcome to the show by pie welcome to the show so we'll save some Q&A for a little bit later in tonight's episode love for to find out where everyone is coming in from Chris welcome in Chris Lujan hey Jason you FC fan nation from Iowa welcome in welcome in all of you guys tonight I'm trying to get the camera Justin properly Arkansas welcome in grant I'm up here in our mountain mountain house for the weekend or for the week coming in from Chicago Michael welcoming Michael Michael has a great story to share by the way in fact Michael I would love to have you on the podcast to tell your refinancings story I think he purchased a property from us for like in the 40s mid 40s and it and you just did a refinance pulled money equity right back out of the property and it's ready to start shopping for second properties I love stories like that because we have investors that do that all the time so love love love love that you had a great success I think you're so you you you you bought it for like in the mid 40s and I think it appraised out in the mid 50s which is great or 53,000 which is great after the rehab so that's great so thank you for sharing that story with us today 45 5 you bought it for 45 5 and it appraised for 53 after the rehab awesome and you're able to pull that equity right back out again that's sweet Michael sweet so thanks so much for sharing that story it's like Twilight here in the mountains hopefully won't get too dark Hercules wants to know do I need to own my property to work with Lima 1 capital M no I mean you can buy rental properties through lima 1 any day of the week frederick from chicago enjoy your videos thank you so much and hopefully you guys are subscribers to the channel thank you so much i really appreciate that thank you so much alright Eddie wants to know what do we think of tax deed properties to get started with investing you know I always say it really doesn't matter what type of property it is foreclosure tax deed short sale I don't care what it is as long as you're able to find a great deal and you have a team in place that can make sure you're getting a rehab properly and up and running and renting properly that's all that matters so you can find a you could find a property of a tumbleweeds rolling down the street I don't care how it hits you in the face as long as the numbers make sense and you're able to make sure that you can get a refinance I'm sorry rehabbed and rented and up and running and that the ROI is very high that's all I care about is the honor line I don't fall in love with real estate I fall in love with ROI as many of you know all right so tonight we're going to talk about the worst mistakes that real estate investors make I want to dive into these to get started with and it will open up to some Q&A about tonight's topic and I'd love to hear what's on your mind and we will talk a little real estate investing if you are new to the channel welcome in this is the investing in real estate show I'm Clayton Morris on the host of this channel we're gonna be doing a ton more streaming we're actually building a brand new studio I'm super excited about this we're building a brand new sort of television studio what we're gonna be doing a lot of live shows a lot of live question and answers if I can tell you how many emails that I receive a day I should show you some day my inbox I get hundreds of emails a day and that's not because I'm special in any kind of way it's because you guys have a ton of great questions and they're all very good questions everything from okay I have an LLC in this particular state and I want to buy a property in that state will that cause me issue I mean questions like that they're all excellent questions what I want to start doing is a lot more live shows where we can answer a lot of these questions to help you become real estate investors or to help you maximize your overall your overall income or how to mitigate your taxes in order to make sure that you're keeping more of your own money I mean I have questions that I asked we we just literally asked our tax accountant today in the office we asked the our tax team this afternoon a very specific question that I didn't know the answer to so there are no stupid questions and that's why I want to be I'm really excited about doing a lot more live shows and bring you a lot more content so I am up here on a family vacation in the mountains with my family this week so I apologize for the beard actually I'm thinking about growing a full-on beard because I just hate shaving so I can't wait to uh to not shave on a regular basis it's not like David Letterman or something alright so tonight we're gonna talk about the five worst mistakes that real estate investors make let's start and there's no there no particular order these are five common mistakes that I see new investors make real estate investors who are long-term real-estate investors maybe they've owned a property for many many years it doesn't matter these are comp 5 common mistakes and I'm gonna kind of give you ways to avoid these five common mistakes as well so let's dive into it number five and I'm just gonna throw this out there to you guys and see how many of you get this question correct so in the comments thread right now what do I like to say is the most important thing when investing in real estate let's see how many of you guys under know know how much I love it I know how much I love this particular answer jeffrey moon you got it you said ROI exactly grant wait ROI James ROI I love it Hercules ROI cash flow cash flow are oir oir why you guys get it number five on our list the number one mistake well number five does again no particular order but the first in this list not focusing on ROI and I can't tell you how often this happens when I'll talk to you let me just give you an example I think a real world example is a perfect example I had a husband and wife out of Philadelphia they owned a property they owned a property that they lived in for a number of years in Manayunk which is a small town just outside of Philadelphia cute little town you know great little young family town with some breweries and some good restaurants and close enough to the city you could take a quick ride to downtown Philadelphia they owned this townhome and they moved well guess what they kept it right I hear this all the time so they kept this particular property and they tried to rent it great its renting so they told me on the phone this was like a year ago they said you know we want to we want to keep this property because you know we think in a number of years we'll have it paid off or paid down and it'll really start to it'll start to be a great investment and so I just a whole full stop right there I know we're talking about doing rental properties with us