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

Jason got his first taste of real estate investing after joining a local real estate club. In 2012, he made his first transaction and hasn’t looked back since. Jason founded HoustonHouseBuyers in July of 2013. In its’ first year they produced $3MM of gross revenue, through wholesaling, leasing, and flipping 70 houses. HoustonHouseBuyer’s is expected to buy 100 houses in 2015 and produce nearly $6M in gross revenue.

In this episode Jason talks about some of the realities he feels most new investors aren’t prepared for. We want you to be prepared so we discussed them in length.

Key takeaways are that this should always be looked at as a business and not just something you can do willy nilly.

Always focus on a strategy and become the best at it because you will get nowhere fast by trying to learn and use every tactic out there.
Things I’ve run into:
Contractors don’t all do a great job, manage themselves, get done on time and all for a great price and you will have to have the courage to fire them.
There are a lot of people out there that are will to sign a contract and then not honor it (sellers, buyers, everybody in between).
When a seller says the house doesn’t need any work, rarely is it true.
There are places in town where druggies will attempt to jump into your moving vehicle.
Nobody is going to care about your work as much as you will (realtors, contractors, other investors)
The hours aren’t going to be 9-5.

I’m sure you’ve run into issues that you didn’t expect. What were they (let us know in the comments)?

Recommended Books

Think and Grow Rich!: The Original Version, Restored and Revised (TM)

Links

Search 12weekstoawesome or Jason Bible in Houston on Facebook.

Jason Bible’s Facebook

Please Rate and Review

This is my simple request: If you enjoy the podcast and look forward to hearing a lot more episodes, I would be very grateful, happy, beholden and otherwise indebted to you to rate and review the podcast on iTunes.

It’s your choice and I do not want you to feel at all obligated. But I’d love it if you would subscribe and leave a rating and review.

Ratings and reviews allow the podcast to be seen by more people, which will help me achieve my goal of helping as many others as we can to get started in the house flipping business and change their lives.

Click here to rate and review our podcast! :)

Not sure how to leave a rating and review? Click here to view the instructions (it only takes 2 minutes)

How to Subscribe to the Podcast

There will be a brand new episode every single week, so be sure to subscribe and receive each episode as it’s released.

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The post Episode 20: [Foundation] Realities new investors rarely expect when getting started w/Jason Bible appeared first on Flipping Junkie.

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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.

In today’s episode we talk about how people need to take action to overcome fear and find out what they need to learn.

Too many new real estate investors spend countless hours, days, weeks, months and even years study all there is to know about flipping houses but never take any action.

The reason for this has to do with fear and the Confidence/Competence Loop. Here’s an excerpt from the Leadership and Learning Blog with Kevin Eikenberry:

Let’s take a task you likely know how to do well, like riding a bicycle.  Are you afraid to ride a bike?  Likely not, because you know how to do it. So if I give you a bicycle and invite you to ride, you likely will do it right away – there is no reason to delay, there is no real fear, you just ride.  If I gave you a unicycle instead, for most people, fear would well up – and they wouldn’t even get on the seat.
So how do we get started?
We put our butt in the seat.
Action overcomes fear.
In the Podcast episode, Andy talks us through how he did his first deal by just jumping in and figuring it out.

We only need to focus on the immediate steps to achieve a simple, clearly defined goal. These simple goals can be, ‘get my first deal’, ‘get my first motivated seller call’, and/or ‘go to an open house’.

It doesn’t really matter what it is, just choose one. Focus on it and do the things that will get you to accomplish that goal. DO NOT waste time learning about sandwich lease options before you ever talk to a motivated seller. Work first on talking to some motivated sellers.

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

Please Rate and Review

This is my simple request: If you enjoy the podcast and look forward to hearing a lot more episodes, I would be very grateful, happy, beholden and otherwise indebted to you to rate and review the podcast on iTunes.

It’s your choice and I do not want you to feel at all obligated. But I’d love it if you would subscribe and leave a rating and review.

Ratings and reviews allow the podcast to be seen by more people, which will help me achieve my goal of helping as many others as we can to get started in the house flipping business and change their lives.

Click here to rate and review our podcast! :)

Not sure how to leave a rating and review? Click here to view the instructions (it only takes 2 minutes)

How to Subscribe to the Podcast

There will be a brand new episode every single week, so be sure to subscribe and receive each episode as it’s released.

subscribe
iTunes Subscribe on iTunes Stitcher Subscribe on Stitcher

The post Episode 19: [Foundation] How much do you really need to know before taking action? w/Andy McFarland appeared first on Flipping Junkie.

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