Download the presentation here: Download

Get the FREE Investing Starter Guide

Real-estate-investing-starter-guide

Sign up to get the FREE Real Estate Investing Starter Kit

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit

 

 

 

 

Unedited Transcript:

 

Hey there again.

Thank you so much for joining me in this mini course on how to make money with rental properties. in this is day number 2.

I want to thank you for joining us for the second day because today we’re going to be looking at some more in-depth analysis on how you can make money rental properties. now imagine if you had 15 20 or 30 rental properties make that would change your life forever.

there’s a couple things I want you to remember earned income and passive income. earned income is where you work 1 hour and you get paid for that one hour of work. passive income’s totally different where you work 1 hour and you continually get paid over and over and over again. It is exciting. now imagine you had replaced your earned income with passive income so that now you can not work. you can choose to say I quit my job I’m out of here because I have money.

I don’t have to worry about my expenses anymore. I want to see you be able to quit your job with rental properties. and have this passive income back and replace your in earned it. So far along today as we look at how rental properties can make you money month after month after month. then also going to look at the business processes that you’re going to need to develop in order to have this be passive income. and have little work on your shoulders. everything for property managers to inspectors to Realtors there’s. many different people that you need on your team that we’re going to look at today. far along let’s jump right on it take a look at it all right. let’s get started.

this is the second part of a mini course and making money with rental properties and. let’s look at how we can achieve our Financial Freedom with rental properties and passive income. the first step in achieving Financial Freedom is defining your goal second step is learning the numbers third step is learning the systems and forth is Implement and 5 is earn cash flow from those rental properties. let’s look at defining your goal what is it that you want to achieve what’s your goal why do you want passive income what is your objective in gaining Financial Freedom with passive income do you want to quit your job do you want to save for retirement is it wealth preservation may be creating more wealth earning extra income for your family.

I know that my goal is to quit my job I personally achieve that where I can quit my job with my passive income I have already surpassed my income from my job with my pastor income for my rental property. let’s take a look at how you can do that. let’s just say you’re going to like mine is to quit your job. the step number one is to find your target income remember I’m part one I had you go through the quick budget worksheet and on that quick budget where you can see all your expenses.

that is a number that you need to keep your mind as we look at passive income and how we can quit her job with rental properties. along with the expenses that you currently have you need to add any other expenses that you might need. if you’re quitting your job you may need to pay for your own health insurance if your employer is it currently covering that if you have any possible desires that you want to get in the future maybe want to remodel your house.

maybe you want to buy a new car maybe where to buy a boat maybe you need to take care of your family member cuz they are sick what about any possible future investing you might want to do. you want to continually grow your business. that you have more and more income every single month he need to save for that what if you want to take a vacation once a year that cost 5 to 6 thousand dollars.

we need to plan for that as well. you need a total all these items and that is the number you need to reach in order to quit your job. first find your target in coming you need to attain step to choose your path to success now with rental properties there’s a many different things that you can buy but let’s look at these two. if you purchase a b or c quality single-family home with a purchase price of $100,000 3 bedroom 2 bath 2 car garage 14 sq ft to build after I take just a regular cookie cutter type home in a subdivision it could rent for $1,100 expenses around $800.

your cash flow every single month your rents -2 expenses is $300 likewise let’s say you buy a C or D quality single family home the purchase price is around $40,000 3 bedroom 2 bath 2 car garage 1200 square feet built after 1930. it’s a little older home the rents are less because of the quality of the home but let’s look at how you can actually still make money. the rents are 750 the expenses are 4:50 but after subtracting the expenses from the rents your cash flow after expenses are $300 as well and. you have two different types of properties but you have the same amount of cash flow and.

these numbers are completely doable I know some people might say hey will you can’t find a house for $40,000 special every living in California are you can’t find one for $100,000 I beg to differ there many many place The nation that you can find properties at this price that can rent for this step 3 is plan your escape from your job job is j o b just over broke your barely making enough money to make ends meet and.

what we want to do is we want to plan our Escape 2 let’s look at a scenario let’s say your expenses are $3,800 a month that you need in order to live off of you know your your rent your food your car payment your gas bill whatever might be all totaling up to $300. to retire in 5 years with your expenses at $3,800 your yearly plan could look like this your 1 you buy one single family home with $300 in monthly income here to you by 2 single family homes with $300 a month plan come your 3 by 3 properties your for you by 4 more properties.

your 5 You by 5 more single family homes at $300 a month in income and that’s actually very doable you might look at that say how am I going to be able to buy one the first year then to the next year then 3 the next 4 than 5 and a sum of you thinking that that’s not doable that you can’t buy them any properties will trust me it’s very doable.