that's great but let's stop right there and let's talk about this property I want to understand the psychology of why you're keeping this property and they thought that if they worked on this property and got it you know paid down the mortgage maybe even increase the rent at some point maybe even did some repairs that eventually the return on investment would be good so I ran the numbers with them right on the phone I said how much you're you know how much you're bringing in every month what are you paying for a mortgage on this property how much are you actually cash flowing at the end of the day after you're paying taxes what are your taxes look like on this property they hadn't accounted for their taxes in this property when we all got finished with it I said look I hate to break the news to you you are in the negative that you are producing a negative return on investment on this property why are you holding on to this property and the answer that they gave me is that they they just had a sentimental value connected to this property because it was their first property they owned together so they thought in their heads they could get this property to cash flow eventually again this is gonna bring us to another point on tonight's show and that brings me to my second point so number one they didn't focus on ROI they were in the red and I said here's what you need to do you need to immediately call up a realtor and you need to list this property and get it sold you're producing a negative cash flow with your taxes you're actually you're not breaking even you're losing money on this property the ROI on this property is terrible why are you attached to this thing get rid of it so anytime you're entering into a new real estate transaction simply run the numbers I'd like to do that back of the book envelope test you can do the 1% test if you like it's what my father-in-law does you know will will it produce cash flow at 1% of the purchase price or you can do my ROI formula which is a very conservative ROI formula it's not for the faint of heart because it's incredibly conservative meaning I take out 40% for vacancy repairs and expenses in my formula and I know a lot of people make fun of me for it because it's so conservative but if you can your monthly rent times 12 so $700 a month times 12 multiply that times 0.6 that means you're moving 40% for vacancy repairs expenses what are you left with now divide that by the all-in cost of the house and that's what you're left with is your return on investment number the ROI number it'll be a point 1 1 point 1 to point 13.10 just move that decimal point over and that just means it's a 10% 11% 12% 13% look the stock market gives you about a two to three percent return so if your net ROI on that is higher than 2 to 3% net not gross your net ROI okay it's better than the stock market but I like personally like to shoot for about a 10 to 12 percent net return on my properties net but because I'm doing repairs and because we're placing a tenant in the property I don't really worry about the repairs for 10 to 15 years so that 40% ends up being kind of a pipe dream at the end of the year it ends up looking closer to that gross number than the net I asked my wife the other day I said how many repairs do we end up having in our properties you know what's that number look like what's our repair percentage on that all the properties that we own and she said I can't remember the last time we've had a repair and that's the point that when you take care of the property upfront those repairs are almost non-existent hey thanks MJ live in dal Lindvall thanks for the great backdrop yeah we're up here in the mountains so just give you a little little preview here what this actually light over here is a little bit better huh that's way better actually sorry about that so here's our little log cabin up here in the woods and now that's a little to pixelate is that look all right and there's the lake you can see the lake right down there got some puzzles out here yeah the light is it's Twilight out here on the lake so me just try to get a little better a little better picture for you guys and I sorry for the jumpiness I don't have tripods I don't have any of our studio stuff set up tonight so I'm just kind of winging it I hope this is OK and you don't mind and you don't mind this I apologize so let me move to the second one in this list out of the five because this brings me to my next point so first is not focusing on ROI the second is investing emotionally which if I go back to my Philadelphia example with this particular cusp for this particular couple they were investing emotionally in this rental property they weren't investing with their with their heads they were investing from their hearts which is which is okay it's sweet it's adorable you know that they wanted to keep this property Sean welcome to the channel thanks so much Sean he just recently discovered the channel yes we we all have a lot of emotions but real estate I don't fall in love with real estate it's four walls and a roof and someone needs to live in a property someone needs to live in these particular areas so why shouldn't you own those properties you know one of my mentors in this business Robert Simon he likes to say that he likes to say that when he dives down the street he'll see high-end properties mediocre properties low-end properties and guess what somebody's living in almost all of them why shouldn't he own them so don't get emotional about real estate let me just show you this house right here so this is this is our mountain place right it's got four walls and a roof we actually used this place as a rental property for a little while we we did a we did a vacation rental with us for a little while and we didn't like that this was our place and we just decided to stop doing that but I didn't get emotional about it we just wanted to spend more time up here but the problem with that Philadelphia couple that I was explaining to you is that they were emotional about this property they in fact buried their heads in the sand and did not want to even run the numbers to know what their cash flow looked like it took me on the phone asking them what are you paying in taxes what do you cash flowing on this property and the wife actually she kind of kept quiet she didn't even want to admit that the taxes that they had to pay on this property and when I got the calculator out the bottom line is that they were in the negative she was tied emotionally to this to this townhome that they had purchased so don't vest in in real estate emotionally now what does that mean when you're selecting properties well let me give you an example sometimes and Michael knows this he's one of our investors if we sent a property to an investor