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Get Rich Education

This show has created more financial freedom for busy people like you than nearly any show in the world.Wealthy people's money either starts out or ends up in real estate. But you can't lose your time. Without being a landlord or flipper, you learn about strategic passive real estate investing to create wealth for yourself. I'm Show Host Keith Weinhold. I also serve on the Forbes Real Estate Council and write for Forbes. I serve you ACTIONABLE content for cash flow on a platter. Our bottom line in real estate investing together is: “What’s your Return On Time?” Where traditional personal finance merely helps you avoid losing, you learn how to WIN. Why live below your means when you can expand your means?Since 2002, international real estate investor Keith Weinhold owns multifamily apartment buildings to single family homes to agricultural real estate. New episodes are delivered every Monday.

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66: Wire Your Mind For Wealth

#66: Learn some broad approaches to getting more money for a down payment so that you can buy income property sooner. Keith also looks at methods of acquiring passive income other than real estate investing. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive Turnkey RE webinar opportunities. Listen to this week’s show and learn: 02:14  Real estate can build massive passive income - this is buy-and-hold real estate, not flipping or wholesaling. 03:36  Why you need to buy time, not sell time. 07:34  Focus on increasing income, not cutting expenses. 10:00  How to approach the classic “time vs. money” conundrum. 12:04  Here’s how much the average American investor lost last year. 15:28  Keith is adamant that we still have inflation today. 16:28  Here’s how wealthy people choose their friends. 24:51  The next episode features an Atlanta Market Profile. 26:28  “How To Win Friends and Influence People” 32:12  Your network determines your net worth. Mastermind groups. 33:09  This is what broke people (broke mindsets) say. 34:03  Want to accumulate liquidity faster? Don’t get a part-time job. Do this instead. 35:58  Passive income from real estate versus: patent royalties, trademarks, original works of art, stock dividends, etc. 37:40  When you were a kid, your parents never told you, “Don’t be broke.” Resources: “How To Win Friends and Influence People” - The classic Dale Carnegie self-help book Business Insider article quoted: BusinessInsider.com/rich-people-choose-friends-2014-12 VisualCapitalist.com MidSouthHomeBuyers.com or call (901) 217-4663 for Top-Notch Turnkey Rental Properties. NoradaRealEstate.com or call (800) 611-3060. Your Premier Source for Nationwide Turnkey Cash-Flow Investment Property. GetRichEducation.com - that’s where to subscribe to our free newsletter, receive turnkey real estate webinar opportunities, and see all Events. Download the GRE Android App at Google Play to keep the GRE icon right on your phone’s home screen! We would be so grateful if you wrote a review! Here’s how to write one at: iTunes, Stitcher, and Android. To get a free GRE logo decal for your review, send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com


15 Jan 2016

Rank #1

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Live Before You Die

If you work for a salary or a wage, then money is an important factor in your life. So there you are, making between $60,000 and $150,000 per year. You’ve got a good home, steady employment, you drive a decent car. Sometimes you even feel “comfortable.” This one precious life of yours is made up of time. Are you trading away that time for dollars at a job that you aren’t passionate about? Every morning, you might even separate yourself from those you love… in order to do this. With real estate investing, you don’t want properties so much as you want its passive income - income that you don’t have to work for. Now your eternal time vs. money dilemma is solved. If you don’t know why you urgently need financial freedom, do it so that you can “Be Yourself”. See… you wake up to a blaring alarm to get to your job - and that’s how your day starts. Then you’re programmed to tote company lines all week. Near the end of the work day, you’re playing another tireless charade - screwing around on the internet while you’re watching the clock like it’s a countdown timer so you can get out of there. that’s unethical. You aren’t being yourself… because you wouldn’t naturally do those things. Most employees aren’t driven by purpose, they’re driven by fear. Your growth can only begin when you peel back each layer of your vulnerability onion and get honest with yourself. The roots of change are nourished with genuineness. You’d rather quit your job and be a nature photographer or a Red Cross volunteer or a sports writer or travel. Even if your job is OK, wouldn’t life be better if you were job-optional? You haven’t created the time to feel peace, joy, happiness, giving, love and freedom in your life. You spend all this time learning how works works, zero time learning about how money works... yet money is the only reason that you even go to work. Look… you won’t obtain freedom by getting your money to work for you. Every dollar that you put in a stock or 401(k) plan can’t leverage other people’s money... ...for freedom, you must ethically employ other people’s money. That’s the mindset shift. Real estate gives you limitless access to other people’s money - the bank’s, the government’s, and your tenants. When you have enough passive income to meet all of your expenses, you can quit your job and be free! Real estate is the generationally-proven way to build wealth and you don’t even need any degree or certificate. That’s why I talk tirelessly on my podcast, and in videos, and articles and newsletters and wrote a book, and keep visiting the best geographic markets to find the right opportunities and properties and to meet the right people. In this one life of yours, you can either be a conformer or you can build wealth. Once you have time freedom, whether or not you want to go on to be rich from there - well, that part’s up to you. This is an unselfish act - because when you do what you love, you’ll produce better results for both your family and society. You can’t help others if you’re poor. Don't live below your means. Expand your means - with anything that you do in life. The sad thing is, you have a choice in this - yet you’re selling your time and your soul for money. And that’s what breaks my heart. Learn how to invest in real estate - the smart, patient, stable way. Most people get used to “settling” in life. When you were 12 years old and thought about your adult life, I’ll tell you one thing that you never thought: “Someday, I’m going to live a small life.” Well, now that’s precisely what you’ve done. Get real with me. How much did your employer pay you to quit your dreams? Do you even remember what your dream was from when you were 12? I bet you’ve forgotten. When your dreams die, you die. Most people die at age 25. It’s just that they’re not buried until age 85. Will you live before you die? -by Keith Weinhold of Get Rich Education _____ See the “Live Before You Die” VIDEO when it is released by subscribing to our e-mail newsletter at: GetRichEducation.com Also, follow me on Instagram: @getricheducation @keithweinhold Facebook: @getricheducation YouTube: Get Rich Education Channel Twitter: @GetRichEd LinkedIn: Keith Weinhold


9 Jan 2019

Rank #2

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249: Beginner's Real Estate Investing Guide

