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Real Estate Investor Hacks That Will Make you Rich
Joe: Real estate investor hacks that will make you rich. First of all, I mean, the obvious, owning property. If you own property, if you own a portfolio it’s going to make you wealthy over time as long as you have positive cash flow as you’re owning it. If you can buy a property that has break even or positive cash flow over a period of time and you don’t have to do very much to make that, sustain it, then it’s going to make you very wealthy over time. So you really want to build a portfolio.
Joe: Now you may not want to start that way. You may want to start just by flipping some properties so you can get some chunks of cash, get a few thousand dollars here, five grand here, ten grand there, and have enough money to make it possible to live. But once you have enough money to live on then it starts to make sense to keep those properties, keep them for the long term. Make them sustainable for the long term. That’s going to be an important part of this process.
Joe: Now the best way to own property is to finance it properly. That means put as little of your money into it as possible and have as low an interest rate on the money, pay as little for the money as you can. My favorite way of doing it is to pay zero interest on a property so that every payment that we make to purchase that property goes 100% towards the purchase price. That means that you pay off that loan in one-third the time. This is the most exciting thing out there. Being able to pay off properties in a very short period of time. You’re talking about you know, five years, seven years, ten years paying off a property instead of fifteen, twenty or thirty years. It’s a huge, huge difference and a huge profit center because every dollar that you pay down on that mortgage is like putting money in a bank account. It’s actually building the equity by that amount.
Joe: Whereas if you, let’s say you went out and got $100,000 property with a 30-year mortgage. The first month you’re making a payment of $1,000. That $1,000 gets split up by you know, $100 goes towards principal and then $900 of it goes to taxes an insurance and interest. So it takes a lot more payments to get that mortgage down to a point where you’re paying it off. Typically three times as long. So thirty years.
Joe: Now on a $100,000 mortgage a bank typically will make $300,000 over the life of the loan and so if you’re making those payments you’re paying three times as much as you should for that property which is absolutely insane. Learn how to structure deals with sellers so that you can pay those properties off in a much shorter period of time and have more of the money that you’re paying them go towards the principal on the property. It’ll make you wealthy a lot faster.
Joe: Another thing you want to try to do, another real estate hack, I guess, is you just want to get more cash flow. And there are a few ways to do that. One is if you’re selling a property on a lease option ask for more down payment. Get a bigger down payment. You know, always try to negotiate the highest amount that you can get from them. And you may not always get it in cash. Maybe you’ll get part of it in cash and part of it as a promissory note. One of the things that we do on a regular basis is we’ll take half of the down payment as cash and half of it as a promissory note. And they’ll make monthly payments to us.
Joe: So let’s say we’ve got a $200,000 property. And we raise the price up to $220,000, sell it on a lease option, and we’re going to ask for $20,000 as a down payment. And we’ll allow them to pay $10,000 in cash and another $10,000 as a promissory note with $300 a month payments until it’s paid off. That’ll give us more cash flow, it’ll give us more income and it’ll make our lives a lot easier. I didn’t used to think that I could get the money if I did a promissory note. I didn’t think it was secured very well. And then a few of my students started doing it and I said, you know, are you getting your money? And they’re saying, yeah, we’re getting it.
Joe: So we started doing it. We just started doing this more than a decade ago and it’s been amazing. It’s doubled our income on these properties because now we know that people only have a certain amount of money for a down payment. They’re going to run out. They’re just not going to have enough to be able to pay the entire amount that you want. So instead what we’ll do is take the amount that they do have, and then we’ll take the balance of it as a note. And they’ll make that payment on top of their monthly payment for the property.
Joe: I hope that helps. If you like this channel hit the subscribe button, hit the like button. Go to JoeCrumBlog.com and get lots of free videos. Get on my mailing list there because I send out material to that list that I don’t send to anybody else. You can also get trained by me personally. Go to ZeroDownInvesting.com and find out about my six-month mentor program. It’s not cheap, it costs about as much as going to college for a semester but the training that you’ll get will be from me personally and it can help you launch your business.
Joe: You also might want to look at my automation system at PushButtonAutomarketer.com. It’ll show you how to automate this entire process.
Joe: All right. Good luck to you.