they usually sell within a few hours when we send it and when we sometimes work with a new investor we'll will say Mary Jonathan we want to let you know that our properties sell within a few hours so if you you know if you're interested in just let us know and we'll we'll get you a purchase agreement sometimes new investors wife/husband they'll look at it for a few days they'll they'll say to themselves well I really wanted like an adorable little bungalow you know with some nice trim and some potted plants or and they have this sort of emotional feeling because they think they're gonna be living in the house you are not gonna be living in the house and so therefore you're you're you know mindset about curtains and the types of paint colors that you think you want in a property it doesn't matter at all you have to really come outside of yourself and realize that if you have a nice house we take care of it rehab it and get a cash flowing that your your sentimentality about you know pink or having potted plants or certain blinds hanging up or certain carpet color and all of that it goes totally out the window who cares what you want I know it's hard sometimes but who cares what you want no one cares what you want right it matters what the tenant lieutenant likes and if you know your neighborhoods like we do then we know what's gonna cash flow we know exactly how to rehab our properties because we know and so we know exactly we know exactly what it's gonna we know exactly what's gonna look like so I apologize did we skip a beat here hopefully not I know that we just had a little internet hiccup here for a second but is it still the same livestream going let me know if you guys can still see everything okay the beauty of the beauty of doing live can you guys still see everything okay are we all good its blipping a little bit it's all good we're back we're all back good good good all right thanks guys you actually had a contractor calling me and actually kicked me kicked me off the internet for a moment yes I used to be on the daily buzz thanks for rule Styne okay so number one number one mistake that new investors make all the time is they're not focusing on return on investment ROI number two they're investing emotionally number three number three the third biggest problem that people make when they're trying to invest in real estate is that they try to self-manage their properties self managing rental properties no no no no no please please please do not try to become your own property management company property management companies have one of the hardest jobs in all of real estate investing not only do they have to deal with you the buyer the person who has this property they also have to deal with the tenants they also have to deal with the city they have to deal with the code enforcement they have to deal with any number of issues that can arise you do not want to be in the property management business it is a thankless job they work incredibly hard they work incredibly hard and they don't make a ton of money and you do not want to be in the self management business now I know it's alluring if you're just starting out in real estate investing it's you think you're gonna save ten percent right a typical property management company almost every property management company I work with charges 10% a month so if your property rents for $700 a month take out $70 and that goes right to the property management company before they direct deposit your monthly income I'm happy to pay that 10% number one it's an expense for your company it's an expense for your business it's an expense for your real estate investing journey and career on your taxes but it's also lets you off the hook if you truly want to create passive income and financial freedom why the hell are you managing properties yourself the problem is that most people think they can do just one right so you buy one property and you think oh this is easy I can manage this one property and you've written you rent it to your you rent it to your high school friend or your brother-in-law's friend and everything's going smoothly it sounds great right well what happens when they move out and then you get a troubling tenant in there and you're doing all of the legwork the background checks and all of that but it's fine what happens if you get a second property this is what I like to try to tell people it sounds great when you have one property great you want them self-managed it okay but I don't want you to just own one rental property how are you gonna build wealth second third fourth fifth and six properties I want you to then start thinking about what it would be like to have all of those managed by you as well because you're not that people don't think the long game well enough they only think short term so think about what that would be like to manage all of those properties 1015 units and then you're showing properties at night in 10 to 15 units chances are you're gonna have a vacancy in one of them right and therefore you're gonna be out on 7 p.m. at night 8 p.m. showing properties to to potential tenants at night after they get on work etc is that the world you want to be in or would you rather have that in the hands of property management teams that then can take out you know show those properties at nighttime those particular people who are showing the properties the leasing agents for the property management team they get like a you know bonus if they get it rented to a quality tenant etc you do not want to be in that business and it just adds a level of headache that you do not need so again don't self manage your rental properties it is a bad bad mistake all right number four on this list not forming a legal entity the fourth biggest mistake that people make when they're getting started and realizing when they're investing in real estate is that they don't form a legal entity to buy their rental properties now this is a little complicated in the United States our accountants have advised us to purchase real estate in a limited liability corporation they take about five minutes to set up it cost about a hundred bucks to do it you pick a name a lot of times our investors will just pick the street address one two three Main Street great that's the property they're buying they stick an LLC at the bet at the end of it they file it with the state it takes about five minutes to do it on the website incredibly easy to do so you know one two three Main Street LLC the reason that you want to incorporate is because now your legal protection as a business owner with that property being owned inside of an LLC is incredibly beneficial not only from a legal perspective but now your income is being taxed as a business opposed to an individual right so you're taxed at a