Two big mistakes are: 1) Renting out your former primary residence. 2) Only being invested in one market.  This Beginner’s Real Estate Investing Audio Guide also helps you step-by-step with buying an income property: Credit Scoring Mortgage Pre-Approval Writing An Offer Inspection Vetting A Property Manager Appraisal Insurance Closing LLCs The entire audio from this episode is transcribed into words and can be found at the end. People set up LLCs for asset protection, anonymity, or tax purposes. But there is a lot of administrative work. Is it even worth setting up? Your FICO credit score has five ingredients. Down payment, debt-to-income ratio covered. Mortgage pre-approval is better than pre-qualification. Select income property in: job-growth economies, high rent in proportion to low purchase price. Cash flow = Rent Income minus “VIMTUM”. Why would someone sell you a cash-flowing property? “Turnkey” defined. Should you make a lowball offer to a turnkey provider? Also discussed: Negotiation Strategy, Earnest Money, Purchase Contracts, Management Fees, Management Agreements, Mobile Notary, Title Company, Rent-To-Value Ratio, Collecting Cash Flow. ___ Want more wealth? 1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book 2) Your actionable turnkey real estate investing opportunity: GREturnkey.com 3) Read my best-selling paperback: getbook.at/7moneymyths ___ Resources mentioned: Mortgage Loans: RidgeLendingGroup.com Find Properties: GREturnkey.com Memphis & Little Rock Property: MidSouthHomeBuyers.com Turnkey Real Estate: NoradaRealEstate.com QRP: TotalControlFinancial.com JWB New Construction Turnkey: NewConstructionTurnkey.com Our Tampa Real Estate Field Trip: RealEstateFieldTrip.com Best Financial Education: GetRichEducation.com Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold Complete Audio Transcript: Welcome to Get Rich Education. I’m your host Keith Weinhold and I’m here to help Beginning Real Estate Investors Today.  The biggest beginner mistakes to avoid, when you make an offer - can you lowball a turnkey provider, and all those buyer steps like LLCs, mortgage pre-approval, inspection, appraisal, and closing. Today, on Get Rich Education. ___ Welcome to GRE. This is Get Rich Education Episode 249 - and this is your Beginner’s Real Estate Investing Audio Guide. Hi, I’m your host Keith Weinhold. We’re talking about how to get into long-term buy & hold RE investing - and that’s because it’s the most generationally-proven way to build wealth. First, let’s talk about a couple of the biggest mistakes that real estate investors make - it’s being invested in only one geographic market. Often, that’s the market that they just happen to live in.  There is more risk with being in only one market than most realize, because you’re now tied to the fortunes or misfortunes of just one area’s economy. Another substantial, common real estate investor mistake is that they continue to hold onto one - I’ll call it - special - property in their portfolio that they usually need to get rid of - but they have either sentimental ties to it - or they just hold onto it for convenience, and do you know what that property is? I’m actually talking about a specific property here. It’s the home that THEY YOU USED TO LIVE IN yourself. Well, what’s wrong with renting out the home that you used to live in yourself?  You might still have the preferable owner-occupied financing locked in on that one - and afterall, that’s a better rate than you could get on a non-owner-occupied rental. The problem is that the property probably doesn’t perform BEST as a rental. But you might be clearing, say $500 per month by using your former primary residence as a rental today.  Look, for you, it’s often about the cash flow - and yes, it is about the cash flow.  But there’s something even more important than cash flow - that’s because nearly any property will cash flow if the loan were paid off. That’s why it’s really more specifically about the rent-to-value ratio of a property. If you’re renting out the home that you used to live in, and it wasn’t strategically bought as a rental, if your rent-to-value ratio (or RV ratio) is 0.6%, meaning that for every $100K in value it has, you’re only getting $600 of monthly rent income, then you’re losing cash flow dollars every year - and every month. Look, let’s give a real life example of the .6% RV ratio. Say that you can get $1,800 rent out of that $300K property that you used to live in.  But instead, three $100K homes bought strategically as rentals can have a combined rent income of $3,000. Yes, you can still find that full 1% rent-to-value ratio. So it’s either one $300K property at $1,800 of rent income. Or three $100K properties at $3,000 of rent income.  So you’re losing $1,200 dollars of cash flow every month - you’re only getting $1,800 rather than $3,000 - by not buying and owning strategically in markets in the Midwest and South where the properties make sense as a RENTAL on the day that you buy it. Your primary residence only made sense as a primary residence on the day that you bought it.  Now you can see that the only reason that you own it, is because you defaulted and “fell” into it. Don’t fall into things. Be intentional.  You are a better investor when you’re intentional rather than emotional. It’s even better for you now. Beyond your $1,200 of additional cash flow with some repositioning, now, with three properties instead of one - now you’ve also taken care of the first real estate investor mistake that I mentioned. WITH three rentals rather than one, now you can be diversified across multiple markets. Two birds are killed with one stone. Now with some re-positioning, you’ve increased your cash flow by $1,200, AND you’re in multiple markets. One property isn’t divisible. We’re talking about real estate investing for beginners today, so let me clearly guide you through step-by-step on just how you go about buying your first property - writing an offer, inspection and vetting your Property Manager which is known as due diligence, appraisal, and onto closing and receiving cash flow from the tenant. As you’ll see, much of today’s show pertains to any investment property at all. But we’re talking mostly about how to buy single-family turnkey homes, especially homes outside your home market - as most of the best deals are not found where you live. Like they say, the best investors live where they want to live, invest where the numbers make sense. Get Rich Education is heard in 188 world nations.  Today’s content is primarily geared toward United States real estate investors - but those that live outside the United States will benefit here too. Here’s a question that you might have - “How do I go about setting up an LLC - a Limited Liability Company - to hold my investment property in?”  I’ll tell you - I don’t think “How do I set up an LLC?” is the best question to ask. The best question to ask is, “Should I set up an LLC?”  The three main reasons people set up an LLC are for either anonymity, tax purposes, or asset protection. Now, if you know that you WANT to set up an LLC - I’ve done three episodes on that topic with Rich Dad Legal Advisor Garrett Sutton. You can go to GetRichEducation.com, type “Garrett Sutton” in the search bar, and those three episode numbers will appear so that you can listen. But the reason that the question is, “Should I even SET up an LLC?” is because: Setup of LLCs complicates your life. Maintaining a registered agent, Articles Of Incorporation, having separate accounts, tracking expenses with separate credit cards, paying annual fees for everything - depending on how many LLCs you have and how you structure your life - it can wear you out. The second reason you should ask yourself, “Should I even set up an LLC?” is because you might not have many assets for a litigant to go after. Retirement accounts have certain protections already. Equity in a property could be low-hanging fruit for a plaintiff attorney if someone gets a judgement against you. But since the Return From Equity is always zero, what would you have much equity in a property anyway? The third reason you should ask yourself, “Why should I even set up an LLC?” is that frivolous or slip-and-fall type of lawsuits are rare. Not only have I never been a party to one, I’ve never even heard of any investor friend or associate having one - and I talk to a lot of people. You probably haven’t heard of one either. Now, note that I’m not saying you can’t get an LLC or shouldn’t get one. I’m saying, prioritize those questions to yourself. First, it’s “Should I get one?”. If that’s a definitive “yes”, only THEN ask: “How do I set one up?” Why do you think you have to? Did some attorney use fear tactics to get you to? If the result of the LLC’s administrative overburden provides a greater reward in the form of asset protection, anonymity, or tax benefit - which is typically a flow-through taxation type anyway, you might then … get an LLC. So, as a beginning real estate investor, understand that real estate is a credit-based asset - meaning it’s usually bought with a loan.  So let’s talk about getting your finances in order before you contact a lender or select an income property.  That begins with you having enough cash liquidated for a 20% down payment on the property - add about 4% for closing costs, depending on the state that you’re buying your property in - and on the lowest-priced property that’s still in a decent area of a low-cost city - which might be a $60,000 property … 24% of that then is about $14,000 that you’ll need. You should have some extra on top of that as reserves.  Now, let’s look at another part of your finances - your DTI - your debt-to-income ratio. It cannot exceed 43% to 45% - maybe up to 50% in some circumstances.  So if your monthly minimum debt payments - everywhere in your life - housing payment, minimum credit card payments, minimum car payment - if that sum is $5,000 and your gross monthly income is $10,000 - that’s a 50% DTI. You can’t exceed that. Of course, before a bank is willing to loan you money, they want to have a reasonable assurance that you aren’t weighed down with debt elsewhere because their fear factor goes up that they won’t get paid back. Next, let’s talk about your credit score. We dedicated an entire episode to this back in Episode 54. If you can remember back that far, Philip Tirone was here with us and you learned more about credit scores that you probably ever thought you would … … and he even went on to call the credit scoring system a total scam. He was quite opinionated - it was interesting and eye-opening, but ...  Playing within the scam here - as it might be.  There are many different credit scoring models, but the FICO Score - F-I-C-O - is a respected one that you’re probably going to see your mortgage lender use. It stands for Fair Isaac Company. Their credit scoring range is 300 - the worst, up to 850. 850 is essentially a perfect score. Importantly, 740 is the highest score that helps you here.  If you have a 782 or an 836, it doesn’t help you qualify for the loan or get you a lower mortgage interest rate or anything else.  740 is where you’re optimized.  Now, just a quick overview of FICO credit scoring ... There are five primary ingredients that make up your credit score. In order of importance, they are your payment history, amounts owed, length of your credit history, new credit, and finally credit mix.  That first one, Payment History, is the most heavily weighted one. It’s 35% of your score. As you might expect, the repayment of past debt is a major factor in the calculation of credit scores. It helps determine your future long-term payment behavior. Both revolving credit (i.e. credit cards) and installment loans (i.e. mortgage) are included in payment history calculations.  Although installment loans like mortgages take a bit more precedence over revolving credit - like credit cards.  This is why one of the best ways to improve or maintain a good score is to make consistent, on-time payments. The next way, your Amounts Owed – 30% This category is basically credit utilization or the percentage of available credit being used - or borrowed against. Credit score formulas “see” borrowers who constantly reach or exceed their credit limit as a potential risk. That is why it’s a good idea to keep low credit card balances and not overextend your credit utilization ratio. So if you’ve got just a $1,000 balance on a credit card with a $10,000 credit limit, that’s seen as a good ratio. You’re staying well within your limits then.  The third FICO credit score ingredient is the Length of your Credit History – 15% This factor is based on the length of time all credit accounts have been open. It also includes the timeframe since an account’s most recent transaction.  Newer credit users could have a more difficult time achieving a high score than those who have a long credit history. That’s because if you have a longer credit history, FICO has more data on which to base their payment history. The fourth of five FICO ingredients is your “Credit Mix” – Now we’re down to an ingredient only comprising 10% of your score. Credit mix just means that it helps your score if you have a combination of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.  Finally, “New Credit” makes up the last 10% of your FICO score. Don’t open too many new credit accounts in a short period of time. That signifies a greater risk to lenders – and that’s especially true for you if you’re a borrower with a short credit history.  And you sure don’t want to open up any new lines of credit, down the road when you’re in the qualification process for buying a new property unless you check with your Mortgage Loan officer first. Knowing what factors make up your FICO® Credit Score can help you qualify for more loans and get better mortgage interest rates. That’s the bottom line. This helps you get pre-qualifed or pre-approved with your Mortgage Lender. To get prequalified, you just need to provide some financial information to your mortgage lender, such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much they can lend you.  After pre-qualification, you can seek the higher-level status and that is getting pre-APPROVAL for credit. Pre-approval is better than pre-qualification. If you think about it, it makes sense. Qualifying for anything in life is not as good as getting approved for something - I suppose.  Pre-approval involves providing your more detailed financial documents - like W-2 statements, paycheck stubs, bank account statements, and your previous two years tax returns. This way, your lender can VERIFY your financial status and credit. Now that you’re pre-approved with a lender, you can focus on the market and property that you’re interested in.  RidgeLendingGroup.com is the mortgage lender that we recommend most often because they SPECIALIZE in income property. They don’t have any seasoning requirements. Seasoning means that the person selling YOU the property needs to have held onto it for a certain length of time - or the lender won’t finance the property for you. While you’re in the pre-approval process, you can be learning about a cash-flowing investment market.  You want to pick a geographic metro market that typically has low-cost properties, and high rent incomes in proportion to those low costs.  In fact, the market is more important than the property. Because your income comes from your tenant, and your tenant’s income comes from a job. So you typically don’t want to own much property in a town with 14,000 people that’s an outlying area - not part of a greater metro - where 1/3rd of the employment is tied to one tungsten factory or even one semiconductor manufacturer. Because now, too much of your income stream is tied to just one industry. You also don’t want to buy slummy property. Those tenants often don’t pay the rent. You also don’t want to buy the median-priced home or higher, because the numbers don’t work out. So you want that working class housing that’s just below the median price point for the area. If you’re not already confident about that and familiar with the right provider ...  We have information on the right market, with the right provider, with properties - and they’re typically in the MidWest and South - at GREturnkey.com.  So read a market report there. That’s good, pointed information. Most investors are interested in a property for the production of cash flow. That’s the margin by which your rent income exceeds all expenses. Rent income minus expenses should be a positive number. So that’s your monthly rent minus VIMTUM. V-I-M-T-U-M.  Vacancy, Insurance, Maintenance, Taxes, Utilities, and Management. I like easy ways to remember things and VIMTUM is an easy way to remember. So, you’re listening to the Beginner’s Real Estate Investing Audio Guide here as a regular episode of Get Rich Education. If you’re not a beginner & you’re still listening, it’s either a good review and you might even be learning some new things along the way yourself.  Including, should you ever lowball a turnkey provider and a negotiation approach that I have for that - in a few minutes.  But first, one reasonable beginner question is ...   “Now why would someone would want to sell me a cash-flowing property in the first place? Why would someone sell me a good thing that pays them every month that they could continue to hold onto for cash flow? If a property pays someone every month while they hold onto it - why in the heck would they sell it to me? OK, some seller out there has a golden goose that lays a golden egg every month, so why in the world would they give me an opportunity to buy the goose? Well, there are just so many reasons for selling cash-flowing property - yes, a ton of reasons for selling even a young, healthy goose that lays golden eggs every month & is expected to so for years. Well, a turnkey provider runs out of money too. They can’t buy all the properties themselves.  They’d prefer a lump sum payout when they sell this property, because their business model is to go pay all cash for another distressed property that they can fix up.  And if you think that they snatched up the good ones themselves a while ago - yeah, they probably did do some of that. In fact - I WANT them to have snatched up some good properties from their own market earlier. It shows me that they believe in what they sell. Now, other reasons that the - I guess general public seller might want to sell you a property is ... One reason is moving. Say that a family in City A owns a few mom-and-pop rental homes that they self-manage and they’re moving to City B in another state, they’ll often sell their income properties. Some people want to self-manage their property (often because they never explored their best-and-highest use, but anyway) & if they have to move to City B, they’ll sell the property rather than try to find a Property Manager in City A.  Another reason people sell cash-flowing property is that - even if someone is not moving, that person might be tired of the self-management hassle - but yet they don’t try professional management - because that person has the DIYer mentality - that soooo common do-it-yourself mindset. OK, most people just don’t take a strategic approach to real estate investing. Other reasons for people selling cash-flowing property are death, marriage, divorce, and all kinds of either joyous or tragic life milestones. If a husband-and-wife own rental properties but running & managing them was kind of the husband’s thing & the husband dies … the wife doesn’t know how to run the properties & she’s likely to sell rather than hire a Property Manager. People may sell their cash-flowing property in case of all kinds of emergencies - medical and otherwise - because they may need a quick lump of cash - instead of the steady stream of cash flow over time that just won’t work for them in their new situation. OK, most of those situations involve some sort of external life change for property sellers - a lot of them tragic. Well - here’s a personal one for you...  A few years ago, I sold two cash-flowing apartment buildings at the same time - well, those sales actually closed on consecutive days - so nearly the same time. Both of those cash-flowing apartment buildings that I sold were 100% occupied with tenants, I had competent management in place, and there were no deferred maintenance issues with the buildings. You want to know my reason for selling two nice golden apartment gooses that were steadily laying some nice golden eggs? OK...can you guess why?  Alright, fortunately I didn't have any distress or emergency in my life. ...oh, and also, I wanted to sell them fast too, I couldn’t let these two cash-flowing apartment buildings linger on the market for a while. I really wanted to get rid of them. I had no distress like those situations I mentioned earlier. So can you guess why I wanted to sell these long-producing golden gooses in a good job growth market that produced nice cash flow, nice golden eggs? I’ll tell you why. That's because I knew I could 1031 Exchange those two gooses for two even larger gooses. Now I won’t get into the 1031 here on a beginner episode.  But I replaced the two smaller apartment buildings with two larger apartment buildings that would produce even larger eggs if I did it with a quick timeline - and I could defer any tax on my profitable gain.  I found - I guess - two very fertile egg producers that were going to produce even more cash flow over time. So...I think you get the message here. To the buyers of my smaller apartment buildings, I appeared as a very motivated seller of cash-flowing property, even though I had no external stress in my life.  It was due to internal reasons that I wanted to sell...and it’s the internal drive to expand my income.  No shrinking thinking here at Get Rich Education. Now, when you’ve found a cash-flowing property that you want to buy, should you make a lowball offer to a turnkey provider? My definition of lowball here, is, a 10% discount.  We’ll say, that a provider is offering a property for $120,000 - then you’d make the offer for 10% less, which is $108,000. That’s a lowball. My answer is ...  No. That’s not going to work. In almost every instance, that’s too much of a discount and it’s going to eat their margin too much.  Depending on how it’s presented, a seller might even be less motivated to work with you if they get a lowball offer.  This company has a business to run and with a turnkey property, you’re typically paying for the convenience. You leveraged their systems of them delivering this product to you that’s already renovated, rehabilitated, tenanted, and under management.  