The Path To A Fully Automated Real Estate Investing Business

“The Path To A Fully Automated Real Estate Investing Business”

Joe: Hey, it’s Joe Crump. Welcome to my new video series for the blog about how to create a fully automated real estate investing business. This first video, I want to go into and overview of what I teach my mentor students, how I take them through this process and to show you that we teach more than just one thing. I know a lot of you ask me, “Do all you teach is lease options?” And that’s not the case.

Joe: What I teach at the beginning, is first we learn how to make offers to sellers, zero down and no credit offers to sellers and get them accepted, get a contract, get control of the property so you become a principal in the transaction. Once you do that, it makes it legal for you, if you’re not an agent, to be able to go out and sell that property without a license.

Joe: So the next step in the process is to go out and find buyers. Typically finding a lease option buyer is an easy way to do that. If you structure these deals the way that I teach with the zero down structure hierarchy that I teach, you can sell these properties pretty easily doing that. Once you’ve done step on and step two, that’s when you start making money. And that’s when you can say, I’ve got a business that’s starting to happen now. Now I’m officially in business.

Joe: After that, you want to learn how to stop doing the things that aren’t productive. Because as you’re learning the process, you do a lot of stuff that’s not productive. Things that it’s just junk time. Eighty percent of your income is going to come from twenty percent of your effort. So you want to do just that twenty percent so that you’re the most productive. You want to eliminate, that’s the second step. First you learn how to do a deal, then you eliminate all the junk and then you want to automate everything you can’t eliminate.

Joe: So you’re going to use software, you’re going to use different automated processes to keep your business running without your doing anything. Once you automate using something like the Automarketer or other types of software, the next thing you want to do is look at your business and say, well, what still needs to be done in my business that I can’t automate or eliminate? With those things, you outsource.

Joe: You find someone else to do that work. When you do that, you can extract yourself from the business or at least partially or mostly, extract yourself from the business and you can look over the business. You can look at your business instead of working in the business all the time. And that’s when you have a true business. That’s when it’s fully automated.

Joe: Once you have your life back then you can start thinking about doing other things and expanding your life in other ways. So, the next step that I suggest is that you increase your business so that you double your previous income. Because once you have your business and once you have it automated and you’re able to quit your regular job and now you’re able to do this full time, the next step is you want to increase the income that you’ve got coming in, at least for many people it is. Some people are just happy with, look Joe, let me just replace the income that I’ve got and I’ll be happy. But a lot of people, it’s not that much more difficult to actually double your income. Because if you’ve been doing this for eight to ten hours a week while you’re working a full time job, and you’re able to replace your income, which is the way most of my students do it, then when you do this full time, and you only work twenty or thirty hours a week, then you can probably double the income that you made and you can become more efficient and you can get your systems up and running in a better way so you have double the income.

Joe: My suggestion is don’t spend all that money. Live on the amount of money that you’ve lived on before and start keeping that second half of your income. Put it aside so that you can start investing it in real estate. At the same time that you’re doing this, you also want to start keeping some of the properties that you purchased. Buy a property subject to the existing loan and you turn it into a lease option rental. You sell that property on a lease option and put a tenant in there and over time those people will either exercise their option and cash you out of the deal and make you a chunk of money, or they’ll stay in there and they’ll pay down the rent and maybe they’ll move out and you’ll put another on in there and you’ll just hold that property for the long term. That is how you build wealth in your life.

Joe: You can make a great income as an investor flipping properties over and over again. But to actually build wealth you need to hold on to some of those properties and you do it without using your cash, without using your credit.

Joe: After that, you start taking some of this cash that you’ve been setting aside and maybe it makes sense at that point to start investing that money and I suggest, you know, they always say that you need money to make money. I believe that if you can’t make money with no money you probably can’t make money with money. It’s easier to buy a house if you have cash or if you have a new loan to go out and buy it, but it’s not any easier to make money doing that. If you go through this process and learn how to do it with zero down, without credit, the time that you finally get to when you have cash to spend you won’t screw it up. And you won’t lose that money. And you won’t screw up your credit.

Joe: After that, you start taking some of this cash that you’ve been setting aside and maybe it makes sense at that point to start investing that money and I suggest, you know, they always say that you need money to make money. I believe that if you can’t make money with no money you probably can’t make money with money. It’s easier to buy a house if you have cash or if you have a new loan to go out and buy it, but it’s not any easier to make money doing that. If you go through this process and learn how to do it with zero down, without credit, the time that you finally get to when you have cash to spend you won’t screw it up. And you won’t lose that money. And you won’t screw up your credit.

Joe: I’m going to suggest that you never use your credit if you can avoid it. Never use hard money. Stay away from private money. You don’t need it if you follow this process and it keeps your risk much, much lower. When you take this money, you could put it into very safe vehicles. One of the things that I’ve done a lot of is we buy little properties for $15,000, $20,000, $25,000, put $10,000, $15,000 into them, sell them for $20,000 more. And we wouldn’t sell them to end users. We would sell them to other investors. So we’ll put a tenant in that property, have them professionally managed and sell them as turnkey investments. There’s a lot of investors that have $40,000, $50,000, $60,000 in cash and they’d like to see a 12%, 14%, 18% return on their investment. And these types of deals can provide that for those investors. And it makes you money as the investor.

Joe: Then you take that money and maybe in three, four or five months it’s taken you to flip that property and get it filled and put a tenant in there. You turn around and flip it and you make another chunk of money, probably 50% to 75% of what you have in that. If you did that every year, you’re going to start building up this cash fund that you’ve got. Eventually you won’t have to put any more cash into this fund. It’ll just be self-perpetuating and it will keep growing and keep growing and the properties, as you keep them, sometimes it makes sense just to keep the properties and put tenants in them.

Joe: One of the problems with flipping properties that you’re just doing rehabs on is that you have to start over every time and if you don’t get it sold, you’ve got a vacant property that you’ve got to deal with. If you’re flipping turnkey investment properties, you have income coming in while you’re trying to get them sold. So if it takes more than a couple months to get them sold, you still have income coming in from those properties and when you look at your return on investment at the end of the year, or the end of the time that you hold that, it’s much more attractive. So that’s the way that you want to keep those properties in the long run.

Joe: Now, that’s kind of the path that I’m trying to take my mentor students through. First of all, let’s just do a deal. Let’s just make a little bit of money. Then automate the process. Then start keeping properties for the long term and then start using the cash that you’re making to build a long-term, large size investment portfolio. A lot of that can be done inside a Roth or an IRA and it can be very profitable so when you finally retire you can pull that money out without paying any taxes on it.

Joe: All right. Well, I hope that helps. We’re going to talk about more automation in the coming videos, but this is just kind of to get you started and give you an idea of the direction we’re going with it. Thanks now.