certain tax rate as a human being as an individual you're taxed at a different tax rate as a business as a limited liability company if your tenant slips and falls and you were negligent for some reason or the property management company was negligent even though they have their own insurance and they're covered chances of you being sued are pretty slim but nevertheless they can only come after your LLC and the value of that LLC they cannot come after your personal assets what does that mean well that means all of the rental properties I own are in different business entities LLC's that means I don't want somebody suing me and then being able to come after the home I live in I don't want people being able to come after this home you know that's something I want I don't want that ever to happen to me and that is a huge mistake that if you are not invested and you not in you don't have an LLC set up you're gonna be in for a rude awakening so please please please make sure you purchase properties in a limited liability corporation or some sort of business entity if you are an international investor we work with a lot of international investors Canada we actually have an investor from Slovenia who's joining us soon China New Zealand you name it typically international investors may set up a different structure inside the United States so we will have Canadian investors for instance set up AC Corp because it offers Canadian investors a level of protection and liability protection that they would not get with a limited liability corporation because they're not American citizens so this is very important for you to talk to your tax accountant if especially if you're an international investor but I will tell you that inside the United States if you're living here then an LLC is definitely going to be one of the best ways for you to go and again seek the counsel of your your your accountants and your lawyers on that but you are offered a level of protection in that it's such a smart move now you may say to yourself but what about buying properties with a mortgage I won't be able to do that if I have an LLC well if you've listened to my most recent podcast or one of my most recent podcasts on the investing in real estate podcast on itunes with Garrett Sutton I would encourage all of you go check out that interview with Garrett Sutton he is Robert Kiyosaki's tax excuse-me lawyer and as he will attest it's very very simple to purchase a property in your own name and then if you're getting a mortgage then once the mortgage is closed but once you've closed on the property transferring it over to an LLC it's incredibly easy to do it just listen to that episode that's mind blowing you will definitely learn a lot about how to be able to transfer that once you have it in your own name transferring it over to an LLC it's very very simple so there you go so that's number four on the list not purchasing properties in a legal entity number five on the list it's a simple one it's overspending on your initial purchase so when you're buying real estate for the first time you're buying real estate investments for the first time please please please just don't overspend what does that mean well it simply means that if you are buying properties on you know the open market and you are you're seeing a retail price for a property and it still needs $20,000 worth of rehab for instance up here in the mountains there's a there's a house next door over here okay let me just give you an example it's a perfect example this house over here you can't really see it yeah maybe can in the woods a little bits of blue house it has been on the market for like a year now and it needs a ton of work on the outside I'm a real estate investor I live next door to this thing I wouldn't buy it they're asking a retail price for this house it needs a ton of work therefore if I were to buy it i donnelly I'd have to put an additional thirty thousand dollars worth of work into the property it means new it needs new siding I think it needs an updated roof it needs a new paint job it needs updated appliances there's a whole slew of things it needs needs updated windows so that is overpaying for that particular property now it might be a good vacation rental for somebody if someone wanted to do that there's a couple of ski resorts near here there's a big lake right near here so it's perfect for summer season it's perfect for the winter but again if the ROI is off because I've overpaid now if I can get a deal on that house and I could buy it maybe for 60% of what they're asking or even you know cuz I know I'm gonna have to put in about 10% more for repairs so that I might be still be about 70 80 % below when I'm done maybe but even then it looks like it's way overpriced so that's the problem people don't know where to look for deals they overspend they go out on the weekend because they want to become a real estate investor and they don't run their numbers they don't know there are and they go out in the meet with a realtor and a realtor says well this one's been on the market for a hundred days I think it's a really good investment you're gonna bring in a thousand dollars a month and yet the property costs two hundred thousand dollars and you have to put another twenty thousand dollars into it that's not a good investment that is not a good return on your investment so please please please know your numbers and make sure you're not overpaying now I overpaid on the first two properties I ever did I bought them off the MLS with a realtor and I put in I over upgraded the property I did all I put in appliances i-i-i did all sorts of like hardwood floors i overpaid guess what do you think it's gonna rent for more hmm I wish I would have saved that additional fifteen thousand dollars in rehab because it would have rented for the same amount if I didn't do those things and that's what you'll learn as a real estate investor and I've got a whole video here on the channel by the way on things to not waste your money on when you're doing a rehab bathrooms kitchens I walk you through why you shouldn't be spending money on these these additional items because at the end of the day you're gonna spend fifteen thousand dollars more on this crap and guess what the property is gonna rent for the same amount as if you didn't spend that extra money so it's not worth doing these big upgrades and overspending on these cosmetic items and doing this stuff that's not gonna come back to benefit you in the end so there you go those are the five items I'm gonna run down them real quick again five mistakes that new real estate investors make when they're just getting started number one not focusing on ROI that's a really important number to investing emotionally don't invest emotionally in real