Now, can you can knock off $1K-$2K? And say, offer the seller then - $118K or $119K for the $120,000 property. Yeah, that might work.  It sure wouldn’t be deemed some unreasonable request. But it’s good to at least provide a reason - some rationale - in asking for the discount. Let me give you some perspective on this negotiation too.  For every $1,000 less in a mortgage loan that you take out, how much do you think that saves you in a monthly payment? Did you ever figure out how much that saves you? Well, at a 5% interest rate on a 30-year loan, reducing your mortgage loan amount by $1,000 saves you … $5. Five bucks in a reduced payment.  For more perspective, keep in mind too, that once the seller accepts your offer - it’s only the first part of the negotiation. Later, it’s a negotiation with the inspection. We’ll discuss how to navigate THAT shortly. I’m Keith Weinhold. You’re listening to Get Rich Education. ____ Welcome back to Get Rich Education. This is your Beginner’s Guide to Real Estate Investing. I’m your host, Keith Weinhold and we’re talking about buying an income-producing property. That may or may not be a TURNKEY property - which just means that it’s already renovated, tenanted, and under management with a tenant on the day that you buy it.  Now, once your offer is accepted by the seller, I want to give you - really just a brief outline of what to expect next.  This isn’t intended to give you every step in exhaustive detail, but this is generally what comes next for United States real estate purchases, and custom varies somewhat from state-to-state. So with that in mind, once the turnkey provider or seller accepts your purchase offer... You need to send in your earnest money. Earnest money is not the down payment. It’s a smaller amount that shows good faith that you’re serious about your offer.  It’s often an amount of $5,000 or less and it shows the seller that you’re serious enough about buying the property that the seller has the confidence to take their property OFF the market and not show it to anyone else. The seller should give you instructions on how to place your Earnest Money.  Now remember, your earnest money deposit is not going directly TO the seller, it is going to a third-party escrow account, and it is refundable to you in accordance with the terms of the contract you signed. Your contract should have an estimated closing date in there. I want to emphasize that the key word there is “estimated”.  While it is important that all parties work towards closing by this date, between you and me - let’s just be realistic - the reality is that many transactions get delayed beyond the closing date in the contract for a variety of reasons on the seller side, sometimes having to do with construction or renovation delays.  If this happens, it is nothing to be worried about, just remain in touch with the seller and you can simply sign a contract extension if needed when the time comes. As you are financing your property, be sure to keep getting your lender anything that they ask you for up so that they can keep processing your loan.  As your closing gets near, they will probably ask you for some updated information and have some final stipulations from the underwriter, so just remain in close touch with your lender and try to provide them what they need as swiftly as you can. During most of this time where you’re under contract & even before you’re in-contract to buy the property, most of your relationship with your lender and seller is just sitting around, waiting for the next stage.  Once construction/renovation is completed on your property, I suggest that you order a professional home inspection before closing.  As the buyer, this is at your expense, but the home inspection is cheap insurance for you and it is an important part of your due diligence. It might cost you about $300 for a single-family turnkey income property. A four-plex inspection might cost up toward $800. When seeking an inspector - seek ASHI certification - that is American Society of Home Inspectors. You’re looking for an inspector with a good reputation, licensed and bonded. It is good to look for a level of experience as well. The choice is really yours as the Buyer. Your inspector points out deficiencies in what I’ll break into a few categories.  #1 is Major concerns – these are significantly defective, safety issues that require immediate repair. Often times, those things MUST be done in order for your lender to even finance the property so the seller is going to do those things for you. That might be adding a railing to a porch. The second category are recommended repairs – So they’re recommended but not required. That might be adding some extra insulation in the attic.  The third category is “nice if it were done” - like a kitchen cabinet door that’s a little loose and doesn’t close snugly. When you get your home inspection report back because the inspector has compiled their findings, the key to remember is that the inspector will ALWAYS return a (usually long) list of items that they recommend be corrected prior to closing.  Now, this even happens on new construction, so expect some findings. And remember, you are not closing on the property in the condition it was inspected. Rather, the inspection is just part of the process on the path to getting the property to its final condition.  Then you and the seller agree on what will be fixed (at the sellers expense, and verified to your satisfaction), prior to closing.  The seller is anticipating that they will need to make some final repairs (at their own expense) after they get the inspection repair request from you. This is all part of the normal process. Of course, you can get in a car or hop on a plane and visit the turnkey property yourself and walk the property with your inspector, but I’d say fewer than 10% of turnkey buyers do this.  But going to see the property in person is never a BAD idea. Today, it’s easier than ever for an inspector or provider to e-mail you a property video. The report that you get from your Home Inspector after he visited the home will have lots of photos and details. Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing.  This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage. Once the seller makes any needed repairs that the third-party inspector found, I suggest having a re-inspection done by that same inspector. This gives you the chance to confirm that any agreed-upon repairs have indeed been made. You might spend another $100 on this re-inspection. Now, if the original inspection showed that a leaky faucet needed to be replaced, and the seller said they’d do it, and the re-inspection finds that that work wasn’t done as promised, then any FURTHER re-inspection costs are often a cost borne by the seller. Which seems pretty fair - they said they’d do work - and the re-inspection that you paid for confirmed that it hadn’t been done in this case. Now, back to the negotiation. If you asked for a reduced Purchase Price, that could lean away from you asking for too much in the inspection. How do I like to play it? Often times, I make a full price offer for the property - and I might even let the seller know at that time that I’d like to give you your price - it’s a full $120,000 in this case - and since you got your price, I’d like my terms. My terms are - that I’m more bold in what I request the seller to do from the inspection findings.  Maybe I will ask them to add that extra insulation in the attic as one of those “Recommended buy not Required For Financing” items - or replace a window pane that had condensation inside it. Then, what’s my justification for asking the seller for that. It’s that I’m paying your full price. Again, financing an extra $1,000 only costs me $5 per month. Now, let’s talk about the property appraisal.  The appraisal is a tool that the bank uses to verify the quality of their collateral.  Because in your loan paperwork, at closing, the bank will basically tell you that if you don’t make your monthly payments, you’ll be foreclosed upon and the bank will take back the property - that’s their collateral. So they want to make sure that the property seems to be worth as much or more than you’re in contract for - that $120,000 in our example. Your lender is the one that orders the property appraisal, not you. In about 90% of U.S. states, you as the buyer pay for the appraisal. It costs up to about $500.  The appraiser is a member of a third-party company and is not directly associated with the lender. It wasn’t always that way.  In fact, one factor that led to the housing downturn of 2007 in the Great Recession is that some lenders & appraisers were “in cahoots”. Haha! That can’t happen anymore.  BTW, the appraisal and some of these other steps are all part of your closing costs. All part of that … about 4% of the property purchase price. The appraisal is typically done by a certified appraiser physically visiting the home - and these people always seemingly have a tape measure with them. The appraiser checks out the premises and their job is to use market comparables to make sure that the lender has adequate collateral in case you, the borrower, default. OK, the bank doesn’t want to lend out more than the property is worth or else they could find themselves underwater if the borrower defaults. The appraisal protects against this. And don’t confuse this appraisal with an assessment. An assessment is something that a county or municipality uses the measure the amount of property taxes that are paid. It’s really unrelated to this appraisal. Now, before you select your Property Manager, I’d really like for you to talk with them on the phone or use a free video chat service like Zoom - it’s Zoom.us - it works a lot like Skype but Zoom is easier to use. I mean, I don’t make many phone calls in my life anymore - much like a lot of people. But I want you to have a phone or video call with your PM because ... I want you to have a good vibe - a good feeling about your property manager and to vet that manager just like you would vet out a manager for a non-turnkey company. Just because a property is branded “turnkey” by a company, doesn’t mean that you can dismiss doing your due diligence. Turnkey can be a great system, but there’s nothing magical about that word alone. Don’t overlook developing a good feeling about your Property Manager, because this is the one long-term relationship that you expect to have. I just can’t emphasize that enough. Your Manager is one of your key team members. They’ll tell you the character of the current tenant that’s currently in the home. Find out how the manager is going to pay you. Feel them out, know what your communication flow is going to be like.  If they’re part of the same company, a good manager should also connect you with whom renovated your turnkey property in case you have some questions for them. Now, notice that I haven’t mentioned a real estate agent. Most turnkey providers work in a direct model so that you don’t have to go through agents. You must sign a written Management Agreement with your Property Manager.  This gives the manager written authority to manage your property for you, it will state their fees, and you’ll have your contact information in that agreement. There are typically two fees - a leasing fee and a management fee. A leasing fee is where you’ll spend ½ month’s rent to one month’s rent amount when the Manager screens a new tenant. So hopefully that only happens every 1 or 2 or even 5 years if you’re lucky.  Yes, you can typically approve or reject their selected prospective tenant. You are going to be the owner of the property afterall. A management fee is often 8-10% of one month’s rent income - and that’s what you pay monthly - ongoing. You can sign a Management Agreement with the property provider if they have management integrated in-house. If not, you can lean on your provider for some management recommendations. Now, there’s one blank to fill in on your Management Agreement - it’s a dollar amount up to which the manager can pay for expenses that come up - against your account - without contacting you.  For example, if the number $500 is written in there, that means that if a maintenance or repair expense on your property exceeds $500, they must contact you prior to incurring that expense. You get to choose that dollar limit. As a beginning real estate investor, go with a lower figure.  Then as you get comfortable and / or you don’t want to be bothered about the property as much, you can increase that dollar limit in which they need to contract you about approving maintenance or repairs. Basically, if there’s something that has to do with the property & you don’t want to deal with it, then make sure it’s written in the Management Agreement that the manager will perform it. Typically, it’s going to say that the manager will collect rent, handle tenant relations, respond to repair requests, send you the rent, keep your ledger of income & expenses on the property, post legal notices if a tenant is paying the rent late, and sooo many other associated duties that I personally don’t want to deal with. I just want to live my life. Get that Management Agreement done - fully executed - signed by both you & the Manager BEFORE you close on the property.  Before you close, you can buy property insurance from any provider you choose.  Your turnkey provider is often happy to recommend some providers that their other clients have used in this market, or you can just Google and find your own.  Be sure to let the insurance provider know that this is a rental property (not a primary residence where you live and not a second home).  Most turnkey buyers purchase both hazard and liability insurance as part of their policy. Like any other insurance policy, you will have choices about deductibles, monthly payments, and coverage amounts.  If you are financing your property, your lender will most likely be able to combine your property taxes and insurance into your monthly payment, so you have one monthly payment for principal, interest, taxes and insurance (PITI) … much like you would on your primary residence. The financing process typically takes about 30 days from the time you submit your EM.  Remember that YOU are a factor in how fast your property closes. If that lender needs another document, give it to them pretty promptly. When you have finalized your due diligence, and verified that the seller has made all the agreed upon repairs from the home inspection report, you will be ready to close.  You likely live in a different state than the property and will close remotely. The title company (or its a closing attorney in some states) will prepare your closing documents - including your loan docs...  ...and can arrange for a mobile notary to meet you with the docs wherever you choose (your home, your office, your local coffee shop, etc.) so you can sign the docs in front of a notary who will then overnight the docs back to the Title Company so the transaction can fund. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying. It may seem like the closing process is a lot of work, but you’ll really spend most of the time waiting. Most of the time, you'll just be sitting on your hands, waiting for someone else involved in the transaction to come through.  So find something enjoyable to occupy your time and distract you while you wait, and feel secure in the knowledge that you've done your research and know how to make your closing process go smoothly. When you complete that closing with the mobile notary - I’ve done these closings at my home’s dining room table, or even in my employer’s conference room back when I used to have a day job - then, hey!  You need to congratulate yourself on adding another income property to your portfolio. You know, the good news is that of all of these stages we’ve discussed - the longest stage of them all is your ownership of the property. You Own & Collect the cash flow. And hey, this isn’t reason enough alone - but it’s kinda cool that you own property in TN and FL and IN.  You own part of each one of those states.  And with each new turnkey property you buy, you might have just increased your mostly passive cash flow by $311 per month or $118 per month or whatever it is. If you can swing it, it can be more efficient timewise for you to buy more than one property at a time. As you buy more income properties, it not only gets easier because you know the process, but you often get quantity discounts. For example, a management company might charge you a 9% management fee on your first three properties, but once you own four or more, they might charge you 8% on all four rather than 9%. Insurance companies often have similar discounts for you….so you may very well get a little more profitable as you buy more property. A rent-to-value ratio of 1% is generally quite desirable, meaning one month’s rent is 1% or more of the purchase price. For example, a $120,000 property and a rent income of $1,200.  $1,000 rent income on a $120,000 property would probably work fairly well too. You typically want to avoid properties with RV ratios of less than 7/10ths of 1%, or 0.75.  Let’s keep in mind that the RV ratio is only a rule of thumb. It doesn’t account for a major recurring expense like property taxes. In high property tax jurisdictions like many Texas markets, you probably want that RV ratio up higher. Now, as a beginning real estate investor, or even an advanced one, don’t worry about not know it ALL. No one’s ever going to know it all with real estate. In fact, I’ve been actively investing in real estate since 2002 and just within the steps of ACQUIRING a property, like I carefully discussed today, some incremental half-step will come up in the process that I hadn’t been thinking about previously - like signing a Lead Paint Disclosure Form. So, you don’t need to commit all of this stuff to memory. Now, something that novice real estate investors say sometimes is something like: “I would only buy an income property that I would live in myself.”  I contend that that is an awful criterion upon which to found strategic fundamentals on purchasing an income property. Once one filters property that way, they have let their emotions trump facts.  If the fact that a clean, safe, affordable, and functional property has a good occupancy rate in a sound employment market, decent ENOUGH neighborhood, and the numbers make sense - that’s more important. OK, you aren’t living there yourself so it’s not a sound criterion. Shoot, if I moved into any income property that I own, my lifestyle would take a substantial hit. Yet I’m not a slumlord - I provide housing that’s clean, safe, affordable and functional. But they’re not replete with fantastic amenities, it does not have Corinthian architecture with alabaster columns - OK - but I know there’s a demographic for my rental property type that demands this responsible-but-no-frills housing over time. It’s about asking yourself a better question, like, “Will this property secure an income stream?”  Alright, would you rather have your property look “cute as a button” - or secure an income stream? OK, we’re investors here. Some think that in today’s electronic age, you should be able to complete a property purchase from the time you write an offer until you close on a property in the same-day.  Well, that’s certainly not true. As you witnessed, physical things need to take place because you’re buying a real, physical asset. We’ve been talking today about how you buy an income property - just simply that - especially as it pertains to buying an out-of-state turnkey income property - from the time that you get a property under contract and submit the earnest money to escrow all the way to closing. ...because that’s how to generate passive income, which in turn, creates a rich life for you. Again, this isn’t an all-encompassing guide today with EVERY little detail. But we’ve hit the major milestones in the process & more. You’ve got a good general guide on the income property-buying structure.  You might have learned something about prioritization - perhaps LLCs matter less than you thought and a communicative Property Manager matters more than you thought. Today’s show has the type of content that will be about as relevant 5 years from now as it does today.  Now, today is also evidence that real estate does not have the liquidity that some other investments do. It takes longer to get in & get out. However, that low liquidity actually contributes to relative price stability in real estate. OK, there’s no panic selling in real estate. Maybe the most important thing for you to keep in mind is that... You cannot make any money from the property that you don’t own. Your future depends on what you do today. To “know” something and not “do” something is to really not know something. The most important thing you can do is act...because you cannot make any money from the property that you don’t own. Again, a recommended, specific INCOME property lender is Ridge Lending Group. Our network of income property providers is at GREturnkey.com And one particular property provider to highlight over there is Memphis, Tennessee’s Mid South Home Buyers. Not only are they great with beginners, but they have profitable properties at lower price points, which some beginners would rather start with. MidSouth Home Buyers has been rather popular for all those reasons and that’s created a longer wait list. Well, the news is that MidSouth Home Buyers has just expanded into another great investment market - Little Rock, Arkansas. So that should help shorten their wait list. If you can’t remember those three resources - Ridge Lending Group for the loan, GREturnkey and MidSouthHomeBuyers for the properties, I’ll be sure that they’re the first three links in the “Resources Mentioned” portion of the Show Notes accompany this episode. There would be nothing worse than for me to share today’s knowledge with you - then not let you know where to go to act upon that knowledge.   It’s been my pleasure to bring you your Beginner’s Real Estate Investing Audio Guide today. If you got value from today’s show, I’d be grateful if you took a screenshot of the podcast player image here on your podcatcher … ...and posted it to your Social Media account - your Facebook, Twitter, Instagram, or LinkedIn - and let your social friends know that if they’re ever interested in real estate investing, this episode is a great place to start.  Next week, I’ll talk about how you Retain your tenants at the same time you RAISE the rent.  I’m your host, Keith Weinhold. Don’t Quit Your Daydream! 


