Think and Grow Rich
Think and Grow Rich
The Science of Getting Rich
The Science of Getting Rich

Matt Napier's Real Estate Warning to InvestorsSince the beginning of the Great Recession, there has been a debate on cash flow between real estate investors, many of whom learned some tough lessons when the Recession began (including myself). Specifically, the debate is: What kind of deals should you focus on and how is your money best used!? Should you focus on creating equity or focus on creating solid income and cash flow?

You may be saying that they don’t have to be mutually exclusive. While that is correct, many investors tend to focus on either building equity OR cash flow. To me, the decision of what kind of deals to focus on is made easy if you boil it down to one thing- how much money do you need right now to live the lifestyle that you are already living (provided it’s already a decent standard of living) and do you already have enough cash flow to live off of on a monthly basis? If you do not have enough to live off of, do NOT focus your efforts too heavily on equity build up. Instead, focus on cash flow (quick flips, wholesaling, and only rentals that will generate strong cash flow); investments that will put cash in your pockets within 1-9 months.

One of my mentors when I got into real estate investing nearly a decade ago, Del Hinds, who headed the SCREIA, made a point of continually telling me not to focus too much on gaining long-term equity, until I had enough to live on today. His famous words still haunt me- YOU CAN’T EAT EQUITY! I also had another mentor that swore to me, you better have a sure fire exit plan and back up strategy if it doesn’t work. I will explain that more in a minute, but for now, let’s talk about Del’s words. At the time, I thought that he just had a different approach to investing, but he was 100% correct. Although I’d built up a significant pile of equity in properties, that was slowly being squeezed out each month when the Recession hit and since I didn’t focus on strong cash flow from the beginning, the $100 to $150 I was making per property on gross rents (before expenses) barely covered basic maintenance and vacancies, meaning my true profit per month on rentals was close to zero.

This serves as a warning. If the economy goes into another recession (which is certainly possible given the lack of fundamental improvement in the economy and massive spending by our government) and you do not have more than enough cash flow to live on already and are focusing too heavily on equity, change your focus… FAST. Focus on wholesaling, rehabbing, and flipping properties, or if you do buy rental properties, ensure that you have at least 30 to 35% cash flow after PITI payments plus a 10% allowance for vacancies and a 10% allowance for repairs (I actually look for 50% net cash flow now). Just because there are enough properties with potential equity that we can buy all day long right now, don’t buy too many properties too quickly if the strong cash flow isn’t there, and if you’re choosing not to re-sell them right away. Your equity may get squeezed out and you may be stuck with a property that you can’t sell for what you thought, and then you’re holding onto properties that aren’t cash flowing well enough to make it worth your time. You’re one of the smart ones though; you know to focus on cash flow, and thus, you will be a successful investor.

Matt Napier

With nearly a decade of experience in specialized niches of real estate, Matt is considered a highly knowledgeable real estate investor in the Charleston, South Carolina area. Matt has dedicated himself to learning highly specialized skills which allow him to find high-return real estate investments for his clients and his investment company, The Napier Organization. His company offers high-return investment opportunities to select individuals and funds, secured by real estate. In his free time, he enjoys coaching new real estate investors on the technical details of real estate investing.


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Show Notes

Andy McFarland is a self-made real estate entrepreneur who started with nothing and currently makes seven figures a year in his real estate business.

After getting fired from his last W-2 job in 2004, Andy went into real estate full time and has never looked back. Andy currently focuses on wholesaling properties in three different states; Utah, New Mexico, and Indiana. In 2015 alone, he did over 150 deals!

Andy has been married for 10 years and currently resides in Farmington Utah with his beautiful wife and three amazing children. Andy enjoys being around family and friends and continuing to grow and learn every day. You can follow Andy on his real estate journey by going to his website: www.iloverealestatestories.com or on his YouTube channel by searching for I Love Real Estate Stories.

He was also with us on episode 19 where we discussed ‘how much do you really need to know before getting started flipping houses?

In today’s episode we talk about how real estate wholesalers operate and how to become one of their VIP buyers.

There is a very common misconception that wholesalers don’t leave enough meat on the bone when they sell their deals. That can and does happen, but it’s not every deal and not every wholesaler.

We discuss how we’ve seen wholesalers put out great deals at crazy prices because they made assumptions that were invalid.

Andy gives an example of how he just bought a house from a wholesaler that thought the house would only work as a rental. Andy determined it would work as a flip and snatched the deal up and wholesaled it himself at a higher price.

Some key points to take away from this episode are as follows:

  • Be top of mind with good wholesalers (call them on a regular basis and befriend them)
  • Develop friendships. Don’t just say, ‘Give me, give me, give me.’
  • Be prepared. Be ready with funding, earnest money, offers, etc.
  • Don’t make assumptions. Do your own due diligence.

Andy wholesales a TON of deals every year and his insights on how to build a great buyers list and how he operates his business are priceless.

Download The Guide

Click Here to Download the Inspiration, Mindset, and Pushing Yourself to the Next Level Keynote Talk

Recommended Books

Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

The Millionaire Real Estate Investor

Links

ILoveRealEstateStories.com

I Love RE Stories Youtube Page

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The post Episode 32: [Team Building] How To Work With Wholesalers w/Andy McFarland appeared first on Flipping Junkie.

Download The Profit Newsletter for May 2016 (PDF)

The Profit Newsletter - May 2016The May 2016 Edition of The Profit Newsletter is now available for download. There are 54 pages this month full of upcoming meetings, workshops, educational articles and other valuable information for your real estate investing pleasure and success. Download it and check it out!

The Profit is Atlanta REIA’s digital, interactive newsletter for serious real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices. Many of the articles and ads in The Profit contain many hyperlinks you can click to get more information online! The high res version of The Profit is “print ready” for those who want to print the newsletter on their home or business printer.

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