estate number three trying to self manage your properties please use a property management company please please please number four not forming a legal entity when you buy your rental properties not only to mitigate your taxes to help you with that but also for the liability protection that you get it's a whole other game once you start setting up and become a business and you start buying real estate and number five overspending on your initial purchase please please please don't overspend on your initial purchases make sure that your you know you're buying smart you're getting a high ROI and your cash flowing consistently so those are my five five tips for tonight so let me just open it up for a few minutes to some questions and answers here I see a lot of questions coming in and trying to stay focused on getting you through these five tips that I wasn't able to read read all of them so let's fire off some questions here first up anyone have a question they'd love to answer love love to be answered I can't believe it's August since that's like 60 degrees it does feel nice I'm up here in the mountains of Pennsylvania all right Terrence says let's say you get approved for 50k for minimum theoretically you can use these alone to buy two properties at 25k yes Terrance theoretically however banks don't like to loan on properties below $40,000 in value so it's gonna take you some finessing to find the right bank and then also to find a property that's also rehabbed and rented you know like the properties that we do are mostly a pre excuse me like pre rehab so banks gonna come in and say oh this house hasn't even rehabbed yet it's way easier to do what Michael who's watching did with one of our properties which is buy it for cash we do the rehab it gets cash flowed and then you pull the money back out on the back side so you have that 50k you buy a property free and clear pull that cash out and you're able to do a refinance that way and pull that money out and buy another property that way banks are much more willing to work with you when they know that you rehab the house and now it's cash flowing Jason Ali says why I mean Wyoming Holding Company in one Florida LLC per property good corporate veil yeah and Jose I'll get to yours in a second well yes absolutely our tax accountants have advised us to set up a Holding Company LLC in the state of Wyoming and then in the states where we own our rental properties we have LLC's in Indiana Michigan Pennsylvania and they report up to the Wyoming holding company now it's important you get a lawyer to set that portion of it up for you because they need to be able to talk to each other correctly important Miguel just closed on my second investment property today happy happy happy awesome Miguel Congrats Pam Dolan says I always feel smarter after listening to you thanks for the info Thank You Pamela please tell my wife that I would love for her to say the same thing I think she's mad at me tonight you know what we're out in the lake today and she said can we just go home cuz you I'm gonna have to fight the baby like the whole time and we didn't we went to this restaurant and then of course guess what she had to fight the baby the whole time and so she's angry with me so I have to deal with that later Mark Henry can you recommend property management companies akin just kind of depends on where I mean so many and depends on what market best way to purchase a first property did you do that's a pretty wide open question best way to buy your first property mark no I don't know any property management companies in Fort Lauderdale I apologize I know I'm not in that market best way to buy your first rental property I mean literally listen to what I just said tonight in these five tips make sure the numbers are right make sure it cash flows properly make sure the ROI is there don't manage the property yourself set up an LLC now if you're asking me about funding and where you're gonna get the money I've got a whole bunch of videos on this channel to help you with that how to get private money how to use a home equity line of credit to purchase properties all of that so incredibly incredibly important you combine them with credit cards that's right you can do a whole bunch of things and if you're interested in some different funding options we partner with a great company if you go to our website Morris invest com slash funding some fantastic way to use business credit cards in order to buy your first properties is Pittsburgh in Youngstown areas good area with ninety billion dollar shell gas plant moving there yeah Pittsburgh is a great area to invest Youngstown is as well but there's a little oversaturated and you may pay higher in taxes and also I'm not a big fan of some of the crime in Pittsburgh as well I went to school to University of Pittsburgh and there are some troubling areas there that it just gets to be a little hairy so Peter Oates how are your Jacksonville properties doing fabulous really really well it's one of those few untapped areas right now Florida where we were seeing it's just a ton of growth which is great rule Stein buying a duplex as your primary residence is easiest way to get into rental properties yeah that's a great way to absolutely that's called sort of house hacking right you buy a duplex you live in one side of it and then your tenants and the other side are paying your mortgage basically best area is Omar you're looking to buy in Indiana we'll reach out to my team my friend you're looking to buy in Indiana that's what we do best I've got three offices there I know you know we do about 50 properties a month so trust me I know every nook and cranny so please please please book a call with our team right now go to our website Morris invest calm click on the schedule a consultation button we'll jump on the phone for 30 minutes with you and help you figure that out Rob I have a 90 K HELOC live in California look at my first investment shoot sorry they're just going so fast oh here I go I can scroll back what do you know what areas would you recommend for a 50k range well again Rob I mean that's what that's what we do all day long we were like for instance I spoke to a doctor yesterday he's his doctor in Los Angeles his friend is also a doctor owns four properties with us with our company and he said he's like look I own an 8 unit property in Southern California and it's cash flowing terribly so I'm ready to take the plunge on buying some $50,000 homes and so he is he's buying I think to two of them right now from us and they'll cashflow about seven eight hundred a month we take care of everything we do the rehab we place a tenant our goal on every property we between a 10 and 12 percent net ROI net that's what we do let's see I hope that helps Rob so that would