What’s up everybody?welcome to my channel today. I want to share with you guys three beginner real estate, investing strategies that I’m using in 2020 and that I think you should use as well.
And if you’re new here, don’t forget to like and subscribe Andrew Carnegie said that 90 % of all millionaires became so through real estate and whether that number is exactly correct or not. The idea is that real estate is a wealth builder in quick sidenote.
If, at this point in the video you’re likely real estate, investing is only for people who are already rich don’t turn off this video think about this quote, which I heard this summer, someone somewhere in your exact situation, could Get it done, someone who’s watching this video someone who’s? Thinking about these strategies in 2020 is gonna change their life through real estate.
Investing I’m gonna do it and I want you guys to do it as well. So, stick with me through this all right. The first strategy that all new investors should be using in 2020 is house hacking. House hacking is when you own a property, and you live in one of the rooms or units and you rent out the other living space.
You use the rental income that you get from the other people who live with you in order to pay portions of your mortgage, or possibly even all of your mortgage. You can live for free or have money left over every single month to put in your pocket.
There are two huge misconceptions about buying houses that prevent beginners from getting started in real estate. If you would ask most people how much money do you have to have in order to buy a house, most of them will tell you 20 %, but if you live in a property there’s, a special loan for you, it’S an owner-occupied loan oftentimes, an FHA loan, which doesn’t require 20 % down.
This loan only requires 3.5 % down, and on top of that, there’s. A second huge misconception that keeps beginners from buying houses, and that is the lack of knowledge about downpayment assistance. I’m under contract right now for my first house hack and I’m using downpayment assistance.
There are 2,500 programs across the country that will give you 3 and a half percent cash money that you don’t have to pay back as a gift in order to buy your house. People aren’t talking about downpayment assistance and, in all honesty I don’t know why I’m, putting a link down in the description, and it will take you to an article that has all 50 states listed and Tell you exactly how to find the downpayment assistance program and you area you can get into your first half sack with little to no money out of your pocket using an FHA loan combined with downpayment assistance.
What’s up squad? If you’re watching this video and house, hacking seems like a beginner strategy, you might want to use, be sure to check out the in-depth ultimate guide. I did on how you can get your first house hack in 2020.
You can click the link. I don’t know in one of those corners. I’m new to YouTube. It’ll show up somewhere here. The second strategy that beginning real estate, investors can use in 2020 is burr. Investing burr is an acronym that was crowned by Brandon Turner, it from bigger pockets and it’s, a strategic way to buy a rental property.
There are five steps by rehab, rent, refinance and repeat. As a beginning, real estate investor, you’re, going around your town and you’re. Looking for a house that needs cosmetic renovations, you’re, not looking for the HGTV open house best realtor in the city, that’s, not the house.
You’re. Looking for you’re, looking for a house that maybe has outdated paint that maybe the landscaping is bad, maybe it needs a new floors but simple things that a first-timer could handle, because this property isn’t.
Yet all pretty and fixed up, you can get it for less than what it’s worth. Let’s! Imagine that you get this house for $ 60,000. Stick with me. I know you may not have $ 60,000 in your pocket right now.
We’ll talk about where you find that money. Also, if you’re thinking, there are no houses in my market for $ 60,000. Don’t worry, the math works, whether your numbers are bigger or smaller $ 60,000 to purchase this house, but because it’s, not all nice and pretty yet you’re gonna have to put the renovation into it.
That’s, the second step and let’s say you can renovate this house for $ 15,000, which means you’re all-in number to buy this house and make it pretty is $ 75,000. All right. We’ll talk about where you get that money in a moment, so once the house is all pretty and fixed up now it’s time for you to rent it out.
Next up is the fourth step refinance. The bank is gonna, take into account that, yes, you bought this house for $ 60,000, but you fixed it up. You & # 39, ve made it pretty, and you have a renter in the house who’s, paying down the mortgage and you’re, getting cash flow from them every single month.
So now the house is going to be worth more. The appraiser comes back and says this house is worth $ 100,000. You bought it for 60,000, you put 15 into it. That’s, only 75 grand. How can it be worth hundred that is appreciation? You forced that property to appreciate to become worth more because you fixed it up and while it’s a bit more complicated than this, that appreciation, isn’t equal to what you spent on the property, but it’s.
Equal to what people will now pay for that fixed up property, that’s, how real estate works. So now the bank will give you a new loan. They will refinance this property for $ 100,000, and here’s. The cash out part.
They’ll, give you 75 % of that loan in cash with seventy five percent of a hundred thousand dollars. Seventy five thousand dollars. So now you’re back at zero. You’ve, gotten back the money that you used to buy the property and you still own a house that has a cash flowing renter in there, paying your passive income every single month, all right.
The question that’s on all of our minds: how do we get the seventy five thousand dollars in the first place? I promise you. There is a real estate investor in your town, who’s, doing burn investing in one way that you can get that seventy five thousand dollars is to partner with them.
You can find them through online forums like BiggerPockets or go to your local real estate, investing Meetup, and once you find that person there are three things that every real estate deal needs: money, hustle and knowledge.
Maybe you don’t have the money, but you can have the hustle. You can have the knowledge you can bring that deal to the table partner with them. Let’s. Go 50/50 on all the cash flow. That’s. Coming out of this property, or whatever type of deal you set up, there are also other ways that you can find that initial money.
You need to start bursting, such as finding a hard money lender, but while that’s a bit more complicated, we’ll, get into that in a future video. In fact, for the third strategy, you need absolutely no money at all to get started.
This strategy is wholesaling, wholesaling is when you find a distressed property, meaning it doesn’t need a little bit of work. It needs a lot of work there’s likely no one living in this house and the person who owns it, probably lives out of state and just doesn’t know what to do with it as a wholesaler.
Your job is to drive around your town, cost you a tank of gas and find these properties. Once you find them, you put the address into your county records, cost you nothing and you contact the owner. This owner, doesn’t want this house.
They’re, not keeping up with it. They don’t know what to do with it and you go to them and you find out for what price they would be willing to sell it. Hypothetically, let’s say they’re willing to sell it for $ 50,000.
You get that property. What’s called an assignable contract, so you’re, not paying the $ 50,000. You’re. Just signing a contract saying that in 30 days or less me or someone I assign this contract to, will buy this house from you.
The simple version is that if you don & # 39, t buy it within 30 days, the contract expires and you and the seller just walk away. But during that 30 days you’re gonna make your money by solving a problem for an investor.
You & # 39. Ve, got a contract in your back pocket for a house that needs to be flipped and you & # 39. Ve got it for 50 grand you’re gonna take that contract, and for that investor you’re gonna offer it to them.
For let’s, say fifty five thousand dollars that’s called your assignment fee. You’re, going to assign this contract to the investor so that they can buy it from the original seller for fifty five thousand dollars.
The original seller gets 50 and you get five. So why should you get five? Why should you be the middle person? Well, you went out and you found the deal, you did the work of finding the owner of this property, contacting them and solving a problem for them and then, on the flip side, you did the work of finding an investor, giving them all the details that they Need to know about this property, how much it’s worth now, how much it’s going to take to fix it up how much it’s gonna sell for at the end of the day, and you brought The properties to them and dumped it in their lap, it’s, a fair fee on all sides.
Everyone walks away from the deal having had their problems solved and all you had to have was hustle and knowledge. Wholesaling is 100 % legal, but it functions differently in different states. Your job is to not only hustle and find the deal, but also to be knowledgeable about the laws that govern your state.
If you made it this far in the video, I appreciate you for rockin with me and I want to know what investment strategy you’re gonna be using in 2020. So leave that down in the comments for me below until next time.