15 Jul 2019

Rank #3

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104: T. Harv Eker | Secrets Of The Millionaire Mind

104: T.Harv Eker is our guest today. His mega-popular seminars and book, “Secrets Of The Millionaire Mind: Mastering The Inner Game Of Wealth” have transformed countless lives. Harv tells you: “Think Rich To Get Rich.” Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Find turnkey real estate investing opportunities. Listen to this week’s show and learn: 03:58  What do you really want in your life? 09:04  Thoughts > Feelings > Actions > Results 11:28  Your mind is set to a “Wealth Thermostat.” 14:37  How to change your Wealth Thermostat: 1) Awareness. 2) Understanding. 3) Reconditioning. 19:24  Your thought influences are: verbal conditioning, modeling, specific incidents. 20:35  Are rich people evil? 26:08  Is it ethical to make passive income? 32:15  How rich people specifically think differently than most people. 34:50  The Bible and wealth. 39:14  Dealing with your disapproving family members. 44:28  Seminars. 45:10  How to win the money game.   50:31  The importance of passive income is freedom. 55:20  “SpeedWealth” has 8 principles. Resources Mentioned: Get SpeedWealth free at HarvEkerOnline.com/GRE Secrets Of The Millionaire Mind - book CorporateDirect.com NoradaRealEstate.com RidgeLendingGroup.com GetRichEducation.com

1hr 1min

7 Oct 2016

Rank #4

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84: Robert Kiyosaki | The Rich Don’t Work For Money | Rich Dad Poor Dad Author | Rich Dad Radio Show: In-Your-Face Advice on Investing, Personal Finance, & Starting a Business

#84: Robert Kiyosaki is our guest today. He tells us about his friendship with Donald Trump, why he’s buying oil, discusses the four types of intelligence, and tells us about his long-predicted Economic Crash. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive Turnkey RE webinar opportunities. Listen to this week’s show and learn: 02:24  Kiyosaki has influenced Keith’s investing thoughts more than anyone else. 04:17  A 401(k) is not a good investment. Why not? It doesn’t pay you. You pay it. 06:46  The words you use help define the life you live. Examples: “cash flow” vs. “budget” and “saving money” vs. “getting liquid.” 09:54  “Rich Dad, Poor Dad” meaning, and global reach. 19:36  What Kiyosaki learned from Donald Trump. 22:04  Four types of intelligence: IQ, EQ, PQ, SQ. 24:25  Savers are losers. Why would you save money? 25:24  Economic Crash of 2016? 27:54  Robert has lost money in business, but not in real estate. 30:05  How to invest $100,000 today. 33:38  Kiyosaki is buying oil. 36:50  Giving to others. 38:00  Good Debt vs. Bad Debt. Fiscal vs. Economic. 40:38  Studying and learning leads to winning at investing. 42:09  QE, Inflation, and Gold. 46:53  Interview recap. 48:21  Instead of saying “It Can’t Be Done,” ask “How Can It Be Done?” 51:09  Don’t live below your means, expand your means. Resources Mentioned: Rich Dad, Poor Dad Rich Dad Website Corporate Direct Norada Real Estate Coffee@GetRichEducation.com The Real Estate Guys Investor Summit At Sea Get Rich Education Website Want a free GRE logo decal? Just write a podcast review; here’s how at: iTunes, Stitcher, and Android. Send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com for your decal.