I’ve actually done it at year 5 I had 18 units that were bringing me cash flow every single month it’s very doable you just need to learn the tools of the trade in order to help you to achieve this. you’re 5 you have 15 single family homes with $300 a month coming in $300 times 15 that would be $4,500 extra each month that would bring in put in your pocket. how would your life change if you had $4,500 extra each month now remember this is not a get-rich-quick scheme.

this is something that you’re going to work hard at that can I take time you’re not going to be rich overnight some people may tell you that you can be rich overnight is very well you could but I find UPS exception I built my business from the ground up learning as I went and building a business that I currently make over $9,000 a month in passive income. how would your life change if you have $4,500 extra each month and you only did that after 5 years it’s very doable I think you can do it.

after defining your goal the next step is to learn the numbers now I want to show you guys 5 different ways that rental properties will make you money the first way is net profit does the cash flow that comes in your pocket every single month from the rent minus expenses second is equity capture third is appreciation for is equity build up and 5 is tax advantages and we’ll look at each one of these and death.

let’s take a look at the example property member this is the general cookie cutter type property that we’re going to be looking for your purchase price for single-family home would be $100,000 down payment would be $10,000 rents are 1100 expenses are $750 a month and.

this is the example property that we can be talking about. all these numbers revolve around this property and I know what you might be thinking I don’t have $10,000 for a downpayment well don’t worry their ways we can work around that there are plenty of ways to acquire properties without down payments that big you could even have one as as little as 3.5% but it’s not easy and you’re going to have to save money to remember this is not a get-rich-quick scheme this is something it’s going to take time hard work but in the end it’s going to pay off huge. with his example property in mind let’s move on and look at the net profit cash flow. that profit which means your cash flow every single month really simple Step 1 total all your monthly rent. what however much money you bring in from that one property.

total it all up step to subtract expenses that could be any insurance payments that could be taxes that could be utilities that could be homeowners association fees whatever fees whatever expenses that come with the property you need a total all those up and subtract that from the Monday red set 3 subtract the mortgage payment from what’s left over from the rents minus expenses and we’ll look at the numbers in just a second. don’t worry if we can go a little fast here. once you get the monthly red subtract expenses subtract equals the total monthly profit now from the prophet you look at x 12 to get the yearly profit. this is your cash flow monthly and yearly let’s look at that specific numbers here rents are $1,100 a month expenses.

$215 a month mortgage $535 a month your total cash flow would be $350 a month imagine if you have 3 + $50 extra each month in your pocket now multiply that by $1,200 extra each year in your pocket as income now let’s look at what type of rate of return. the total invested is $10,000 your total yearly income is $4,164 Percentage Roi return on investment.

you take the total amount you made / how much you actually spent to buy the property remember even though you bought it for $100,000 you only put $10,000 of your own money into the property. 4200 / 10000 is 42 which is a 42% return on your investment in one year can you believe that that’s move on.

Equity capture Equity capture is the amount of money that you make when you buy the property. let’s look at a couple points at you need to remember. you make your money when you buy the property you realize your money when you sell a property. you make your money which means you earned it there and then when you buy the property but you realize which means you actually put the money in your pocket when you sell the property.

or if you refinance the property and take the money out tax-free which that’s a whole another ball of wax that is going to be a game changer for you in the future trust me. what does one single family home you purchase it at $100,000 but the market value because you bought it lower the market value was $125,000 your net.

Equity capture is $25,000. $25,000 / $10,000 the down payment you put it is a 250% return on investment just from Equity capture can you believe that 250% return on investment crazy money being made in real estate next up is appreciation appreciation is the value of your property after repairs are done and you fixed it up and you’ve got it reappraised. you purchase property for on $1,000 you fix it up for $15,000.