that would basically get you two properties with a 90 kg lock right there you could pick up two properties boom boom have them cash flowing about 700 apiece 1,400 bucks a month in cash flow that's the beauty of taking ninety thousand dollars and turning it into a stream of cash buy wants to know by pie what do I have to get a commercial loan to buy a four-plex no you don't four units and under is considered residential anything over four is considered commercial so five and up ever our dough wants to know if I can set up a call with you you bet ever our dough please you know jump on our website or you can just email me directly if you'd like as well and I can set something up with our team just Clayton at Morris invest calm Jose wants so finding a good tax accountant that knows real estate exemptions Oh Jose I would only recommend one company we work with pro vision wealth out of phoenix obscure house scottsdale tom wheelwright and his team if you listen to my podcast the investing in real estate podcast we've done now three episodes with tom he's the smartest tax accountant in the world he's the most smartest real estate tax accountant in the world he's Robert Kiyosaki's personal tax advisor he used to work in the Treasury Department he used to work under Ronald Reagan book a call with his team at provision wealth they are the best when it comes to real estate investing that's who we use Sora and Lloyd wants to know about to close on our third investment property so far all of our all for cash which non-bank lenders do you recommend for us to start to leverage our assets that's a great question non bank so you're talking about private money now I would say companies like Vizio lending vis IO Lima 1 capital is another good one but they require a minimum value of about $60,000 so they're they're private they're private money they're basically like hedge funds they can make their own determination of what they want to lend on so they're not governed by Fannie and Freddie and that sort of stuff I would check their start with those guys sleep is not necessary wants to know if we were in a housing bubble how would that affect the business it's too hard to answer because to me bubbles are specific to demographics and areas and geography and California for instance is may or may not be in a bubble I mean there's certainly areas like San Francisco absolutely look like they are because of all of the tech boom but like where I invest we're not at a bubble stable blue-collar jobs that aren't going anywhere minimal appreciation slight like one to two two and a half percent appreciation very stable no mortgages so you can't buy properties that I buy frankly with mortgages on the front end and well mostly I shouldn't say that and there you can get like you know State Farm and other programs will lend on in down to a low value but it's hard to get you have to prove income you have to prove stable jobs so I don't really believe we're in much of a housing bubble in you know most of the country I think certain areas we might see some bubble activity for seasoned pro wants so for your first few properties is it best to buy an estate where you live or you should be looking properties all across the country so please listen to my podcast the investing in real estate podcast with Clayton Morris I think episode three I talked about how the best properties are not in your backyard and I explain why so please go and listen to those that episode I walk you through step by step why that's not the case why investing in your own backyard is a huge mistake typically unless you happen to live in one of these great rental markets Mike Henry how about buying a $10,000 $15,000 duplex with cash there's a lot of those in Ohio and Pennsylvania Mike please please be careful okay I've had a lot of investors who think that there are greener pastures by buying one of these dumpy ass ten to fifteen thousand dollar properties because you found it on Zillow and I love you Mike I'm telling you right now that's gonna be the biggest mistake you ever make why because you're not gonna even have any idea how much it's gonna cost you to rehab that property then you get it fully up and running you don't know the history of that property foundation problems all kinds of issues right you know my team will walk these properties make sure that we know what we're doing before we buy it we have our contractors we have our inspection team we go through it we know what we're buying so please be careful like I know it can be alluring to buy one of these things if you're a one-off investor and you come into one of these one-horse towns and you start hiring contractors they're gonna see you as a it's like you know it's gonna be like the vultures are gonna be hovering over you like how this guy Mike he bought this property yeah Mike will fix it for you 40,000 rehab will cost you 40 what I thought it would only cost me like 20 yeah we noticed some things we didn't find before okay let me get another opinion you're gonna go across town try to find another contractor and now it's wintertime and now it's November in December I guess what a big snowstorm is coming now you own this piece of crap property and the city wants to start putting violation letters on your front door cuz you know what it's vacant and you have broken windows okay and this contractors don't want to touch it cuz it's winter so you need to be very careful just please please please be very careful Rob California is not good for cash flow no it is not I would say 80% of the investors that we work with amoris invest are from California no joke and half of my extended family is from California father-in-law mother-in-law they all own properties through us and California is in the San Francisco Bay Area just as an example the same property that my mother-in-law was able to buy with us she bought in Tracy California and spent $400,000 on the same square footage same bedroom bathroom count she just sold it two years ago and said I'm done so just to give you some perspective on how much she then end up buying one with us which was like 45,000 Vanessa wants to know is it better to rent to section 8 or ray Giller personal preference Vanessa I love section 8 tenants you know why because the city unit does an inspection on it they make sure that it's ready to go they have to have income and they tend to stay a long time you can typically do like longer leases with a tenant like that I like I love section 8 the only downside I really find from section 8 is the amount of time it can take to get your money from this from the state meaning when you get a section a tenant into a property they usually I think they accumulate the money depends on the state anywhere from 60 to 90 days before they cut you a check that doesn't