20 May 2016

Rank #5

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6: Here’s Why You Aren’t Financially Free

#6: Would you rather be debt-free or financially-free? Did you know that for most people with home mortgages, their approach to home equity management actually prevents them from being financially free? In this no-holds barred episode, which includes material that has shocked some of Keith’s students, your paradigm with what you thought was true about money management can shift dramatically.  Homes are for housing people. Not storing cash.  Opportunity cost is opportunity lost.  Learn about one of the greatest under-utilizations of using OTHER PEOPLE’S MONEY in order to achieve the freedom that you and your loved ones seek. 


21 Nov 2014

Rank #6

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44: How A Four-Plex Building Can Be Your Massive Wealth Generator (1 of 2)

#44: A four-plex apartment building can be your major wealth catalyst with an FHA loan and your small 3.5% down payment. Live in one of the four units and rent out the other three. It’s exactly how Keith began investing in real estate. Subscribe on iTunes so you never miss an episode. Listen to this week's show and learn: 03:05  Why a four-plex rather than another property type? 04:35  How to put as little as a 3.5% down payment on a four-plex apartment building with an FHA loan. 06:19  Common objections to owning a four-plex this way. 09:28  Different four-plex layouts - townhouse style vs. apartment style. 12:32  Do you live in a geographic market favorable to “owner-occupying” a four-plex? Here are some indicators. 14:30  Running the numbers. 16:09  Leverage creates wealth for you in an appreciating environment. But if the market loses value, leverage can become difficult for you. 20:48  Preparation: how to position your affairs to buy a four-plex. 23:35  Property selection considerations. 26:46  How to structure your purchase offer with the seller to your advantage. 30:25  By buying a four-plex, you’re starting off bigger than most well-known real estate investors have. Most people simply don’t consider buying four-plexes with FHA loans. Resources mentioned: MyFico.com TheLandGeek.com/GRE and MidSouthHomeBuyers.com Visit our website at GetRichEducation.com to subscribe to our newsletter or see all Events. Download the GRE Android App at Google Play and keep the GRE icon right on your phone’s home screen! We would be grateful if you wrote a review! Here’s how to write one at: iTunes, Stitcher, and Android.


14 Aug 2015

Rank #7

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56: Investment Property Loans and Mortgage Closing Costs with Caeli Ridge

#56: Learn today’s financing qualification requirements for investment property with Caeli Ridge, Owner and CEO of Ridge Lending Group. This pertains to conventional financing of: single family homes, duplexes, triplexes and four-plexes that you do not intend to occupy. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, 2) Receive turnkey RE webinar opportunities. Listen to this week’s show and learn: 00:52  If you want to control more property, you need good loans. 04:50  Compared to last year, are borrower requirements more rigid or more lax? 07:39  Your credit score, debt-to-income ratio, percent down payment, reserve requirement. 12:46  Qualifying for your first 4 properties is different from your 5th through 10th financed properties. 15:47  Qualifying for your 11th through 35th financed properties. 17:13  Can foreign buyers qualify? Also, LIBOR comments. 19:28  Maximizing your cash-on-cash return when structuring a financed offer. 21:21  Buying income property outside the state where you reside. 22:44  Minimum loan amount is $50,000 to $60,000. 26:10  What is a Good Faith Estimate? 27:58  Closing costs - what are they and where do they all come from? 30:58  Why you would want to pay a 2% Origination Fee rather than 1%. It’s by paying 1 Discount Point to “buy down” your interest rate. 32:55  Recording costs, transfer taxes, escrow charges, appraisal fees, processing fees. 36:02  Title Insurance Resources: RidgeLendingGroup.com MidSouthHomeBuyers.com or call (901) 217-4663 for Top-Notch Turnkey Rental Properties. NoradaRealEstate.com or call (800) 611-3060. Your Premier Source for Turnkey Cash-Flow Investment Property. GetRichEducation.com - that’s where to subscribe to our free newsletter, receive turnkey real estate webinar opportunities, and see all Events. Download the GRE Android App at Google Play to keep the GRE icon right on your phone’s home screen! We would be so grateful if you wrote a review! Here’s how to write one at: iTunes, Stitcher, and Android. To get a free GRE logo decal for your review, send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com


6 Nov 2015

Rank #8

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54: Building You: Your Credit Score with Philip Tirone

#54: Today you are going to learn more about credit scores than you ever have. We’re joined by 720 Credit Score’s Philip Tirone. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive turnkey RE webinar opportunities. Listen to this week’s show and learn: 01:33  A high credit score reduces your cost of capital, and maximizes your ROI. 08:28  You can have bad credit even if you pay your bills on time. 09:04  Credit scores matter for: property loans, car loans, insurance, employment, credit cards, more. 61% of employers run your credit report before hiring you. 10:21  Why credit scoring is a monumental scam. Yes, a scam. 11:45  You can have a clean credit report, yet poor credit score. 13:45  Many credit repair companies use illegal tactics. 15:03  46% of credit cards in your wallet do not report proper information to the credit bureaus. 18:28  You need 3 to 5 credit cards. 20:20  Get credit cards that: 1) Report to all three bureaus. 2) Report the proper credit limit. 21:03  Credit card utilization ratios. American Express often behaves differently. 23:30  FICO credit scores are the ones that matter. 26:07  U.S. vs. Canadian credit scoring Other developed western countries like Great Britain and Australia are similar. 27:10  The well-known pie chart at www.MyFico.com. 28:10  Installment loans’ importance. 29:02  Credit utilization ratio “breaks” at 100%, 90%, 70%, 50%, 30%, 10%, and 0%. 31:57  Credit inquiries and how much they matter; controlling credit report errors. 33:50  If your credit score is already above 720, you could still be brought down by one error. 34:55  Collections. 36:42  Get free credit reports (not scores) annually here: AnnualCreditReport.com 40:00  Why banks lack motivation to help you improve your credit score. Resources: 720CreditScore.com - Philip Tirone’s company that helps clients rebuild their credit. MyFico.com AnnualCreditReport.com MidSouthHomeBuyers.com or call (901) 217-4663 for Top-Notch Turnkey Rental Properties. NoradaRealEstate.com or call (800) 611-3060. Your Premier Source for Turnkey Cash-Flow Investment Property. GetRichEducation.com - that’s where to subscribe to our free newsletter, receive turnkey real estate webinar opportunities, and see all Events. Download the GRE Android App at Google Play to keep the GRE icon right on your phone’s home screen! We would be so grateful if you wrote a review! Here’s how to write one at: iTunes, Stitcher, and Android. To get a free GRE logo decal for your review, send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com


23 Oct 2015

Rank #9

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82: How To Buy An Income Property: Step-By-Step

#82: Your offer is accepted, your Earnest Money goes into to escrow, then your property has an Inspection, Appraisal, and more - all the way to closing. We discuss those steps, tell you what your action items are, and discuss how long the income property-buying process takes. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive Turnkey RE webinar opportunities. Listen to this week’s show and learn: 02:00  Robert Kiyosaki will be our guest in two weeks. 04:11  Why we’re embarking on the best decade ever for income property investing. 05:41  Why would anyone sell you a cash-flowing property? Many reasons given. 11:59  How to identify a winning income property: RV Ratio, eliminate your emotion, turnkey buying. 17:48  Investors get excited by the next deal. Remember to protect what you have. 19:20  What your Mortgage Loan Officer needs from you. Pre-approval letter. 20:22  Can you negotiate the property price with turnkey providers? Yes. 21:15  Submitting your Earnest Money. 23:03  Get a professional Property Inspection. What to expect. 27:17  Your Property Management Agreement. 28:21  Property Insurance. 29:18  Get a relationship with your Property Manager. 31:42  Your Property Appraisal. 33:23  Mobile Notary. 35:42  Real estate’s lack of liquidity contributes to its price stability. 36:14  You need to act. You won’t make money from the property that you don’t own. Resources Mentioned: CorporateDirect.com - Garrett Sutton’s company builds your business structure and protects your assets. Mention “Get Rich Education” for a free bonus. NoradaRealEstate.com or call (800) 611-3060. Your Premier Source for Nationwide Turnkey Cash-Flow Investment Property. MidSouthHomeBuyers.com - Top-Notch turnkey rental property in Memphis, Tennessee. GetRichEducation.com - that’s where to subscribe to our free newsletter, receive turnkey real estate webinar opportunities, and see all Events. Download the GRE Android App at Google Play to keep the GRE icon right on your phone’s home screen! Want a free GRE logo decal? We’ll send you one if you write a podcast review! Here’s how to write one at: iTunes, Stitcher, and Android.  Send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com for your decal.