Remember we already have the first appraised value is $125,000 but as we repair the property we get it painted redo Landscaping we maybe change the flooring out or you can just clean the carpets we put $15,000 in the property that’s a total of $140,000 into the property from the appraised value and the cost of improvements when you get it appraised it will be worth more money let’s say for example it’s worth $180,000 – the appraised value of $155,000 and the cost of improvements of $15,000. that is 180 – 140 which is $40,000 forced up appreciation just by fixing up the property.

that is a 400% return on investment because you take the $40,000 / $10,000 that you put in as a down payment equals a 400% return on investment cursor raising money being made in real estate the next 1 Equity build up now this one is where as the tenants pay your rent you pay the mortgage company with those rents and that mortgage payment goes towards the principal of the loan amount you just borrowed let’s say can you purchased the property for $100,000 does your down payment was $10,000. your initial loan amount is $90,000 let’s have to the entire year the amount apply to the principles $800 which means you’ve lower the loan amount $800.

the principal is paid down by $100 and you put $10,000 in as a down payment that’s $800 that you brought the mortgage down / $10,000 down payment is another 8% return on investment that alone is probably going to beat most stocks in the stock market. Equity build up basically as you’re paying down the loan amount on your property by the tenant paying the rent. they’re the ones paying it the last one in the 5 ways rental properties make you money is the tax advantages now the tax advantages can vary depending on each person because some people may have a higher tax bracket than others.

I want you to remember is that your property goes up in value we all know that we see prices of homes go up and up and up but the IRS the Internal Revenue Service who collects taxes says in their code that your property actually depreciates in value. they allow you as an investor to deduct the depreciation over 27 years to decrease your taxable income on average that’s about 10% tax savings. that’s another way rental properties make you money by Saving you on your taxes every single year. that’s another way that rental properties make you money just by Saving you money on your taxes every single year.

let’s recap you five ways that rental properties making money the net profit or the cash flow every single month your Equity capture your appreciation your Equity buildup and a tax advantages let’s recap let’s look at the numbers again from your $10,000 down payment net cash flow is 42% 250 % you’re forced to previous 70% Your Equity build-up is 8% in your tax advantage on average about 10% that’s a total first-year return of 780 % imagine putting $10,000 in the stock market and returning back 780 % back.

crazy how much money you can make from rental properties all right now the third step is learning the systems of a rental property business. the first step is to find a property. how do you do that never won would be in multiple listing service which is the MLS for realtors list all the properties that they’re trying to sell in one General list.

at all other Realtors can look at and you can get access to one of these list through a realtor that can give you access to it or you can look up online there are some free ways to get into the MLS but the MLS is going to have some very good deals some deals or not-so-good some girls are great but the MLS is a great place to start another one is w w w Craigslist calm this is basically a for sale by owner site but there also are some realtors that list on there as well but you’re going to find lots of properties that are not on the MLS on craigslist.com another great place to find properties is www.zillow.com now they’re going to pull from the multiple listing service the property and it was not just for finding properties it’s also able to tell you how much it’s worth how much rent going to be able to collect out of it when was it last sold how much the taxes are it’s going to give you. much data on this property.

you going to be really well educated on the one particular property now Realtors they are a fantastic way to find properties for you while you do not do any work but they are doing all the work. you get a realtor on your team looking for properties while you are doing whatever you want. they’re the ones doing the work cuz they want to make a sale and get their commission and. you you are able to do whatever you want go on vacation go play with your kids go up the mountain to go skiing go to the beach whatever you want to do.

with they are still working finding you deals another good way is fine wholesalers in your area those are basically non realtors that fine properties and then try to find investors to sell those properties to and. if you find some wholesalers they may have some good deals and they have not it’s a great idea to have wholesalers on your team because they can find you some good deals legal notices like foreclosures tax liens all these legal notices that the government dictates that must be submitted for the general public to view classified ads that are in the newspaper for sale by owners or even listed properties people still do you use classified ads or even direct mail if you really want to get into building this business Fast Direct Mail is a great way to do that the next step is running the numbers.

you need to locate a property once you found that property you need to find out how much it a rent for you can ask a realtor can find a property manager in your area that would know what the rent would be and ask him how much the rent would be you all seem to find out the estimated repairs needed to rent out the property you need to figure all the expenses for the property of each month calculate the mortgage payment as well the rent minus expenses minus the mortgage and that equals your total profit per month that goes into your pocket.