mean you're not earning during that time it just means it'll take you about 90 days to finally get that first rent check if you want to start cash flowing immediately then that's not the route for you you also contend to get a higher rent amount with section 8 tenants so to each their own I like both of them I have I have section 8 tenants but I also have regular tenants what I know about commercial lending Terrance I don't know a lot about commercial lending I really don't there are some different laws that govern commercial lending and how many you you can bundle together in a portfolio so that's something you definitely want to speak to a commercial lender they're governed by different laws I don't do anything in the commercial space so I apologize on that James wants to know where your typical turnkey properties located state wise we are in Indiana Michigan Florida and Ohio Jill wants to know cash out refinance for 15 years or 30 years you know to me I would rather go for the lower interest rate and just funnel all of that cash flow directly towards that primary balance whether it's a 15 or 30 years so I would go for the lower interest rate frankly how many after how many property should you consider having a property management company I would say after the first one well thank you guys I guess so many great questions holy smokes Q McCall was soon after the first properties acquired how easy it to pull cash out should be very easy and you can do it pretty quickly I think like one of our investors is on here on the live stream tonight and I think he just closed in June and he was already able to pull the cash out of that property so maybe in the spring I think was closed and was already able to pull the cash out and it's now August so just a few months others can happen it can happen very quickly depends on how quickly and what bank you're working with some will require you know six months seasoning for you to hold it others a year it really just depends on who you're working with John Doe wants to know are you still aggressively snagging at properties oh yeah I thank my wife and I just bought two yesterday we bought two properties yesterday we I wish we could keep all of our properties but it comes down to capital so in a week my wife came to me yesterday and said we've got we need to our accounts have advised us we need to buy more properties ASAP so we acquired two properties yesterday if I buy from Morris invest in cash how long before I can cash refile Oh like I said I'm sorry I already answered that question a moment ago very quickly depending on your the bank you're working with or the lender that you're working with everardo wants to know I purchased a four unit with leverage and was not able to put the property in an LLC do I wait to pay it off and then open an LLC you couldn't no no again everardo go listen to my episode with Garrett Sutton on my podcast go to the iTunes Store right now subscribe listen to my episode with Garrett Sutton I think it was like four episodes ago the investing in real estate podcast is the name of it Garrett explains how to exactly do this with with leverage and an LLC transfer after purchase go listen to that buh-buh-buh-buh-buh Mike oh the property you're thinking about buying is eight unit apartment building in a small unincorporated community with a population of 342 people Oh Mike again I come back to what I know the reason I love the markets and the territories that I invest in is because of the stable blue-collar jobs that are there for instance in Indianapolis where I invest where my team is located the properties that I buy are right next to the hospitals they're right next to the post office to the Amazon distribution center these are areas at the FedEx distribution hub the NCAA headquarters the Convention Center these are all huge employers and drives enormous amount of you know of jobs that are not going to China that are not going to Mexico that during a recession don't go away the hospital unit doesn't cut staff nurses postal employees those type of people during a recession did not see one dip in my rental income so a 342 population town I don't know I don't like those those lottery numbers very much again I think you're being a little I know you're trying to analyze this deal just please be aware of the the jobs and what does the local economy look like for instance you know I like the towns that I'm in because the vacancy rate is very very low it's like 5% you go to places like Memphis Memphis has a over 20% vacancy rate and the crime is like oh is incredible it's like over 20% I mean the crime rate is ridiculous so just be aware of where you're buying like where I like to invest is like under 5% so Rob yeah absolutely I mean I don't want to turn this into anything about me really but just go over to our website if you're interested that's what we do I mean I I'm a real estate investor I've been through the wringer I rehabbed thousands of homes so that's what my company does Rob says hey can we give you can you give a brief overview of what you do with your company I thought you just invest so can we invest with you I run Morris invest which is a large turn rental company which our goal on every property we do is between a ten and twelve percent net ROI and our average property prices are between forty and fifty thousand although we just started some brand-new construction properties that are sixty eight thousand three-bedroom two-bath and they use cash flow nine hundred dollars a month and that's it we take care of everything you call us you booked a call with our team we try to we really want to know what your freedom number looks like meaning your financial freedom number you can download the free cheat sheet by the way if you haven't already downloaded our cheat sheet I'll just go to Morris invest comm slash freedom it's free it's like three pages and it'll kind of walk you through how to figure out what your freedom number looks like how many rental properties it would take for you to achieve financial freedom given our formula I hope that helps Thank You Anthony I do a great job Morris thank you I really appreciate that James wants to know do you offer forty to sixty K all-in turnkey houses in Florida Michigan and Ohio yes sir that's what we do it's what I do all day long but Nessun wants to know how long should you hold onto a property our goal in house is to hold on to our properties for the rest of our lives I want to hand my properties down to my children which is the way that I've structured them with our estate I don't ever want to sell my properties will go through economic downturns maybe the values will drop five ten thousand at some point who knows ten years from now five years from now guess what they're gonna go back up and I don't