6 May 2016

Rank #10

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197: Inventor Of 401(k), Ted Benna Joins Us

#197: I dislike 401(k)s. They REDUCE your income. Sound investments INCREASE your income. Most people simply do not realize that there are alternatives to “defined contribution” retirement plans like 401(k)s, 403(b)s, 457s, IRAs, and Canadian RRSPs. Societal belief systems condition you into “Salary Reduction Plans” - which is, in fact, an early name of the 401(k)! The man credited as the “Father” and “Inventor” of the 401(k), Ted Benna, joins us today. He created and gained IRS approval of the first 401(k) savings plan. Even Ted laments that they should be “blown up”. They are not serving participants in the way they were intended. Ted & I discuss alternatives to 401(k)s. Personally, I don’t invest in 401(k)s. Admittedly, I used to, succumbing to poor financial education and societal conditioning. They’re not designed to begin paying you until between age 59.5 and 70.5. That’s a “life deferral plan” - awful. Want more wealth? 1) Grab my free E-book and Newsletter at: GetRichEducation.com/Book 2) Actionable turnkey real estate investing opportunity: GREturnkey.com 3) Read my best-selling paperback: getbook.at/7moneymyths Listen to this week’s show and learn: 02:09 What exactly is wrong with a 401(k). 06:45 Replace your “Salary Reduction Plan” with a “Salary Increase Plan”. 08:02 Similar plans like 403(b), 457, IRA, Canadian RRSP. 09:30 Ted Benna Interview begins. 1980 roots. 12:45 Reducing employee wages. 13:37 Benefits and drawbacks of 401(k)s. 18:51 Fees. 25:43 Why 401(k)s should be “blown up”. 32:02 Comparing “Get Rich Education” vs. “401(k)”. 34:44 What does Ted Benna do today? 36:01 My summary. Resources Mentioned: Ted Benna’s website: Benna401k.com Ted’s charity interest: Compassion.com Mortgage Loans: RidgeLendingGroup.com Cash Flow Banking: ProducersWealth.com Apartment Investor Mastery: BradSumrok.com Turnkey RE: NoradaRealEstate.com Find Properties: GREturnkey.com GRE Book: GetRichEducation.com/Book Education: GetRichEducation.com


16 Jul 2018

Rank #11

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114: U.S. Geography and Real Estate Investing with Peter Zeihan

#114: Your mental map is stimulated today as we discuss what geographies will be prosperous for real estate investors. Geopolitical Strategist Peter Zeihan of Zeihan.com takes us on a virtual cross-country journey economically, geographically, and demographically. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Find turnkey real estate investing opportunities. Listen to this week’s show and learn: 03:46  The Mississippi River System promotes continental commerce. Luckily, it’s superimposed atop the U.S. agricultural belt. 06:47  Demographic luck. 13:54  Capital flight to “Gateway Cities”: Toronto, Montreal, Vancouver, Santa Monica, San Francisco, Seattle, New York City, and Miami. 17:38  “Reinvented Cities”: Oklahoma City, Austin, Salt Lake City, Charleston (SC). 20:05  Migration to low-cost-of-living cities. 25:27  New England. 26:58  New York. 28:42  Pennsylvania. 31:44  New Jersey through DC to the Carolinas. 34:22  Georgia. 36:21  Florida. 38:12  Alabama. 40:53  Tennessee. 43:12  Great Lakes Region. 44:11  Missouri. 45:16  Arkansas & Louisiana. 46:58  Texas. 50:01  Upper Great Plains. 51:07  Denver and Salt Lake City. 53:16  Arizona and Nevada. 56:53  California. 59:33  Washington and Oregon. 62:47  Alaska and Hawaii. Resources Mentioned: Zeihan.com TheRealAssetInvestor.com/GRE CorporateDirect.com RidgeLendingGroup.com GetRichEducation.com

1hr 10mins

16 Dec 2016

Rank #12

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57: Qualifying for Multifamily Apartment Building Loans f/ Old Capital Real Estate Investing Podcast with Michael Becker & Paul Peebles

#57: Keith comes to you from Little Rock, Arkansas today. Our guest is Old Capital Lending’s Michael Becker of Dallas, TX, to tell us about originating Multifamily Apartment Building loans. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter. 2) Receive Turnkey RE webinar opportunities. Listen to this week’s show and learn: 01:05  Keith is in Little Rock, Arkansas this week for an investment real estate tour. 04:53  Michael Becker of Old Capital Lending appears. 06:50  Single Family Homes vs. Multifamily Apartment advantages / disadvantages. 08:57  Recent happenings in this lending space. 10:20  Loans for 5+ unit residential property are called commercial loans. 11:55  Multifamily commercial loans are primarily qualified by the asset, not the borrower. 15:48  Residential 1-4 lending is like a formulaic science; multifamily commercial 5+ is closer to an art. 17:48  Debt Service Coverage Ratio (DSC or DCR). 1.25 minimum is typical. 19:00  How much liquidity do you need for a multifamily loan? 21:12  Borrower credit scores. 24:10  Loan duration. 26:08  Balloon payments, Pre-payment Penalties, Assumable Loans. 29:26  Recourse vs. Non-Recourse Loans. “Bad Boy Carve Outs.” 31:26  Can you buddy up with friends to buy a big apartment building together? 34:38  Qualifying for multifamily property loans out-of-state. 35:49  Higher closing costs for apartment building loans 39:32  How many states does Old Capital lend in? Resources: OldCapitalLending.com - Multifamily / commercial lending. SPIAdvisory.com - Michael Becker’s syndicating company. MidSouthHomeBuyers.com or call (901) 217-4663 for Top-Notch Turnkey Rental Properties. NoradaRealEstate.com or call (800) 611-3060. Your Premier Source for Turnkey Cash-Flow Investment Property. GetRichEducation.com - that’s where to subscribe to our free newsletter, receive turnkey real estate webinar opportunities, and see all Events. Download the GRE Android App at Google Play to keep the GRE icon right on your phone’s home screen! We would be so grateful if you wrote a review! Here’s how to write one at: iTunes, Stitcher, and Android. To get a free GRE logo decal for your review, send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com


13 Nov 2015

Rank #13

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195: Quit Working For Money and Be Yourself | Prosperity Economics with Kim Butler

#195: If I had maxed out a loser 401(k) when I worked a “day job”, you never would have heard my name. I'd still be working. Learn how to build multiple income streams. The average millionaire has 7 income streams. Be frugal with your time, not your money. I discuss the mindset around building passive income to have time freedom in your life. If you don’t invest in real estate, then how else will you acquire wealth? Options explored. Be yourself. When you strictly trade your time for dollars, you aren’t being yourself. When you have more time, it makes you more of what you are. Kim Butler of Partners For Prosperity joins us. She’s an original Rich Dad Advisor. She & I discuss retirement, the importance of passive income, and more. “Financial planning” has an ugly connotation. Kim & I break it down. We discuss why people keep investing in losing 401(k)s, IRAs, and other “life deferral plans”. Want more wealth? 1) Grab my free E-book and Newsletter at: GetRichEducation.com/Book 2) Actionable turnkey real estate investing opportunity: GREturnkey.com 3) Read my best-selling paperback: getbook.at/7moneymyths Listen to this week’s show and learn: 00:46 You are an investor. 02:19 Your life’s cash inflows & outflows. 09:16 Be yourself. 13:01 How you benefit when you’re “halfway there”. 18:08 Kim Butler interview begins. “Financial planning” has an ugly connotation. 25:57 Why do people still invest in 401(k)s and IRAs? 28:46 Retirement. 36:04 Why every human is an investor. 39:42 The 7 Principles Of Prosperity: Think-See-Measure-Flow-Control-Move-Multiply. 42:18 Whole Life Insurance. 45:36 Book recommendations. 50:44 If I had maxed out a 401(k), you never would have heard of me. Resources Mentioned: Partners4Prosperity.com Book: The Mystery Of Capital Mortgage Loans: RidgeLendingGroup.com Cash Flow Banking: ProducersWealth.com Apartment Investor Mastery: BradSumrok.com Find Properties: GREturnkey.com GRE Book: GetRichEducation.com/Book Education: GetRichEducation.com


2 Jul 2018

Rank #14

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98: Cap Rate, Cash-On-Cash Return, and Equity Management

#98: Turn your $100K into $300K over five years with five turnkey income properties. See exactly how. Also, Cap Rate, Cash-On-Cash Return, and Equity Management are explored. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive Turnkey RE webinar opportunities. Listen to this week’s show and learn: 01:03  Special technique to help you get more rent for your property. 04:37  How to add value to a multifamily property via NOI and Cap Rate. 08:58  Cap Rates versus Cash-On-Cash Return. 11:51  Neighborhood character affecting valuation. 13:50  How to create wealth with five turnkey properties over five years. 21:24  Amazon lockers are changing apartment buildings and consumer behaviors. 25:02  Keith’s HELOC application was denied! Details. 27:02  Earthquakes. The return from home equity is zero. 31:29  The borrower is in control of a loan, not the lender. 32:22  Why “Live Below Your Means” Is Bad Advice. Resources Mentioned: CorporateDirect.com NoradaRealEstate.com RidgeLendingGroup.com GetRichEducation.com


26 Aug 2016

Rank #15

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53: Building You: What’s Your Income and Cash Flow?

#53: Your income and cash flow tell you about yourself and your allocation. What proportions are active, earned, and passive income? Where are you vulnerable? Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive Maverick turnkey RE webinar opportunities. Listen to this week’s show and learn: 02:45  Most people’s #1 cash flow source is their work-a-day job. But they’re trading their time for dollars. 04:02  Here’s how to best determine your cash flow. Cash flow is simply income minus expenses. 05:54  Current U.S. median household income, Top 10%, and Top 1%. 10:02  You need cash to function in an economy, not equity. 11:32  How you can have a negative net worth, yet be financially free. 15:25  Trace your personal cash flow to different industry sectors. 22:04  “Budget” is almost a swear word. 25:07  Turning equity into cash flow. 28:14  “Retirement calculators” don’t work for real estate investors. 32:12  The Outsourcing Myth. Resources: MidSouthHomeBuyers.com or call (901) 217-4663 for Top-Notch Turnkey Rental Properties. NoradaRealEstate.com or call (800) 611-3060. Your Premier Source for Turnkey Cash-Flow Investment Property. GetRichEducation.com - that’s where to subscribe to our free newsletter, receive turnkey real estate webinar opportunities, and see all Events. Download the GRE Android App at Google Play to keep the GRE icon right on your phone’s home screen! We would be so grateful if you wrote a review! Here’s how to write one at: iTunes, Stitcher, and Android. To get a free GRE logo decal for your review, send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com


16 Oct 2015

Rank #16

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97: Assisted Living Homes Create Massive Cash Flow with Gene Guarino