the estimated amount of money that it needs for the repairs is for you when you purchase a property to make sure you don’t overpay for the property. you cuz you wanted make a good deal on the property and you also want a factor in how much repairs is going to need. the next part of the system of building your business is finding your team members. number one is your property manager your business is going to live and die off your property manager if you get a good one hold on to him as best you can if you get a bad 1 fire him as quickly as possible I’ve had some bad property managers and it’s better to just cut bait and run you don’t want to have a bad property manager Realtors are terrific they work for you even though you’re not working there going to find your properties home inspectors and roof inspectors and electrical and all these different types of inspectors are great people to have on your team.

because they are going to help you find out what you need to do to the property or if the property is not worth buying contractors are there to help you estimate what the total rehab is going to be if their problems with the building the contract is going to help you have a good understanding of how much the cost for repairs are going to be any men are great people have on your team to there could be little projects that need to get done or you could even have a toilet leak in the middle of the night and a handyman can run over there and fix it for cheaper than a contractor would title companies are great because they check to make sure that there’s no liens against the property is .

Noah conferences that the title is free and clear. that when you get in your name. that when you buy the property there’s nothing that’s going to come and surprise you and it’s. title companies help to make sure that your property Rehabbing it and getting it rented out accountants are fantastic I absolutely love my account and I give him all the paperwork and he does all the work he is fantastic you need to have a good accountant on your side lawyers are also great team members to have now you don’t necessarily need one to be on retainer but it is a good idea to have the number of a lawyer just in case something happens we looked at the first three ways of how to achieve Financial Freedom let’s look at the fourth step in implementing your business.

this is basically your homework there’s a few things I want you to do. would to implement will be learned in this mini course you need to start by going and checking out the investment calculator that’s on my website www.mastercard.com for calculators you go to that link you’re going to find many calculators that are going to help you figure out if a property is worth buying and how much money you going to make I specifically created these calculators to help investors like you and me to run all the numbers and make sure that we’re going to make money taking and what to do cuz.

I want you to develop a mindset that is going to help you be rich. go to my website I have a book summary review of the richest man in Babylon It Was Written many many years ago it’s a fictional story that will help you learn how passive income will make you financially free it’s a fantastic book and you can read my summer review at Master passive income.com forward slash Babylon another homework you have is to create a financial statement. go to my website and master passive income.com Mini Mini 4 / mini and download the financial statement worksheet now this worksheet is going to help you figure out all your expenses all your debt all your income all your assets and basically some it up altogether. that you can present it to any bank and they can see your financial history because they want to know how well you’re going to be able to pay back the loan.

that you’re boring from them. go there download the sheet fill it out and you’ll have that in your bag. that when you go to get loan you’ll have that right away the last thing I want you to go to www.zillow.com I want you to go there and look at your part 1 a look at the area see what’s for sale get to know the numbers and get to know the properties in the area you need to know what they’re selling for what they’re renting for the size of the homes you just need to understand the market in order to jump into it cuz you don’t want to by poorly in my opinion when I bought my first property I way overpaid and. I should have known but I didn’t I didn’t know all this stuff I didn’t have somebody like me that was walking me through or teaching me every step of the way how to build a business and do it right. that’s your homework don’t feel like it’s daunting but you got to remember this is not a get-rich-quick scheme this is something that’s going to take time it will get easier and easier as the years go by because you make more money from your passive income that you can put into buying more properties which will help you to buy more properties and. on but you need to be diligent and do the work because if you don’t know if he’s going to do it for you you got to make yourself. this concludes the making money with rental properties mini-course part 2 and I want to thank you. much for being a part of this many course I hope you’ve learned a lot and you’ve developed a lot of questions if you have any questions please go to my website contact me I’d love to hear from you have a contact form on there you could send me a direct email at dustin@masterpassiveincome.com

 

Get the FREE Investing Starter Guide

Real-estate-investing-starter-guide

Sign up to get the FREE Real Estate Investing Starter Kit

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit
Video Course – Making Money with Rental Properties Mini Course Part 2
Tagged on:
  • Dustin Heiner

    test