care you know why cuz the cash flow will stay the same that same seven hundred dollars a month in rent is not gonna go down you know it's gonna stay consistent Thank You Rob I really appreciate it thanks everyone john wants to know what resources do you use to analyze markets again on this youtube channel I talk about crime data I talk about job growth I talk about a lot of those different things right here on this YouTube channel we've got a whole bunch of videos to kind of walk you through that basically I look for crime very I don't I don't care much about crime to be honest with you crime data websites are pretty awful so I want to make sure that you know my houses aren't getting you know blown up but when you drive down the streets of the properties that I own everyone's at work their blue-collar neighborhoods I've got property walkthrough videos on our website here as well on YouTube I look for vacancy rates I want our vacancy rates to be low cuz after all I want my properties to cash flow you know I don't want I don't want high vacancy rates like you get in places like Memphis and Little Rock Arkansas those types of places plus we have but job growth I want stable blue-collar jobs I want and also I love boring I want my markets to be very boring low volatility in all of that Anthony have ever thought about land investing no toilets or tenants yes I have however in a down economy people that own land or people that rent land you know for you know they want to drive ATVs on them and those types of things they don't tend to hold on to that they're much more likely to retain the house that they live in they're also much more likely to retain the car that they drive if they own a piece if they're renting a piece of land so they can go enjoy some ATV off-roading with their son or skeet-shooting or whatever they will likely drop the ball on that on that land investment and therefore you're left holding the bag also you don't get to enjoy the tax benefits of owning land in the way that you do with owning rental real estate being able to claim depreciation there's a whole host of reasons why I'm not you know I like land lands fine but there's a whole host of reasons why owning rental properties is a better to me owning rental real estate is the number one way to build wealth in this country bottom line there is no better investment there's no better investment not even land land is like maybe the closest but it's still not good enough what is my opinion on apartment buildings people ask me that all the time I've had great success and I've achieved financial freedom by buying single-family homes because they have a yard and the driveway and that's what I know and I know that tenants will stay a long time they come home after a long day at work and they feel like it's their house when you have a 10 unit apartment complex they're great you're always gonna have a vacancy it's incredibly rare that you'll be fully stocked fully occupied you're gonna be continually fixing things anytime you have you know two three four five six units on on and up multi families some multi families can be great if they're large but I'm telling you large multi families you're always gonna be dealing with vacancies so but again grant knows multi families he likes them he's a commercial real estate investor I'm a residential real estate investor I have achieved financial freedom from doing what I do best which is staying focus on single-family homes and I can't speak to how other people you know look you can invest in storage facilities you can invest in mobile home parks you can invest in commercial real estate you can invest in residential real estate you can invest in you can invest you know multi families you can invest in billboards you can invest in land as Anthony was just saying there's any number of ways you can invest in real estate find one way that makes sense for you don't go eight different directions though stick to one course of action that works well for you and achieve financial freedom so this channel we talked all about residential real estate buy and hold investing and mostly I do single-family homes so that's what this channel is all about I don't really talk about commercial so if you're interested in commercial I hate to burst your bubble you know but please please please don't seek my advice on large commercial properties that's not what I do thank you everyone I really appreciate it taking up enough of your time tonight please subscribe to the channel if you're not already subscribed driver to this YouTube channel please hit the subscribe button we're gonna be doing a lot more live events as we build the new studio the Morison best television studio I cannot wait we're gonna be doing live Q&A sessions just like this you can bring your heavy questions Natalie and I will both be on here we're gonna be having expert guests live as well folks like Robert Kiyosaki Garrett Sutton Tom wheelwright we're gonna be doing live interaction stuff I cannot wait so thank you guys so much us yes as everyone's saying here smash the like button can you guys hit the like button we have a hundred and ten people watching live it at this very moment can you hit all the the thumbs up button right now for me pound it pound it pound it pound it pound it I never asked for it and I just had one of our viewers say smash the like button yes smash the like button thank you so much Rob thanks everyone for all of your kind words I really appreciate it smash that like button let's see if we can get it up over 100 before I sign off here for the night for all of you any comments we didn't get to please just please leave them Jean thank you so much Jean Jeffery thank you so much you're very kind then again please reach out to me if you have any further questions I'm happy to help set up a call with our team we that's what we do we eat breathe this stuff and also we love about real estate investing is that there's nothing we cannot fix there's no problem that we can't fix tenant needs an eviction great get an eviction get a new ten in their roof is leaky great put on a new roof fix the roof water heater breaks great get a new water heater you get a violation letter from the City of Phoenix great deal with it there is nothing you can't fix and real estate investing and that's the beauty of this business thank you guys love you guys have a great night everyone I really appreciate it thanks Rob looking forward to working with you my friend reach out to me I'm happy to jump on a call again reach out thanks guys I really love talking with you guys and thanks for all of your really great questions you guys gave me a ton of great questions and I look forward to seeing you guys next time much love to you all everyone thanks Omar thanks Joyce love you guys