#97: Generate $36,000 of monthly income and $10,000 of monthly cash flow per single-family residence used as an Assisted Living Home (ALH). Demographics tell the story. Our aging population means there will be more need for senior housing. Gene Guarino of the Residential Assisted Living Academy tells us why and how to own and operate ALHs. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive Turnkey RE webinar opportunities. Listen to this week’s show and learn: 01:05  Get $5,000 - $15,000 cash flow per month from one single-family home. 01:37  Upcoming guests on future shows include T. Harv Eker and Tom Wheelwright. 02:50  40 million senior citizens today will balloon to 89 million by 2050. 05:15  Single-family homes - not giant institutional complexes - are a great niche for the individual investor / businessperson. 08:09  Don’t be involved in the day-to-day operation of the ALH. 09:13  Ideal ALH location. Home size 300-500 sf per person. 13:20  No commercial kitchen. Grab bars, wide doors. 14:18  Profit & Loss Statement. $36,000 / monthly avg. income for ten private rooms in one ALH. 17:51  Owning vs. Leasing the real estate to operate your ALH. 19:43  Zoning, Licensing, Liability Insurance. 27:13  How do you find an ALH? 31:19  State-administered trainings vs. business-oriented trainings. 32:39  Financing. 37:15  Occupying your ALH with residents. 39:27  “Mom & Pop” ALHs. 42:04  Caring for others.   43:35  What does an ALH manager do? 45:00  Gene shows others how to provide ALHs with a live 3-day Training, and at RALAcademy.com Resources Mentioned: RALAcademy.com CorporateDirect.com NoradaRealEstate.com RidgeLendingGroup.com GetRichEducation.com


19 Aug 2016

Rank #17

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198: Your Cash Flow, HELOCs | Real Estate Technology with Daren Blomquist

#198: The five ways real estate pays you, your monthly cash flow and using HELOCs are three listener questions that I answer today. Home inventory is so low that machine learning and artificial intelligence are being used to predict when someone is likely to sell. ATTOM Data’s Daren Blomquist tells us where today’s housing values are compared to pre-recession peaks. Want more wealth? 1) Grab my free E-book and Newsletter at: GetRichEducation.com/Book 2) Actionable turnkey real estate investing opportunity: GREturnkey.com 3) Read my best-selling paperback: getbook.at/7moneymyths Listen to this week’s show and learn: 00:57 How would $1,500 monthly cash flow help me? 04:00 The “5 Ways” real estate pays you. 06:40 HELOCs. 26:16 Daren Blomquist interview begins. 29:00 Machine learning, artificial intelligence in real estate. 35:00 Higher mortgage interest rates = higher home prices. 38:18 National median housing prices vs. “pre-crash” highs. 40:30 Housing values in “stable” markets. 43:38 Get Rich Education TV. Resources Mentioned: www.attomdata.com Get Rich Education TV: GetRichEducation.tv Mortgage Loans: RidgeLendingGroup.com Cash Flow Banking: ProducersWealth.com Apartment Investor Mastery: BradSumrok.com Turnkey RE: NoradaRealEstate.com Find Properties: GREturnkey.com GRE Book: GetRichEducation.com/Book Education: GetRichEducation.com Hey, welcome in to Get Rich Education, Episode 198. I’m your host Keith Weinhold and I’m going to answer a few listener questions today… ...about your cash flow, your total rate of return, and finally, Home Equity Lines Of Credit. Then we’re going to have one of the top real estate trend trackers in the nation join us here later. Let’s get right into it. Ellis from Gastonia, North Carolina asks, “Keith, Episode 188 had a great breakdown of how run you all of the numbers on an income property. The thing I’m wondering about is that your example only resulted in a positive cash flow of $150 on that property. With the maximum of 10 conforming loans that we can get, that’s only $1,500 in monthly cash flow. How would that be enough for us to leave our job?” Thanks, Ellis. And, of course, not everyone that listens here wants to have their passive real estate income replace their passive job income. Though many do. ...and it’s not a get rich quick thing...it’s about incrementally building up durable cash flow streams over years. Well, Ellis, and I’m not sure how many shows you’ve listened to. That example of the $150 cash flow was just for one SFH - and really for one of the lower-cost ones - the purchase price on that was 70-some thousand dollars. It was in Memphis. So most of the income properties you buy will have a higher purchase price, higher figures, and often a higher cash flow. Really, $1,500 with ten properties would be about as low as a projected number could possibly get. So Ellis, if you’re married, both you and your spouse - you each qualify for 10 one-to-four unit properties...20 total and BTW… ...you want to put those in your individual names. If both you and your wife were on the loan, that would count as a strike against each of your limit of 10, so as you buy, alternate back-and-forth - you own the first one, she owns the second, you own the third, and so on, or something like that. So that’s 20 doors minimum there - or I guess 19 since your primary residence is part of that formula, plus if you have some duplexes or four-plexes in there, that might be 25 or 30 or 40 doors. So, there’s so many reasons why you would likely have substantially more than $1,500 in passive monthly cash flow. Then there are financing programs beyond conventional ones, you might also have some 5+ unit apartment buildings, some agricultural parcels or a mobile home community, or maybe you even got a couple low-cost properties paid-off and don’t think it’s worth getting a loan for tiny amounts, so they produce cash flow although there’s no loan there… ...there are a ton of reasons why it would be way more than $1,500. Thank you for the question, Ellis.  ...And another important thing to remember there is that we’re only talking about cash flow - which is only one of five simultaneous profit centers that you typically have. But cash flow is a key profit center because it’s the most liquid one. Jessy from Sacramento, CA says, I love your show. It’s flipped my financial mindset totally upside-down, changed my family’s life, and changed what I thought was possible for us.  Part of what I love hearing about is that 5 Ways You’re Paid in real estate. Ah - then he (or she?) shows me an example here in the question of 30% for leveraged appreciation + 6% cash flow , 5% loan paydown, 4% tax benefits, 3% inflation-hedging = a total return of 48%. Yes, those are the five ways that real estate investors often have as profit centers. The question Jessy asks about this is: “Though I get my properties from GREturnkey.com and these returns seem about right, I don’t think I’m invested in any one market that performs this way.” OK, I love that question, Jessy. Few individual markets are going to perform just that way. It’s a blended portfolio approach. For example, on your new purchase in Dallas-Fort Worth, you might not have any cash flow any more. It might be cash flow zero. That’s just the way DFW behaves now. But it’s likely that you’ve been achieving better than 6% appreciation there in DFW (and I’m referencing that 6% appreciation at 5:1 leverage as the 30% Jessy gave in the example). Then if you’ve also bought in Memphis, you’re likely achieving less-than-average appreciation - that’s just how many areas in Memphis behave, but you’re getting above-average cash flow. So it’s the blended portfolio approach that can lead to “Year One” returns like what I’ve described with the “Five Ways That You’re Paid”. Multiple markets means you’re more diversified at the same time. One market, however, that’s performed lately with a nearly equal measure of both appreciation and cash flow are some of the Orlando and Tampa Bay submarkets...so some markets will come close - most won’t - they’ll be weighted differently across your five profit centers. Thanks for the question, Jessy. The next question comes from Michael in Astoria, Oregon. Astoria is beautiful. One day, I went to the top of the Astoria column there - it’s a tower overlooking the mouth of the Columbia River. Michael says, “There aren’t any cash flow markets out here on the west coast and we have substantial equity in our $1 million Astoria home. We still owe $504,000 on the loan so it’s about half-paid off. From listening to you and understanding that the Return From Home Equity is always zero, I also know that our leverage ratio has been cut to 2-to-1. What’s the best way of removing our home equity to use for down payments on cash-flowing income property?”   Well, thanks for the question, Michael. First of all, you need to decide for yourself that that’s what you want to do with your home equity. Understand that doing so means that none of your equity is lost - it is merely transferred into multiple properties - and it also can produce a cash flow for you now. Of course, though the return from home equity is always zero, borrowing against your home equity incurs an interest rate expense that you need to beat. I’ve removed equity from my property with a HELOC for buying more investment property...and let’s drill down and unpackage a HELOC here - H.e.l.o.c. - Home Equity Line Of Credit. Let’s talk about why you would use one, how it works, and both your advantages and your risks here, Michael. With a HELOC - if you understand how a CC works, you largely understand how a HELOC works, except your credit limit is based on how much equity you have in your home. You can usually borrow up to an 80% combined LTV ratio. So what’s 80% combined LTV really mean? Now with your home, let’s just round your million-dollar home’s mortgage loan balance to 500K. This means that you could potentially borrow up to $800K total - you’ve already got a $500K lien on the property, meaning you could get a HELOC for another $300K. Yes, with $300K, you could potentially put $30K into ten low-cost income properties in the Midwest and South - down payment & closing costs. Now you’ve spread your risk around because you’re invested in multiple RE markets. Now to qualify for a HELOC, you'll need to document your income and employment status just like you would if you were refinancing your home, Michael. People often use HELOCs for home repairs, sometimes they’re used to pay down higher interest rate CCs. But you can use the funds for anything - a trip to France, a new fishing boat. The HELOC is essentially a second mortgage for you. Like a credit card, homeowners can borrow or draw money on multiple occasions, usually for a period of 5-10 years, and up to a maximum amount - it would be $300K for you in this case, Michael. There are two time phases with a HELOC. The first one is your Draw Period, which typically lasts 5-10 years. The second one is your Repayment Period - which can last about 10 years, maybe even up to 20 years. Now the first one, your HELOC Draw Period is a really nice time. Now you’ve got access to $300K, and you only need to make interest-only payments on it - which means you have flexibility - you can make principal payments on it if you want, but you only need to pay the interest portion monthly. And your HELOC balance can be very elastic - like a credit card - you could just borrow out $150K on your $300K line right away, make extra principal payments to get it down to $120K after a few months, then months later, run it all the way up to the limit of $300K, and years later pay it back down to “0” again. It’s a pretty great time for you - you’re enjoying what feels like a windfall of cash and you only need to make the interest-only payments. But after this 5-10 year Draw period, the second of your two HELOC time phases begins - your Repayment Period. Now, this can be a real test of how responsible you’ve been with your HELOC funds during your Draw Period - because during this repayment period which can last 10 to 20 years, you must pay both the interest and the principal amount - so your required minimum payment will be higher over all these months until you pay the HELOC balance back down to zero. Usually, the repayment amount is calculated by dividing the capital you’ve accessed - call it $300K here - by the number of months in your repayment period. Simple math here. Now, before you originate your HELOC - beware - occasionally, a lender requires your capital to be fully repaid at the end of your 5-10 Drawdown period all in one lump sum - which is known as a balloon payment. So before you take out a HELOC, just ask your mortgage loan officer about the duration of your Repayment Period once your Draw period ends, ensuring that there’s no balloon due. Now, even if you do have a 10-20 year repayment period, some borrowers still get surprised at the higher payment during the repayment period - but you won’t be - you’ve got to pay both principal and interest there. Your required payment will increase then. Now, here’s a great option for you. Of course once your 5-10 year Draw Period ends, maybe you want to keep your line of credit and extend the draw period. Many lenders will do this for you, so long as your home still has enough equity and your financial health hasn’t tanked. Typically, a lender will “pay off” your old line of credit by simply extending you a new one. Now that you understand Draw Periods and Repayment Periods, let’s talk about your HELOC’s interest rate. HELOCs have substantially lower interest rates than CCs. HELOC interest is often tax deductible - CCs are not. Your interest rate floats. It’s not fixed. HELOC interest rates are tied to Prime Rate or LIBOR plus a margin above that which is based on your credit score. Your upfront HELOC costs low, Michael. A $300K HELOC cost might only be a $1K upfront cost. Now, let’s talk about some risks associated with using your primary residence’s equity for purchasing rental property. If you have a habit of abusing credit, maybe avoid a HELOC altogether. Since a HELOC is secured by your home equity, if you don't repay it, you could end up in foreclosure. The same of which can be said for most any mortgage. Let me tell you about something bad and unforeseen that happened to me with a HELOC in about 2007 or 2008….and by the way, lending guidelines were so loose then that I actually had a 90% LTV HELOC on a non owner-occupied four-plex. If you can believe that! But it’s not like that today, so with your HELOC based on 80% LTV on your primary residence, say, Michael, that you’re in a place during your draw period a couple years down the road and say you’ve borrowed $150K of your $300K HELOC. You’ve got half of it in use. Here’s what happened to me, just using your numbers to stick with your example - I got a notice from the bank telling me, essentially that they froze my HELOC. What did freezing my HELOC mean? It meant that even though I was still in my Draw Period, they wouldn’t let me draw further equity from my home - it was frozen at $150K. Now, they didn’t call the note due or demand any principal payments. I could still make interest-only payments on the $150K, but with no further drawdowns. There was another $150K that remained unutilized. ...and why was that? Well, a lot of unprecedented things happened during the Great Recession of 2007 to 2009. Even though the property I owned didn’t fall in value all that much ten years ago, when housing values started turning down nationally 10-12 years ago, many banks said that you can’t make any further draws on your HELOC - we’re freezing it - essentially the banks were saying that we’re worried about the value of your collateral that secures this loan that we made to you. Well, I was disappointed because I still had some open funds to use on my HELOC, but access was shut off for quite a while. That was the HELOC freeze. Now, I could have avoided that had I just taken all the money out of the HELOC and put it in my own liquid bank account. Of course, I would have had to pay interest on a lump that I wasn’t investing too. Let me just add here, that whomever you listen to for finance and real estate investing information and education, listen to someone that been through a downturn. I’ve been successfully investing in real estate directly since 2002, and the housing crisis and mortgage meltdown of 2007 to 2009 was actually good for me - as I’ve discussed on other shows. Now, for you to get a gain - your HELOC interest rate that you’re paying should be the same as, or lower than, the cash-on-cash return of the income property that you’re buying with the HELOC funds. That’s because it’s cash that you service the I/O HELOC payments with - and you’re really keeping an eye on that when your Draw Period comes to an end. Remember that HELOC rates have been rising and they’re poised to keep rising. Now, I already know what you’re thinking. You’re excited about real estate investing and building your portfolio and if you have some equity in your home, you might even be thinking something like: “Even if my income property’s CCR ends up lower than my home’s HELOC interest rate, it’s all going to work out for me because when I consider that the income property pays me 5 ways (of which the CCR is only one of those five), my Total Rate Of Return will dwarf the smaller HELOC interest rate. I know you might be thinking that. And you know what, you might even end up being right and it will work out for you, but now you’re tilting into a riskier area. And you’re going to do whatever you’re going to do…. ...but the Mortgage Meltdown ten years ago proved to me that liquid cash flow is what services HELOC payments. The other four ways you’re often paid - appreciation, loan paydown paid by the tenant, tax benefits, and inflation-hedging - none of those profit centers are liquid. By the way, and thanks for the question Michael - Now, I’ve had some detractors in the debt-free School Of Thought that won’t even entertain the notion of harvesting equity from their own home and buying rental property with it. But I do it...and I’m not telling you to do it...I’m saying make your own decision. But some even say things like - I bet you won’t like your decision when we have another mortgage meltdown like we did ten years ago. My response is - this way, I’m better positioned in a mortgage meltdown. During the Housing Crisis, some markets even lost 50, even 60% of their housing values. In a meltdown, I’m going to be really happy that I didn’t have a lump of equity all in one property just in one market. Plus, during all that time leading up to a potential future meltdown, I will have had positive cash flow the entire time. I’ve even had a couple people - that just don’t ever seem to want to think abundantly say - well what if things go beyond a recession and we’re in an all-out depression and everyone loses their job and Americans are massively starved for food. Then the person that rents your Kansas City property won’t have their medical job to pay your rent anymore, and the Fedex employee in Memphis that rents your place won’t have a job and your cash flow will dry up. Sheesh, if we’re in an all-out Depression, and the economy breaks down, no one accepts the dollar, and there’s anarchy and mass starvation and looting and Americans don’t even have clean water and everyone’s defaulted on every loan they have, then the fact that you lost the cash flow on your St. Louis rental property is not even going to be one of your Top 20 problems. So...I don’t know what these people are thinking. Now... When you’re running your numbers on a single-family income property that you’re thinking about buying and you get a CCR greater than 10%, you know, these days. I want you to look at that CCR with a magnifying glass. Many markets have prices rising faster than rents that can keep up proportionally. You can still get 10% on a SFH, but not as easily as before. And I still don’t know of a better place to invest right now than SF income property. And I don’t think we’re in any kind of housing “bubble” now. A bubble is defined as a price level unsupported by fundamentals. Today, supply shortage is driving demand. Therefore, it is very much still a fundamental price increase, not a bubble - in these stable inland markets where we buy homes a little below the median housing value. So...know the pros and cons of strategic investment moves like a HELOC origination. Your goal, as a successful investor, is to maximize your ROI throughout your investing lifetime. I frequently sell or refinance properties due to that fact that equity-heavy properties decrease your ROE - your Return On Equity. Financially-free beats debt-free. The debt-free person asks a question like “Where do I think I can be someday?” The financially-free person instead asked themself a better question - what do I have right now to make my & my family’s life better now - what tool do I have that I didn’t even know I had. What knowledge do I have now, what talent do I have now, what property equity do I have now, what relationships do I have now. So...thanks for the listener questions today. I only got to three. There is such a backlog of questions that I’ve got. I wanted to answer three that I felt would be most applicable to the greatest number of people. Well, ATTOM Data’s Senior VP Daren Blomquist is back with us today. We’re going to discuss how among homeowners - they’re staying in their homes longer than before - but renters are not included in this - so note that this isn’t a direct measure of transiency. There are so many reasons for why homeowners are staying put longer Low interest rates that they locked in years ago often means they don’t want to leave. Mortgage underwriting standards are tougher than they were pre-recession. The supply of replacement properties is low. To a lesser degree - our population aging - the older one gets, the less they move. The supply problem is getting so bad that people increasingly are using data sets of predictive analytics and Artificial Intelligence to tell if someone is about to sell their home. All that’s next, plus where the more undervalued Midwest & South housing markets are for income property today. You’re listening to Get Rich Education. __ For those figures Daren was using in comparing various metro housing market prices to their pre-recession peaks, those numbers are not adjusted for inflation. Keep that in mind. So if over the last decade we had a cumulative 30% inflation over all those years, then a housing price that’s 30% greater is essentially the same. Very important distinction there. Thanks again to Daren Blomquist. I know that you’re a Get Rich Education listener, but are you a Get Rich Education watcher? Get Rich Education TV is developing. Understand that a lot of changes are taking place there as it’s just evolving. If you want free education, motivation and tutorial videos from me - just go to GetRichEducation.tv for more. Let me know what you think about Get Rich Education TV. Land there directly at  GetRichEducation.tv. Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Day Dream!


23 Jul 2018

Rank #18

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62: Tom Wheelwright | Make Your Travel & Meals Tax-Deductible; Avoid An Audit; Recent Tax Changes

#62: Rich Dad Advisor and Provision Wealth Founder Tom Wheelwright updates you about recent tax changes; provides tips for avoiding and dealing with an audit; and how to make your travel, meals and entertainment tax-deductible. Keith brings you the show from Juneau, Alaska today. Want more wealth? Visit GetRichEducation.com and 1) Subscribe to our free newsletter, and 2) Receive Turnkey RE webinar opportunities. Listen to this week’s show and learn: 02:35  Actually, the U.S. has the best tax compliance record in the world. 06:02  Now you can lose your passport for tax non-compliance! 09:25  During audits, the IRS is becoming more difficult & invasive. 14:00  Tips to help avoid an audit. It includes: call the deduction “continuing education” rather than a “seminar.” 17:37  Why you should never talk to the IRS. 20:45  Tax actions you can take now: 1) Pay your children, 2) Home office, 3) Automobile use. 4) Accelerate income. 27:30  Making your travel, meal, and entertainment expenses tax-deductible. 34:18  “Low-hanging fruit” ways to save on your taxes. 35:32  Tom believes in focusing on an investment niche. “A niche makes you rich.” Resources: ProvisionWealth.com - Tom Wheelwright’s Tax and Wealth Strategy firm. TaxFreeWealthBook.com - Tom Wheelwright’s popular book, Tax-Free Wealth. MidSouthHomeBuyers.com or call (901) 217-4663 for Top-Notch Turnkey Rental Properties. NoradaRealEstate.com or call (800) 611-3060. Your Premier Source for Nationwide Turnkey Cash-Flow Investment Property. GetRichEducation.com - that’s where to subscribe to our free newsletter, receive turnkey real estate webinar opportunities, and see all Events. Download the GRE Android App at Google Play to keep the GRE icon right on your phone’s home screen! We would be so grateful if you wrote a review! Here’s how to write one at: iTunes, Stitcher, and Android. To get a free GRE logo decal for your review, send: 1) A screenshot of your review. 2) Your mailing address to: Info@GetRichEducation.com


18 Dec 2015

Rank #19

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269: How Wealthy People Think

Money matters. It buys you freedom, options, and even the best medical care. You have the same 168 hours per week as Jeff Bezos or Bill Gates. Getting an MBA or Ph. D. is a slow way to wealth. How many of your 8 great grandparents can you name? See. Making an impact is rare. You can either live below your means or expand your means. By the time you’re age 30, you should know how to produce income without trading your time for it. Employees are motivated by fear. Wealthy people are motivated by ideas and value creation. You can only be truly free … with wealth. Middle class people want enough money to retire; rich people want enough money to impact the world. You can either be a conformer or build wealth. Your choice. ______ Resources mentioned: Mortgage Loans: RidgeLendingGroup.com Turnkey Real Estate: NoradaRealEstate.com eQRP: Text “QRP” to 72000 or: TotalControlFinancial.com By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. JWB New Construction Turnkey: NewConstructionTurnkey.com Best Financial Education: GetRichEducation.com Find Properties: GREturnkey.com Follow us on Instagram: @getricheducation


2 Dec 2019

Rank #20